01—Abstract
Summary
Summary of the 10-Q filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.
MSCI Inc. reported operating revenues of $679.97 milliona for the three months ended March 31, 2024, up from $592.22 million a year earlier, with net income of $255.95 million (diluted EPS of $3.22, versus $2.97).
Operating income rose to $339.38 millionb from $314.60 million, though operating expenses grew 22.7%, driven by compensation costs, amortization of acquired intangibles and transaction and integration costs tied to the Burgiss step acquisition. Adjusted EBITDA was $383.57 million, up 11.3%, with Adjusted EBITDA margin of 56.4% compared with 58.2% a year earlier. Recurring subscriptions were $513.06 million, up 15.2%, and total Run Rate reached $2.73 billion, up 14.6%.
Net new recurring subscription sales fell to $19.57 millionc from $34.64 million, and subscription cancellations rose to $37.77 million from $21.76 million, with total Retention Rate of 92.8% versus 95.2% a year earlier. The Index segment's Retention Rate was 93.2% compared with 96.4%. On the balance sheet, total assets were $5.48 billion and total long-term debt was $4.51 billion.
The company drew $336.9 milliond on a new $1.25 billion revolving credit facility entered January 26, 2024, which was used to prepay the Tranche A Term Loans. Shareholders' equity was a deficit of $650.5 million. The Board declared a quarterly dividend of $1.60 per share payable May 31, 2024, and $845.7 million of repurchase authorization remained, with no open-market repurchases during the quarter.
02—Key points
Key Highlights
- Operating revenues rose 14.8% to $679.97 million, led by recurring subscriptions (up 15.2%) and asset-based fees (up 12.9%).
- Net income increased 7.2% to $255.95 million; diluted EPS was $3.22 versus $2.97.
- Adjusted EBITDA grew 11.3% to $383.57 million, though Adjusted EBITDA margin declined to 56.4% from 58.2%.
- Total Run Rate reached $2.73 billion, up 14.6%, including a 15.9% increase in asset-based fee Run Rate.
- Net new recurring subscription sales declined 43.5% to $19.57 million, as cancellations rose 73.6% to $37.77 million; Retention Rate fell to 92.8% from 95.2%.
- Total operating expenses rose 22.7%, reflecting compensation growth from headcount, higher amortization of intangibles and Burgiss-related transaction and integration costs.
- Refinanced the credit agreement with a $1.25 billion revolver maturing January 2029; $336.9 million drawn at March 31, 2024, and the Board declared a $1.60 quarterly dividend.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 23, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $679.97M$592.22M | +14.8% |
| R&D Expenses | $40.52M$31.32M | +29.4% |
| Operating Expenses | $340.58M$277.62M | +22.7% |
| Operating Income | $339.38M$314.60M | +7.9% |
| Interest Expense | $46.67M$46.21M | +1.0% |
| Net Income | $255.95M$238.73M | +7.2% |
| EPS (Basic) | $3.23$2.98 | +8.4% |
| EPS (Diluted) | $3.22$2.97 | +8.4% |
| Shares Outstanding (Basic) | 79.19M80.04M | −1.1% |
| Shares Outstanding (Diluted) | 79.51M80.48M | −1.2% |
05—Questions
Frequently Asked Questions
How did MSCI perform financially in the first quarter of 2024?
Operating revenues were $679.97 million, up 14.8% from $592.22 million, and net income was $255.95 million, up 7.2%. Diluted EPS was $3.22 compared with $2.97 a year earlier. Adjusted EBITDA reached $383.57 million, up 11.3%.
Why did profit margins decline despite revenue growth?
Operating expenses rose 22.7%, faster than revenue growth of 14.8%. The filing attributes this to higher compensation from headcount growth, increased amortization of acquired intangibles and capitalized software, and transaction and integration costs related to the Burgiss step acquisition. Operating margin fell to 49.9% from 53.1%, and Adjusted EBITDA margin fell to 56.4% from 58.2%.
What do the subscription sales and retention figures indicate?
New recurring subscription sales were $57.34 million, up 1.7%, but subscription cancellations rose to $37.77 million from $21.76 million. As a result, net new recurring subscription sales fell 43.5% to $19.57 million, and the total Retention Rate declined to 92.8% from 95.2%. The filing notes that Retention Rate is an important metric because cancellations reduce Run Rate and future operating revenues.
What is MSCI's debt and liquidity position?
Total debt principal was $4.54 billion at March 31, 2024, including $4.20 billion of senior unsecured notes and $336.9 million drawn on the revolving credit facility. The Consolidated Leverage Ratio was 2.56:1.00 against a 4.25:1.00 maximum, and the Consolidated Interest Coverage Ratio was 9.16:1.00 against a 4.00:1.00 minimum. Cash and cash equivalents totaled $519.3 million.
What capital return actions did MSCI disclose?
The Board declared a quarterly cash dividend of $1.60 per share, payable May 31, 2024, and dividends declared in the quarter totaled $129.44 million. No shares were repurchased on the open market during the quarter, leaving $845.7 million of authorization under the 2022 Repurchase Program.
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