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) fourth-quarter 2023 adjusted earnings of $3.68 per share beat the Zacks Consensus Estimate by 11.85% and jumped 29.6% year over year.
Revenues increased 19.8% year over year to $690.1 million and beat the consensus mark by 5.04%. Organic revenues increased 14.7% year over year.
Recurring subscriptions of $505.4 million increased 16.8% year over year and accounted for 73.2% of revenues.
Asset-based fees of $145.1 million increased 15.9% year over year and contributed 21% of revenues.
Non-recurring revenues of $39.6 million surged 114.4% year over year and contributed 5.7% of revenues.
At the end of the reported quarter, average assets under management (AUM) were $1.468 trillion in ETFs linked to MSCI indexes.
The total retention rate was 93.6% in the quarter under review.
Top-Line Details
In the fourth quarter, Index revenues of $388 million beat the Zacks Consensus Estimate by 6.43% and increased 17.8% year over year. Recurring subscriptions, asset-based fees and non-recurring revenues increased 10.9%, 15.9% and 128.5% on a year-over-year basis, respectively.
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.
Analytics operating revenues of $164.7 million beat the consensus mark by 3.71%, and increased 10% year over year. Excluding the impact of foreign currency exchange rate fluctuations, Analytics’ operating revenue growth was 10.2%.
Recurring subscriptions and non-recurring revenues increased 8.9% and 71.5% on a year-over-year basis, respectively.
The increase in Analytics revenues 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.
ESG and Climate segment’s operating revenues of $76.3 million lagged the consensus mark by 1.16% but increased 20% year over year. Excluding the impact of foreign currency exchange rate fluctuations and the Trove acquisition, ESG and Climate operating revenue growth was 14.5%. Trove contributed $0.8 million of revenues in the reported quarter.
Recurring subscriptions and non-recurring revenues increased 20.3% and 4.7% on a year-over-year basis, respectively.
The increase was primarily driven by strong growth from recurring subscriptions related to Ratings, Climate and Screening products.
All Other – Private Assets operating revenues, which primarily comprise the Real Assets operating segment and the Private Capital Solutions (formerly known as Burgiss), were $61.1 million, up 81.5% year over year. The figure beat the consensus mark by 9.02%.
Operating Details
Adjusted EBITDA increased 22.3% year over year to $414.6 million in the reported quarter. Adjusted EBITDA margin expanded 130 basis points (bps) on a year-over-year basis to 60.1%.
Total operating expenses increased 19.4% on a year-over-year basis to $319.4 million.
Adjusted EBITDA expenses were $75.5 million, up 16.1%, primarily reflecting higher compensation and incentive compensation expenses related to higher headcount.
Operating income improved 20.1% year over year to $370.7 million. The operating margin expanded 10 bps on a year-over-year basis to 53.7%.
Balance Sheet & Cash Flow
Total cash and cash equivalents, as of Dec 31, 2023, were $461.7 million compared with $928.6 million as of Sep 30, 2023.
Total debt was $4.5 billion as of Dec 31, unchanged sequentially. The total debt-to-adjusted EBITDA ratio (based on trailing twelve-month-adjusted EBITDA) was 3 times, within the management’s target range of 3-3.5 times.
Free cash flow was $367.1 million, up 24.5% year over year.
MSCI had $0.8 billion outstanding under its share-repurchase authorization as of Jan 29, 2024.
It paid out dividends worth $109.2 million in the fourth quarter. MSCI increased dividend payout by 15.9% to $1.60 per share for the first quarter of 2024.
Guidance
For 2024, MSCI expects total operating expenses in the range of $1.300-$1.340 billion.
Adjusted EBITDA expenses are expected between $1.130 billion and $1.160 billion.
Interest expenses are expected between $185 million and $189 million.
Net cash provided by operating activities and free cash flow is expected to be $1.33-$1.38 billion and $1.225-$1.285 billion, respectively.
Zacks Rank & Other Stocks to Consider
Currently, MSCI carries a Zacks Rank #2 (Buy).
MSCI shares have underperformed the Zacks Computer & Technology sector in the past six-month period. While MSCI shares have gained 0.5%, the Computer & Technology sector increased 12%.
Image: Bigstock
MSCI Q4 Earnings Beat, Recurring Subscriptions Rise Y/Y
MSCI Inc.'s (MSCI - Free Report) fourth-quarter 2023 adjusted earnings of $3.68 per share beat the Zacks Consensus Estimate by 11.85% and jumped 29.6% year over year.
Revenues increased 19.8% year over year to $690.1 million and beat the consensus mark by 5.04%. Organic revenues increased 14.7% year over year.
Recurring subscriptions of $505.4 million increased 16.8% year over year and accounted for 73.2% of revenues.
Asset-based fees of $145.1 million increased 15.9% year over year and contributed 21% of revenues.
Non-recurring revenues of $39.6 million surged 114.4% year over year and contributed 5.7% of revenues.
MSCI Inc Price, Consensus and EPS Surprise
MSCI Inc price-consensus-eps-surprise-chart | MSCI Inc Quote
At the end of the reported quarter, average assets under management (AUM) were $1.468 trillion in ETFs linked to MSCI indexes.
The total retention rate was 93.6% in the quarter under review.
Top-Line Details
In the fourth quarter, Index revenues of $388 million beat the Zacks Consensus Estimate by 6.43% and increased 17.8% year over year. Recurring subscriptions, asset-based fees and non-recurring revenues increased 10.9%, 15.9% and 128.5% on a year-over-year basis, respectively.
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.
Analytics operating revenues of $164.7 million beat the consensus mark by 3.71%, and increased 10% year over year. Excluding the impact of foreign currency exchange rate fluctuations, Analytics’ operating revenue growth was 10.2%.
Recurring subscriptions and non-recurring revenues increased 8.9% and 71.5% on a year-over-year basis, respectively.
The increase in Analytics revenues 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.
ESG and Climate segment’s operating revenues of $76.3 million lagged the consensus mark by 1.16% but increased 20% year over year. Excluding the impact of foreign currency exchange rate fluctuations and the Trove acquisition, ESG and Climate operating revenue growth was 14.5%. Trove contributed $0.8 million of revenues in the reported quarter.
Recurring subscriptions and non-recurring revenues increased 20.3% and 4.7% on a year-over-year basis, respectively.
The increase was primarily driven by strong growth from recurring subscriptions related to Ratings, Climate and Screening products.
All Other – Private Assets operating revenues, which primarily comprise the Real Assets operating segment and the Private Capital Solutions (formerly known as Burgiss), were $61.1 million, up 81.5% year over year. The figure beat the consensus mark by 9.02%.
Operating Details
Adjusted EBITDA increased 22.3% year over year to $414.6 million in the reported quarter. Adjusted EBITDA margin expanded 130 basis points (bps) on a year-over-year basis to 60.1%.
Total operating expenses increased 19.4% on a year-over-year basis to $319.4 million.
Adjusted EBITDA expenses were $75.5 million, up 16.1%, primarily reflecting higher compensation and incentive compensation expenses related to higher headcount.
Operating income improved 20.1% year over year to $370.7 million. The operating margin expanded 10 bps on a year-over-year basis to 53.7%.
Balance Sheet & Cash Flow
Total cash and cash equivalents, as of Dec 31, 2023, were $461.7 million compared with $928.6 million as of Sep 30, 2023.
Total debt was $4.5 billion as of Dec 31, unchanged sequentially. The total debt-to-adjusted EBITDA ratio (based on trailing twelve-month-adjusted EBITDA) was 3 times, within the management’s target range of 3-3.5 times.
Free cash flow was $367.1 million, up 24.5% year over year.
MSCI had $0.8 billion outstanding under its share-repurchase authorization as of Jan 29, 2024.
It paid out dividends worth $109.2 million in the fourth quarter. MSCI increased dividend payout by 15.9% to $1.60 per share for the first quarter of 2024.
Guidance
For 2024, MSCI expects total operating expenses in the range of $1.300-$1.340 billion.
Adjusted EBITDA expenses are expected between $1.130 billion and $1.160 billion.
Interest expenses are expected between $185 million and $189 million.
Net cash provided by operating activities and free cash flow is expected to be $1.33-$1.38 billion and $1.225-$1.285 billion, respectively.
Zacks Rank & Other Stocks to Consider
Currently, MSCI carries a Zacks Rank #2 (Buy).
MSCI shares have underperformed the Zacks Computer & Technology sector in the past six-month period. While MSCI shares have gained 0.5%, the Computer & Technology sector increased 12%.
Shopify (SHOP - Free Report) , Pinterest (PINS - Free Report) and AvidXchange (AVDX - Free Report) are some other top-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify shares have gained 23.6% in the past six-month period. SHOP is set to report its fourth-quarter 2023 results on Feb 13.
Pinterest shares have gained 35.1% in the past six-month period. PINS is set to report its fourth-quarter 2023 results on Feb 8.
AvidXchange shares have declined 7.8% in the past six-month period. AVDX is set to report its fourth-quarter 2023 results on Feb 28.