MSCI CEO Hails Decade of Growth, Record Q4 Earnings Signal Strong Future for Investment Giant

MSCI Inc MSCI reported fourth-quarter FY23 revenue growth of 19.8% year-on-year to $690.11 million, beating the consensus of $662.74 million. The adjusted EPS of $3.68 beat the consensus of $3.29.

The total run-rate at December 31, 2023, rose 15.8% Y/Y to $2.69 billion. The organic recurring subscription run rate growth was 9.9%. The retention rate was 93.6% compared to 93.0% last year.

Index operating revenues of the investment research firm rose 17.8% Y/Y to $388 million, aided by higher recurring subscription revenues and asset-based fees.

Analytics operating revenues increased 10% Y/Y to $164.7 million, driven by higher recurring subscription revenues from Equity and Multi-Asset Class Analytics products.

ESG and Climate operating revenues grew 20% Y/Y to $76.3 million from solid growth from Ratings, Screening, and Climate products.

All Other – Private Assets operating revenues improved 81.5% Y/Y to $61.1 million.

Margin: The operating margin remained flattish at 53.7%. The adjusted EBITDA margin expanded 130 basis points to 60.1%.

MSCI generated $367.1 million in free cash flow and held $461.7 million in cash and equivalents.

“Operationally, we completed our 10th consecutive year of double-digit subscription run-rate growth in Index, while achieving our highest-ever full-year retention rate in Analytics, along with our best quarter and full year on record for recurring sales in Equity Analytics,” said Henry A. Fernandez, Chairman and CEO of MSCI.

Outlook: MSCI expects FY24 operating expense of $1.30 billion – $1.34 billion, capex of $95 million – $105 million, and free cash flow of $1.225 billion – $1.285 billion.

Price Action: MSCI shares traded higher by 8.81% at $599.48 on the last check Tuesday.

Photo by Sharon McCutcheon on Unsplash