MSCI Touts Strong Subscription Growth, CEO Says Q3's Recurring Sales Were 'Best-Ever'

MSCI Inc (NYSE: MSCI) reported fiscal 2024 third-quarter revenue growth of 15.9% year-on-year to $724.7 million, beating the analyst consensus estimate of $715.7 million. 

The adjusted EPS of $3.86 beat the analyst consensus estimate of $3.77.

The total run rate on Sept. 30, 2024, rose 17.3% Y/Y to $2.89 billion. 

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The organic recurring subscription run rate growth was 8%. The retention rate was 94.2% compared to 95.4% last year.

The investment research firm's index operating revenues rose 11.8% year over year to $404.9 million, aided by higher recurring subscription revenues and asset-based fees.

Analytics operating revenues increased 11.7% Y/Y to $172.4 million, driven by higher recurring subscription revenues from Equity and Multi-Asset Class Analytics products.

ESG and Climate operating revenues grew 14.5% year over year to $83.6 million, driven by solid growth in Ratings, Screening, and Climate products.

All Other – Private Assets operating revenues improved 77.2% Y/Y to $63.8 million.

Margin: The operating margin declined from 56.5% to 55.4%. The adjusted EBITDA margin improved from 61.8% to 62.2%.

MSCI generated $394 million in free cash flow and held $501 million in cash and equivalents as of Sept. 30, 2024.

Dividend: The board declared a dividend per share of $1.60 for the fourth quarter.

“Among other achievements, we posted our best-ever Q3 for recurring sales in Index and Analytics, along with nearly 20% growth in asset-based-fee revenue, which was driven by record AUM balances in financial products linked to our indexes,” said Henry A. Fernandez, Chairman and CEO of MSCI.

FY24 Outlook: MSCI reiterated operating expense of $1.305 billion– $1.345 billion, capex of $105–$115 million (prior $95 million–$105 million), and free cash flow of $1.305 billion–$1.365 billion ($1.225 billion–$1.285 billion).

Price Action: MSCI stock closed higher by 1.11% at $595.27 at Monday.

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