01—Abstract
Summary
Summary of the 10-K filed February 9, 2024. Cited figures are marked; the original filing is the authoritative source.
MSCI Inc. reported operating revenues of $2.53 billiona for the year ended December 31, 2023, up 12.5% from $2.25 billion in 2022, with net income of $1.15 billion, up 31.9% from $870.6 million.
Adjusted EBITDA rose 14.5% to $1.52 billionb, and the Adjusted EBITDA margin was 60.2%. Growth was driven by recurring subscriptions, which increased 12.8% to $1.87 billion, and by asset-based fees, which increased 5.6% to $557.5 million. Non-recurring revenues rose 64.3% to $100.1 million, primarily from fees for unlicensed usage of content in historical periods.
The Index segment accounted for 57.4% of revenues, Analytics for 24.4%, ESG and Climate for 11.4%, and All Other – Private Assets for 6.9%. The year was shaped by the October 2, 2023 acquisition of the remaining 66.4% interest in The Burgiss Group for $696.8 millionc in cash, which produced a non-taxable $143.0 million remeasurement gain on the prior 33.6% stake. MSCI also acquired Trove Research Ltd for approximately $37.9 million in cash on November 1, 2023.
Total Run Rate reached $2.69 billiond, up 15.8%, and total gross sales were $386.2 million. BlackRock accounted for 9.8% of consolidated operating revenues, down from 10.3% in 2022. Total debt principal was $4.54 billion at year-end, and the company repurchased $504.2 million of stock in cash terms during 2023, with $845.7 million of authorization remaining.
The company's cash and cash equivalents fell to $461.7 million from $993.6 million, mainly due to the Burgiss acquisition and share repurchases. On January 26, 2024, MSCI entered into a Second Amended and Restated Credit Agreement providing $1.25 billion of revolving commitments, which was drawn to repay the term loans. The Board declared a quarterly dividend of $1.60 per share on January 29, 2024, a 15.9% increase over the prior quarter's dividend.
02—Key points
Key Highlights
- Operating revenues of $2,528.9 million, up 12.5% year over year; net income of $1,148.6 million, up 31.9%.
- Adjusted EBITDA of $1,523.0 million, up 14.5%, with an Adjusted EBITDA margin of 60.2%.
- Recurring subscription revenues of $1,871.3 million (up 12.8%) make up the largest share of revenue; asset-based fees were $557.5 million (up 5.6%).
- Acquired the remaining 66.4% of The Burgiss Group for $696.8 million in cash, producing a non-taxable $143.0 million gain on remeasurement of the prior equity-method stake.
- Total Run Rate increased 15.8% to $2,686.2 million; total gross sales were $386.2 million and net sales were $293.0 million.
- Retention Rate for the year was 94.7%, and total cancellations were $93.2 million.
- Entered a $1,250.0 million revolving credit agreement on January 26, 2024; total debt principal was $4,539.1 million at December 31, 2023.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 9, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $2.53B$2.25B | +12.5% |
| R&D Expenses | $132.12M$107.20M | +23.2% |
| Operating Expenses | $1.14B$1.04B | +9.9% |
| Operating Income | $1.38B$1.21B | +14.7% |
| Interest Expense | $186.68M$171.57M | +8.8% |
| Net Income | $1.15B$870.57M | +31.9% |
| EPS (Basic) | $14.45$10.78 | +34.0% |
| EPS (Diluted) | $14.39$10.72 | +34.2% |
| Shares Outstanding (Basic) | 79.46M80.75M | −1.6% |
| Shares Outstanding (Diluted) | 79.84M81.22M | −1.7% |
05—Questions
Frequently Asked Questions
How much of MSCI's revenue depends on a single client?
BlackRock, the largest client organization by revenue, accounted for 9.8% of consolidated operating revenues in 2023, down from 10.3% in 2022. The filing states that 95.4% of BlackRock-related operating revenues came from fees based on assets in its ETFs and non-ETF products that use MSCI indexes.
What drove the growth in 2023 results?
Operating revenues increased 12.5%, led by recurring subscriptions (up 12.8%) and non-recurring revenues (up 64.3%). ESG and Climate revenues grew 26.0%, and All Other – Private Assets grew 23.1%, partly due to the Burgiss acquisition. Total operating expenses rose 9.9%.
How did the Burgiss acquisition affect the financial statements?
MSCI paid $696.8 million in cash for the remaining 66.4% interest in Burgiss and recorded a non-taxable $143.0 million gain from remeasuring its prior 33.6% stake, which had a fair value of $353.2 million. Burgiss contributed $25.4 million of revenue in 2023, and goodwill from the acquisition was $618.4 million.
What are MSCI's capital return and dividend plans?
MSCI repurchased $504.2 million of stock in cash during 2023 and paid $441.0 million in dividends. As of February 8, 2024, $845.7 million of authorization remained under the share repurchase program. On January 29, 2024, the Board declared a quarterly dividend of $1.60 per share, a 15.9% increase over the prior quarter's dividend.
What is MSCI's debt position?
At December 31, 2023, MSCI had $4,200.0 million of senior unsecured notes and $339.1 million of term loans outstanding. The Consolidated Leverage Ratio was 2.64:1.00 and the Consolidated Interest Coverage Ratio was 8.92:1.00, both within the covenant limits. On January 26, 2024, the company refinanced the term loans through a new $1,250.0 million revolving credit facility that matures in January 2029.
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