News

MSCI Inc.'s MSCI first-quarter 2024 adjusted earnings of $3.52 per share beat the Zacks Consensus Estimate by 2.33% and increased 12.1% year over year.

Revenues increased 14.8% year over year to $680 million but missed the consensus mark by 0.38%. Organic revenues increased 10.3% year over year.

Recurring subscriptions of $513.1 million increased 15.2% year over year and accounted for 75% of revenues.

Asset-based fees of $150.3 million increased 12.9% year over year and contributed 21% of revenues.

Non-recurring revenues of $16.7 million surged 20.3% year over year and contributed 2% of revenues.

MSCI Inc Price, Consensus and EPS Surprise

At the end of the reported quarter, average assets under management (AUM) were $1.582 trillion in ETFs linked to MSCI indexes.

The total retention rate was 92.8% in the quarter under review.

Top-Line Details

In the first quarter, Index revenues of $374 million missed the Zacks Consensus Estimate by 6.3% and increased 10.2% year over year. Recurring subscriptions, asset-based fees and non-recurring revenues increased 8.3%, 12.9% and 11.3% 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 70% 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.

Analytics operating revenues of $164 million beat the consensus mark by 3.3% and increased 11.5% year over year. Organically, Analytics’ operating revenue growth was 11.9%.

Recurring subscriptions and non-recurring revenues increased 11.1% and 33% on a year-over-year basis, respectively.

ESG and Climate segment’s operating revenues of $78 million lagged the consensus mark by 2.67% but increased 16.1% year over year. Organic operating revenue growth was 11%.

Recurring subscriptions and non-recurring revenues increased 16.3% and 10.6% 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 $64.2 million, up 66% year over year. The figure missed the consensus mark by 1.37%.

Operating Details

Adjusted EBITDA increased 11.3% year over year to $383.6 million in the reported quarter. Adjusted EBITDA margin contracted 180 basis points (bps) on a year-over-year basis to 56.4%.

Total operating expenses increased 22.7% on a year-over-year basis to $340.6 million.

Adjusted EBITDA expenses were $296.6 million, up 19.8%, primarily reflecting higher compensation and incentive compensation expenses related to higher headcount.

Operating income improved 7.9% year over year to $339.4 million. The operating margin contracted 320 bps on a year-over-year basis to 49.9%.

Balance Sheet & Cash Flow

Total cash and cash equivalents, as of Mar 31, 2024, were $519.3 million compared with $461.7 million as of Dec 31, 2023.

Total debt was $4.5 billion as of Mar 31, unchanged sequentially. The total debt-to-adjusted EBITDA ratio (based on trailing twelve-month-adjusted EBITDA) was 3.9 times, higher than the management’s target range of 3-3.5 times.

Free cash flow was $276 million, up 13.7% year over year.

MSCI had $0.8 billion outstanding under its share-repurchase authorization as of Apr 22, 2024.

It paid out dividends worth $126.8 million in the first quarter.

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 & Stocks to Consider

Currently, MSCI carries a Zacks Rank #3 (Hold).

MSCI shares have underperformed the Zacks Computer & Technology sector year to date. While MSCI shares have declined 15.5%, the Computer & Technology sector has increased 37.4%.

Opera OPRA, Perfect PERF and Pinterest PINS are some better-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.

Opera shares have gained 32.7% year to date. OPRA is set to report its first-quarter 2024 results on Apr 25.

Perfect shares have declined 60.3% year to date. PERF is set to report its first-quarter 2024 results on Apr 24.

Pinterest shares have gained 19.6% year to date. PINS is set to report its first-quarter 2024 results on Apr 30.

Top 5 Dividend Stocks for Your Retirement

Zacks targets 5 well-established companies with solid fundamentals and a history of raising dividends. More importantly, they have the resources and will to likely pay them in the future.

Click now for a Special Report packed with unconventional wisdom and insights you simply won’t get from your neighborhood financial planner.

See our Top 5 now – the report is FREE >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.