We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
MSCI Inc.’s (MSCI - Free Report) second-quarter 2020 adjusted earnings of $1.77 per share beat the Zacks Consensus Estimate by 4.1% and also increased 14.9% from the year-ago quarter.
Operating revenues improved 6.2% year over year to $409.6 million but lagged the consensus mark by 0.6%. This year-over-year growth was driven by a 7.2% and 0.4% rise in recurring subscriptions (75.7% of revenues) and asset-based fees (21.5% of revenues), respectively.
Non-recurring revenues (2.8% of revenues) surged 34.4% year over year to $11.7 million.
At the end of the quarter, average assets under management were $825.4 billion in ETFs linked to MSCI indexes. Total retention rate was 93.5% in the quarter under review.
In the second quarter, Index operating revenues (59.3% of operating revenues) improved 7.7% year over year to $242.9 million, primarily driven by growth in recurring subscriptions (up 10%) and asset-based fees (up 0.4%).
Higher recurring subscriptions were driven by growth in core products as well as factor and ESG/Climate index products.
Index net new recurring subscription sales decreased 19.3%.
Analytics Revenue Details
Analytics operating revenues (31.1% of operating revenues) improved 3.1% year over year to $127.6 million. While recurring subscription revenues increased 3.7%, non-recurring revenues were down 30.7%.
Analytics net new recurring subscription sales plunged 32.6%.
All Other Segment Revenue Details
All Other operating revenues (9.6% of operating revenues) rose 7.8% from the year-ago quarter to $39.1 million, primarily driven by recurring subscriptions (up 8.5%).
All Other organic operating revenue growth was 9.2% with ESG organic operating revenues increasing 23%. However, Real Estate organic operating revenues declined 10.7% in the reported quarter.
All Other net new recurring subscription sales surged 65.3% year over year.
Operating Details
Adjusted EBITDA grew 11.8% year over year to $236.7 million in the reported quarter. Moreover, adjusted EBITDA margin expanded 290 basis points (bps) on a year-over-year basis to 57.8%.
Total operating expenses increased 0.7% on a year-over-year basis at $194.4 million, primarily due to higher compensation and benefit costs.
Research & development and selling & marketing expenses fell 5.1% and 0.1% respectively. However, general & administrative expenses rose 7.3% year over year.
Operating income improved 11.9% from the year-ago quarter to $215.2 million. Operating margin expanded 260 bps to 52.5%.
Balance Sheet & Cash Flow
Total cash and cash equivalents as of Jun 30, 2020 were $1.38 billion compared with $1.07billion as of Mar 31, 2020.
Total debt was $3.4 billion as of Jun 30 compared with $3.2 billion as of Mar 31. Total debt to adjusted EBITDA ratio (based on trailing twelve-month-adjusted EBITDA) was 3.7, higher than management’s target range of 3-3.5.
Net cash provided by operating activities was $262.6 million in the second quarter, up 38.6% year over year. Free cash flow was $251.1 million, up 41.8% year over year.
In second quarter, MSCI repurchased 0.1 million shares for a total value of $31.1 million. Notably, $1.1 billion is outstanding under the share repurchase authorization as of Jul 28, 2020.
MSCI also paid out dividends worth $56.9 million in the second quarter.
Guidance
For 2020, MSCI still expects total operating expenses of $790-$840 million. Adjusted EBITDA expenses are expected between $700 million and $750 million.
Capex is expected to be $50-$60 million.
Moreover, net cash provided by operating activities and free cash flow are expected to be in the upper end of the previously provided guidance ranges of $600-$650 million and $540-$600 million, respectively.
A10 Networks is set to release quarterly results on Jul 28. Both Dropbox and Everbridge are scheduled to report earnings on Aug 6.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
MSCI Q2 Earnings Beat, Recurring Subscription Revenues Rise
MSCI Inc.’s (MSCI - Free Report) second-quarter 2020 adjusted earnings of $1.77 per share beat the Zacks Consensus Estimate by 4.1% and also increased 14.9% from the year-ago quarter.
Operating revenues improved 6.2% year over year to $409.6 million but lagged the consensus mark by 0.6%. This year-over-year growth was driven by a 7.2% and 0.4% rise in recurring subscriptions (75.7% of revenues) and asset-based fees (21.5% of revenues), respectively.
Non-recurring revenues (2.8% of revenues) surged 34.4% year over year to $11.7 million.
At the end of the quarter, average assets under management were $825.4 billion in ETFs linked to MSCI indexes. Total retention rate was 93.5% in the quarter under review.
MSCI Inc Price, Consensus and EPS Surprise
MSCI Inc price-consensus-eps-surprise-chart | MSCI Inc Quote
Index Revenue Details
In the second quarter, Index operating revenues (59.3% of operating revenues) improved 7.7% year over year to $242.9 million, primarily driven by growth in recurring subscriptions (up 10%) and asset-based fees (up 0.4%).
Higher recurring subscriptions were driven by growth in core products as well as factor and ESG/Climate index products.
Index net new recurring subscription sales decreased 19.3%.
Analytics Revenue Details
Analytics operating revenues (31.1% of operating revenues) improved 3.1% year over year to $127.6 million. While recurring subscription revenues increased 3.7%, non-recurring revenues were down 30.7%.
Analytics net new recurring subscription sales plunged 32.6%.
All Other Segment Revenue Details
All Other operating revenues (9.6% of operating revenues) rose 7.8% from the year-ago quarter to $39.1 million, primarily driven by recurring subscriptions (up 8.5%).
All Other organic operating revenue growth was 9.2% with ESG organic operating revenues increasing 23%. However, Real Estate organic operating revenues declined 10.7% in the reported quarter.
All Other net new recurring subscription sales surged 65.3% year over year.
Operating Details
Adjusted EBITDA grew 11.8% year over year to $236.7 million in the reported quarter. Moreover, adjusted EBITDA margin expanded 290 basis points (bps) on a year-over-year basis to 57.8%.
Total operating expenses increased 0.7% on a year-over-year basis at $194.4 million, primarily due to higher compensation and benefit costs.
Research & development and selling & marketing expenses fell 5.1% and 0.1% respectively. However, general & administrative expenses rose 7.3% year over year.
Operating income improved 11.9% from the year-ago quarter to $215.2 million. Operating margin expanded 260 bps to 52.5%.
Balance Sheet & Cash Flow
Total cash and cash equivalents as of Jun 30, 2020 were $1.38 billion compared with $1.07billion as of Mar 31, 2020.
Total debt was $3.4 billion as of Jun 30 compared with $3.2 billion as of Mar 31. Total debt to adjusted EBITDA ratio (based on trailing twelve-month-adjusted EBITDA) was 3.7, higher than management’s target range of 3-3.5.
Net cash provided by operating activities was $262.6 million in the second quarter, up 38.6% year over year. Free cash flow was $251.1 million, up 41.8% year over year.
In second quarter, MSCI repurchased 0.1 million shares for a total value of $31.1 million. Notably, $1.1 billion is outstanding under the share repurchase authorization as of Jul 28, 2020.
MSCI also paid out dividends worth $56.9 million in the second quarter.
Guidance
For 2020, MSCI still expects total operating expenses of $790-$840 million. Adjusted EBITDA expenses are expected between $700 million and $750 million.
Capex is expected to be $50-$60 million.
Moreover, net cash provided by operating activities and free cash flow are expected to be in the upper end of the previously provided guidance ranges of $600-$650 million and $540-$600 million, respectively.
Zacks Rank & Other Stocks to Consider
Currently, MSCI has a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader technology sector are A10 Networks (ATEN - Free Report) , Dropbox (DBX - Free Report) and Everbridge (EVBG - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
A10 Networks is set to release quarterly results on Jul 28. Both Dropbox and Everbridge are scheduled to report earnings on Aug 6.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>