MSCI Inc. (NYSE: MSCI), a leading provider of indexes and
portfolio construction and risk management tools and services for
global investors, today announced results for the three months
ended December 31, 2018 (“fourth quarter 2018”) and full-year ended
December 31, 2018 (“full-year 2018”).
Financial and Operational Highlights for Fourth Quarter 2018
and Full-Year 2018
(Notes: Percentage and other changes refer to fourth quarter
2017 or full-year 2017 unless otherwise noted.)
- Organic subscription Run Rate growth
as of December 31, 2018 of 10.0% with Index up 11.4%, Analytics up
6.5% and All Other up 18.6%.
- Full-year 2018 operating revenues up
12.5%; recurring subscription revenues up 9.6%; asset-based fees up
21.9%; non-recurring revenues up 23.3%.
- Fourth quarter 2018 operating
revenues up 8.0%; recurring subscription revenues up 9.0%;
asset-based fees up 3.8%; non-recurring revenues up 19.9%.
- Fourth quarter 2018 diluted EPS up
142.9%, and full-year 2018 diluted EPS up 71.0%; fourth quarter
2018 adjusted EPS of $1.31, up 13.9%, resulting in full-year 2018
adjusted EPS of $5.35, up 34.4%.
- Fourth quarter and full-year 2018
operating income growth of 10.2% and 18.5%, respectively; fourth
quarter 2018 operating margin of 47.0%, and 47.9% for full-year
2018.
- Fourth quarter and full-year 2018
adjusted EBITDA growth of 9.2%, and 17.1%, respectively; fourth
quarter 2018 adjusted EBITDA margin of 52.5%, and 53.9% for the
full-year 2018.
- Continued strong retention with
full-year 2018 total Retention Rate at 94.1%.
- During fourth quarter 2018 and
through January 25, 2019, a total of 5.1 million shares were
repurchased at an average price of $147.71 per share for a total
value of $754.5 million.
Three Months Ended
Year Ended Dec. 31, Dec. 31,
Sep. 30, YoY % Dec. 31, Dec. 31,
YoY % In thousands, except per share data 2018
2017 2018 Change 2018 2017
Change Operating revenues $ 361,688 $ 334,779 $ 357,934 8.0
% $ 1,433,984 $ 1,274,172 12.5 % Operating income $ 169,818 $
154,139 $ 176,403 10.2 % $ 686,898 $ 579,770 18.5 % Operating
margin % 47.0 % 46.0 % 49.3 % 47.9 % 45.5 % Net income $
152,132 $ 64,602 $ 123,832 135.5 % $ 507,885 $ 303,972 67.1 %
Diluted EPS $ 1.70 $ 0.70 $ 1.36 142.9 % $ 5.66 $ 3.31 71.0
% Adjusted EPS $ 1.31 $ 1.15 $ 1.35 13.9 % $ 5.35 $ 3.98 34.4 %
Adjusted EBITDA $ 189,762 $ 173,817 $ 195,537 9.2 % $
772,433 $ 659,757 17.1 % Adjusted EBITDA margin % 52.5 % 51.9 %
54.6 % 53.9 % 51.8 %
“During a year of volatility in international markets and a
heightened level of uncertainty in the U.S. market over the last
several months, the remarkable financial and operating successes
achieved in the fourth quarter and the full year 2018 highlight the
resiliency of our franchise, the mission-critical nature of our
differentiated content and capabilities, as well as the strong
secular tailwinds fueling our business. We have shown that we have
the ability to take advantage of opportunities even in times of
volatility and uncertainty in the markets,” commented Henry A.
Fernandez, Chairman and CEO of MSCI.
“While we are witnessing a rapid pace of change across the
investment industry, coupled with a volatile market environment,
the continued double-digit organic growth in our core subscription
business together with the robust demand for equity ETFs linked to
our indexes reflect our increasing ability to provide tools that
help clients adapt for the future. As we head into 2019, we are
well-positioned to continue to capitalize on the tremendous
opportunities in front of us and drive increasingly attractive
subscription growth,” added Mr. Fernandez.
Fourth Quarter and Full-Year 2018
Consolidated Results
Revenues: Operating
revenues for fourth quarter 2018 increased $26.9 million, or 8.0%,
to $361.7 million, compared to $334.8 million for the three months
ended December 31, 2017 (“fourth quarter 2017”). The $26.9 million
increase in operating revenues was driven by a $22.5 million, or
9.0%, increase in recurring subscriptions (driven primarily by a
$12.0 million, or 10.8%, increase in Index products and a $6.2
million, or 27.8%, increase in All Other products), a $2.9 million,
or 3.8%, increase in asset-based fees and a $1.4 million, or 19.9%,
increase in non-recurring revenues. Adjusting for the impact from
foreign currency exchange rate fluctuations (“ex-FX”) in fourth
quarter 2018, operating revenues increased 8.2%. Foreign currency
exchange rate fluctuations had a negligible impact on recurring
subscription revenues and asset-based fees. Asset-based fees ex-FX
does not adjust for the impact from foreign currency exchange rate
fluctuations on the underlying assets under management (“AUM”).
For full-year 2018, operating revenues increased $159.8 million,
or 12.5%, to $1,434.0 million, compared to $1,274.2 million for the
full-year ended December 31, 2017 (“full-year 2017”). The increase
was primarily driven by a $93.5 million, or 9.6%, increase in
recurring subscriptions, and by a $60.5 million, or 21.9%, increase
in asset-based fees. For full-year 2018, operating revenues ex-FX
increased 12.4%, and recurring subscription revenues ex-FX
increased 9.4%. There was a negligible impact on asset-based fees
ex-FX.
Run Rate: Total Run
Rate at December 31, 2018 grew by $65.6 million, or 4.8%, to
$1,431.3 million, compared to December 31, 2017. The $65.6 million
increase was driven by a $70.5 million, or 6.7%, increase in
recurring subscription Run Rate to $1,119.4 million, which was
partially offset by a decrease of $4.9 million, or 1.5%, in
asset-based fees Run Rate to $311.9 million and a $25.3 million
decline in recurring subscription Run Rate from the divestitures of
Financial Engineering Associates, Inc. (“FEA”) and Investor Force
Holdings, Inc. (“InvestorForce”). Organic subscription Run Rate
growth was 10.0% in fourth quarter 2018 driven by strong growth in
the Index and ESG segments and in the Analytics segment’s
Multi-Asset Class and Equity Analytics products. Retention Rate was
92.9% in fourth quarter 2018, compared to 91.6% in fourth quarter
2017 and 94.1% for full-year 2018 compared to 93.8% for full-year
2017.
Expenses: Total
operating expenses for fourth quarter 2018 increased $11.2 million,
or 6.2%, to $191.9 million compared to fourth quarter 2017, driven
mainly by a $6.2 million, or 5.4%, increase in compensation and
benefits costs. The compensation and benefits costs increase is
attributable to an increase in incentive compensation and wages and
salaries, partially offset by a decrease in severance costs.
Non-compensation costs increased by $4.8 million, or 10.4%, and was
attributable to an increase in professional fees, marketing costs
and IT costs. Adjusted EBITDA expenses for fourth quarter 2018
increased $11.0 million, or 6.8%, to $171.9 million compared to
fourth quarter 2017. Total operating expenses ex-FX and adjusted
EBITDA expenses ex-FX for fourth quarter 2018 increased 8.1% and
8.8%, respectively, compared to fourth quarter 2017.
For full-year 2018, total operating expenses increased $52.7
million, or 7.6%, to $747.1 million. Adjusted EBITDA expenses
increased $47.1 million, or 7.7%, to $661.6 million compared to
full-year 2017. Total operating expenses ex-FX and adjusted EBITDA
expenses ex-FX for full-year 2018 increased 7.3% and 7.4%,
respectively, compared to full-year 2017.
Headcount: As of
December 31, 2018, there were 3,112 employees, up 2.4% from 3,038
as of December 31, 2017, and relatively flat compared to 3,121
employees as of September 30, 2018. The 2.4% year-over-year
increase in employees was primarily driven by increased headcount
in emerging market centers and in areas related to technology,
marketing and research. As of December 31, 2018, a total of 39% and
61% of employees were located in developed market and emerging
market centers, respectively, compared to 41% in developed market
centers and 59% in emerging market centers as of December 31,
2017.
Amortization and Depreciation
Expenses: Amortization and depreciation expenses
of $19.9 million increased by $0.3 million, or 1.4%, for fourth
quarter 2018, compared to fourth quarter 2017, primarily as a
result of higher software depreciation and higher amortization of
internally capitalized software development costs released into
production.
For full-year 2018, amortization and depreciation expenses of
$85.5 million increased by $5.5 million, or 6.9%, compared to
full-year 2017. This increase was primarily attributable to an
increase in amortization expense reflecting a $7.9 million non-cash
charge recognized in the three months ended June 30, 2018 related
to the write-off of the IPD tradename used by the Real Estate
segment, as well as higher amortization of internally capitalized
software development costs released into production, partially
offset by certain intangible assets becoming fully amortized.
Other Expense (Income),
Net: Other expense (income), net reflected an
income amount of $17.5 million for fourth quarter 2018, compared to
an expense amount of $27.2 million for fourth quarter 2017. The
$44.7 million change was primarily due to the gain realized from
the divestiture of InvestorForce and higher interest income driven
by higher yields on higher cash balances, partially offset by
higher interest expense associated with higher outstanding
debt.
For full-year 2018, other expense (income), net was $57.0
million which decreased $55.9 million, or 49.5%, compared to
full-year 2017, primarily as a result of the gain realized from the
divestitures of FEA and InvestorForce being recognized in second
quarter and fourth quarter 2018, respectively, and higher interest
income driven by higher yields on higher cash balances, partially
offset by higher interest expense associated with higher
outstanding debt.
Tax Rate: Income tax
expense was $35.2 million for fourth quarter 2018, compared to
$62.4 million for fourth quarter 2017. The effective tax rates were
18.8% and 49.1% for fourth quarter 2018 and fourth quarter 2017,
respectively. The decline largely reflected the impact of the Tax
Cuts and Jobs Act that was enacted on December 22, 2017 (“Tax
Reform”) and the favorable impact of various discrete items, offset
by an unfavorable impact resulting from the taxes associated with
the gain realized upon the completion of the divestiture of
InvestorForce. The tax benefit of the sale of InvestorForce and
certain discrete items related to the true up of a one-time charge
taken in Q4 2017 related to the implementation of Tax Reform are an
adjustment to net income in the adjusted net income and adjusted
EPS measures for fourth quarter 2018.
Income tax expense was $122.0 million for full-year 2018,
compared to $162.9 million for full-year 2017. The effective tax
rates were 19.4% and 34.9% for full-year 2018 and full-year 2017,
respectively. Full-Year 2018 included a benefit of $11.2 million
relating to a revision of the full-year 2017 net charge of $34.5
million associated with taxes arising from the enactment of Tax
Reform.
The benefit of $11.2 million related to Tax Reform adjustments
in the full-year 2018 consisted of a tax benefit of $5.7 million
recognized on the deemed repatriated earnings of foreign
subsidiaries, a tax benefit of $2.9 million related to the
revaluation of deferred taxes at the now lower statutory corporate
rate and a tax benefit of $2.6 million related to the assertion
that cumulative profits were permanently reinvested overseas as of
December 31, 2017. The $2.9 million benefit related to the
revaluation of deferred taxes was associated with active tax
planning the Company undertook in response to Tax Reform to
accelerate certain tax deductible expense items into the year ended
December 31, 2017. This $2.9 million benefit will not be an
adjustment to net income in the adjusted net income and adjusted
EPS measures for full-year 2018.
The final cumulative charge recognized related to Tax Reform was
$23.3 million.
Net Income: Net
income increased 135.5% to $152.1 million in fourth quarter 2018,
compared to $64.6 million in fourth quarter 2017. For full-year
2018, net income increased 67.1% to $507.9 million, compared to
$304.0 million for full-year 2017.
Adjusted EBITDA:
Adjusted EBITDA was $189.8 million in fourth quarter 2018, up $15.9
million, or 9.2%, from fourth quarter 2017. Adjusted EBITDA margin
in fourth quarter 2018 was 52.5%, compared to 51.9% in fourth
quarter 2017. For full-year 2018, adjusted EBITDA was $772.4
million, up 17.1% from full-year 2017, and adjusted EBITDA margin
was 53.9% for full-year 2018, compared to 51.8% for full-year
2017.
Cash Balances and Outstanding
Debt: Total cash and cash equivalents as of
December 31, 2018 was $904.2 million. MSCI seeks to maintain
minimum cash balances globally of approximately $200.0 million to
$250.0 million for general operating purposes.
Total outstanding debt as of December 31, 2018 was $2,600.0
million, which excludes deferred financing fees of $24.5 million.
Net debt, defined as total outstanding debt less cash and cash
equivalents, was $1,695.8 million at December 31, 2018. The total
debt to operating income ratio (based on trailing twelve months
operating income) was 3.8x. The total debt to adjusted EBITDA ratio
(based on trailing twelve months adjusted EBITDA) was 3.4x, which
is within the stated gross leverage to adjusted EBITDA target range
of 3.0x to 3.5x.
Cash Flow and Capex:
Net cash provided by operating activities was $173.2 million in
fourth quarter 2018, compared to $143.2 million in fourth quarter
2017 and $143.8 million in the three months ended September 30,
2018 ("third quarter 2018"). Capex for fourth quarter 2018 was
$22.8 million, compared to $20.6 million in fourth quarter 2017 and
$13.1 million in third quarter 2018. Free cash flow was $150.4
million in fourth quarter 2018, compared to $122.6 million in
fourth quarter 2017 and $130.7 million in third quarter 2018. The
increase in net cash provided by operating activities and free cash
flow, compared to third quarter 2018, was driven primarily by
higher cash collections and lower income tax payments, partially
offset by higher payments of cash expenses. The increase in net
cash provided by operating activities and free cash flow, compared
to fourth quarter 2017, was primarily driven by increased cash
collections, partially offset by higher scheduled interest payments
attributable to the notes offering completed in May 2018 and higher
income tax payments.
Net cash provided by operating activities was $612.8 million for
full-year 2018, compared to $404.2 million for full-year 2017.
Capex for full-year 2018 was $49.0 million, compared to $48.8
million for full-year 2017. Free cash flow was $563.8 million for
full-year 2018, compared to $355.3 million for full-year 2017. The
increase in both net cash provided by operating activities and free
cash flow for full-year 2018 compared to full-year 2017 was
primarily driven by higher cash collections, partially offset by
higher payments of cash expenses, higher income tax payments and
higher scheduled interest payments.
Share Count and Capital
Return: The weighted average diluted shares
outstanding in fourth quarter 2018 declined 3.2% to 89.5 million,
compared to 92.5 million in fourth quarter 2017. In fourth quarter
2018 and through January 25, 2019, MSCI repurchased 5.1 million
shares at an average price of $147.71 per share for a total value
of $754.5 million. A total of $0.7 billion remains on the
outstanding share repurchase authorization as of January 25, 2019.
Total shares outstanding as of December 31, 2018 was 84.2
million.
On January 30, 2019, the Board declared a cash dividend of $0.58
per share for first quarter 2019. The first quarter 2019 dividend
is payable on March 15, 2019 to shareholders of record as of the
close of trading on February 22, 2019.
Table 1: Results by Segment
(unaudited)
Index
Analytics All Other Adjusted Adjusted
Adjusted Operating Adjusted EBITDA
Operating Adjusted EBITDA Operating
Adjusted EBITDA
In thousands
Revenues EBITDA Margin Revenues
EBITDA Margin Revenues EBITDA
Margin Q4'18 $ 210,433 $ 149,930 71.2 % $ 121,935 $
36,679 30.1 % $ 29,320 $ 3,153 10.8 % Q4'17 $ 193,774
$ 142,702 73.6 % $ 117,510 $ 31,141 26.5 % $ 23,495 $ (26 ) (0.1 %)
Q3'18 $ 210,194 $ 154,477 73.5 % $ 119,898 $ 37,046 30.9 % $ 27,842
$ 4,014 14.4 % YoY % change 8.6 % 5.1 % 3.8 % 17.8 % 24.8 % nm
FY 2018 $ 835,475 $ 607,853 72.8 % $ 479,939 $ 143,645 29.9
% $ 118,570 $ 20,935 17.7 % FY 2017 $ 718,959 $ 522,241 72.6 % $
458,269 $ 125,624 27.4 % $ 96,944 $ 11,892 12.3 % YoY % change 16.2
% 16.4 % 4.7 % 14.3 % 22.3 % 76.0 %
nm: not meaningful
Index Segment:
Operating revenues for fourth quarter 2018 increased $16.7 million,
or 8.6%, to $210.4 million, compared to $193.8 million for fourth
quarter 2017. The increase was driven by a $12.0 million, or 10.8%,
increase in recurring subscriptions, a $2.9 million, or 3.8%,
increase in asset-based fees and a $1.7 million, or 45.5%, increase
in non-recurring revenues.
The increase in recurring subscriptions was driven by strong
growth in core products, custom and specialized index products and
factor and ESG index products.
The increase in asset-based fees was driven by growth in revenue
from non-exchange traded funds (“ETFs”) passive funds linked to
MSCI indexes and exchange traded futures and options contracts
based on MSCI indexes, partially offset by a decrease in revenues
from ETFs linked to MSCI indexes. A $3.6 million, or 17.4%,
increase in revenue from non-ETF passive products was driven by
higher AUM and an increased contribution from higher-fee products.
Revenues from exchange traded futures and options grew $1.5
million, or 41.4%, driven primarily by an increase in total trading
volumes. The revenues from ETFs linked to MSCI indexes decreased
$2.2 million, or 4.0%, driven by relatively flat average AUM,
coupled with a decline in average basis point fees resulting
primarily from a change in product mix.
The increase in non-recurring revenues was primarily driven by
growth in license fees associated with use of our indexes for
over-the-counter derivatives.
Operating revenues for full-year 2018 increased $116.5 million,
or 16.2%, to $835.5 million, compared to $719.0 million for
full-year 2017. The increase was driven by a $60.5 million, or
21.9%, increase in asset-based fees, a $50.3 million, or 11.8%,
increase in recurring subscriptions, and a $5.7 million, or 36.7%,
increase in non-recurring revenues. The adjusted EBITDA margin for
Index was 72.8% for full-year 2018, compared to 72.6% for full-year
2017.
Index Run Rate at December 31, 2018 grew by $46.7 million, or
6.1%, to $814.6 million, compared to December 31, 2017. The
increase was driven by a $51.6 million, or 11.4%, increase in
recurring subscriptions Run Rate, partially offset by a decrease of
$4.9 million, or 1.5%, in asset-based fees Run Rate. The decline in
asset-based fees Run Rate was primarily driven by lower AUM in ETFs
linked to MSCI indexes, which was attributable to a decline of
$110.3 billion in asset values, partially offset by cash inflows of
$61.6 billion. Within asset-based fees, a change in product mix
drove a decline in average basis point fees to 2.92 at December 31,
2018 from 3.04 a year ago. The 11.4% increase in Index recurring
subscriptions Run Rate was driven by strong growth in core
products, factor and ESG indexes and custom and specialized index
products and growth in the asset owners, hedge fund and wealth
management client segments.
Analytics Segment:
Operating revenues for fourth quarter 2018 increased $4.4 million,
or 3.8%, to $121.9 million, compared to $117.5 million for fourth
quarter 2017, primarily driven by growth in both Multi-Asset Class
and Equity Analytics products and the timing of client
implementations, partially offset by the divestitures of
InvestorForce and FEA. There was negligible impact on operating
revenue from foreign currency exchange rate fluctuations. Operating
revenues ex-FX and excluding the impact of the divestitures of
InvestorForce and FEA (“ex-divestitures”) increased 9.7%.
Operating revenues for full-year 2018 increased $21.7 million,
or 4.7%, to $479.9 million, compared to $458.3 million for
full-year 2017. Operating revenues ex-FX increased 4.6%. Operating
revenues ex-FX and ex-divestitures increased 7.0%. The adjusted
EBITDA margin for Analytics was 29.9% for full-year 2018, compared
to 27.4% for full-year 2017.
Analytics Run Rate at December 31, 2018 grew by $2.4 million, or
0.5%, to $491.9 million, compared to December 31, 2017, primarily
driven by growth in both Multi-Asset Class and Equity Analytics
products, partially offset by the removal of Run Rate associated
with FEA, which was divested in April 2018, and InvestorForce,
which was divested in October 2018. Analytics organic Run Rate
growth was 6.5% compared to December 31, 2017.
All Other Segment:
Operating revenues for fourth quarter 2018 increased $5.8 million,
or 24.8%, to $29.3 million, compared to $23.5 million for fourth
quarter 2017. The increase in All Other revenues was driven by a
$4.4 million, or 30.1%, increase in ESG revenues to $19.1 million,
and a $1.4 million, or 16.0%, increase in Real Estate revenues to
$10.2 million. The increase in ESG revenues was driven by strong
growth in ESG Ratings product revenues, which benefited from
increased investments. The increase in Real Estate revenues was
primarily driven by growth in Enterprise Analytics and Market
Information products. Fourth quarter 2018 All Other revenues ex-FX
increased 26.7% with Real Estate revenues ex-FX increasing 19.3%
and ESG revenues ex-FX increasing 31.1%.
Operating revenues for full-year 2018 increased $21.6 million,
or 22.3%, to $118.6 million, compared to $96.9 million for
full-year 2017. The increase in All Other revenues was driven by a
$16.6 million, or 30.2%, increase in ESG revenues to $71.4 million,
and a $5.1 million, or 12.0%, increase in Real Estate revenues to
$47.2 million. Operating revenues ex-FX for full-year 2018 for All
Other increased 20.8%, with Real Estate increasing 8.3% and ESG
increasing 30.4%. The adjusted EBITDA margin for All Other was
17.7% for full-year 2018, compared to 12.3% for full-year 2017.
All Other Run Rate at December 31, 2018 grew by $16.5 million,
or 15.2%, to $124.9 million, compared to December 31, 2017. The
increase was driven by a $14.8 million, or 23.0%, increase in ESG
Run Rate to $79.5 million, and a $1.6 million, or 3.7%, increase in
Real Estate Run Rate to $45.4 million. The increase in ESG Run Rate
was primarily driven by strong growth in ESG Ratings products and
an increase in ESG Screening products. The increase in Real Estate
Run Rate was primarily driven by growth in Market Information
products. All Other Run Rate ex-FX increased 18.6% with ESG Run
Rate ex-FX increasing 25.1% and Real Estate Run Rate ex-FX
increasing 8.9%, each compared to December 31, 2017.
Full-Year 2019 Guidance
MSCI’s guidance for full-year 2019 is as follows:
- Total operating expenses are expected
to be in the range of $772 million to $800 million.
- Adjusted EBITDA expenses1 are expected
to be in the range of $685 million to $705 million.
- Interest expense, including the
amortization of financing fees, is expected to be approximately
$144 million, assuming no additional financings.
- Capex is expected to be in the range of
$45 million to $55 million.
- Net cash provided by operating
activities and free cash flow are expected to be in the ranges of
$600 million to $630 million and $545 million to $585 million,
respectively.
- The effective tax rate2 is expected to
be in the range of 11.5 to 14.5 percentage points.
1Excludes the estimated payroll tax impact from the vesting in
the three months ending March 31, 2019 of the multi-year PSU awards
granted to executives in 2016 (the “Multi-Year PSUs”).2Includes the
estimated income tax windfall benefit related to the vesting of the
Multi-Year PSUs which is expected to reduce the 2019 effective tax
rate by 8.5 to 9.5 percentage points.
New Revenue Standard Effective January 1, 2018
Effective January 1, 2018, MSCI adopted the new revenue standard
using the modified retrospective transition method. This resulted
in a cumulative adjustment to increase retained earnings on January
1, 2018 by $16.1 million, net of tax, reflecting future period
revenue from existing contracts under the old revenue standard that
would have been recognized in prior periods under the new revenue
standard, and the application of the provisions of the new standard
prospectively.
Compared to the revenue recognition method used prior to 2018,
the new revenue standard has resulted in more revenue being
recognized up-front or earlier in the life of new contracts for
certain products and services, including fees related to the
licensing of desktop applications, implementation and set-up
services and multi-year deals. The lost future period revenue from
existing contracts as a result of the cumulative adjustment to
retained earnings is expected to be largely offset by the
acceleration of revenue from certain new contracts. As a result,
the overall impact of adopting the new revenue standard is not
expected to have a material impact on MSCI’s consolidated financial
statements or the annual trend of revenue. It is possible that some
increased quarterly revenue variability may exist by segment
depending on the timing of the execution of new license contracts
and renewals.
As a result of the adoption of the new revenue standard, MSCI
recorded $0.7 million of higher revenue in fourth quarter 2018 and
$6.2 million for full-year 2018.
In addition, as a result of the adoption of the new revenue
standard, the amount of accounts receivable and deferred revenue
reported on the Company’s balance sheet as of December 31, 2017
would have increased, with no increase to net assets, by
approximately $135.5 million. Accounts receivable was $473.4
million at December 31, 2018 and $327.6 million at December 31,
2017. Deferred revenue was $538 million at December 31, 2018 and
$374.4 million at December 31, 2017. Under the old revenue
standard, MSCI only recorded the value of an invoice to accounts
receivable and deferred revenue once the service period began.
Under the new revenue standard, MSCI now records accounts
receivable and a corresponding offset to deferred revenue when an
invoice is issued for a non-cancellable, non-refundable contract,
regardless of when the service period begins.
There are no changes to how we calculate our operating
metrics.
Conference Call Information
MSCI's senior management will review the fourth quarter and
full-year 2018 results on Thursday, January 31, 2019 at 11:00 AM
Eastern Time. To listen to the live event, visit the events and
presentations section of MSCI's Investor Relations homepage,
http://ir.msci.com/events.cfm, or dial 1-877-376-9931 conference
ID: 3474708 within the United States. International callers dial
1-720-405-2251 conference ID: 3474708. The earnings release and
related investor presentation used during the conference call will
be made available on MSCI's Investor Relations homepage.
An audio recording of the conference call will be available on
our Investor Relations website, http://ir.msci.com/events.cfm,
beginning approximately two hours after the conclusion of the live
event. Through February 3, 2019, the recording will also be
available by dialing 1-855-859-2056 conference ID: 3474708 within
the United States or 1-404-537-3406 conference ID: 3474708 for
international callers. A replay of the conference call will be
archived in the events and presentations section of MSCI's Investor
Relations website for 12 months after the call.
About MSCI
For more than 45 years, MSCI's research-based indexes and
analytics have helped the world’s leading investors build and
manage better portfolios. Clients rely on our offerings for deeper
insights into the drivers of performance and risk in their
portfolios, broad asset class coverage and innovative research.
Our line of products and services includes indexes, analytical
models, data, real estate benchmarks and ESG research.
For more information, visit us at 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, our full-year 2019 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 our
control and that could materially affect our 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, 2017 filed with the Securities and Exchange Commission
(“SEC”) on February 26, 2018 and in quarterly reports on Form 10-Q
and current reports on Form 8-K filed or furnished with the SEC
(herein, referred to as “Public Filings”). If any of these risks or
uncertainties materialize, or if our 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 website and corporate Twitter account (@MSCI_Inc)
as channels of distribution of company information. The information
we post through these channels may be deemed material. Accordingly,
investors should monitor these channels, in addition to following
our 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 Subscription” section of MSCI’s
Investor Relations homepage at http://ir.msci.com/alerts.cfm. The
contents of MSCI’s website 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 Run Rate, subscription sales and
cancellations, non-recurring sales and Retention Rate.
Retention Rate for a 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 during the
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 notice is not effective until a later
date. This annualized cancellation figure is then divided by the
subscription Run Rate at the beginning of the 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 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 reporting purposes,
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 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 Estate 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-sale of the same product or service as a
cancellation to the extent of the reduction.
This definition of Retention Rate was revised and was previously
provided beginning with our earnings release, dated August 2, 2018,
to describe our methodology for calculating cancellations. We
believe this methodology has been applied in all material respects
in calculating cancellation rates reported in the prior periods
covered in our Form 10-K for the year ended December 31, 2017 and
in our Form 10-Q for the quarters ended March 31, 2018, June 30,
2018 and September 30, 2018, and accordingly, we do not believe
changes to those previously reported cancellation rates are
required. Beginning in second quarter 2018, “Aggregate Retention
Rate” is referred to as “Retention Rate.”
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 are renewed and assuming
then-current currency exchange rates, subject to the adjustments
and exclusions described elsewhere in our Public Filings. 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 with respect to
which we have received a notice of termination or non-renewal
during the period and have determined that such notice evidences
the client’s final decision to terminate or not renew the
applicable products or services, even though such notice is not
effective until a later date.
“Organic 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.
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 – 13 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.
“Operating revenues ex-FX and ex-divestitures” is defined as
operating revenues excluding the impact of foreign currency
exchange and the operating revenues attributable to divested
businesses for the comparable prior year period.
“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.
“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.
“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, the impact of
divestitures, the impact of Tax Reform adjustments (except for
amounts associated with active tax planning implemented as a result
of Tax Reform) and, at times, certain other transactions or
adjustments.
“Adjusted tax rate” is defined as the effective tax rate
excluding the impact of Tax Reform adjustments (except for amounts
associated with active tax planning implemented as a result of Tax
Reform).
“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.
We believe operating revenues ex-FX and ex-divestitures are
meaningful measures of the operating performance of MSCI because
they adjust for the impact of foreign currency exchange and exclude
the impact of operating revenues attributable to divested
businesses for the comparable prior year period, providing insight
to our core operating performance for the period(s) presented.
We believe adjusted EBITDA 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 capital
spending and acquisitions that do not directly affect what
management considers to be our core 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 accounting effects of acquisitions
that do not directly affect what management considers to be our
core 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 that adjusted tax rate is useful to investors because
it increases the comparability of period-to-period results by
adjusting for the estimated net impact of Tax Reform.
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.
Operating revenues ex-FX and ex-divestitures, adjusted EBITDA
expenses, adjusted EBITDA, adjusted net income, adjusted EPS,
adjusted tax rate, Capex and free cash flow 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.
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
two-thirds of the AUM are 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
Year Ended Dec. 31, Dec.
31, Sep. 30, YoY % Dec. 31,
Dec. 31, YoY % In thousands, except per share
data 2018 2017(2) 2018 Change
2018 2017(2) Change Operating revenues $
361,688 $ 334,779 $ 357,934 8.0 % $ 1,433,984 $ 1,274,172 12.5 %
Operating expenses: Cost of revenues 73,757 69,247 70,906 6.5 %
287,335 273,681 5.0 % Selling and marketing 52,949 47,726 46,149
10.9 % 192,923 177,121 8.9 % Research and development 20,312 20,709
20,591 (1.9 %) 81,411 75,849 7.3 % General and administrative
24,908 23,280 24,751 7.0 % 99,882 87,764 13.8 % Amortization of
intangible assets 11,633 11,560 11,681 0.6 % 54,189 44,547 21.6 %
Depreciation and amortization of property, equipment and leasehold
improvements 8,311 8,118 7,453 2.4 %
31,346 35,440 (11.6 %) Total operating expenses(1)
191,870 180,640 181,531 6.2 % 747,086
694,402 7.6 % Operating income 169,818 154,139 176,403 10.2
% 686,898 579,770 18.5 % Interest income (6,096 ) (2,237 )
(6,522 ) 172.5 % (19,669 ) (6,314 ) 211.5 % Interest expense 35,891
29,027 35,902 23.6 % 133,114 116,098 14.7 % Other expense (income)
(47,266 ) 389 177 nm (56,443 )
3,087 nm Other expenses (income), net (17,471 )
27,179 29,557 (164.3 %) 57,002 112,871 (49.5
%) Income before provision for income taxes 187,289 126,960
146,846 47.5 % 629,896 466,899 34.9 % Provision for income
taxes 35,157 62,358 23,014 (43.6 %)
122,011 162,927 (25.1 %) Net income 152,132
64,602 123,832 135.5 % 507,885 303,972 67.1 %
Earnings per basic common share $ 1.75 $ 0.72 $ 1.39 143.1 %
$ 5.83 $ 3.36 73.5 %
Earnings per diluted common share $
1.70 $ 0.70 $ 1.36 142.9 % $ 5.66 $ 3.31 71.0 % Weighted
average shares outstanding used in computing earnings per share:
Basic 86,968 90,130 88,796 (3.5 %)
87,179 90,336 (3.5 %) Diluted 89,495
92,467 91,372 (3.2 %) 89,701 91,914 (2.4 %)
(1) Includes stock-based compensation expense of $10.5 million,
$9.3 million and $10.6 million for the three months ended Dec. 31,
2018, Dec. 31, 2017 and Sep. 30, 2018, respectively. Includes
stock-based compensation expense of $40.6 million and $37.9 million
for the years ended Dec. 31, 2018 and Dec. 31, 2017,
respectively.(2) As a result of the adoption of recent accounting
guidance, the Company has restated its Condensed Consolidated
Statements of Income by reclassifying $0.2 million and $0.6 million
of non-service related pension costs from Operating Expenses and to
Other expense (income) for the three months and full-year ended
Dec.31, 2017, respectively.nm: not meaningful
Table 3: Selected Balance Sheet Items
(unaudited)
As of Dec. 31, Dec. 31,
Sep. 30, In thousands 2018 2017
2018 Cash and cash equivalents $904,176 $889,502 $1,398,398
Accounts receivable, net of allowances(1) $473,433 $327,597
$378,705 Deferred revenue(2) $537,977 $374,365 $441,884
Long-term debt(3) $2,575,502 $2,078,093 $2,574,616
(1) Accounts receivable, net of allowances would have been
$473.4 million at Dec. 31, 2017 under the new revenue standard.(2)
Deferred revenue would have been $494.6 million at Dec. 31, 2017
under the new revenue standard.(3) Consists of gross long-term
debt, net of deferred financing fees. Gross long-term debt at Dec.
31, 2018, Dec. 31, 2017 and Sep. 30, 2018 was $2.6 billion, $2.1
billion and $2.6 billion, respectively.
Table 4: Selected Cash Flow Items
(unaudited)
Three Months Ended
Year Ended Dec. 31, Dec.
31, Sep. 30, YoY % Dec. 31,
Dec. 31, YoY % In thousands 2018
2017 2018 Change 2018 2017
Change Net cash provided by operating activities $ 173,175 $
143,153 $ 143,825 21.0 % $ 612,762 $ 404,158 51.6 % Net cash
provided by (used in) investing activities 40,038 (20,600 ) (13,097
) (294.4 %) 34,874 (48,046 ) (172.6 %) Net cash used in financing
activities (707,083 ) (33,668 ) (97,758 ) nm (626,483 ) (267,543 )
134.2 % Effect of exchange rate changes (352 ) 1,602
(2,168 ) (122.0 %) (6,479 ) 9,099 (171.2 %)
Net increase (decrease) in cash and cash equivalents $ (494,222 ) $
90,487 $ 30,802 (646.2 %) $ 14,674 $ 97,668 (85.0 %)
nm: not meaningful
Table 5: Operating Results by Segment
and Revenue Type (unaudited)
Index Three Months Ended
Year Ended Dec. 31,
Dec. 31, Sep. 30, YoY % Dec. 31,
Dec. 31, YoY % In thousands 2018
2017 2018 Change 2018 2017
Change Operating revenues: Recurring subscriptions $ 123,496
$ 111,503 $ 121,285 10.8 % $ 477,612 $ 427,289 11.8 % Asset-based
fees 81,439 78,493 82,007 3.8 % 336,565 276,092 21.9 %
Non-recurring 5,498 3,778 6,902 45.5 %
21,298 15,578 36.7 % Total operating revenues 210,433
193,774 210,194 8.6 % 835,475 718,959 16.2 % Adjusted EBITDA
expenses 60,503 51,072 55,717 18.5 %
227,622 196,718 15.7 % Adjusted EBITDA $ 149,930 $ 142,702 $
154,477 5.1 % $ 607,853 $ 522,241 16.4 % Adjusted EBITDA margin %
71.2 % 73.6 % 73.5 % 72.8 % 72.6 %
Analytics Three
Months Ended Year Ended Dec. 31, Dec. 31,
Sep. 30, YoY % Dec. 31, Dec. 31, YoY
% In thousands 2018 2017 2018
Change 2018 2017 Change Operating
revenues: Recurring subscriptions $ 119,705 $ 115,349 $ 118,857 3.8
% $ 474,334 $ 452,253 4.9 % Non-recurring 2,230 2,161
1,041 3.2 % 5,605 6,016 (6.8 %) Total
operating revenues 121,935 117,510 119,898 3.8 % 479,939 458,269
4.7 % Adjusted EBITDA expenses 85,256 86,369
82,852 (1.3 %) 336,294 332,645 1.1 % Adjusted EBITDA
$ 36,679 $ 31,141 $ 37,046 17.8 % $ 143,645 $ 125,624 14.3 %
Adjusted EBITDA margin % 30.1 % 26.5 % 30.9 % 29.9 % 27.4 %
All Other Three Months Ended Year Ended
Dec. 31, Dec. 31, Sep. 30, YoY %
Dec. 31, Dec. 31, YoY % In thousands
2018 2017 2018 Change 2018
2017 Change Operating revenues: Recurring
subscriptions $ 28,405 $ 22,225 $ 27,234 27.8 % $ 114,590 $ 93,481
22.6 % Non-recurring 915 1,270 608 (28.0 %)
3,980 3,463 14.9 % Total operating revenues 29,320
23,495 27,842 24.8 % 118,570 96,944 22.3 % Adjusted EBITDA expenses
26,167 23,521 23,828 11.2 % 97,635
85,052 14.8 % Adjusted EBITDA $ 3,153 $ (26 ) $ 4,014 nm $
20,935 $ 11,892 76.0 % Adjusted EBITDA margin % 10.8 % (0.1 %) 14.4
% 17.7 % 12.3 %
Consolidated Three Months
Ended Year Ended Dec.
31, Dec. 31, Sep. 30, YoY % Dec.
31, Dec. 31, YoY % In thousands
2018 2017 2018 Change 2018
2017 Change Operating revenues: Recurring
subscriptions $ 271,606 $ 249,077 $ 267,376 9.0 % $ 1,066,536 $
973,023 9.6 % Asset-based fees 81,439 78,493 82,007 3.8 % 336,565
276,092 21.9 % Non-recurring 8,643 7,209 8,551
19.9 % 30,883 25,057 23.3 % Operating revenues total
361,688 334,779 357,934 8.0 % 1,433,984
1,274,172 12.5 % Adjusted EBITDA expenses 171,926 160,962
162,397 6.8 % 661,551 614,415 7.7 % Adjusted EBITDA $ 189,762 $
173,817 $ 195,537 9.2 % $ 772,433 $ 659,757 17.1 % Adjusted EBITDA
margin % 52.5 % 51.9 % 54.6 % 53.9 % 51.8 % Operating margin % 47.0
% 46.0 % 49.3 % 47.9 % 45.5 %
nm: not meaningful
Table 6: Sales and Retention Rate by
Segment (unaudited)
Three Months Ended Year Ended
Dec. 31, Sep. 30, June 30,
Mar. 31, Dec. 31, Dec. 31,
Dec. 31, In thousands 2018 2018
2018 2018 2017 2018 2017
Index New recurring subscription sales $ 21,013 $ 15,546 $
20,906 $ 15,195 $ 17,980 $ 72,660 $ 61,308 Subscription
cancellations (7,699 ) (4,428 ) (4,577 )
(4,115 ) (6,180 ) (20,819 ) (16,995 )
Net new recurring subscription sales $ 13,314 $ 11,118 $ 16,329 $
11,080 $ 11,800 $ 51,841 $ 44,313 Non-recurring sales $ 6,845 $
7,097 $ 5,328 $ 3,459 $ 3,677 $ 22,729 $ 16,310 Total gross
sales(1) $ 27,858 $ 22,643 $ 26,234 $ 18,654 $ 21,657 $ 95,389 $
77,618 Total Index net sales $ 20,159 $ 18,215 $ 21,657 $ 14,539 $
15,477 $ 74,570 $ 60,623 Index Retention Rate(2) 93.2 % 96.1
% 95.9 % 96.4 % 93.9 % 95.4 % 95.8 %
Analytics New
recurring subscription sales $ 19,438 $ 16,797 $ 17,395 $ 11,356 $
25,217 $ 64,986 $ 64,177 Subscription cancellations (8,524 )
(7,117 ) (9,452 ) (8,578 ) (11,679 )
(33,671 ) (33,674 ) Net new recurring subscription
sales $ 10,914 $ 9,680 $ 7,943 $ 2,778 $ 13,538 $ 31,315 $ 30,503
Non-recurring sales $ 3,249 $ 3,189 $ 2,425 $ 1,346 $ 3,742 $
10,209 $ 10,306 Total gross sales(1) $ 22,687 $ 19,986 $ 19,820 $
12,702 $ 28,959 $ 75,195 $ 74,483 Total Analytics net sales $
14,163 $ 12,869 $ 10,368 $ 4,124 $ 17,280 $ 41,524 $ 40,809
Analytics Retention Rate(2) 92.7 % 94.1 % 92.1 % 93.0 % 89.7 % 93.0
% 92.5 %
All Other New recurring subscription sales $
7,596 $ 6,459 $ 6,678 $ 5,468 $ 8,391 $ 26,201 $ 22,544
Subscription cancellations (1,959 ) (1,547 )
(1,384 ) (1,531 ) (1,954 ) (6,421 )
(7,717 ) Net new recurring subscription sales $ 5,637 $ 4,912 $
5,294 $ 3,937 $ 6,437 $ 19,780 $ 14,827 Non-recurring sales $ 1,194
$ 641 $ 909 $ 694 $ 1,479 $ 3,438 $ 3,875 Total gross sales(1) $
8,790 $ 7,100 $ 7,587 $ 6,162 $ 9,870 $ 29,639 $ 26,419 Total All
Other net sales $ 6,831 $ 5,553 $ 6,203 $ 4,631 $ 7,916 $ 23,218 $
18,702 All Other Estate Retention Rate(2) 92.8 % 94.3 % 94.9
% 94.4 % 91.1 % 94.1 % 91.2 %
Consolidated New
recurring subscription sales $ 48,047 $ 38,802 $ 44,979 $ 32,019 $
51,588 $ 163,847 $ 148,029 Subscription cancellations
(18,182 ) (13,092 ) (15,413 ) (14,224 )
(19,813 ) (60,911 ) (58,386 ) Net new recurring
subscription sales $ 29,865 $ 25,710 $ 29,566 $ 17,795 $ 31,775 $
102,936 $ 89,643 Non-recurring sales $ 11,288 $ 10,927 $ 8,662 $
5,499 $ 8,898 $ 36,376 $ 30,491 Total gross sales(1) $ 59,335 $
49,729 $ 53,641 $ 37,518 $ 60,486 $ 200,223 $ 178,520 Total net
sales $ 41,153 $ 36,637 $ 38,228 $ 23,294 $ 40,673 $ 139,312 $
120,134 Total Retention Rate(2) 92.9 % 95.0 % 94.1 % 94.6 %
91.6 % 94.1 % 93.8 %
(1) Total gross sales equal new recurring subscription sales
plus non-recurring sales.(2) See "Notes Regarding the Use of
Operating Metrics" for details regarding the definition of
Retention Rate.
Table 7: AUM in ETFs Linked to MSCI
Indexes (unaudited)(1)(2)
Three Months Ended Year
Ended Dec. 31, Sep. 30,
June 30, Mar. 31, Dec. 31,
Dec. 31, Dec. 31, In billions
2018 2018 2018 2018 2017
2018 2017 Beginning Period AUM in ETFs linked to MSCI
Indexes $ 765.5 $ 744.7 $ 764.9 $ 744.3 $ 674.3 $ 744.3 $ 481.4
Market Appreciation/(Depreciation) (94.7 ) 15.6 (19.4 ) (11.7 )
32.0 (110.2 ) 123.6 Cash Inflows 24.8 5.2 (0.8 ) 32.3 38.0 61.5
139.3 Period-End AUM in ETFs linked to
MSCI Indexes $ 695.6 $ 765.5 $ 744.7 $ 764.9 $ 744.3 $ 695.6
$ 744.3 Period Average AUM in ETFs linked to MSCI Indexes $
717.1 $ 755.8 $ 776.5 $ 779.5 $ 712.3 $ 757.2 $ 621.4 Avg.
Basis Point Fee(3) 2.92 2.90 2.96 3.02 3.04 2.92 3.04
Source: Bloomberg and MSCI
(1) ETF assets under management calculation methodology is ETF
net asset value multiplied by shares outstanding.(2) The AUM in
ETFs numbers also include AUM in Exchange Traded Notes, the value
of which is less than 1.0% of the AUM amounts presented.(3) Based
on period-end Run Rate for ETFs linked to MSCI indexes using
period-end AUM.AUM: assets under management.
Table 8: Run Rate by Segment and Type
(unaudited)(1)
As of Dec. 31,
Dec. 31, Sep. 30, YoY
% In thousands 2018 2017 2018
Change Index Recurring subscriptions $ 502,665 $
451,048 $ 489,515 11.4 % Asset-based fees 311,908
316,812 326,148 (1.5 %)
Index Run Rate 814,573
767,860 815,663 6.1 %
Analytics Run
Rate 491,861 489,451 499,219 0.5 %
All Other Run Rate 124,886 108,413
120,419 15.2 %
Total Run Rate $
1,431,320 $ 1,365,724 $
1,435,301 4.8 % Total recurring
subscriptions $ 1,119,412 $ 1,048,912 $ 1,109,153 6.7 % Total
asset-based fees 311,908 316,812 326,148 (1.5
%)
Total Run Rate $ 1,431,320 $
1,365,724 $ 1,435,301 4.8 %
(1) See "Notes Regarding the Use of Operating Metrics" for
details regarding the definition of Run Rate.
Table 9: Reconciliation of Adjusted
EBITDA to Net Income (unaudited)
Three Months Ended Year
Ended Dec. 31, Dec. 31, Sep.
30, Dec. 31, Dec. 31, In
thousands 2018 2017(1) 2018 2018
2017(1) Index adjusted EBITDA $ 149,930 $ 142,702 $ 154,477
$ 607,853 $ 522,241 Analytics adjusted EBITDA 36,679 31,141 37,046
143,645 125,624 All Other adjusted EBITDA 3,153 (26 )
4,014 20,935 11,892
Consolidated adjusted
EBITDA 189,762 173,817
195,537 772,433 659,757
Amortization of intangible assets 11,633 11,560 11,681 54,189
44,547 Depreciation and amortization of property, equipment and
leasehold improvements 8,311 8,118 7,453
31,346 35,440
Operating income 169,818
154,139 176,403 686,898 579,770 Other
expense (income), net (17,471 ) 27,179 29,557 57,002 112,871
Provision for income taxes 35,157 62,358
23,014 122,011 162,927
Net income $
152,132 $ 64,602 $ 123,832
$ 507,885 $ 303,972
(1) As a result of the adoption of recent accounting guidance,
the Company has restated its adjusted EBITDA by excluding $0.2
million and $0.6 million of non-service related pension costs from
adjusted EBITDA expenses for the three months and full-year ended
Dec.31, 2017, respectively.
Table 10: Reconciliation of Net Income
and Diluted EPS to Adjusted Net Income and Adjusted EPS
(unaudited)
Three Months Ended Year Ended
Dec. 31, Dec. 31, Sep. 30,
Dec. 31, Dec. 31, In thousands, except per
share data 2018 2017 2018 2018
2017 Net income $ 152,132 $ 64,602 $ 123,832 $ 507,885 $
303,972 Plus: Amortization of acquired intangible assets 8,746
9,238 8,999 43,981 39,157
Less: Gain on sale of Alacra (not
tax-effected)
— — — — (771 )
Less: Gain on sale of FEA (not
tax-effected)
— — (10 ) (10,646 ) — Less: Gain on sale of InvestorForce (46,595 )
— — (46,595 ) — Less: Valuation allowance released related to
InvestorForce disposition — — (7,758 ) (7,758 ) — Less: Tax Reform
adjustments (6,671 ) 34,500 — (8,272 ) 34,500 Less: Income tax
effect 9,390 (1,922 ) (1,884 ) 1,678
(10,772 )
Adjusted net income $ 117,002
$ 106,418 $ 123,179 $
480,273 $ 366,086 Diluted EPS $ 1.70 $
0.70 $ 1.36 $ 5.66 $ 3.31 Plus: Amortization of acquired intangible
assets 0.10 0.10 0.10 0.49 0.43
Less: Gain on sale of Alacra (not
tax-effected)
- - - - (0.01 )
Less: Gain on sale of FEA (not
tax-effected)
- - - (0.12 ) - Less: Gain on sale of InvestorForce (0.52 ) - -
(0.52 ) - Less: Valuation allowance released related to
InvestorForce disposition - - (0.08 ) (0.09 ) - Plus: Tax Reform
adjustments (0.07 ) 0.37 - (0.09 ) 0.38 Less: Income tax effect
0.10 (0.02 ) (0.03 ) 0.02 (0.13
)
Adjusted EPS $ 1.31 $ 1.15
$ 1.35 $ 5.35 $ 3.98
Table 11: Reconciliation of Adjusted
EBITDA Expenses to Operating Expenses (unaudited)
Three Months Ended Year
Ended Full-Year Dec. 31,
Dec. 31, Sep. 30, Dec.
31, Dec. 31, 2019 In
thousands 2018 2017(1) 2018 2018
2017(1) Outlook(2) Index adjusted EBITDA expenses $
60,503 $ 51,072 $ 55,717 $ 227,622 $ 196,718 Analytics adjusted
EBITDA expenses 85,256 86,369 82,852 336,294 332,645 All Other
adjusted EBITDA expenses 26,167 23,521 23,828
97,635 85,052
Consolidated adjusted EBITDA
expenses 171,926 160,962
162,397 661,551 614,415
$685,000 - $705,000 Payroll taxes from vesting of Multi-Year
PSUs - - - - - 12,000 - 15,000 Amortization of intangible assets
11,633 11,560 11,681 54,189 44,547 Depreciation and amortization of
property, 75,000 - 80,000 equipment and leasehold improvements
8,311 8,118 7,453 31,346 35,440
Total operating expenses $ 191,870
$ 180,640 $ 181,531 $
747,086 $ 694,402 $772,000 - $800,000
(1) As a result of the adoption of recent accounting guidance,
the Company has restated its adjusted EBITDA by excluding $0.2
million and $0.6 million of non-service related pension costs from
adjusted EBITDA expenses for the three months and full-year ended
Dec.31, 2017, respectively.(2) We have not provided a line-item
reconciliation for adjusted EBITDA expenses to total operating
expenses for this future period because we do not provide guidance
on the individual reconciling items between total operating
expenses and adjusted EBITDA expenses.
Table 12: Reconciliation of Net Cash
Provided by Operating Activities to Free Cash Flow
(unaudited)
Three Months Ended Year Ended
Full-Year Dec. 31, Dec. 31,
Sep. 30, Dec. 31, Dec. 31,
2019 In thousands 2018 2017 2018
2018 2017 Outlook(1) Net cash provided by
operating activities $ 173,175 $ 143,153 $ 143,825 $ 612,762 $
404,158 $600,000 - $630,000 Capital expenditures (17,188 ) (15,736
) (8,590 ) (30,257 ) (33,177 ) Capitalized software development
costs (5,589 ) (4,863 ) (4,517 )
(18,704 ) (15,640 ) Capex (22,777 )
(20,599 ) (13,107 ) (48,961 ) (48,817 )
(55,000 - 45,000)
Free cash flow $ 150,398
$ 122,554 $ 130,718 $
563,801 $ 355,341 $545,000 - $585,000
(1) We have not provided a line-item reconciliation for free
cash flow to net cash from operating activities for this future
period because we do not provide guidance on the individual
reconciling items between net cash from operating activities and
free cash flow.
Table 13: Reconciliation of Effective
Tax Rate to Adjusted Tax Rate (unaudited)
Three Months Ended
Year Ended Dec. 31, Dec. 31,
Sep. 30, Dec. 31, Dec. 31, 2018
2017 2018 2018 2017 Effective tax rate
18.77% 49.12% 15.67% 19.37% 34.90% Tax Reform impact on effective
tax rate 3.56% (27.18%) —% 1.31% (7.39%) Adjusted tax rate 22.33%
21.94% 15.67% 20.68% 27.51%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190131005433/en/
MSCI Inc.InvestorsAndrew Wiechmann
andrew.wiechmann@msci.com + 1 212 804 3986
MediaSamuel Wang samuel.wang@msci.com + 1 212 804
5244
MSCI (NYSE:MSCI)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
MSCI (NYSE:MSCI)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024