01—Abstract
Summary
Summary of the 10-Q filed July 23, 2024. Cited figures are marked; the original filing is the authoritative source.
MSCI Inc. reported operating revenues of $707.9 milliona for the three months ended June 30, 2024, up 14.0% from $621.2 million a year earlier, and $1,387.9 million for the six months, up 14.4%.
Net income rose 8.1% to $266.8 millionb for the quarter and 7.7% to $522.7 million for the half-year. Diluted EPS was $3.37 for the quarter, compared with $3.09 in the prior-year quarter. Growth was driven by recurring subscriptions and asset-based fees, with the Burgiss acquisition (completed October 2, 2023) contributing $26.8 million of revenue in the quarter.
Adjusted EBITDA was $430.0 millionc for the quarter, up 14.0%, with Adjusted EBITDA margin of 60.7%, flat year over year. Total Run Rate reached $2.81 billion at June 30, 2024, up 14.6% from a year earlier, and total net sales for the six months were $118.7 million, down 9.5%. Operating expenses grew 18.2% in the quarter, led by a 36.3% increase in R&D and a 55.9% increase in amortization of intangible assets, as headcount rose to 6,059 employees.
Operating cash flow for the six months was $649.4 milliond, versus $555.9 million a year earlier. The company repurchased $241.5 million of stock in the first half and declared a $1.60 quarterly dividend, and it had $604.2 million of repurchase authorization remaining. Total debt was $4.51 billion carrying value, and the Consolidated Leverage Ratio was 2.49:1.00 against a covenant maximum of 4.25:1.00.
02—Key points
Key Highlights
- Operating revenues of $707.9 million in Q2 2024, up 14.0% year over year; recurring subscriptions rose 14.4% and asset-based fees rose 18.2% for the quarter.
- Net income of $266.8 million in Q2 2024, up 8.1%; diluted EPS of $3.37 versus $3.09 a year earlier.
- Adjusted EBITDA of $430.0 million in Q2 2024, up 14.0%, with Adjusted EBITDA margin of 60.7%, unchanged from the prior-year quarter.
- Total Run Rate of $2.81 billion as of June 30, 2024, up 14.6%; the All Other - Private Assets segment's Run Rate grew 73.0%, including $105.6 million from Burgiss.
- Operating expenses rose 18.2% in Q2 2024, driven by compensation growth tied to headcount (6,059 employees, up 21.7%), R&D up 36.3%, and amortization of intangibles up 55.9%.
- Operating cash flow of $649.4 million for the six months ended June 30, 2024, up from $555.9 million; the company repurchased $241.5 million of stock and paid $258.2 million in dividends.
- Total debt of $4.51 billion carrying value; Consolidated Leverage Ratio of 2.49:1.00 versus a 4.25:1.00 maximum and Consolidated Interest Coverage Ratio of 9.45:1.00 versus a 4.00:1.00 minimum.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 23, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $707.95M$621.16M | +14.0% |
| R&D Expenses | $41.07M$30.14M | +36.3% |
| Operating Expenses | $325.34M$275.20M | +18.2% |
| Operating Income | $382.61M$345.95M | +10.6% |
| Net Income | $266.76M$246.82M | +8.1% |
| EPS (Basic) | $3.37$3.10 | +8.7% |
| EPS (Diluted) | $3.37$3.09 | +9.1% |
| Shares Outstanding (Basic) | 79.08M79.59M | −0.6% |
| Shares Outstanding (Diluted) | 79.25M79.91M | −0.8% |
05—Questions
Frequently Asked Questions
How did MSCI's revenue and profitability perform in the second quarter of 2024?
Operating revenues were $707.9 million, up 14.0% from $621.2 million, and net income was $266.8 million, up 8.1% from $246.8 million. Diluted EPS was $3.37 versus $3.09. Adjusted EBITDA rose 14.0% to $430.0 million, and Adjusted EBITDA margin was 60.7%, the same as in the prior-year quarter.
What drove the growth in revenue?
Recurring subscriptions rose 14.4% to $521.5 million in the quarter, led by All Other - Private Assets, which grew 71.8% and included $26.8 million of Burgiss revenue. Asset-based fees rose 18.2%, mainly from ETFs and non-ETF funds linked to MSCI equity indexes, as average AUM increased. Non-recurring revenues fell 15.0% because the prior-year quarter included one-time fees for unlicensed content usage.
Why did operating expenses increase faster than revenue?
Total operating expenses rose 18.2% to $325.3 million. The filing attributes the increase mainly to compensation and benefits, which rose 15.2%, driven by headcount growth. R&D expenses rose 36.3%, and amortization of intangible assets rose 55.9%, primarily from recent acquisitions and higher amortization of internal-use software. G&A increased 11.4%, reflecting acquisition-related transaction and integration costs.
How is the company managing its capital and debt?
During the six months ended June 30, 2024, MSCI repurchased $241.5 million of stock on the open market and paid $258.2 million in dividends, with $604.2 million of repurchase authorization remaining. In January 2024 it entered into a Second Amended and Restated Credit Agreement with a $1,250.0 million revolving facility, and it drew $336.9 million to repay Tranche A Term Loans. Senior Notes outstanding total $4,200.0 million. The company declared a $1.60 quarterly dividend on July 22, 2024, and reported a Consolidated Leverage Ratio of 2.49:1.00 at June 30, 2024.
What were the main acquisitions during the period, and what are their effects?
The Burgiss step acquisition, completed October 2, 2023 for $696.8 million in cash, contributed $26.8 million of revenue in the quarter and $51.0 million in the six months. Trove (November 1, 2023), Fabric (January 2, 2024) and Foxberry (April 16, 2024) were also acquired, with aggregate purchase prices of $37.5 million, $16.1 million and $42.6 million, respectively. Goodwill rose to $2.91 billion at June 30, 2024, and intangible assets, net, were $949.2 million.
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