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MSCI Reports Financial Results for Third Quarter and Nine Months 2021

MSCI Inc. (“MSCI” or the “Company”) (NYSE:MSCI), a leading provider of critical decision support tools and services for the global investment community, today announced its financial results for the three months ended September 30, 2021 (“third quarter 2021”) and nine months ended September 30, 2021 (“nine months 2021”).

Financial and Operational Highlights for Third Quarter 2021
(Note: Unless otherwise noted, percentage and other changes are relative to the three months ended September 30, 2020 (“third quarter 2020”) and Run Rate percentage changes are relative to September 30, 2020).

  • Operating revenues of $517.1 million, up 21.6%; Organic operating revenue growth of 20.4%
  • Recurring subscription revenues up 14.2%; Asset-based fees up 41.2%
  • Operating margin of 54.2%; Adjusted EBITDA margin of 59.3%
  • Diluted EPS of $2.03, down 6.0%; Adjusted EPS of $2.53, up 15.0%
  • New recurring subscription sales growth of 27.5%; Organic subscription Run Rate growth of 11.8%; Retention Rate of 94.5%
  • Approximately $85.8 million in dividends were paid to shareholders in third quarter 2021; Cash dividend of $1.04 per share declared by MSCI Board of Directors for fourth quarter 2021

 

 

Three Months Ended

 

 

Nine Months Ended

 

In thousands,

 

Sep. 30,

 

 

Sep. 30,

 

 

 

 

 

 

Sep. 30,

 

 

Sep. 30,

 

 

 

except per share data (unaudited)

 

2021

 

 

2020

 

 

% Change

 

 

2021

 

 

2020

 

 

% Change

 

Operating revenues

 

$

517,099

 

 

$

425,333

 

 

 

21.6

%

 

$

1,493,702

 

 

$

1,251,729

 

 

 

19.3

%

Operating income

 

$

280,230

 

 

$

227,620

 

 

 

23.1

%

 

$

792,138

 

 

$

650,679

 

 

 

21.7

%

Operating margin %

 

 

54.2

%

 

 

53.5

%

 

 

 

 

 

 

53.0

%

 

 

52.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

169,876

 

 

$

182,358

 

 

 

(6.8

%)

 

$

532,118

 

 

$

445,606

 

 

 

19.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

2.03

 

 

$

2.16

 

 

 

(6.0

%)

 

$

6.38

 

 

$

5.26

 

 

 

21.3

%

Adjusted EPS

 

$

2.53

 

 

$

2.20

 

 

 

15.0

%

 

$

7.44

 

 

$

5.87

 

 

 

26.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

306,595

 

 

$

249,447

 

 

 

22.9

%

 

$

878,130

 

 

$

715,374

 

 

 

22.8

%

Adjusted EBITDA margin %

 

 

59.3

%

 

 

58.6

%

 

 

 

 

 

 

58.8

%

 

 

57.2

%

 

 

 

 

“MSCI's third quarter reflected strong performance across the company, resulting in double-digit organic operating revenue growth. We benefited from our targeted investments, which position us very well for the ongoing transformation of the global investment industry,” said Henry A. Fernandez, Chairman and CEO of MSCI.

“Our deep engagement with clients and other capital market participants regarding climate change supports MSCI's continued leadership of the investment industry's critical transition to a net-zero world. We will continue to innovate and invest heavily in order to best serve investors globally,” added Mr. Fernandez.

Third Quarter Consolidated Results

Operating Revenues: Operating revenues were $517.1 million, up 21.6%. Excluding the impact of foreign currency and contributions from Real Capital Analytics, Inc. (“RCA”), operating revenues were up 20.4%. The $91.8 million increase was comprised of $44.5 million in higher recurring subscription revenues and $41.4 million in higher asset-based fees, as well as $5.9 million in higher non-recurring revenues.

Run Rate and Retention Rate: Total Run Rate at September 30, 2021 was $2,096.3 million, up 21.9%. Recurring subscriptions Run Rate increased by $227.7 million and asset-based fees Run Rate increased by $149.0 million. Organic recurring subscriptions Run Rate growth was 11.8%. Retention Rate in third quarter 2021 was 94.5%, unchanged from third quarter 2020.

Expenses: Total operating expenses were $236.9 million, up 19.8%. Adjusted EBITDA expenses were $210.5 million, up 19.7%, primarily reflecting continued investments in the business including increased headcount in product development, research and technology to support growth, as well as higher non-compensation costs in the areas of professional fees, information technology costs and market data costs. During the quarter, total operating expenses associated with RCA were $10.3 million, of which $3.6 million were included in Adjusted EBITDA expenses. Approximately $5.5 million in non-recurring integration and transaction costs related to the acquisition of RCA, and $1.2 million of acquired intangible assets amortization expense related to RCA were excluded from Adjusted EBITDA expenses. Total operating expenses excluding the impact of foreign currency exchange rate fluctuations (“ex-FX”) and adjusted EBITDA expenses ex-FX increased 18.4% and 18.2%, respectively.

Headcount: As of September 30, 2021, headcount was 4,237 employees, with approximately 37% and approximately 63% of employees located in developed market and emerging market locations, respectively.

Other Expense (Income), Net: Other expense (income), net was $79.6 million, up 106.3%, primarily driven by a loss of approximately $37.3 million on debt extinguishment associated with the redemption of the $500.0 million aggregate principal amount of the Company’s 5.375% senior unsecured notes due 2027 (the “2027 Senior Notes Redemption”) in third quarter 2021, which was excluded from adjusted net income and adjusted EPS.

Income Taxes: The effective tax rate was 15.3% in third quarter 2021, compared to 3.5% in third quarter 2020. The increase was primarily due to the absence of the prior year benefits related to the favorable impact of final regulations released during third quarter 2020 clarifying certain provisions of the Tax Cuts and Jobs Act that was enacted on December 22, 2017 (“Tax Reform”). Both periods reflected significant discrete tax benefits, in relation to pretax income, including in third quarter 2021, the tax impact of loss on debt extinguishment recognized in the period, in third quarter 2020, the tax impact related to the revaluation of the cost of deemed repatriation of foreign earnings and in each period, the settlement of prior year items.

Net Income: As a result of the factors described above, net income was $169.9 million, down 6.8%.

Adjusted EBITDA: Adjusted EBITDA was $306.6 million, up 22.9%. Adjusted EBITDA margin was 59.3%, compared to 58.6% in third quarter 2020.

Index Segment:

Table 1A: Results (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$165,310

 

$146,387

 

12.9%

 

$480,488

 

$431,631

 

11.3%

Asset-based fees

 

141,745

 

100,371

 

41.2%

 

404,593

 

288,642

 

40.2%

Non-recurring

 

14,448

 

8,933

 

61.7%

 

34,876

 

27,582

 

26.4%

Total operating revenues

 

321,503

 

255,691

 

25.7%

 

919,957

 

747,855

 

23.0%

Adjusted EBITDA expenses

 

75,916

 

60,971

 

24.5%

 

221,023

 

186,292

 

18.6%

Adjusted EBITDA

 

$245,587

 

$194,720

 

26.1%

 

$698,934

 

$561,563

 

24.5%

Adjusted EBITDA margin %

 

76.4%

 

76.2%

 

 

 

76.0%

 

75.1%

 

 

Index operating revenues were $321.5 million, up 25.7%. The $65.8 million increase was primarily driven by $41.4 million in higher asset-based fees mainly reflecting an increase in revenues from exchange traded funds (“ETFs”) linked to MSCI equity indexes. This increase was in turn driven by a 52.4% increase in average AUM in ETFs linked to MSCI equity indexes, partially offset by a decline in average basis point fees on those AUM. Non-ETF indexed funds linked to MSCI indexes also contributed to the increase in asset-based fees.

Recurring subscription revenues increased by $18.9 million, primarily reflecting strong contributions from market cap-weighted index products and from factor, ESG and climate index products. The $5.5 million increase in non-recurring revenue included client license and usage fees related to prior periods.

Index Run Rate as of September 30, 2021 was $1.2 billion, up 21.7%. The $217.3 million increase was comprised of a $149.0 million increase in asset-based fees Run Rate and a $68.2 million increase in recurring subscription Run Rate. The increase in asset-based fees Run Rate was primarily driven by higher AUM in ETFs linked to MSCI equity indexes and higher AUM in non-ETF indexed funds linked to MSCI indexes. The increase in recurring subscription Run Rate was primarily driven by growth across products, including market cap-weighted index products and strong growth in factor, ESG and climate index products and reflected growth across all regions and all client segments.

Analytics Segment:

Table 1B: Results (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$134,320

 

$126,251

 

6.4%

 

$399,360

 

$376,505

 

6.1%

Non-recurring

 

1,978

 

2,086

 

(5.2%)

 

6,857

 

4,903

 

39.9%

Total operating revenues

 

136,298

 

128,337

 

6.2%

 

406,217

 

381,408

 

6.5%

Adjusted EBITDA expenses

 

86,007

 

83,281

 

3.3%

 

260,381

 

253,868

 

2.6%

Adjusted EBITDA

 

$50,291

 

$45,056

 

11.6%

 

$145,836

 

$127,540

 

14.3%

Adjusted EBITDA margin %

 

36.9%

 

35.1%

 

 

 

35.9%

 

33.4%

 

 

Analytics operating revenues were $136.3 million, up 6.2%. The $8.0 million increase was driven by higher recurring subscription revenues from both Multi-Asset Class and Equity Analytics products.

Analytics Run Rate as of September 30, 2021 was $568.9 million, up 4.5%. The increase of $24.6 million was also driven by growth in both Equity Analytics and Multi-Asset Class products. Analytics organic Run Rate growth was 4.9%.

ESG and Climate Segment:

Table 1C: Results (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$42,592

 

$28,152

 

51.3%

 

$115,299

 

$78,961

 

46.0%

Non-recurring

 

1,099

 

399

 

175.4%

 

2,450

 

1,125

 

117.8%

Total operating revenues

 

43,691

 

28,551

 

53.0%

 

117,749

 

80,086

 

47.0%

Adjusted EBITDA expenses

 

33,871

 

20,893

 

62.1%

 

97,164

 

63,303

 

53.5%

Adjusted EBITDA

 

$9,820

 

$7,658

 

28.2%

 

$20,585

 

$16,783

 

22.7%

Adjusted EBITDA margin %

 

22.5%

 

26.8%

 

 

 

17.5%

 

21.0%

 

 

ESG and Climate operating revenues were $43.7 million, up 53.0%. The $15.1 million increase was primarily driven by strong growth from Ratings, Screening and Climate products. Excluding foreign currency exchange rate fluctuations, ESG and Climate revenue growth was 47.2%.

ESG and Climate Run Rate as of September 30, 2021 was $178.4 million, up 45.9%. The $56.1 million increase primarily reflects strong growth across both Ratings and Climate products with contributions across all regions and client segments. ESG and Climate organic Run Rate growth was 46.3%.

All Other – Private Assets Segment:

Table 1D: Results (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$15,418

 

$12,400

 

24.3%

 

$48,355

 

$40,402

 

19.7%

Non-recurring

 

189

 

354

 

(46.6%)

 

1,424

 

1,978

 

(28.0%)

Total operating revenues

 

15,607

 

12,754

 

22.4%

 

49,779

 

42,380

 

17.5%

Adjusted EBITDA expenses

 

14,710

 

10,741

 

37.0%

 

37,004

 

32,892

 

12.5%

Adjusted EBITDA

 

$897

 

$2,013

 

(55.4%)

 

$12,775

 

$9,488

 

34.6%

Adjusted EBITDA margin %

 

5.7%

 

15.8%

 

 

 

25.7%

 

22.4%

 

 

All Other – Private Assets operating revenues, which reflects the Real Estate operating segment, were $15.6 million, up 22.4%, and included $3.4 million from the acquisition of RCA, which closed on September 13, 2021. Excluding the acquisition of RCA, All Other – Private Assets segment revenues were lower due to lower volume of deliveries to clients in third quarter 2021 as compared to third quarter 2020. Excluding foreign currency exchange rate fluctuations and contributions from RCA, All Other – Private Assets revenue growth decreased 7.6%.

All Other – Private Assets Run Rate, which reflects the Real Estate operating segment, as of September 30, 2021 was $131.7 million, up 148.6%, and included $73.9 million associated with the RCA business. Excluding the acquisition, the increase reflected contributions from both Global Intel and Enterprise Analytics products, as well as strong growth in new sales of Real Estate Climate Value-at-Risk products. All Other – Private Assets organic subscription Run Rate growth was 7.3%.

Select Balance Sheet Items and Capital Allocation

Cash Balances and Outstanding Debt: Cash and cash equivalents was $1.3 billion as of September 30, 2021. This balance reflects the net impact from funding the acquisition of RCA for $948.7 million, receiving the proceeds from the issuance of $700.0 million aggregate principal amount of 3.250% senior unsecured notes due 2033 completed on August 17, 2021, and funding the 2027 Senior Notes Redemption. MSCI typically seeks to maintain minimum cash balances globally of approximately $200.0 million to $250.0 million for general operating purposes.

Total principal amounts of debt outstanding as of September 30, 2021 was $4.2 billion. The total debt to net income ratio (based on trailing twelve months net income) was 6.0x. The total debt to adjusted EBITDA ratio (based on trailing twelve months adjusted EBITDA) was 3.7x.

MSCI seeks to maintain total debt to adjusted EBITDA in a target range of 3.0x to 3.5x.

Capex and Cash Flow: For third quarter 2021, Capex was $14.8 million, cash provided by operating activities increased by 8.1% to $215.9 million due to higher cash collections and free cash flow was $201.1 million, up 6.9%.

Share Count and Share Repurchases: Weighted average diluted shares outstanding were 83.6 million in third quarter 2021, down 1.1% year-over-year. Total shares outstanding as of September 30, 2021 were 82.4 million. A total of $1.6 billion of outstanding share repurchase authorization remains as of October 22, 2021.

Dividends: Approximately $85.8 million in dividends were paid to shareholders in third quarter 2021. On October 25, 2021, the MSCI Board of Directors declared a cash dividend of $1.04 per share for fourth quarter 2021, payable on November 30, 2021 to shareholders of record as of the close of trading on November 12, 2021.

Full-Year 2021 Guidance

MSCI's guidance for the year ending December 31, 2021 (“Full-Year 2021”) is based on assumptions about a number of macroeconomic and capital market factors, in particular related to equity markets. These assumptions are subject to uncertainty, and actual results for the year could differ materially from our current guidance, including as a result of ongoing uncertainty related to the duration, magnitude and impact of the ongoing COVID-19 pandemic.

Guidance Item

Current Guidance for Full-Year 2021

Prior Guidance for Full-Year 2021

Operating Expense(1)

$955 to $975 million

$920 to $940 million

Adjusted EBITDA Expense

$840 to $860 million

$820 to $840 million

Interest Expense (including amortization of financing fees)(2)

~$160 million

~$160 million

Depreciation & Amortization Expense(1)

~$110 million

~$100 million

Effective Tax Rate

15.0% to 16.0%

14.0% to 17.0%

Capital Expenditures

$50 to $60 million

$50 to $60 million

Net Cash Provided by Operating Activities

$800 to $840 million

$900 to $940 million

Free Cash Flow(3)

$740 to $790 million

$840 to $890 million

(1) Depreciation & Amortization includes $16.0 million intangible asset write-off related to Beon in second quarter 2021, partially offset by lower depreciation & amortization expenses for the remainder of 2021.

(2) Interest income will continue to be impacted by the lower rates available on cash balances.

(3) Lower free cash flow range is nearly all attributable to cash tax payments incremental to what we previously expected to make, of which approximately $110.0 million will occur in the fourth quarter. We currently expect these accelerated tax payments to reduce future tax payments.

Conference Call Information

MSCI's senior management will review the third quarter 2021 results on Tuesday, October 26, 2021 at 11:00 AM Eastern Time. To listen to the live event, visit the events and presentations section of MSCI's Investor Relations homepage, https://ir.msci.com/events-and-presentations, or dial 1-877-376-9931 conference ID: 2974258 within the United States. International callers may dial 1-720-405-2251 conference ID: 2974258. The teleconference will also be webcast with an accompanying slide presentation which can be accessed through MSCI's Investor Relations website.

MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process. To learn more, please visit www.msci.com. MSCI#IR

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, MSCI’s full-year 2021 guidance. These forward-looking statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond MSCI’s control and that could materially affect actual results, levels of activity, performance or achievements.

Other factors that could materially affect actual results, levels of activity, performance or achievements can be found in MSCI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on February 12, 2021 and in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC. If any of these risks or uncertainties materialize, or if MSCI’s underlying assumptions prove to be incorrect, actual results may vary significantly from what MSCI projected. Any forward-looking statement in this earnings release reflects MSCI’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to MSCI’s operations, results of operations, growth strategy and liquidity. MSCI assumes no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law.

Website and Social Media Disclosure

MSCI uses its website, including its quarterly updates, blog, podcasts and social media channels, including its corporate Twitter account (@MSCI_Inc), as channels of distribution of company information. The information MSCI posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following MSCI’s press releases, quarterly SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about MSCI when you enroll your email address by visiting the “Email Alerts Subscription” section of MSCI’s Investor Relations homepage at http://ir.msci.com/email-alerts. The contents of MSCI’s website, including its quarterly updates, blog, podcasts and social media channels are not, however, incorporated by reference into this earnings release.

Notes Regarding the Use of Operating Metrics

MSCI has presented supplemental key operating metrics as part of this earnings release, including Retention Rate, Run Rate, subscription sales, subscription cancellations and non-recurring sales.

Retention Rate is an important metric because subscription cancellations decrease our Run Rate and ultimately our operating revenues over time. The annual Retention Rate represents the retained subscription Run Rate (subscription Run Rate at the beginning of the fiscal year less actual cancels during the year) as a percentage of the subscription Run Rate at the beginning of the fiscal year.

The Retention Rate for a non-annual period is calculated by annualizing the cancellations for which we have received a notice of termination or for which we believe there is an intention not to renew or discontinue the subscription during the non-annual period, and we believe that such notice or intention evidences the client’s final decision to terminate or not renew the applicable agreement, even though such notice is not effective until a later date. This annualized cancellation figure is then divided by the subscription Run Rate at the beginning of the fiscal year to calculate a cancellation rate. This cancellation rate is then subtracted from 100% to derive the annualized Retention Rate for the period.

Retention Rate is computed by operating segment on a product/service-by-product/service basis. In general, if a client reduces the number of products or services to which it subscribes within a segment, or switches between products or services within a segment, we treat it as a cancellation for purposes of calculating our Retention Rate except in the case of a product or service switch that management considers to be a replacement product or service. In those replacement cases, only the net change to the client subscription, if a decrease, is reported as a cancel. In the Analytics and the ESG and Climate operating segments, substantially all product or service switches are treated as replacement products or services and netted in this manner, while in our Index and Real Estate operating segments, product or service switches that are treated as replacement products or services and receive netting treatment occur only in certain limited instances. In addition, we treat any reduction in fees resulting from a down-sale of the same product or service as a cancellation to the extent of the reduction. We do not calculate Retention Rate for that portion of our Run Rate attributable to assets in index-linked investment products or futures and options contracts, in each case, linked to our indexes.

Run Rate estimates at a particular point in time the annualized value of the recurring revenues under our client license agreements (“Client Contracts”) for the next 12 months, assuming all Client Contracts that come up for renewal, or reach the end of the committed subscription period, are renewed and assuming then-current currency exchange rates, subject to the adjustments and exclusions described below. For any Client Contract where fees are linked to an investment product’s assets or trading volume/fees, the Run Rate calculation reflects, for ETFs, the market value on the last trading day of the period, for futures and options, the most recent quarterly volumes and/or reported exchange fees, and for other non-ETF products, the most recent client-reported assets. Run Rate does not include fees associated with “one-time” and other non-recurring transactions. In addition, we add to Run Rate the annualized fee value of recurring new sales, whether to existing or new clients, when we execute Client Contracts, even though the license start date, and associated revenue recognition, may not be effective until a later date. We remove from Run Rate the annualized fee value associated with products or services under any Client Contract with respect to which we have received a notice of termination, non-renewal or an indication the client does not intend to continue their subscription during the period and have determined that such notice evidences the client’s final decision to terminate or not renew the applicable products or services, even though such notice is not effective until a later date.

“Organic subscription Run Rate growth” is defined as the period over period Run Rate growth, excluding the impact of changes in foreign currency and the first year impact of any acquisitions, including the acquisition of RCA completed on September 13, 2021. It is also adjusted for divestitures. Changes in foreign currency are calculated by applying the currency exchange rate from the comparable prior period to current period foreign currency denominated Run Rate.

Sales represents the annualized value of products and services clients commit to purchase from MSCI and will result in additional operating revenues. Non-recurring sales represent the actual value of the customer agreements entered into during the period and are not a component of Run Rate. New recurring subscription sales represent additional selling activities, such as new customer agreements, additions to existing agreements or increases in price that occurred during the period and are additions to Run Rate. Subscription cancellations reflect client activities during the period, such as discontinuing products and services and/or reductions in price, resulting in reductions to Run Rate. Net new recurring subscription sales represent the amount of new recurring subscription sales net of subscription cancellations during the period, which reflects the net impact to Run Rate during the period.

Total gross sales represent the sum of new recurring subscription sales and non-recurring sales. Total net sales represent the total gross sales net of the impact from subscription cancellations.

Notes Regarding the Use of Non-GAAP Financial Measures

MSCI has presented supplemental non-GAAP financial measures as part of this earnings release. Reconciliations are provided in Tables 9 through 15 below that reconcile each non-GAAP financial measure with the most comparable GAAP measure. The non-GAAP financial measures presented in this earnings release should not be considered as alternative measures for the most directly comparable GAAP financial measures. The non-GAAP financial measures presented in this earnings release are used by management to monitor the financial performance of the business, inform business decision-making and forecast future results.

“Adjusted EBITDA” is defined as net income before (1) provision for income taxes, (2) other expense (income), net, (3) depreciation and amortization of property, equipment and leasehold improvements, (4) amortization of intangible assets and, at times, (5) certain other transactions or adjustments, including certain non-recurring acquisition-related integration and transaction costs.

“Adjusted EBITDA expenses” is defined as operating expenses less depreciation and amortization of property, equipment and leasehold improvements and amortization of intangible assets and, at times, certain other transactions or adjustments, including certain non-recurring acquisition-related integration and transaction costs.

“Adjusted net income” and “adjusted EPS” are defined as net income and diluted EPS, respectively, before the after-tax impact of the amortization of acquired intangible assets, including the amortization of the basis difference between the cost of the equity method investment and MSCI’s share of the net assets of the investee at historical carrying value, the impact of divestitures, the impact of adjustments for Tax Reform, except for certain amounts associated with active tax planning implemented as a result of Tax Reform, and, at times, certain other transactions or adjustments, including the impact related to costs associated with debt extinguishment and the impact related to certain non-recurring acquisition-related integration and transaction costs.

“Adjusted tax rate” is defined as the effective tax rate excluding the impact of Tax Reform adjustments (except for certain amounts associated with active tax planning implemented as a result of Tax Reform).

“Capex” is defined as capital expenditures plus capitalized software development costs.

“Free cash flow” is defined as net cash provided by operating activities, less Capex.

“Organic operating revenue growth” is defined as operating revenue growth compared to the prior year period excluding the impact of acquired businesses, divested businesses and foreign currency exchange rate fluctuations.

Asset-based fees ex-FX does not adjust for the impact from foreign currency exchange rate fluctuations on the underlying assets under management (“AUM”).

We believe adjusted EBITDA and adjusted EBITDA expenses are meaningful measures of the operating performance of MSCI because they adjust for significant one-time, unusual or non-recurring items as well as eliminate the accounting effects of certain capital spending and acquisitions that do not directly affect what management considers to be our ongoing operating performance in the period.

We believe adjusted net income and adjusted EPS are meaningful measures of the performance of MSCI because they adjust for the after-tax impact of significant one-time, unusual or non-recurring items as well as eliminate the impact of any transactions that do not directly affect what management considers to be our ongoing operating performance in the period. We also exclude the after-tax impact of the amortization of acquired intangible assets and amortization of the basis difference between the cost of the equity method investment and MSCI’s share of the net assets of the investee at historical carrying value, as these non-cash amounts are significantly impacted by the timing and size of each acquisition and therefore not meaningful to the ongoing operating performance in the period.

We believe that adjusted tax rate is useful to investors because it increases the comparability of period-to-period results by adjusting for the estimated net impact of Tax Reform.

We believe that free cash flow is useful to investors because it relates the operating cash flow of MSCI to the capital that is spent to continue and improve business operations, such as investment in MSCI’s existing products. Further, free cash flow indicates our ability to strengthen MSCI’s balance sheet, repay our debt obligations, pay cash dividends and repurchase shares of our common stock.

We believe organic operating revenue growth is a meaningful measure of the operating performance of MSCI because it adjusts for the impact of foreign currency exchange rate fluctuations and excludes the impact of operating revenues attributable to acquired and divested businesses for the comparable prior year period, providing insight into our ongoing operating performance for the period(s) presented.

We believe that the non-GAAP financial measures presented in this earnings release facilitate meaningful period-to-period comparisons and provide a baseline for the evaluation of future results.

Adjusted EBITDA expenses, adjusted EBITDA, adjusted net income, adjusted EPS, adjusted tax rate, Capex, free cash flow and organic operating revenue growth are not defined in the same manner by all companies and may not be comparable to similarly-titled non-GAAP financial measures of other companies. These measures can differ significantly from company to company depending on, among other things, long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Accordingly, the Company’s computation of these measures may not be comparable to similarly-titled measures computed by other companies.

Notes Regarding Adjusting for the Impact of Foreign Currency Exchange Rate Fluctuations

Foreign currency exchange rate fluctuations reflect the difference between the current period results as reported compared to the current period results recalculated using the foreign currency exchange rates in effect for the comparable prior period. While operating revenues adjusted for the impact of foreign currency fluctuations includes asset-based fees that have been adjusted for the impact of foreign currency fluctuations, the underlying AUM, which is the primary component of asset-based fees, is not adjusted for foreign currency fluctuations. Approximately three-fifths of the AUM are invested in securities denominated in currencies other than the U.S. dollar, and accordingly, any such impact is excluded from the disclosed foreign currency-adjusted variances.

Table 2: Condensed Consolidated Statements of Income (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

Sep. 30,

 

 

Sep. 30,

 

 

%

 

 

Sep. 30,

 

 

Sep. 30,

 

 

%

 

In thousands, except per share data

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Operating revenues

 

$

517,099

 

 

$

425,333

 

 

 

21.6

%

 

$

1,493,702

 

 

$

1,251,729

 

 

 

19.3

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

89,674

 

 

 

70,704

 

 

 

26.8

%

 

 

262,781

 

 

 

215,769

 

 

 

21.8

%

Selling and marketing

 

 

59,819

 

 

 

52,668

 

 

 

13.6

%

 

 

174,477

 

 

 

159,834

 

 

 

9.2

%

Research and development

 

 

28,352

 

 

 

24,901

 

 

 

13.9

%

 

 

80,745

 

 

 

73,997

 

 

 

9.1

%

General and administrative

 

 

38,110

 

 

 

27,613

 

 

 

38.0

%

 

 

103,020

 

 

 

86,755

 

 

 

18.7

%

Amortization of intangible assets

 

 

14,105

 

 

 

14,333

 

 

 

(1.6

%)

 

 

59,569

 

 

 

42,171

 

 

 

41.3

%

Depreciation and amortization of property,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equipment and leasehold improvements

 

 

6,809

 

 

 

7,494

 

 

 

(9.1

%)

 

 

20,972

 

 

 

22,524

 

 

 

(6.9

%)

Total operating expenses(1)

 

 

236,869

 

 

 

197,713

 

 

 

19.8

%

 

 

701,564

 

 

 

601,050

 

 

 

16.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

280,230

 

 

 

227,620

 

 

 

23.1

%

 

 

792,138

 

 

 

650,679

 

 

 

21.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(396

)

 

 

(475

)

 

 

(16.6

%)

 

 

(1,129

)

 

 

(4,729

)

 

 

(76.1

%)

Interest expense

 

 

42,137

 

 

 

37,536

 

 

 

12.3

%

 

 

119,278

 

 

 

118,994

 

 

 

0.2

%

Other expense (income)

 

 

37,839

 

 

 

1,516

 

 

n/m

 

 

 

61,616

 

 

 

45,355

 

 

 

35.9

%

Other expense (income), net

 

 

79,580

 

 

 

38,577

 

 

 

106.3

%

 

 

179,765

 

 

 

159,620

 

 

 

12.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

200,650

 

 

 

189,043

 

 

 

6.1

%

 

 

612,373

 

 

 

491,059

 

 

 

24.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

30,774

 

 

 

6,685

 

 

n/m

 

 

 

80,255

 

 

 

45,453

 

 

 

76.6

%

Net income

 

$

169,876

 

 

$

182,358

 

 

 

(6.8

%)

 

$

532,118

 

 

$

445,606

 

 

 

19.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per basic common share

 

$

2.06

 

 

$

2.18

 

 

 

(5.5

%)

 

$

6.45

 

 

$

5.30

 

 

 

21.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per diluted common share

 

$

2.03

 

 

$

2.16

 

 

 

(6.0

%)

 

$

6.38

 

 

$

5.26

 

 

 

21.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding used

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in computing earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

82,470

 

 

 

83,602

 

 

 

(1.4

%)

 

 

82,521

 

 

 

84,044

 

 

 

(1.8

%)

Diluted

 

 

83,554

 

 

 

84,479

 

 

 

(1.1

%)

 

 

83,446

 

 

 

84,789

 

 

 

(1.6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

n/m: not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes stock-based compensation expense of $13.7 million and $12.0 million for the three months ended Sep. 30, 2021 and Sep. 30, 2020, respectively. Includes stock-based compensation expense of $46.3 million and $43.3 million for the nine months ended Sep. 30, 2021 and Sep. 30, 2020, respectively.

Table 3: Selected Balance Sheet Items (unaudited)

 

 

As of

 

 

Sep. 30,

 

Dec. 31,

In thousands

 

2021

 

2020

Cash and cash equivalents

 

$1,284,664

 

$1,300,521

Accounts receivable, net of allowances

 

$496,726

 

$558,569

 

 

 

 

 

Deferred revenue

 

$643,352

 

$675,870

Long-term debt(1)

 

$4,160,379

 

$3,366,777

(1) Consists of gross long-term debt, net of deferred financing fees. Gross long-term debt was $4,200.0 million at Sep. 30, 2021 and $3,400.0 million at Dec. 31, 2020.

Table 4: Selected Cash Flow Items (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

Sep. 30,

 

 

Sep. 30,

 

 

 

 

 

 

Sep. 30,

 

 

Sep. 30,

 

 

 

In thousands

 

2021

 

 

2020

 

 

% Change

 

 

2021

 

 

2020

 

 

 

% Change

 

Net cash provided by operating activities

 

$

215,891

 

 

$

199,795

 

 

 

8.1

%

 

$

656,405

 

 

$

575,181

 

 

 

14.1

%

Net cash used in investing activities

 

 

(963,558

)

 

 

(11,725

)

 

n/m

 

 

 

(985,879

)

 

 

(224,899

)

 

n/m

 

Net cash provided by (used in) financing activities

 

 

64,391

 

 

 

(274,433

)

 

 

123.5

%

 

 

321,249

 

 

 

(549,484

)

 

 

158.5

%

Effect of exchange rate changes

 

 

(4,062

)

 

 

4,244

 

 

 

(195.7

%)

 

 

(7,632

)

 

 

(4,507

)

 

 

(69.3

%)

Net increase (decrease) in cash and cash equivalents

 

$

(687,338

)

 

$

(82,119

)

 

n/m

 

 

$

(15,857

)

 

$

(203,709

)

 

 

92.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

n/m: not meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 5: Operating Results by Segment and Revenue Type (unaudited)

Index

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$165,310

 

$146,387

 

12.9%

 

$480,488

 

$431,631

 

11.3%

Asset-based fees

 

141,745

 

100,371

 

41.2%

 

404,593

 

288,642

 

40.2%

Non-recurring

 

14,448

 

8,933

 

61.7%

 

34,876

 

27,582

 

26.4%

Total operating revenues

 

321,503

 

255,691

 

25.7%

 

919,957

 

747,855

 

23.0%

Adjusted EBITDA expenses

 

75,916

 

60,971

 

24.5%

 

221,023

 

186,292

 

18.6%

Adjusted EBITDA

 

$245,587

 

$194,720

 

26.1%

 

$698,934

 

$561,563

 

24.5%

Adjusted EBITDA margin %

 

76.4%

 

76.2%

 

 

 

76.0%

 

75.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Analytics

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$134,320

 

$126,251

 

6.4%

 

$399,360

 

$376,505

 

6.1%

Non-recurring

 

1,978

 

2,086

 

(5.2%)

 

6,857

 

4,903

 

39.9%

Total operating revenues

 

136,298

 

128,337

 

6.2%

 

406,217

 

381,408

 

6.5%

Adjusted EBITDA expenses

 

86,007

 

83,281

 

3.3%

 

260,381

 

253,868

 

2.6%

Adjusted EBITDA

 

$50,291

 

$45,056

 

11.6%

 

$145,836

 

$127,540

 

14.3%

Adjusted EBITDA margin %

 

36.9%

 

35.1%

 

 

 

35.9%

 

33.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESG and Climate

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$42,592

 

$28,152

 

51.3%

 

$115,299

 

$78,961

 

46.0%

Non-recurring

 

1,099

 

399

 

175.4%

 

2,450

 

1,125

 

117.8%

Total operating revenues

 

43,691

 

28,551

 

53.0%

 

117,749

 

80,086

 

47.0%

Adjusted EBITDA expenses

 

33,871

 

20,893

 

62.1%

 

97,164

 

63,303

 

53.5%

Adjusted EBITDA

 

$9,820

 

$7,658

 

28.2%

 

$20,585

 

$16,783

 

22.7%

Adjusted EBITDA margin %

 

22.5%

 

26.8%

 

 

 

17.5%

 

21.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other - Private Assets

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$15,418

 

$12,400

 

24.3%

 

$48,355

 

$40,402

 

19.7%

Non-recurring

 

189

 

354

 

(46.6%)

 

1,424

 

1,978

 

(28.0%)

Total operating revenues

 

15,607

 

12,754

 

22.4%

 

49,779

 

42,380

 

17.5%

Adjusted EBITDA expenses

 

14,710

 

10,741

 

37.0%

 

37,004

 

32,892

 

12.5%

Adjusted EBITDA

 

$897

 

$2,013

 

(55.4%)

 

$12,775

 

$9,488

 

34.6%

Adjusted EBITDA margin %

 

5.7%

 

15.8%

 

 

 

25.7%

 

22.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

 

 

Sep. 30,

 

Sep. 30,

 

In thousands

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$357,640

 

$313,190

 

14.2%

 

$1,043,502

 

$927,499

 

12.5%

Asset-based fees

 

141,745

 

100,371

 

41.2%

 

404,593

 

288,642

 

40.2%

Non-recurring

 

17,714

 

11,772

 

50.5%

 

45,607

 

35,588

 

28.2%

Operating revenues total

 

517,099

 

425,333

 

21.6%

 

1,493,702

 

1,251,729

 

19.3%

Adjusted EBITDA expenses

 

210,504

 

175,886

 

19.7%

 

615,572

 

536,355

 

14.8%

Adjusted EBITDA

 

$306,595

 

$249,447

 

22.9%

 

$878,130

 

$715,374

 

22.8%

Adjusted EBITDA margin %

 

59.3%

 

58.6%

 

 

 

58.8%

 

57.2%

 

 

Operating margin %

 

54.2%

 

53.5%

 

 

 

53.0%

 

52.0%

 

 

Table 6: Sales and Retention Rate by Segment (unaudited)(1)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

Sep. 30,

 

 

Sep. 30,

 

 

Sep. 30,

 

 

Sep. 30,

 

In thousands

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Index

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New recurring subscription sales

 

$

19,546

 

 

$

18,743

 

 

$

66,037

 

 

$

58,073

 

Subscription cancellations

 

 

(6,203

)

 

 

(7,050

)

 

$

(18,192

)

 

 

(19,589

)

Net new recurring subscription sales

 

$

13,343

 

 

$

11,693

 

 

$

47,845

 

 

$

38,484

 

Non-recurring sales

 

$

17,366

 

 

$

10,001

 

 

$

39,340

 

 

$

30,734

 

Total gross sales

 

$

36,912

 

 

$

28,744

 

 

$

105,377

 

 

$

88,807

 

Total Index net sales

 

$

30,709

 

 

$

21,694

 

 

$

87,185

 

 

$

69,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Index Retention Rate

 

 

96.0

%

 

 

95.0

%

 

 

96.1

%

 

 

95.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Analytics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New recurring subscription sales

 

$

15,889

 

 

$

15,229

 

 

$

44,381

 

 

$

41,426

 

Subscription cancellations

 

 

(9,213

)

 

 

(8,211

)

 

$

(25,188

)

 

 

(27,008

)

Net new recurring subscription sales

 

$

6,676

 

 

$

7,018

 

 

$

19,193

 

 

$

14,418

 

Non-recurring sales

 

$

2,377

 

 

$

2,562

 

 

$

8,123

 

 

$

7,486

 

Total gross sales

 

$

18,266

 

 

$

17,791

 

 

$

52,504

 

 

$

48,912

 

Total Analytics net sales

 

$

9,053

 

 

$

9,580

 

 

$

27,316

 

 

$

21,904

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Analytics Retention Rate

 

 

93.4

%

 

 

93.8

%

 

 

94.0

%

 

 

93.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESG and Climate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New recurring subscription sales

 

$

17,310

 

 

$

7,932

 

 

$

46,706

 

 

$

26,128

 

Subscription cancellations

 

 

(1,338

)

 

 

(1,215

)

 

$

(3,636

)

 

 

(4,473

)

Net new recurring subscription sales

 

$

15,972

 

 

$

6,717

 

 

$

43,070

 

 

$

21,655

 

Non-recurring sales

 

$

1,090

 

 

$

135

 

 

$

2,927

 

 

$

702

 

Total gross sales

 

$

18,400

 

 

$

8,067

 

 

$

49,633

 

 

$

26,830

 

Total ESG and Climate net sales

 

$

17,062

 

 

$

6,852

 

 

$

45,997

 

 

$

22,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESG and Climate Retention Rate

 

 

96.1

%

 

 

95.2

%

 

 

96.5

%

 

 

94.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other - Private Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New recurring subscription sales

 

$

2,479

 

 

$

1,412

 

 

$

6,023

 

 

$

3,733

 

Subscription cancellations

 

 

(1,296

)

 

 

(656

)

 

$

(2,881

)

 

 

(1,694

)

Net new recurring subscription sales

 

$

1,183

 

 

$

756

 

 

$

3,142

 

 

$

2,039

 

Non-recurring sales

 

$

130

 

 

$

112

 

 

$

1,201

 

 

$

1,150

 

Total gross sales

 

$

2,609

 

 

$

1,524

 

 

$

7,224

 

 

$

4,883

 

Total All Other - Private Assets net sales

 

$

1,313

 

 

$

868

 

 

$

4,343

 

 

$

3,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other - Private Assets Retention Rate2

 

 

91.0

%

 

 

94.8

%

 

 

91.2

%

 

 

95.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New recurring subscription sales

 

$

55,224

 

 

$

43,316

 

 

$

163,147

 

 

$

129,360

 

Subscription cancellations

 

 

(18,050

)

 

 

(17,132

)

 

 

(49,897

)

 

 

(52,764

)

Net new recurring subscription sales

 

$

37,174

 

 

$

26,184

 

 

$

113,250

 

 

$

76,596

 

Non-recurring sales

 

$

20,963

 

 

$

12,810

 

 

$

51,591

 

 

$

40,072

 

Total gross sales

 

$

76,187

 

 

$

56,126

 

 

$

214,738

 

 

$

169,432

 

Total net sales

 

$

58,137

 

 

$

38,994

 

 

$

164,841

 

 

$

116,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Retention Rate

 

 

94.5

%

 

 

94.5

%

 

 

94.9

%

 

 

94.3

%

(1) See "Notes Regarding the Use of Operating Metrics" for details regarding the definition of new recurring subscription sales, subscription cancellations, net new recurring subscription sales, non-recurring sales, total gross sales, total net sales and Retention Rate.
(2) Retention rate for All Other – Private Assets excluding the impact of RCA was 93.7% and 94.2% for the three and nine months ended Sep. 30, 2021, respectively.

Table 7: AUM in ETFs Linked to MSCI Equity Indexes (unaudited)(1)(2)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

Sep. 30,

 

 

June 30,

 

 

Mar. 31,

 

 

Dec. 31,

 

 

Sep. 30,

 

 

Sep. 30,

 

 

Sep. 30,

 

In billions

 

2021

 

 

2021

 

 

2021

 

 

2020

 

 

2020

 

 

2021

 

 

2020

 

Beginning Period AUM in ETFs linked to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MSCI equity indexes

 

$

1,336.2

 

 

$

1,209.6

 

 

$

1,103.6

 

 

$

908.9

 

 

$

825.4

 

 

$

1,103.6

 

 

$

934.4

 

Market Appreciation/(Depreciation)

 

 

(30.7

)

 

 

73.7

 

 

 

43.2

 

 

 

135.7

 

 

 

57.0

 

 

 

86.2

 

 

 

(42.1

)

Cash Inflows

 

 

31.1

 

 

 

52.9

 

 

 

62.8

 

 

 

59.0

 

 

 

26.5

 

 

 

146.8

 

 

 

16.6

 

Period-End AUM in ETFs linked to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MSCI equity indexes

 

$

1,336.6

 

 

$

1,336.2

 

 

$

1,209.6

 

 

$

1,103.6

 

 

$

908.9

 

 

$

1,336.6

 

 

$

908.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Average AUM in ETFs linked to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MSCI equity indexes

 

$

1,361.9

 

 

$

1,292.4

 

 

$

1,169.2

 

 

$

999.2

 

 

$

893.4

 

 

$

1,274.5

 

 

$

849.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-End Basis Point Fee(3)

 

 

2.57

 

 

 

2.58

 

 

 

2.61

 

 

 

2.67

 

 

 

2.67

 

 

 

2.57

 

 

 

2.67

 

(1) The historical values of the AUM in ETFs linked to our equity indexes as of the last day of the month and the monthly average balance can be found under the link “AUM in ETFs Linked to MSCI Equity Indexes” on our Investor Relations homepage at http://ir.msci.com. Information contained on our website is not incorporated by reference into this Press Release or any other report filed with the SEC. The AUM in ETFs also includes AUM in Exchange Traded Notes, the value of which is less than 1.0% of the AUM amounts presented.
(2) The value of AUM in ETFs linked to MSCI equity indexes is calculated by multiplying the equity ETFs net asset value by the number of shares outstanding.
(3) Based on period-end Run Rate for ETFs linked to MSCI equity indexes using period-end AUM.

Table 8: Run Rate by Segment and Type (unaudited)(1)

 

 

As of

 

 

 

 

 

Sep. 30,

 

Sep. 30,

 

 

 

In thousands

 

2021

 

2020

 

% Change

 

Index

 

 

 

 

 

 

 

 

 

Recurring subscriptions

 

$

667,023

 

$

598,799

 

11.4

%

Asset-based fees

 

 

550,230

 

 

401,196

 

37.1

%

Index Run Rate

 

 

1,217,253

 

 

999,995

 

21.7

%

 

 

 

 

 

 

 

 

 

 

Analytics Run Rate

 

 

568,932

 

 

544,315

 

4.5

%

 

 

 

 

 

 

 

 

 

 

ESG and Climate Run Rate

 

 

178,398

 

 

122,273

 

45.9

%

 

 

 

 

 

 

 

 

 

 

All Other - Private Assets Run Rate

 

 

131,678

 

 

52,970

 

148.6

%

 

 

 

 

 

 

 

 

 

 

Total Run Rate

 

$

2,096,261

 

$

1,719,553

 

21.9

%

 

 

 

 

 

 

 

 

 

 

Total recurring subscriptions

 

$

1,546,031

 

$

1,318,357

 

17.3

%

Total asset-based fees

 

 

550,230

 

 

401,196

 

37.1

%

Total Run Rate

 

$

2,096,261

 

$

1,719,553

 

21.9

%

(1) See "Notes Regarding the Use of Operating Metrics" for details regarding the definition of Run Rate.

Table 9: Reconciliation of Adjusted EBITDA to Net Income (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

Sep. 30,

 

Sep. 30,

In thousands

 

2021

 

2020

 

2021

 

2020

Index adjusted EBITDA

 

$

245,587

 

$

194,720

 

$

698,934

 

$

561,563

Analytics adjusted EBITDA

 

 

50,291

 

 

45,056

 

 

145,836

 

 

127,540

ESG and Climate adjusted EBITDA

 

 

9,820

 

 

7,658

 

 

20,585

 

 

16,783

All Other - Private Assets adjusted EBITDA

 

 

897

 

 

2,013

 

 

12,775

 

 

9,488

Consolidated adjusted EBITDA

 

 

306,595

 

 

249,447

 

 

878,130

 

 

715,374

Acquisition-related integration and transaction costs1

 

 

5,451

 

 

 

 

5,451

 

 

Amortization of intangible assets

 

 

14,105

 

 

14,333

 

 

59,569

 

 

42,171

Depreciation and amortization of property,

 

 

 

 

 

 

 

 

 

 

 

 

equipment and leasehold improvements

 

 

6,809

 

 

7,494

 

 

20,972

 

 

22,524

Operating income

 

 

280,230

 

 

227,620

 

 

792,138

 

 

650,679

Other expense (income), net

 

 

79,580

 

 

38,577

 

 

179,765

 

 

159,620

Provision for income taxes

 

 

30,774

 

 

6,685

 

 

80,255

 

 

45,453

Net income

 

$

169,876

 

$

182,358

 

$

532,118

 

$

445,606

(1) Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the acquired business that have occurred no later than 12 months after the close of the transaction.

Table 10: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

Sep. 30,

 

 

Sep. 30,

 

 

Sep. 30,

 

 

Sep. 30,

 

In thousands, except per share data

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

 

$

169,876

 

 

$

182,358

 

 

$

532,118

 

 

$

445,606

 

Plus: Amortization of acquired intangible assets and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equity method investment basis difference

 

 

10,792

 

 

 

9,515

 

 

 

29,915

 

 

 

27,885

 

Plus: Debt extinguishment costs associated with the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024, 2025, 2026 and 2027 Senior Notes Redemptions

 

 

37,312

 

 

 

 

 

 

59,104

 

 

 

44,930

 

Plus: Write-off of internally developed capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

software

 

 

 

 

 

 

 

 

16,013

 

 

 

 

Plus: Acquisition-related integration and transaction costs1

 

 

5,451

 

 

 

 

 

 

5,451

 

 

 

 

Less: Tax Reform adjustments

 

 

 

 

 

(5,497

)

 

 

 

 

 

(6,256

)

Less: Income tax effect

 

 

(12,143

)

 

 

(532

)

 

 

(21,966

)

 

 

(14,483

)

Adjusted net income

 

$

211,288

 

 

$

185,844

 

 

$

620,635

 

 

$

497,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

2.03

 

 

$

2.16

 

 

$

6.38

 

 

$

5.26

 

Plus: Amortization of acquired intangible assets and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equity method investment basis difference

 

 

0.13

 

 

 

0.11

 

 

 

0.36

 

 

 

0.33

 

Plus: Debt extinguishment costs associated with the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024, 2025 and 2026 Senior Notes Redemptions

 

 

0.45

 

 

 

 

 

 

0.71

 

 

 

0.53

 

Plus: Write-off of internally developed capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

software

 

 

 

 

 

 

 

 

0.19

 

 

 

 

Plus: Acquisition-related integration and transaction costs1

 

 

0.07

 

 

 

 

 

 

0.07

 

 

 

 

Less: Tax Reform adjustments

 

 

 

 

 

(0.07

)

 

 

 

 

 

(0.07

)

Less: Income tax effect

 

 

(0.15

)

 

 

 

 

 

(0.27

)

 

 

(0.18

)

Adjusted EPS

 

$

2.53

 

 

$

2.20

 

 

$

7.44

 

 

$

5.87

 

(1) Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the acquired business that have occurred no later than 12 months after the close of the transaction.

Table 11: Reconciliation of Adjusted EBITDA Expenses to Operating Expenses (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

Full-Year

 

 

Sep. 30,

 

Sep. 30,

 

Sep. 30,

 

Sep. 30,

 

2021

In thousands

 

2021

 

2020

 

2021

 

2020

 

Outlook(1)

Index adjusted EBITDA expenses

 

$

75,916

 

$

60,971

 

$

221,023

 

$

186,292

 

 

Analytics adjusted EBITDA expenses

 

 

86,007

 

 

83,281

 

 

260,381

 

 

253,868

 

 

ESG and Climate adjusted EBITDA expenses

 

 

33,871

 

 

20,893

 

 

97,164

 

 

63,303

 

 

All Other - Private Assets adjusted EBITDA expenses

 

 

14,710

 

 

10,741

 

 

37,004

 

 

32,892

 

 

Consolidated adjusted EBITDA expenses

 

 

210,504

 

 

175,886

 

 

615,572

 

 

536,355

 

$840,000 - $860,000

Acquisition-related integration and transaction costs2

 

 

5,451

 

 

 

 

5,451

 

 

 

 

Amortization of intangible assets

 

 

14,105

 

 

14,333

 

 

59,569

 

 

42,171

 

 

Depreciation and amortization of property,

 

 

 

 

 

 

 

 

 

 

 

 

 

~$110,000

equipment and leasehold improvements

 

 

6,809

 

 

7,494

 

 

20,972

 

 

22,524

 

 

Total operating expenses

 

$

236,869

 

$

197,713

 

$

701,564

 

$

601,050

 

$955,000 - $975,000

(1) We have not provided a full line-item reconciliation for adjusted EBITDA expenses to total operating expenses for this future period because we do not provide guidance on the individual reconciling items between total operating expenses and adjusted EBITDA expenses.
(2) Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the acquired business that have occurred no later than 12 months after the close of the transaction.

Table 12: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

Full-Year

 

 

Sep. 30,

 

 

Sep. 30,

 

 

Sep. 30,

 

 

Sep. 30,

 

 

2021

In thousands

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Outlook(1)

Net cash provided by operating activities

 

$

215,891

 

 

$

199,795

 

 

$

656,405

 

 

$

575,181

 

 

$800,000 - $840,000

Capital expenditures

 

 

(4,646

)

 

 

(4,555

)

 

 

(7,119

)

 

 

(12,152

)

 

 

Capitalized software development costs

 

 

(10,141

)

 

 

(7,170

)

 

 

(29,078

)

 

 

(21,931

)

 

 

Capex

 

 

(14,787

)

 

 

(11,725

)

 

 

(36,197

)

 

 

(34,083

)

 

($60,000 - $50,000)

Free cash flow

 

$

201,104

 

 

$

188,070

 

 

$

620,208

 

 

$

541,098

 

 

$740,000 - $790,000

(1) We have not provided a line-item reconciliation for free cash flow to net cash from operating activities for this future period because we do not provide guidance on the individual reconciling items between net cash from operating activities and free cash flow.

Table 13: Reconciliation of Effective Tax Rate to Adjusted Tax Rate (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

Sep. 30,

 

Sep. 30,

 

Sep. 30,

 

Sep. 30,

 

 

2021

 

2020

 

2021

 

2020

Effective tax rate

 

15.3%

 

3.5%

 

13.1%

 

9.3%

Tax Reform impact on effective tax rate

 

—%

 

2.9%

 

—%

 

1.2%

Adjusted tax rate

 

15.3%

 

6.4%

 

13.1%

 

10.5%

Table 14: Third Quarter 2021 Reconciliation of Operating Revenue Growth to Organic Operating Revenue Growth (unaudited)

 

 

Comparison of the Three Months Ended September 30, 2021 and 2020

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

Index

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

25.7%

 

12.9%

 

41.2%

 

61.7%

Impact of acquisitions and divestitures

 

—%

 

—%

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

0.1%

 

0.1%

 

—%

 

—%

Organic operating revenue growth

 

25.8%

 

13.0%

 

41.2%

 

61.7%

 

 

 

 

 

 

 

 

 

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

Analytics

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

6.2%

 

6.4%

 

—%

 

(5.2%)

Impact of acquisitions and divestitures

 

—%

 

—%

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

0.2%

 

0.2%

 

—%

 

(0.1%)

Organic operating revenue growth

 

6.4%

 

6.6%

 

—%

 

(5.3%)

 

 

 

 

 

 

 

 

 

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

ESG and Climate

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

53.0%

 

51.3%

 

—%

 

175.4%

Impact of acquisitions and divestures

 

—%

 

—%

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

(5.8%)

 

(5.9%)

 

—%

 

(2.7%)

Organic operating revenue growth

 

47.2%

 

45.4%

 

—%

 

172.7%

 

 

 

 

 

 

 

 

 

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

All Other - Private Assets

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

22.4%

 

24.3%

 

—%

 

(46.6%)

Impact of acquisitions and divestures

 

(26.8%)

 

(27.5%)

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

(3.2%)

 

(3.3%)

 

—%

 

(0.9%)

Organic operating revenue growth

 

(7.6%)

 

(6.5%)

 

—%

 

(47.5%)

 

 

 

 

 

 

 

 

 

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

Consolidated

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

21.6%

 

14.2%

 

41.2%

 

50.5%

Impact of acquisitions and divestitures

 

(0.8%)

 

(1.1%)

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

(0.4%)

 

(0.5%)

 

—%

 

(0.2%)

Organic operating revenue growth

 

20.4%

 

12.6%

 

41.2%

 

50.3%

Table 15: Nine Months 2021 Reconciliation of Operating Revenue Growth to Organic Operating Revenue Growth (unaudited)

 

 

Comparison of the Nine Months Ended September 30, 2021 and 2020

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

Index

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

23.0%

 

11.3%

 

40.2%

 

26.4%

Impact of acquisitions and divestitures

 

—%

 

—%

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

—%

 

—%

 

(0.1%)

 

—%

Organic operating revenue growth

 

23.0%

 

11.3%

 

40.1%

 

26.4%

 

 

 

 

 

 

 

 

 

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

Analytics

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

6.5%

 

6.1%

 

—%

 

39.9%

Impact of acquisitions and divestitures

 

—%

 

—%

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

—%

 

—%

 

—%

 

(0.7%)

Organic operating revenue growth

 

6.5%

 

6.1%

 

—%

 

39.2%

 

 

 

 

 

 

 

 

 

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

ESG and Climate

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

47.0%

 

46.0%

 

—%

 

117.8%

Impact of acquisitions and divestures

 

—%

 

—%

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

(7.4%)

 

(7.4%)

 

—%

 

(5.6%)

Organic operating revenue growth

 

39.6%

 

38.6%

 

—%

 

112.2%

 

 

 

 

 

 

 

 

 

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

All Other - Private Assets

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

17.5%

 

19.7%

 

—%

 

(28.0%)

Impact of acquisitions and divestures

 

(8.1%)

 

(8.5%)

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

(7.8%)

 

(7.9%)

 

—%

 

(4.3%)

Organic operating revenue growth

 

1.6%

 

3.3%

 

—%

 

(32.3%)

 

 

 

 

 

 

 

 

 

 

 

Total

 

Recurring
Subscription

 

Asset-Based Fees

 

Non-Recurring
Revenues

Consolidated

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

 

Change
Percentage

Operating revenue growth

 

19.3%

 

12.5%

 

40.2%

 

28.2%

Impact of acquisitions and divestitures

 

(0.2%)

 

(0.4%)

 

—%

 

—%

Impact of foreign currency exchange rate fluctuations

 

(0.8%)

 

(0.9%)

 

(0.1%)

 

(0.5%)

Organic operating revenue growth

 

18.3%

 

11.2%

 

40.1%

 

27.7%

 

MSCI Registered (A) Aktie jetzt über den Testsieger (Finanztest 11/2020) handeln, ab 0 € auf Smartbroker.de





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Nachrichtenquelle: Business Wire (engl.)
26.10.2021, 12:45  |  137   |   |   

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Disclaimer

MSCI Reports Financial Results for Third Quarter and Nine Months 2021 MSCI Inc. (“MSCI” or the “Company”) (NYSE:MSCI), a leading provider of critical decision support tools and services for the global investment community, today announced its financial results for the three months ended September 30, 2021 (“third …

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