MSCI 8-K

MSCI Inc. (MSCI)

8-K 2023-10-31 For: 2023-10-31

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Delaware		001-33812		13-4038723
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		MSCI		New York Stock Exchange

Exhibit No.		Description
Exhibit 99.1		Press Release of the Registrant, dated October 31, 2023, containing financial information for the third quarter ended September 30, 2023.
Exhibit 104		Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL).

	MSCI Inc.


Date: October 31, 2023	By:	/s/ Henry A. Fernandez
	Name:	Henry A. Fernandez
	Title:	Chairman and Chief Executive Officer

	Three Months Ended								Nine Months Ended
	Sep. 30,			Sep. 30,					Sep. 30,			Sep. 30,
In thousands, except per share data (unaudited)	2023			2022			% Change		2023			2022			% Change
Operating revenues	$	625,439		$	560,639		11.6	%	$	1,838,814		$	1,672,390		10.0	%
Operating income	$	353,309		$	309,531		14.1	%	$	1,013,864		$	898,890		12.8	%
Operating margin %		56.5	%		55.2	%				55.1	%		53.7	%

Net income	$	259,659		$	216,592		19.9	%	$	745,212		$	655,602		13.7	%

Diluted EPS	$	3.27		$	2.68		22.0	%	$	9.32		$	8.05		15.8	%
Adjusted EPS	$	3.45		$	2.85		21.1	%	$	9.85		$	8.61		14.4	%

Adjusted EBITDA	$	386,289		$	340,961		13.3	%	$	1,108,324		$	990,649		11.9	%
Adjusted EBITDA margin %		61.8	%		60.8	%				60.3	%		59.2	%

MSCI 8-K

MSCI Reports Financial Results for Third Quarter and Nine Months 2023

Contacts

Guidance Item	Current Guidance for Full-Year 2023	Prior Guidance for Full-Year 2023
Operating Expense	$1,135 to $1,165 million	$1,090 to $1,130 million
Adjusted EBITDA Expense	$1,000 to $1,020 million	$965 to $995 million
Interest Expense (including amortization of financing fees)⁽¹⁾	$187 million	$185 to $187 million
Depreciation & Amortization Expense	$135 to $145 million	$125 to $135 million
Effective Tax Rate	16.5% to 18.0%	17.0% to 20.0%
Capital Expenditures	$85 to $95 million	$80 to $90 million
Net Cash Provided by Operating Activities	$1,145 to $1,195 million	$1,145 to $1,195 million
Free Cash Flow	$1,060 to $1,120 million	$1,060 to $1,120 million

	As of
	Sep. 30,	Dec. 31,
In thousands	2023	2022
Cash and cash equivalents (1)	$928,552	$993,564
Accounts receivable, net of allowances	$603,266	$663,236

Current deferred revenue	$837,479	$882,886
Current portion of long-term debt (2)	$8,719	$8,713
Long-term debt(3)	$4,500,063	$4,503,233

^{(1) Includes restricted cash of $3.8 million at September 30, 2023 and $0.4 million at December 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 $8.8 million at September 30, 2023 and $8.8 million at December 31, 2022.}
^{(3) Consists of gross long-term debt, net of deferred financing fees. Gross long-term debt was $4,532.5 million at September 30, 2023 and $4,539.1 million at December 31, 2022.}

*Index*	Three Months Ended								Nine Months Ended
	Sep. 30,			Sep. 30,			%		Sep. 30,			Sep. 30,			%
In thousands	2023			2022			Change		2023			2022			Change
Operating revenues:
Recurring subscriptions	$	206,453		$	185,531		11.3	%	$	603,845		$	539,740		11.9	%
Asset-based fees		141,066			125,620		12.3	%		412,354			402,889		2.3	%
Non-recurring		14,603			11,089		31.7	%		47,621			31,319		52.1	%
Total operating revenues		362,122			322,240		12.4	%		1,063,820			973,948		9.2	%
Adjusted EBITDA expenses		84,450			76,273		10.7	%		255,396			236,936		7.8	%
Adjusted EBITDA	$	277,672		$	245,967		12.9	%	$	808,424		$	737,012		9.7	%
Adjusted EBITDA margin %		76.7	%		76.3	%				76.0	%		75.7	%

*Analytics*	Three Months Ended								Nine Months Ended
	Sep. 30,			Sep. 30,			%		Sep. 30,			Sep. 30,			%
In thousands	2023			2022			Change		2023			2022			Change
Operating revenues:
Recurring subscriptions	$	151,269		$	142,751		6.0	%	$	443,276		$	420,047		5.5	%
Non-recurring		2,999			2,164		38.6	%		7,943			6,349		25.1	%
Total operating revenues		154,268			144,915		6.5	%		451,219			426,396		5.8	%
Adjusted EBITDA expenses		82,487			77,281		6.7	%		253,509			244,912		3.5	%
Adjusted EBITDA	$	71,781		$	67,634		6.1	%	$	197,710		$	181,484		8.9	%
Adjusted EBITDA margin %		46.5	%		46.7	%				43.8	%		42.6	%

*ESG and Climate*	Three Months Ended								Nine Months Ended
	Sep. 30,			Sep. 30,			%		Sep. 30,			Sep. 30,			%
In thousands	2023			2022			Change		2023			2022			Change
Operating revenues:
Recurring subscriptions	$	71,744		$	56,353		27.3	%	$	207,523		$	160,962		28.9	%
Non-recurring		1,294			1,242		4.2	%		3,792			3,790		0.1	%
Total operating revenues		73,038			57,595		26.8	%		211,315			164,752		28.3	%
Adjusted EBITDA expenses		47,598			41,685		14.2	%		145,201			122,418		18.6	%
Adjusted EBITDA	$	25,440		$	15,910		59.9	%	$	66,114		$	42,334		56.2	%
Adjusted EBITDA margin %		34.8	%		27.6	%				31.3	%		25.7	%

*All Other - Private Assets*	Three Months Ended								Nine Months Ended
	Sep. 30,			Sep. 30,			%		Sep. 30,			Sep. 30,			%
In thousands	2023			2022			Change		2023			2022			Change
Operating revenues:
Recurring subscriptions	$	35,531		$	35,581		(0.1	)%	$	111,292		$	106,276		4.7	%
Non-recurring		480			308		55.8	%		1,168			1,018		14.7	%
Total operating revenues		36,011			35,889		0.3	%		112,460			107,294		4.8	%
Adjusted EBITDA expenses		24,615			24,439		0.7	%		76,384			77,475		(1.4	)%
Adjusted EBITDA	$	11,396		$	11,450		(0.5	)%	$	36,076		$	29,819		21.0	%
Adjusted EBITDA margin %		31.6	%		31.9	%				32.1	%		27.8	%

*Consolidated*	Three Months Ended								Nine Months Ended
	Sep. 30,			Sep. 30,			%		Sep. 30,			Sep. 30,			%
In thousands	2023			2022			Change		2023			2022			Change
Operating revenues:
Recurring subscriptions	$	464,997		$	420,216		10.7	%	$	1,365,936		$	1,227,025		11.3	%
Asset-based fees		141,066			125,620		12.3	%		412,354			402,889		2.3	%
Non-recurring		19,376			14,803		30.9	%		60,524			42,476		42.5	%
Operating revenues total		625,439			560,639		11.6	%		1,838,814			1,672,390		10.0	%
Adjusted EBITDA expenses		239,150			219,678		8.9	%		730,490			681,741		7.2	%
Adjusted EBITDA	$	386,289		$	340,961		13.3	%	$	1,108,324		$	990,649		11.9	%
Operating margin %		56.5	%		55.2	%				55.1	%		53.7	%
Adjusted EBITDA margin %		61.8	%		60.8	%				60.3	%		59.2	%

	Three Months Ended				Nine Months Ended				Full-Year
	Sep. 30,		Sep. 30,		Sep. 30,		Sep. 30,		2023
In thousands	2023		2022		2023		2022		Guidance (1)
Total operating expenses	$	272,130	$	251,108	$	824,950	$	773,500	$1,135,000 - $1,165,000
Amortization of intangible assets		26,722		23,375		77,543		67,274
Depreciation and amortization of property,
equipment and leasehold improvements		5,252		7,127		15,911		20,426	$135,000 - $145,000
Acquisition-related integration and transaction costs(2)		1,006		928		1,006		4,059
Consolidated adjusted EBITDA expenses	$	239,150	$	219,678	$	730,490	$	681,741	$1,000,000 - $1,020,000

Index adjusted EBITDA expenses	$	84,450	$	76,273	$	255,396	$	236,936
Analytics adjusted EBITDA expenses		82,487		77,281		253,509		244,912
ESG and Climate adjusted EBITDA expenses		47,598		41,685		145,201		122,418
All Other - Private Assets adjusted EBITDA expenses		24,615		24,439		76,384		77,475
Consolidated adjusted EBITDA expenses	$	239,150	$	219,678	$	730,490	$	681,741	$1,000,000 - $1,020,000

^{(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.}

	Comparison of the Three Months Ended September 30, 2023 and 2022
	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
Index	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	12.4 %	11.3 %	12.3 %	31.7 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	0.1 %	0.1 %	— %	— %
Organic operating revenue growth	12.5 %	11.4 %	12.3 %	31.7 %

	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
Analytics	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	6.5 %	6.0 %	— %	38.6 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	0.1 %	0.1 %	— %	(2.0) %
Organic operating revenue growth	6.6 %	6.1 %	— %	36.6 %

	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
ESG and Climate	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	26.8 %	27.3 %	— %	4.2 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	(6.5) %	(6.6) %	— %	(2.9) %
Organic operating revenue growth	20.3 %	20.7 %	— %	1.3 %

	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
All Other - Private Assets	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	0.3 %	(0.1) %	— %	55.8 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	(1.6) %	(1.6) %	— %	(1.6) %
Organic operating revenue growth	(1.3) %	(1.7) %	— %	54.2 %

	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
Consolidated	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	11.6 %	10.7 %	12.3 %	30.9 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	(0.7) %	(0.9) %	— %	(0.6) %
Organic operating revenue growth	10.9 %	9.8 %	12.3 %	30.3 %

	Comparison of the Nine Months Ended September 30, 2023 and 2022
	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
Index	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	9.2 %	11.9 %	2.3 %	52.1 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	0.2 %	0.2 %	0.1 %	— %
Organic operating revenue growth	9.4 %	12.1 %	2.4 %	52.1 %

	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
Analytics	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	5.8 %	5.5 %	— %	25.1 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	0.4 %	0.4 %	— %	(0.1) %
Organic operating revenue growth	6.2 %	5.9 %	— %	25.0 %

	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
ESG and Climate	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	28.3 %	28.9 %	— %	0.1 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	0.5 %	0.6 %	— %	(0.3) %
Organic operating revenue growth	28.8 %	29.5 %	— %	(0.2) %

	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
All Other - Private Assets	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	4.8 %	4.7 %	— %	14.7 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	1.4 %	1.4 %	— %	(0.1) %
Organic operating revenue growth	6.2 %	6.1 %	— %	14.6 %

	Total	Recurring Subscription	Asset-Based Fees	Non-Recurring Revenues
Consolidated	Change Percentage	Change Percentage	Change Percentage	Change Percentage
Operating revenue growth	10.0 %	11.3 %	2.3 %	42.5 %
Impact of acquisitions and divestitures	— %	— %	— %	— %
Impact of foreign currency exchange rate fluctuations	0.3 %	0.4 %	0.1 %	— %
Organic operating revenue growth	10.3 %	11.7 %	2.4 %	42.5 %

	Three Months Ended								Nine Months Ended
	Sep. 30,			Sep. 30,			%		Sep. 30,			Sep. 30,			%
In thousands, except per share data	2023			2022			Change		2023			2022			Change
Operating revenues	$	625,439		$	560,639		11.6	%	$	1,838,814		$	1,672,390		10.0	%
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)		105,311			98,418		7.0	%		324,024			301,957		7.3	%
Selling and marketing		66,581			65,545		1.6	%		201,044			192,671		4.3	%
Research and development		31,438			25,941		21.2	%		92,901			78,179		18.8	%
General and administrative		36,826			30,702		19.9	%		113,527			112,993		0.5	%
Amortization of intangible assets		26,722			23,375		14.3	%		77,543			67,274		15.3	%
Depreciation and amortization of property,
equipment and leasehold improvements		5,252			7,127		(26.3	)%		15,911			20,426		(22.1	)%
Total operating expenses(1)		272,130			251,108		8.4	%		824,950			773,500		6.7	%

Operating income		353,309			309,531		14.1	%		1,013,864			898,890		12.8	%

Interest income		(10,314	)		(3,938	)	161.9	%		(31,079	)		(5,160	)	n/m
Interest expense		46,902			44,162		6.2	%		139,725			125,961		10.9	%
Other expense (income)		(935	)		103		n/m			4,032			(90	)	n/m
Other expense (income), net		35,653			40,327		(11.6	)%		112,678			120,711		(6.7	)%

Income before provision for income taxes		317,656			269,204		18.0	%		901,186			778,179		15.8	%

Provision for income taxes		57,997			52,612		10.2	%		155,974			122,577		27.2	%
Net income	$	259,659		$	216,592		19.9	%	$	745,212		$	655,602		13.7	%


Earnings per basic common share	$	3.28		$	2.69		21.9	%	$	9.36		$	8.09		15.7	%


Earnings per diluted common share	$	3.27		$	2.68		22.0	%	$	9.32		$	8.05		15.8	%

Weighted average shares outstanding used
in computing earnings per share:

Basic		79,116			80,500		(1.7	)%		79,580			81,001		(1.8	)%
Diluted		79,500			80,874		(1.7	)%		79,959			81,481		(1.9	)%

n/m: not meaningful.

	Three Months Ended								Nine Months Ended
	Sep. 30,			Sep. 30,			%		Sep. 30,			Sep. 30,			%
In thousands	2023			2022			Change		2023			2022			Change
Net cash provided by operating activities	$	291,131		$	323,069		(9.9	)%	$	847,076		$	779,942		8.6	%
Net cash used in investing activities		(20,981	)		(18,000	)	(16.6	)%		(69,411	)		(52,413	)	(32.4	)%
Net cash (used in) provided by financing activities		(130,312	)		(269,891	)	51.7	%		(842,364	)		(1,252,827	)	32.8	%
Effect of exchange rate changes		(3,615	)		(10,366	)	65.1	%		(313	)		(29,039	)	98.9	%
Net (decrease) increase in cash, cash equivalents and restricted cash	$	136,223		$	24,812		n/m		$	(65,012	)	$	(554,337	)	88.3	%

n/m: not meaningful.

	Three Months Ended						Nine Months Ended
	Sep. 30,			Sep. 30,			Sep. 30,			Sep. 30,
In thousands	2023			2022			2023			2022
Index
New recurring subscription sales	$	23,978		$	24,130		$	80,156		$	74,493
Subscription cancellations		(7,402	)		(5,388	)		(22,617	)		(18,468	)
Net new recurring subscription sales	$	16,576		$	18,742		$	57,539		$	56,025
Non-recurring sales	$	14,679		$	13,375		$	54,365		$	41,357
Total gross sales	$	38,657		$	37,505		$	134,521		$	115,850
Total Index net sales	$	31,255		$	32,117		$	111,904		$	97,382

Index Retention Rate		96.2	%		96.9	%		96.1	%		96.5	%

Analytics
New recurring subscription sales	$	18,787		$	17,568		$	50,751		$	50,391
Subscription cancellations		(7,543	)		(6,029	)		(24,094	)		(22,523	)
Net new recurring subscription sales	$	11,244		$	11,539		$	26,657		$	27,868
Non-recurring sales	$	3,206		$	2,505		$	8,734		$	8,412
Total gross sales	$	21,993		$	20,073		$	59,485		$	58,803
Total Analytics net sales	$	14,450		$	14,044		$	35,391		$	36,280

Analytics Retention Rate		95.1	%		95.9	%		94.8	%		94.9	%

ESG and Climate
New recurring subscription sales	$	12,124		$	14,270		$	38,497		$	55,617
Subscription cancellations		(2,639	)		(1,303	)		(7,331	)		(3,315	)
Net new recurring subscription sales	$	9,485		$	12,967		$	31,166		$	52,302
Non-recurring sales	$	1,532		$	1,375		$	4,066		$	3,553
Total gross sales	$	13,656		$	15,645		$	42,563		$	59,170
Total ESG and Climate net sales	$	11,017		$	14,342		$	35,232		$	55,855

ESG and Climate Retention Rate		96.0	%		97.4	%		96.3	%		97.8	%

All Other - Private Assets
New recurring subscription sales	$	4,788		$	5,218		$	14,746		$	16,490
Subscription cancellations		(3,153	)		(1,744	)		(8,634	)		(5,080	)
Net new recurring subscription sales	$	1,635		$	3,474		$	6,112		$	11,410
Non-recurring sales	$	262		$	83		$	1,069		$	690
Total gross sales	$	5,050		$	5,301		$	15,815		$	17,180
Total All Other - Private Assets net sales	$	1,897		$	3,557		$	7,181		$	12,100

	Three Months Ended													Nine Months Ended
		Sep. 30,			Dec. 31,		Mar. 31,		June 30,		Sep. 30,			Sep. 30,			Sep. 30,
In billions		2022			2022		2023		2023		2023			2022			2023
Beginning Period AUM in ETFs linked to		$	1,189.5		$	1,081.2	$	1,222.9	$	1,305.4	$	1,372.5		$	1,451.6		$	1,222.9
MSCI equity indexes
Market Appreciation/(Depreciation)			(105.7	)		118.8		75.1		48.4		(56.1	)		(402.7	)		67.4
Cash Inflows			(2.6	)		22.9		7.4		18.7		6.4			32.3			32.5
Period-End AUM in ETFs linked to
MSCI equity indexes		$	1,081.2		$	1,222.9	$	1,305.4	$	1,372.5	$	1,322.8		$	1,081.2		$	1,322.8

Period Average AUM in ETFs linked to
MSCI equity indexes		$	1,208.9		$	1,182.1	$	1,287.5	$	1,333.8	$	1,376.5		$	1,295.6		$	1,332.6

Period-End Basis Point Fee(3)			2.52			2.54		2.53		2.52		2.51			2.52			2.51

^{(1) The historical values of the AUM in ETFs linked to our equity indexes as of the last day of the month and the monthly average balance can be found under the link “AUM in ETFs Linked to MSCI Equity Indexes” on our Investor Relations homepage at http://ir.msci.com. Information contained on our website is not incorporated by reference into this Press Release or any other report filed with the SEC. The AUM in ETFs also includes AUM in Exchange Traded Notes, the value of which is less than 1% of the AUM amounts presented.}
^{(2) The value of AUM in ETFs linked to MSCI equity indexes is calculated by multiplying the equity ETFs net asset value by the number of shares outstanding.}
^{(3) Based on period-end Run Rate for ETFs linked to MSCI equity indexes using period-end AUM.}