MSCI’s (MSCI Quick QuoteMSCI - Free Report) first-quarter 2025 adjusted earnings of $4 per share beat the Zacks Consensus Estimate by 3.36% and increased 13.6% year over year.

MSCI's revenues rose 9.7% year over year to $745.8 million, surpassing the consensus estimate by 0.66%, driven by strong growth in recurring subscription revenues and asset-based fees. Organic operating revenues grew 9.9% year over year.

Recurring subscriptions of $552.6 million increased 7.7% year over year and contributed 74.1% to revenues. Asset-based fees of $177.4 million jumped 18.1% year over year and contributed 23.8% to revenues. Non-recurring revenues of $15.8 million decreased 5.3% year over year and contributed 2.1% to revenues.

At the end of the reported quarter, average assets under management were $1.783 trillion in ETFs linked to MSCI equity indexes. The total retention rate was 95.3% in the quarter under review.

MSCI reported solid growth in the first quarter of 2025, with notable increases in revenues and earnings. However, despite the strong quarterly results, MSCI shares fell 0.84% in the pre-market trading on April 22.

MSCI’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the earnings surprise being 3.13%, on average. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

MSCI’s Top-Line Details

In first-quarter 2025, Index revenues of $421.7 million increased 12.8% year over year. Recurring subscriptions and asset-based fees rose 9.6% and 18.1% on a year-over-year basis, respectively. Non-recurring revenues grew 3.2% year over year. Organically, Index operating revenue growth was 12.8%.

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 $172.2 million increased 5% year over year. Recurring subscription revenues jumped 5.7%. However, non-recurring revenues declined 28.8% on a year-over-year basis. Organically, Analytics’ operating revenue growth was 5.2%.

The Sustainability and Climate segment’s (previously titled "ESG and Climate") operating revenues were $84.6 million, rising 8.6% year over year. Recurring subscriptions and non-recurring revenues increased 8.3% and 28.4% on a year-over-year basis, respectively. Organically, Sustainability and Climate operating revenue growth was 9.2%. 

All Other – Private Assets operating revenues, which primarily comprise the Real Assets operating segment and the Private Capital Solutions (formerly known as Burgiss), were $67.3 million, up 4.7% year over year. Organic operating revenue growth for All Other – Private Assets was 5.2%.

MSCI’s Q1 Operating Details

Adjusted EBITDA increased 11% year over year to $425.6 million in the reported quarter. The adjusted EBITDA margin in the first quarter of 2025 was 57.1% compared with 56.4% in the first quarter of 2024.

Adjusted EBITDA expenses were $320.2 million, up 8% year over year, reflecting higher compensation and benefits costs due to higher headcount, as well as elevated severance costs.

Total operating expenses increased 8.3% on a year-over-year basis to $368.8 million due to higher compensation costs from a 5.6% increase in headcount.

Operating income improved 11.1% year over year to $377 million. The operating margin expanded 60 bps on a year-over-year basis to 50.6%.

MSCI’s Balance Sheet & Cash Flow

Total cash and cash equivalents, as of March 31, 2025, were $360.7 million compared with $409.4 million as of Dec. 31, 2024.

Total debt was $4.6 billion as of March 31, 2025, compared with $4.5 billion as of Dec. 31, 2024. The total debt-to-adjusted EBITDA ratio (based on trailing 12-month-adjusted EBITDA) was 2.6 times, lower than management’s target of 3-3.5 times.

As of March 31, 2025, the free cash flow was $268.9 million, down 2.5% year over year from $394.7 million as of Dec. 31, 2024.

MSCI had $1.3 billion outstanding under its share-repurchase authorization as of April 21, 2025.

The company paid out dividends worth $139.7 million in the first quarter of 2025.

MSCI Maintains 2025 Guidance

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

Adjusted EBITDA expenses are anticipated between $1.220 billion and $1.250 billion.

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

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

Zacks Rank & Stocks to Consider

MSCI currently carries Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Finance sector include Apollo Commercial Real Estate Finance (ARI Quick QuoteARI - Free Report) , Barclays (BCS Quick QuoteBCS - Free Report) and Cousins Properties (CUZ Quick QuoteCUZ - Free Report) . Apollo Commercial Real Estate Finance sports a Zacks Rank #1 (Strong Buy), and Barclays and Cousins Properties carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rates for ARI, BCS and CUZ are pegged at 39.57%, 18.17% and 3.69%, respectively.