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 December 31, 2023 (“fourth quarter
2023”) and full year ended December 31, 2023 (“full year
2023”).
Financial and Operational Highlights for Fourth Quarter
2023 (Note: Unless otherwise noted, percentage and other
changes are relative to the three months ended December 31, 2022
(“fourth quarter 2022”) and Run Rate percentage changes are
relative to December 31, 2022).
- Operating revenues of $690.1 million, up 19.8%; Organic
operating revenue growth of 14.7%
- Recurring subscription revenues up 16.8%; Asset-based fees
up 15.9%
- Operating margin of 53.7%; Adjusted EBITDA margin of
60.1%
- Diluted EPS of $5.07, up 89.9%; Adjusted EPS of $3.68, up
29.6%
- New recurring subscription sales up by 1.9%; Organic
recurring subscription Run Rate growth of 9.9%; Retention Rate of
93.6%
- In full year 2023 and through trade date of January 29,
2024, a total of $458.7 million or 979,623 shares were repurchased
at an average repurchase price of $468.26
- In fourth quarter 2023, dividends of $109.2 million were
paid to shareholders; Cash dividend of $1.60 per share declared by
MSCI Board of Directors for first quarter 2024, an increase of
15.9%
Three Months Ended
Year Ended
In thousands, except per share data
(unaudited)
Dec. 31, 2023
Dec. 31, 2022
% Change
Dec. 31, 2023
Dec. 31, 2022
% Change
Operating revenues
$
690,106
$
576,208
19.8
%
$
2,528,920
$
2,248,598
12.5
%
Operating income
$
370,745
$
308,750
20.1
%
$
1,384,609
$
1,207,640
14.7
%
Operating margin %
53.7
%
53.6
%
54.8
%
53.7
%
Net income
$
403,380
$
214,971
87.6
%
$
1,148,592
$
870,573
31.9
%
Diluted EPS
$
5.07
$
2.67
89.9
%
$
14.39
$
10.72
34.2
%
Adjusted EPS
$
3.68
$
2.84
29.6
%
$
13.52
$
11.45
18.1
%
Adjusted EBITDA
$
414,627
$
339,022
22.3
%
$
1,522,951
$
1,329,671
14.5
%
Adjusted EBITDA margin %
60.1
%
58.8
%
60.2
%
59.1
%
“MSCI delivered impressive results to close out 2023, despite
continued external headwinds. In the fourth quarter, we achieved
Adjusted EPS growth of nearly 30%, and organic revenue growth of
14.7%. Operationally, we completed our 10th consecutive year of
double-digit subscription run-rate growth in Index, while achieving
our highest-ever full-year retention rate in Analytics, along with
our best quarter and full year on record for recurring sales in
Equity Analytics,” said Henry A. Fernandez, Chairman and CEO of
MSCI.
“We continue to capitalize on important secular trends that are
reshaping the global investment landscape, such as rising demand
for portfolio customization at scale. Looking ahead, MSCI remains
committed to making organic investments and bolt-on acquisitions
that add value, while returning excess capital to our owners
through share buybacks and dividend payments. As always, we will
balance our long-term strategic investments with our commitment to
rigorous financial management and short-term execution,” Mr.
Fernandez added.
Fourth Quarter Consolidated
Results
Operating Revenues:
Operating revenues were $690.1 million, up 19.8%. Organic operating
revenue growth was 14.7%. The $113.9 million increase was driven by
$72.9 million in higher recurring subscription revenues and $21.1
million in higher non-recurring revenues primarily related to the
Index and Analytics segments, as well as $19.9 million in higher
asset-based fees.
Run Rate and Retention Rate:
Total Run Rate at December 31, 2023 was $2,686.2 million, up 15.8%.
Recurring subscription Run Rate increased by $289.2 million, and
asset-based fees Run Rate increased by $76.6 million. Organic
recurring subscription Run Rate growth was 9.9%. Retention Rate in
fourth quarter 2023 was 93.6%, compared to 93.0% in fourth quarter
2022.
Expenses: Total operating
expenses were $319.4 million, up 19.4%, including $33.4 million
associated with The Burgiss Group, LLC (“Burgiss”) and Trove
Research Ltd (“Trove”). Adjusted EBITDA expenses were $275.5
million, up 16.1%, primarily reflecting higher compensation and
incentive compensation expenses related to higher headcount to
support business growth, partially offset by lower severance costs.
Adjusted EBITDA expense also includes $22.6 million of expenses
associated with Burgiss and Trove. Approximately $1.4 million in
non-recurring integration and transaction costs related to the
acquisition of Burgiss and $9.3 million of acquired intangible
assets amortization expenses related to Burgiss and Trove were
excluded from Adjusted EBITDA expenses. Total operating expenses
excluding the impact of foreign currency exchange rate fluctuations
(“ex-FX”) and adjusted EBITDA expenses ex-FX increased 17.6% and
14.2%, respectively.
Operating Income: Operating
income was $370.7 million, up 20.1%. Operating income margin in
fourth quarter 2023 was 53.7%, compared to 53.6% in fourth quarter
2022.
Headcount: As of December
31, 2023, headcount was 5,794 employees, with approximately 33.5%
and approximately 66.5% of employees located in developed market
and emerging market locations, respectively.
Other Expense (Income), Net:
Other expense (income), net was ($97.1) million in fourth quarter
2023, as compared to $43.1 for the fourth quarter 2022, primarily
driven by the non-taxable, one-time gain on the remeasurement of
our equity method investment in Burgiss of $143.0 million,
partially offset by lower interest income due to lower cash balance
and higher interest expense due to higher interest rates.
Income Taxes: In the fourth
quarter 2023, the effective tax rate was 13.8% compared to 19.1% in
the fourth quarter 2022, primarily due to the non-taxable, one-time
gain on the remeasurement of our equity method investment in
Burgiss of $143.0 million and a discrete benefit related to a
favorable outcome on the application of a foreign tax law change
received late in the quarter, partially offset by an increase due
to accruals related to open tax audits.
Net Income: As a result of
the factors described above, net income was $403.4 million, up
87.6%.
Adjusted EBITDA: Adjusted
EBITDA was $414.6 million, up 22.3%. Adjusted EBITDA margin in
fourth quarter 2023 was 60.1%, compared to 58.8% in fourth quarter
2022.
Index Segment:
Table 1A: Results (unaudited)
Three Months Ended
Year Ended
In thousands
Dec. 31, 2023
Dec. 31, 2022
% Change
Dec. 31, 2023
Dec. 31, 2022
% Change
Operating revenues:
Recurring subscriptions
$
210,737
$
189,970
10.9
%
$
814,582
$
729,710
11.6
%
Asset-based fees
145,148
125,238
15.9
%
557,502
528,127
5.6
%
Non-recurring
32,110
14,053
128.5
%
79,731
45,372
75.7
%
Total operating revenues
387,995
329,261
17.8
%
1,451,815
1,303,209
11.4
%
Adjusted EBITDA expenses
89,446
80,866
10.6
%
344,842
317,802
8.5
%
Adjusted EBITDA
$
298,549
$
248,395
20.2
%
$
1,106,973
$
985,407
12.3
%
Adjusted EBITDA margin %
76.9
%
75.4
%
76.2
%
75.6
%
Index operating revenues were $388.0 million, up 17.8%. The
$58.7 million increase was driven by $20.8 million in higher
recurring subscription revenues, $19.9 million in higher
asset-based fees, as well as $18.1 million in higher non-recurring
revenues.
Growth in recurring subscription revenues was primarily driven
by strong growth from market-cap weighted Index products.
Revenues from ETFs linked to MSCI equity indexes, mainly driven
by an increase in average AUM, drove more than half of the increase
in revenues attributable to asset-based fees. The balance of the
increase was contributed by non-ETF indexed funds linked to MSCI
indexes, driven by an increase in average AUM as well as an
increase in average basis point fees.
Non-recurring revenues were $32.1 million, up 128.5%. The $18.1
million increase was primarily driven by $16 million related to
fees for unlicensed usage of our content in historical periods,
which is recognized in the current period given the signing of an
agreement during the quarter to be paid for that past usage.
Index Run Rate as of December 31, 2023 was $1.5 billion, up
12.4%. The $160.4 million increase was comprised of a $83.7 million
increase in recurring subscription Run Rate, as well as $76.6
million increase in asset-based fees Run Rate. The increase in
recurring subscription Run Rate was driven by growth from market
cap-weighted products, custom Index products and special packages
as well as factor, ESG and climate products, and reflected growth
across all regions and client segments. The increase in asset-based
fees Run Rate primarily reflected growth in AUM in ETFs linked to
MSCI equity indexes and non-ETF indexed funds linked to MSCI
indexes, partially offset by lower exchanged traded futures and
options volume.
Analytics Segment:
Table 1B: Results (unaudited)
Three Months Ended
Year Ended
In thousands
Dec. 31, 2023
Dec. 31, 2022
% Change
Dec. 31, 2023
Dec. 31, 2022
% Change
Operating revenues:
Recurring subscriptions
$
160,015
$
146,957
8.9
%
$
603,291
$
567,004
6.4
%
Non-recurring
4,722
2,754
71.5
%
12,665
9,103
39.1
%
Total operating revenues
164,737
149,711
10.0
%
615,956
576,107
6.9
%
Adjusted EBITDA expenses
87,572
83,300
5.1
%
341,081
328,212
3.9
%
Adjusted EBITDA
$
77,165
$
66,411
16.2
%
$
274,875
$
247,895
10.9
%
Adjusted EBITDA margin %
46.8
%
44.4
%
44.6
%
43.0
%
Analytics operating revenues were $164.7 million, up 10.0%. The
$15.0 million increase was primarily driven by growth from
recurring subscriptions related to both Equity Analytics and
Multi-Asset Class products. More than half of the growth in
non-recurring revenues was driven by a large number of
implementations that were completed in the quarter, and the
remainder was driven by one-time deals related to Multi-Asset Class
products. Excluding the impact of foreign currency exchange rate
fluctuations, Analytics operating revenue growth was 10.2%.
Analytics Run Rate as of December 31, 2023, was $661.9 million,
up 7.4%. The increase of $45.9 million was driven by growth in both
Multi-Asset Class and Equity Analytics products, and reflected
growth across all regions. Excluding the impact of foreign currency
exchange rate fluctuations, Analytics Run Rate growth was 7.2%.
ESG and Climate Segment:
Table 1C: Results (unaudited)
Three Months Ended
Year Ended
In thousands
Dec. 31, 2023
Dec. 31, 2022
% Change
Dec. 31, 2023
Dec. 31, 2022
% Change
Operating revenues:
Recurring subscriptions
$
74,828
$
62,198
20.3
%
$
282,351
$
223,160
26.5
%
Non-recurring
1,425
1,361
4.7
%
5,217
5,151
1.3
%
Total operating revenues
76,253
63,559
20.0
%
287,568
228,311
26.0
%
Adjusted EBITDA expenses
50,689
44,799
13.1
%
195,890
167,217
17.1
%
Adjusted EBITDA
$
25,564
$
18,760
36.3
%
$
91,678
$
61,094
50.1
%
Adjusted EBITDA margin %
33.5
%
29.5
%
31.9
%
26.8
%
ESG and Climate operating revenues were $76.3 million, up 20.0%,
and included $0.8 million from the acquisition of Trove, which
closed on November 1, 2023. Excluding the acquisition, the $11.9
million increase was primarily driven by strong growth from
recurring subscriptions related to Ratings, Climate and Screening
products. Excluding the impact of foreign currency exchange rate
fluctuations and the Trove acquisition, ESG and Climate operating
revenue growth was 14.5%.
ESG and Climate Run Rate as of December 31, 2023, was $319.3
million, up 19.6%. The $52.3 million increase primarily reflects
strong growth from Ratings, Screening and Climate products, with
contributions across all regions and client segments. Excluding the
impact of foreign currency exchange rate fluctuations and the Trove
acquisition, ESG and Climate Run Rate growth was 16.1%.
All Other – Private Assets
Segment:
Table 1D: Results (unaudited)
Three Months Ended
Year Ended
In thousands
Dec. 31, 2023
Dec. 31, 2022
% Change
Dec. 31, 2023
Dec. 31, 2022
% Change
Operating revenues:
Recurring subscriptions
$
59,774
$
33,373
79.1
%
$
171,066
$
139,649
22.5
%
Non-recurring
1,347
304
n/m
2,515
1,322
90.2
%
Total operating revenues
61,121
33,677
81.5
%
173,581
140,971
23.1
%
Adjusted EBITDA expenses
47,772
28,221
69.3
%
124,156
105,696
17.5
%
Adjusted EBITDA
$
13,349
$
5,456
144.7
%
$
49,425
$
35,275
40.1
%
Adjusted EBITDA margin %
21.8
%
16.2
%
28.5
%
25.0
%
All Other – Private Assets operating revenues, which reflects
the Real Assets operating segment and the Private Capital Solutions
(formerly known as Burgiss) operating segment, were $61.1 million,
up 81.5%, and included $25.4 million from the Burgiss acquisition,
which closed on October 2, 2023. Excluding the impact of the
acquisition of Burgiss, All Other - Private Assets revenues were
higher by $2.0 million primarily driven by growth from recurring
subscriptions related to Real Capital Analytics, Inc. (“RCA”),
Index Intel and Performance Insights products, as well as favorable
foreign currency exchange rate fluctuations. Excluding the impact
of foreign currency exchange rate fluctuations and the Burgiss
acquisition, All Other – Private Assets operating revenue growth
was 4.4%.
All Other – Private Assets Run Rate, which reflects the Real
Assets and Private Capital Solutions operating segments, was $252.7
million as of December 31, 2023, up 73.9%, and included $98.0
million associated with Burgiss. Excluding the impact of the
acquisition of Burgiss, the growth was primarily driven by Index
Intel, RCA and Performance Insights products as well as favorable
foreign currency exchange rate fluctuations. This increase
reflected growth across all regions. Excluding the impact of
foreign currency exchange rate fluctuations and the Burgiss
acquisition, All Other – Private Assets Run Rate growth was
4.9%.
Select Balance Sheet Items and Capital
Allocation
Cash Balances and Outstanding
Debt: Cash and cash equivalents was $461.7 million as of
December 31, 2023. MSCI typically seeks to maintain minimum cash
balances globally of approximately $225.0 million to $275.0 million
for general operating purposes.
Total principal amount of debt outstanding as of December 31,
2023 was $4.5 billion. The total debt to net income ratio (based on
trailing twelve months net income) was 3.9x. The total debt to
adjusted EBITDA ratio (based on trailing twelve months adjusted
EBITDA) was 3.0x.
MSCI seeks to maintain total debt to adjusted EBITDA in a target
range of 3.0x to 3.5x.
Subsequent to December 31, 2023, we amended and restated the
credit agreement governing our credit facilities (the “Credit
Agreement”) to provide for a new revolving credit facility (the
“Revolving Credit Facility”) with an aggregate of $1.25 billion of
revolving loan commitments, which may be drawn until January 2029.
On the closing of the Credit Agreement, we drew down on the
Revolving Credit Facility in an amount sufficient to prepay the
term loans outstanding under the prior term loan A facility.
Capex and Cash Flow: Capex
was $21.8 million, and net cash provided by operating activities
increased by 23.3% to $389.0 million, primarily reflecting higher
cash collections from customers, partially offset by higher cash
expenses and income taxes paid in the quarter. Free cash flow was
up 24.5% to $367.1 million.
Share Count and Share
Repurchases: Weighted average diluted shares outstanding
were 79.5 million in fourth quarter 2023, down 1.2% year-over-year.
Total shares outstanding as of December 31, 2023 were 79.1 million.
A total of $0.8 billion remains on the outstanding share repurchase
authorization as of trade date of January 29, 2024.
Dividends: Approximately
$109.2 million in dividends were paid to shareholders in fourth
quarter 2023. On January 29, 2024, the MSCI Board of Directors
declared a cash dividend of $1.60 per share for first quarter 2024,
payable on February 29, 2024 to shareholders of record as of the
close of trading on February 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
Guidance for Full-Year
2024
Operating Expense
$1,300 to $1,340 million
Adjusted EBITDA Expense
$1,130 to $1,160 million
Interest Expense
(including amortization of financing
fees)(1)
$185 to $189 million
Depreciation & Amortization
Expense
$170 to $180 million
Effective Tax Rate
18% to 21%
Capital Expenditures
$95 to $105 million
Net Cash Provided by Operating
Activities
$1,330 to $1,380 million
Free Cash Flow
$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 fourth quarter and full
year 2023 results on Tuesday, January 30, 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 2144291 within the United States.
International callers may dial 1-646-307-1963 conference ID
2144291. 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, 2022 filed with the Securities and Exchange Commission
(“SEC”) on February 10, 2023 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 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 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 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 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 cancellation.
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 with respect to
which we have received a notice of termination, non-renewal or an
indication the client does not intend to continue their
subscription 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 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,
impairment related to sublease of leased property and 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, impairment related to sublease of leased property and
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 from impairment related to sublease of leased
property 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 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
In thousands, except per share
data
Dec. 31, 2023
Dec. 31, 2022
% Change
Dec. 31, 2023
Dec. 31, 2022
% Change
Operating revenues
$
690,106
$
576,208
19.8
%
$
2,528,920
$
2,248,598
12.5
%
Operating expenses:
Cost of revenues (exclusive of
depreciation and
amortization)
122,557
102,384
19.7
%
446,581
404,341
10.4
%
Selling and marketing
75,160
71,912
4.5
%
276,204
264,583
4.4
%
Research and development
39,220
29,026
35.1
%
132,121
107,205
23.2
%
General and administrative
40,440
33,864
19.4
%
153,967
146,857
4.8
%
Amortization of intangible assets
36,886
23,805
55.0
%
114,429
91,079
25.6
%
Depreciation and amortization of property,
equipment and leasehold improvements
5,098
6,467
(21.2
)%
21,009
26,893
(21.9
)%
Total operating expenses(1)
319,361
267,458
19.4
%
1,144,311
1,040,958
9.9
%
Operating income
370,745
308,750
20.1
%
1,384,609
1,207,640
14.7
%
Interest income
(3,400
)
(6,609
)
(48.6
)%
(34,479
)
(11,769
)
193.0
%
Interest expense
46,954
45,610
2.9
%
186,679
171,571
8.8
%
Gain on remeasurement of equity method
investment
(143,029
)
—
—
%
(143,029
)
—
—
%
Other expense (income)
2,345
4,087
(42.6
)%
6,377
3,997
59.5
%
Other expense (income), net
(97,130
)
43,088
nm
15,548
163,799
(90.5
)%
Income before provision for income
taxes
467,875
265,662
76.1
%
1,369,061
1,043,841
31.2
%
Provision for income taxes
64,495
50,691
27.2
%
220,469
173,268
27.2
%
Net income
403,380
214,971
87.6
%
1,148,592
870,573
31.9
%
Earnings per basic common share
$
5.10
$
2.69
89.6
%
$
14.45
$
10.78
34.0
%
Earnings per diluted common share
$
5.07
$
2.67
89.9
%
$
14.39
$
10.72
34.2
%
Weighted average shares outstanding used
in computing earnings per share:
Basic
79,115
79,989
(1.1
)%
79,462
80,746
(1.6
)%
Diluted
79,499
80,424
(1.2
)%
79,843
81,215
(1.7
)%
n/m: not meaningful.
(1) Includes stock-based compensation
expense of $17.0 million and $12.6 million for the three months
ended Dec. 31, 2023 and Dec. 31, 2022, respectively. Includes
stock-based compensation expense of $73.0 million and $58.0 million
for the year ended Dec. 31, 2023 and Dec. 31, 2022,
respectively.
Table 3: Selected Balance Sheet Items (unaudited)
As of
In thousands
Dec. 31, 2023
Dec. 31, 2022
Cash and cash equivalents (1)
$461,693
$993,564
Accounts receivable, net of allowances
$839,555
$663,236
Current deferred revenue
$1,083,864
$882,886
Current portion of long-term debt (2)
$10,902
$8,713
Long-term debt(3)
$4,496,826
$4,503,233
(1) Includes restricted cash of $3.9
million at Dec. 31, 2023 and $0.4 million at Dec. 31, 2022.
(2) Consists of gross current portion of
long-term debt, net of deferred financing fees. Gross current
portion of long-term debt was $10.9 million at Dec. 31, 2023 and
$8.8 million at Dec. 31,2022.
(3) Consists of gross long-term debt, net
of deferred financing fees. Gross long-term debt was $4,528.1
million at Dec. 31, 2023 and $4,539.1 million at Dec. 31, 2022.
Table 4: Selected Cash Flow Items (unaudited)
Three Months Ended
Year Ended
In thousands
Dec. 31, 2023
Dec. 31, 2022
% Change
Dec. 31, 2023
Dec. 31, 2022
% Change
Net cash provided by operating
activities
$
388,953
$
315,427
23.3
%
$
1,236,029
$
1,095,369
12.8
%
Net cash used in investing activities
(749,967
)
(26,922
)
n/m
(819,378
)
(79,335
)
n/m
Net cash (used in) provided by financing
activities
(111,567
)
(172,553
)
35.3
%
(953,931
)
(1,425,380
)
33.1
%
Effect of exchange rate changes
5,722
10,500
(45.5
)%
5,409
(18,539
)
129.2
%
Net (decrease) increase in cash, cash
equivalents and restricted cash
$
(466,859
)
$
126,452
n/m
$
(531,871
)
$
(427,885
)
(24.3
)%
n/m: not meaningful.
Table 5: Operating Results by Segment and Revenue Type
(unaudited)
Index
Three Months Ended
Year Ended
In thousands
Dec. 31, 2023
Dec. 31, 2022
% Change
Dec. 31, 2023
Dec. 31, 2022
% Change
Operating revenues:
Recurring subscriptions
$
210,737
$
189,970
10.9
%
$
814,582
$
729,710
11.6
%
Asset-based fees
145,148
125,238
15.9
%
557,502
528,127
5.6
%
Non-recurring
32,110
14,053
128.5
%
79,731
45,372
75.7
%
Total operating revenues
387,995
329,261
17.8
%
1,451,815
1,303,209
11.4
%
Adjusted EBITDA expenses
89,446
80,866
10.6
%
344,842
317,802
8.5
%
Adjusted EBITDA
$
298,549
$
248,395
20.2
%
$
1,106,973
$
985,407
12.3
%
Adjusted EBITDA margin %
76.9
%
75.4
%
76.2
%
75.6
%
Analytics
Three Months Ended
Year Ended
Dec. 31,
Dec. 31,
%
Dec. 31,
Dec. 31,
%
In thousands
2023
2022
Change
2023
2022
Change
Operating revenues:
Recurring subscriptions
$
160,015
$
146,957
8.9
%
$
603,291
$
567,004
6.4
%
Non-recurring
4,722
2,754
71.5
%
12,665
9,103
39.1
%
Total operating revenues
164,737
149,711
10.0
%
615,956
576,107
6.9
%
Adjusted EBITDA expenses
87,572
83,300
5.1
%
341,081
328,212
3.9
%
Adjusted EBITDA
$
77,165
$
66,411
16.2
%
$
274,875
$
247,895
10.9
%
Adjusted EBITDA margin %
46.8
%
44.4
%
44.6
%
43.0
%
ESG and Climate
Three Months Ended
Year Ended
Dec. 31,
Dec. 31,
%
Dec. 31,
Dec. 31,
%
In thousands
2023
2022
Change
2023
2022
Change
Operating revenues:
Recurring subscriptions
$
74,828
$
62,198
20.3
%
$
282,351
$
223,160
26.5
%
Non-recurring
1,425
1,361
4.7
%
5,217
5,151
1.3
%
Total operating revenues
76,253
63,559
20.0
%
287,568
228,311
26.0
%
Adjusted EBITDA expenses
50,689
44,799
13.1
%
195,890
167,217
17.1
%
Adjusted EBITDA
$
25,564
$
18,760
36.3
%
$
91,678
$
61,094
50.1
%
Adjusted EBITDA margin %
33.5
%
29.5
%
31.9
%
26.8
%
All Other - Private Assets
Three Months Ended
Year Ended
Dec. 31,
Dec. 31,
%
Dec. 31,
Dec. 31,
%
In thousands
2023
2022
Change
2023
2022
Change
Operating revenues:
Recurring subscriptions
$
59,774
$
33,373
79.1
%
$
171,066
$
139,649
22.5
%
Non-recurring
1,347
304
n/m
2,515
1,322
90.2
%
Total operating revenues
61,121
33,677
81.5
%
173,581
140,971
23.1
%
Adjusted EBITDA expenses
47,772
28,221
69.3
%
124,156
105,696
17.5
%
Adjusted EBITDA
$
13,349
$
5,456
144.7
%
$
49,425
$
35,275
40.1
%
Adjusted EBITDA margin %
21.8
%
16.2
%
28.5
%
25.0
%
Consolidated
Three Months Ended
Year Ended
Dec. 31,
Dec. 31,
%
Dec. 31,
Dec. 31,
%
In thousands
2023
2022
Change
2023
2022
Change
Operating revenues:
Recurring subscriptions
$
505,354
$
432,498
16.8
%
$
1,871,290
$
1,659,523
12.8
%
Asset-based fees
145,148
125,238
15.9
%
557,502
528,127
5.6
%
Non-recurring
39,604
18,472
114.4
%
100,128
60,948
64.3
%
Operating revenues total
690,106
576,208
19.8
%
2,528,920
2,248,598
12.5
%
Adjusted EBITDA expenses
275,479
237,186
16.1
%
1,005,969
918,927
9.5
%
Adjusted EBITDA
$
414,627
$
339,022
22.3
%
$
1,522,951
$
1,329,671
14.5
%
Operating margin %
53.7
%
53.6
%
54.8
%
53.7
%
Adjusted EBITDA margin %
60.1
%
58.8
%
60.2
%
59.1
%
Table 6: Sales and Retention Rate by Segment
(unaudited)(1)
Three Months Ended
Year Ended
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
In thousands
2023
2022
2023
2022
Index
New recurring subscription sales
$
35,860
$
35,206
$
116,016
$
109,699
Subscription cancellations
(9,681
)
(8,635
)
(32,298
)
(27,103
)
Net new recurring subscription sales
$
26,179
$
26,571
$
83,718
$
82,596
Non-recurring sales
$
33,410
$
16,203
$
87,775
$
57,560
Total gross sales
$
69,270
$
51,409
$
203,791
$
167,259
Total Index net sales
$
59,589
$
42,774
$
171,493
$
140,156
Index Retention Rate
95.0
%
95.0
%
95.8
%
96.1
%
Analytics
New recurring subscription sales
$
28,284
$
25,193
$
79,035
$
75,584
Subscription cancellations
(10,581
)
(14,648
)
(34,675
)
(37,171
)
Net new recurring subscription sales
$
17,703
$
10,545
$
44,360
$
38,413
Non-recurring sales
$
5,645
$
2,731
$
14,379
$
11,143
Total gross sales
$
33,929
$
27,924
$
93,414
$
86,727
Total Analytics net sales
$
23,348
$
13,276
$
58,739
$
49,556
Analytics Retention Rate
93.1
%
90.0
%
94.4
%
93.6
%
ESG and Climate
New recurring subscription sales
$
16,595
$
23,363
$
55,092
$
78,980
Subscription cancellations
(3,592
)
(2,303
)
(10,923
)
(5,618
)
Net new recurring subscription sales
$
13,003
$
21,060
$
44,169
$
73,362
Non-recurring sales
$
1,559
$
715
$
5,625
$
4,268
Total gross sales
$
18,154
$
24,078
$
60,717
$
83,248
Total ESG and Climate net sales
$
14,562
$
21,775
$
49,794
$
77,630
ESG and Climate Retention Rate(2)
94.7
%
95.4
%
95.9
%
97.2
%
All Other - Private Assets
New recurring subscription sales
$
11,429
$
6,723
$
26,175
$
23,213
Subscription cancellations
(6,703
)
(2,489
)
(15,337
)
(7,569
)
Net new recurring subscription sales
$
4,726
$
4,234
$
10,838
$
15,644
Non-recurring sales
$
1,082
$
574
$
2,151
$
1,264
Total gross sales
$
12,511
$
7,297
$
28,326
$
24,477
Total All Other - Private Assets net
sales
$
5,808
$
4,808
$
12,989
$
16,908
All Other - Private Assets Retention
Rate(3)
88.8
%
92.6
%
90.4
%
94.4
%
Consolidated
New recurring subscription sales
$
92,168
$
90,485
$
276,318
$
287,476
Subscription cancellations
(30,557
)
(28,075
)
(93,233
)
(77,461
)
Net new recurring subscription sales
$
61,611
$
62,410
$
183,085
$
210,015
Non-recurring sales
$
41,696
$
20,223
$
109,930
$
74,235
Total gross sales
$
133,864
$
110,708
$
386,248
$
361,711
Total net sales
$
103,307
$
82,633
$
293,015
$
284,250
Total Retention Rate
93.6
%
93.0
%
94.7
%
95.2
%
(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 ESG and Climate
excluding the impact of the acquisition of Trove was 94.7% and
95.9% for the three months and year ended Dec. 31, 2023,
respectively.
(3) Retention rate for All Other – Private
Assets excluding the impact of the acquisition of Burgiss was 88.6%
and 91.2% for the three months and year ended Dec. 31, 2023,
respectively.
Table 7: AUM in ETFs Linked to MSCI Equity Indexes
(unaudited)(1)(2)
Three Months Ended
Year Ended
Dec. 31,
Mar. 31,
June 30,
Sep. 30,
Dec. 31,
Dec. 31,
Dec. 31,
In billions
2022
2023
2023
2023
2023
2022
2023
Beginning Period AUM in ETFs linked to
MSCI equity indexes
$
1,081.2
$
1,222.9
$
1,305.4
$
1,372.5
$
1,322.8
$
1,451.6
$
1,222.9
Market Appreciation/(Depreciation)
118.8
75.1
48.4
(56.1
)
130.5
(283.9
)
197.9
Cash Inflows/(Outflows)
22.9
7.4
18.7
6.4
15.6
55.2
48.1
Period-End AUM in ETFs linked to MSCI
equity indexes
$
1,222.9
$
1,305.4
$
1,372.5
$
1,322.8
$
1,468.9
$
1,222.9
$
1,468.9
Period Average AUM in ETFs linked to MSCI
equity indexes
$
1,182.1
$
1,287.5
$
1,333.8
$
1,376.5
$
1,364.9
$
1,267.2
$
1,340.7
Period-End Basis Point Fee(3)
2.54
2.53
2.52
2.51
2.50
2.54
2.50
(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 or furnished with the SEC. The AUM in ETFs
also includes AUM in Exchange Traded Notes, the value of which is
less than 1.0% 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
Dec. 31,
Dec. 31,
%
In thousands
2023
2022
Change
Index
Recurring subscriptions
$
861,366
$
777,633
10.8
%
Asset-based fees
590,872
514,253
14.9
%
Index Run Rate
1,452,238
1,291,886
12.4
%
Analytics Run Rate
661,922
616,069
7.4
%
ESG and Climate Run Rate
319,324
267,019
19.6
%
All Other - Private Assets Run
Rate
252,677
145,333
73.9
%
Total Run Rate
$
2,686,161
$
2,320,307
15.8
%
Total recurring subscriptions
$
2,095,289
$
1,806,054
16.0
%
Total asset-based fees
590,872
514,253
14.9
%
Total Run Rate
$
2,686,161
$
2,320,307
15.8
%
(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
Year Ended
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
In thousands
2023
2022
2023
2022
Net income
$
403,380
$
214,971
$
1,148,592
$
870,573
Provision for income taxes
64,495
50,691
220,469
173,268
Other expense (income), net
(97,130
)
43,088
15,548
163,799
Operating income
370,745
308,750
1,384,609
1,207,640
Amortization of intangible assets
36,886
23,805
114,429
91,079
Depreciation and amortization of property,
equipment and leasehold improvements
5,098
6,467
21,009
26,893
Impairment related to sublease of leased
property
477
—
477
—
Acquisition-related integration and
transaction costs(1)
1,421
—
2,427
4,059
Consolidated adjusted EBITDA
$
414,627
$
339,022
$
1,522,951
$
1,329,671
Index adjusted EBITDA
$
298,549
$
248,395
$
1,106,973
$
985,407
Analytics adjusted EBITDA
77,165
66,411
274,875
247,895
ESG and Climate adjusted EBITDA
25,564
18,760
91,678
61,094
All Other - Private Assets adjusted
EBITDA
13,349
5,456
49,425
35,275
Consolidated adjusted EBITDA
$
414,627
$
339,022
$
1,522,951
$
1,329,671
(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
Year Ended
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
In thousands, except per share
data
2023
2022
2023
2022
Net income
$
403,380
$
214,971
$
1,148,592
$
870,573
Plus: Amortization of acquired intangible
assets and equity method investment basis difference
24,873
16,809
75,229
67,373
Plus: Impairment related to sublease of
leased property
492
—
492
—
Plus: Acquisition-related integration and
transaction costs(1)(2)
1,421
—
2,427
4,220
Less: Gain from changes in ownership
interest of investees
(143,029
)
—
(143,476
)
—
Plus/(Less): Income tax effect(3)(4)
5,071
(3,218
)
(3,809
)
(11,883
)
Adjusted net income
$
292,208
$
228,562
$
1,079,455
$
930,283
Diluted EPS
$
5.07
$
2.67
$
14.39
$
10.72
Plus: Amortization of acquired intangible
assets and equity method investment basis difference
0.31
0.21
0.94
0.83
Plus: Impairment related to sublease of
leased property
0.01
—
0.01
—
Plus: Acquisition-related integration and
transaction costs(1)(2)
0.02
—
0.03
0.05
Less: Gain from changes in ownership
interest of investees
(1.79
)
—
(1.80
)
—
Plus/(Less): Income tax effect(3)(4)
0.06
(0.04
)
(0.05
)
(0.15
)
Adjusted EPS
$
3.68
$
2.84
$
13.52
$
11.45
Diluted weighted average common shares
outstanding
79,499
80,424
79,843
81,215
(1) Acquisition-related integration and
transaction costs of $4.1 million are presented within "General and
administrative" expenses and $0.2 million are
presented within "Depreciation and
amortization of property, equipment and leasehold improvements"
expenses for the year ended Dec. 31, 2022.
(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.
(3) 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.
(4) The pre-tax gain from changes in
ownership interest of Burgiss of $143.0 is non-taxable; however,
$8.6 million of income tax expense recognized during the three and
twelve months ended December 31, 2023 was related to the
remeasurement of the deferred tax liability on the Company's
previous equity method investment in Burgiss.
Table 11: Reconciliation of Operating Expenses to Adjusted
EBITDA Expenses (unaudited)
Three Months Ended
Year Ended
Full-Year
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
2024
In thousands
2023
2022
2023
2022
Outlook(1)
Total operating expenses
$
319,361
$
267,458
$
1,144,311
$
1,040,958
$1,300,000 - $1,340,000
Amortization of intangible assets
36,886
23,805
114,429
91,079
Depreciation and amortization of property,
equipment and leasehold improvements
5,098
6,467
21,009
26,893
$170,000 - $180,000
Impairment related to sublease of leased
property
477
—
477
—
Acquisition-related integration and
transaction costs(2)
1,421
—
2,427
4,059
Consolidated adjusted EBITDA
expenses
$
275,479
$
237,186
$
1,005,969
$
918,927
$1,130,000 -
$1,160,000
Index adjusted EBITDA expenses
$
89,446
$
80,866
$
344,842
$
317,802
Analytics adjusted EBITDA expenses
87,572
83,300
341,081
328,212
ESG and Climate adjusted EBITDA
expenses
50,689
44,799
195,890
167,217
All Other - Private Assets adjusted EBITDA
expenses
47,772
28,221
124,156
105,696
Consolidated adjusted EBITDA
expenses
$
275,479
$
237,186
$
1,005,969
$
918,927
$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
Year Ended
Full-Year
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
2024
In thousands
2023
2022
2023
2022
Outlook(1)
Net cash provided by operating
activities
$
388,953
$
315,427
$
1,236,029
$
1,095,369
$1,330,000 -
$1,380,000
Capital expenditures
(3,815
)
(5,605
)
(22,757
)
(13,617
)
Capitalized software development costs
(18,014
)
(14,853
)
(68,094
)
(59,278
)
Capex
(21,829
)
(20,458
)
(90,851
)
(72,895
)
($95,000 - $105,000)
Free cash flow
$
367,124
$
294,969
$
1,145,178
$
1,022,474
$1,225,000 -
$1,285,000
(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 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: Fourth Quarter 2023 Reconciliation of Operating
Revenue Growth to Organic Operating Revenue Growth
(unaudited)
Comparison of the Three Months
Ended December 31, 2023 and 2022
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Index
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
17.8
%
10.9
%
15.9
%
128.5
%
Impact of acquisitions and
divestitures
—
%
—
%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
0.1
%
0.2
%
—
%
—
%
Organic operating revenue growth
17.9
%
11.1
%
15.9
%
128.5
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Analytics
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
10.0
%
8.9
%
—
%
71.5
%
Impact of acquisitions and
divestitures
—
%
—
%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
0.2
%
0.1
%
—
%
(0.2
)%
Organic operating revenue growth
10.2
%
9.0
%
—
%
71.3
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
ESG and Climate
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
20.0
%
20.3
%
—
%
4.7
%
Impact of acquisitions and
divestitures
(1.2
)%
(1.2
)%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
(4.3
)%
(4.3
)%
—
%
(1.8
)%
Organic operating revenue growth
14.5
%
14.8
%
—
%
2.9
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
All Other - Private Assets
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
81.5
%
79.1
%
—
%
343.1
%
Impact of acquisitions and
divestitures
(75.5
)%
(73.8
)%
—
%
(263.8
)%
Impact of foreign currency exchange rate
fluctuations
(1.6
)%
(1.6
)%
—
%
(1.0
)%
Organic operating revenue growth
4.4
%
3.7
%
—
%
78.3
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Consolidated
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
19.8
%
16.8
%
15.9
%
114.4
%
Impact of acquisitions and
divestitures
(4.6
)%
(5.8
)%
—
%
(4.3
)%
Impact of foreign currency exchange rate
fluctuations
(0.5
)%
(0.7
)%
—
%
(0.2
)%
Organic operating revenue growth
14.7
%
10.3
%
15.9
%
109.9
%
Table 14: Full-Year 2023 Reconciliation of Operating Revenue
Growth to Organic Operating Revenue Growth (unaudited)
Comparison of the Years Ended
December 31, 2023 and 2022
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Index
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
11.4
%
11.6
%
5.6
%
75.7
%
Impact of acquisitions and
divestitures
—
%
—
%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
0.1
%
0.2
%
—
%
—
%
Organic operating revenue growth
11.5
%
11.8
%
5.6
%
75.7
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Analytics
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
6.9
%
6.4
%
—
%
39.1
%
Impact of acquisitions and
divestitures
—
%
—
%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
0.3
%
0.3
%
—
%
(0.1
)%
Organic operating revenue growth
7.2
%
6.7
%
—
%
39.0
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
ESG and Climate
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
26.0
%
26.5
%
—
%
1.3
%
Impact of acquisitions and
divestitures
(0.4
)%
(0.3
)%
—
%
—
%
Impact of foreign currency exchange rate
fluctuations
(0.8
)%
(0.8
)%
—
%
(0.7
)%
Organic operating revenue growth
24.8
%
25.4
%
—
%
0.6
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
All Other - Private Assets
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
23.1
%
22.5
%
—
%
90.2
%
Impact of acquisitions and
divestitures
(18.0
)%
(17.6
)%
—
%
(60.6
)%
Impact of foreign currency exchange rate
fluctuations
0.6
%
0.6
%
—
%
(0.3
)%
Organic operating revenue growth
5.7
%
5.5
%
—
%
29.3
%
Total
Recurring Subscription
Asset-Based Fees
Non-Recurring Revenues
Consolidated
Change Percentage
Change Percentage
Change Percentage
Change Percentage
Operating revenue growth
12.5
%
12.8
%
5.6
%
64.3
%
Impact of acquisitions and
divestitures
(1.2
)%
(1.6
)%
—
%
(1.3
)%
Impact of foreign currency exchange rate
fluctuations
0.1
%
0.2
%
—
%
(0.1
)%
Organic operating revenue growth
11.4
%
11.4
%
5.6
%
62.9
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240130168751/en/
MSCI Inc.
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