MSCI Financial Analysis

Analysis Date: 1/30/2025

Business Model

MSCI generates revenue through recurring subscriptions (73%), asset-based fees (22%), and non-recurring revenue (3%)

Revenue Sources

• Recurring subscription revenues (73% of total revenue)
• Asset-based fees from ETFs, futures & options, and non-ETF products (22% of total revenue)
• Non-recurring revenues (3% of total revenue)

Revenue Distribution by Channel

• Asset Managers: 50% of subscription run rate
• Banks & Trading: 14% of subscription run rate
• Asset Owners & Consultants: 13% of subscription run rate

Income Statement Analysis

• Operating revenues grew 7.7% YoY driven by recurring subscription growth and asset-based fees
• Operating margin improved to 54.5% from 53.7% in Q4 2023
• Net income declined 24.3% YoY due to one-time gain in Q4 2023 from Burgiss investment remeasurement

Balance Sheet Analysis

• Strong balance sheet with $409M cash and equivalents
• Total debt to adjusted EBITDA ratio of 2.6x, below target range of 3.0-3.5x

Cash Flow Analysis

• Strong operating cash flow growth of 10.7% YoY to $431M
• Free cash flow increased 7.5% YoY to $395M

Capital Allocation

MSCI maintains a balanced capital allocation approach with $495M returned to shareholders in Q4 through $370M in share repurchases and $125M in dividends. The company has $1.5B remaining on share repurchase authorization and declared a 12.5% increase in quarterly dividend to $1.80 per share.

Management Commentary

Strong financial metrics demonstrating scale and leadership in servicing global investment ecosystem

Best-ever recurring sales in Index segment

15% fixed income run-rate growth across product lines

15% asset-based fees run-rate growth

Overall Sentiment: Positive and confident in continued growth across market cycles

Recommendation

Rating: Buy

Reason for Rating: Strong business model with diverse revenue streams and high recurring revenue

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/30/2025, 7:46:58 AM