It has been about a month since the last earnings report for MSCI (MSCI Quick QuoteMSCI - Free Report) . Shares have lost about 1.6% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MSCI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

MSCI Q4 Earnings Beat Estimates, Revenues Up Y/Y

MSCI’s fourth-quarter 2024 adjusted earnings of $4.18 per share beat the Zacks Consensus Estimate by 5.56% and increased 13.6% year over year.

MSCI’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, which is commendable.

Revenues increased 7.7% year over year to $743.5 million, missing the consensus mark by 0.13%. Organic revenues rose 7.4% year over year.

Recurring subscriptions of $543.3 million increased 7.5% year over year and contributed 73.1% to revenues. 

Asset-based fees of $175.3 million jumped 20.8% year over year and contributed 23.6% to revenues. 

Non-recurring revenues of $24.9 million decreased 37.2% year over year and contributed 3.3% to revenues. 

At the end of the reported quarter, average assets under management were $1.725 trillion in ETFs linked to MSCI indexes. 

The total retention rate was 93.1% in the quarter under review.

MSCI’s Top-Line Details

In the fourth quarter, Index revenues of $420.1 million increased 8.3% year over year. 

Recurring subscriptions and asset-based fees rose 8.4% and 20.8% on a year-over-year basis, respectively. However, non-recurring revenues declined 48.9% year over year. Organically, Index operating revenue growth was 8.3%.

The uptick in recurring subscription revenues was driven by strong growth from market-cap-weighted Index products and ETFs linked to MSCI equity indexes.

Analytics operating revenues of $172.8 million increased 4.9% year over year. Organically, Analytics’ operating revenue growth was 4.8%.

Recurring subscriptions and non-recurring revenues jumped 4.9% and 5.3% on a year-over-year basis, respectively.

ESG and Climate segment’s operating revenues were $85.2 million, rising 11.8% year over year. Organically, ESG and Climate operating revenue growth was 9%. 

Recurring subscriptions and non-recurring revenues increased 10.8% and 64.1% on a year-over-year basis, respectively.

All Other – Private Assets operating revenues, which primarily comprise the Real Assets operating segment and the Private Capital Solutions (formerly known as Burgiss), were $65.3 million, up 6.9% year over year. Organic operating revenue growth for All Other – Private Assets was 6.7%.

MSCI’s Operating Details

Adjusted EBITDA increased 9.1% year over year to $452.2 million in the reported quarter. Adjusted EBITDA margin in the fourth quarter of 2024 was 60.8% compared with 60.1% in the fourth quarter of 2023.

Total operating expenses increased 5.9% on a year-over-year basis to $338.3 million. 

Adjusted EBITDA expenses were $291.3 million, up 5.7% year over year, reflecting higher compensation and incentive compensation expenses related to higher headcount.

Operating income improved 9.3% year over year to $405.2 million. The operating margin expanded 80 bps on a year-over-year basis to 54.5%.

MSCI’s Balance Sheet & Cash Flow

Total cash and cash equivalents, as of Dec. 31, 2024, were $409.3 million compared with $501 million as of Sept. 30, 2024.

Total debt was $4.5 billion as of Dec. 31, unchanged sequentially. The total debt-to-adjusted EBITDA ratio (based on trailing 12-month-adjusted EBITDA) was 2.6 times, lower than management’s target range of 3-3.5 times.

As of Dec. 31, 2024, free cash flow was $394.7 million, up 7.5% year over year compared with $394 million as of Sept. 30, 2024.

MSCI had $1.5 billion outstanding under its share-repurchase authorization as of Jan. 28, 2025. 

It paid out dividends worth $124.8 million in the fourth quarter.

MSCI’s 2025 Guidance

For 2025, MSCI expects total operating expenses in the range of $1.405-$1.445 billion. 

Adjusted EBITDA expenses are expected to be between $1.220 billion and $1.250 billion.

Interest expenses are expected to be between $182 million and $186 million.

Net cash provided by operating activities and free cash flow is expected to be in the $1.52-$1.57 billion band and the $1.400-$1.460 billion range, respectively.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, MSCI has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MSCI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.