Slide 1: Third Quarter 2023 Earnings Presentation
Third Quarter 2023 EARNINGS PRESENTATION October 31, 2023 © 2023 MSCI Inc. All rights reserved.
Slide 2: Forward-Looking Statements
Forward-Looking Statements • This earnings presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, MSCI’s full-year 2023 guidance. These forward-looking statements relate to future events or to future
Slide 3: Other Information
Other Information • Percentage changes and totals in this earnings presentation may not sum due to rounding. • Percentage changes refer to the comparable period in 2022, unless otherwise noted. • All financial figures for the three months ended September 30, 2023 are unaudited unless otherwise noted
Slide 4: MSCI Third Quarter 2023 Earnings Call Participants
MSCI Third Quarter 2023 Earnings Call Participants Henry Fernandez Baer Pettit Andy Wiechmann Jeremy Ulan Chairman & CEO President & COO Chief Financial Officer Head of IR & Treasurer 4
Slide 5: Financial & Strategic Highlights
Financial & Strategic Highlights
Slide 6: 3Q23 Financial Results Snapshot
3Q23 Financial Results Snapshot Robust earnings growth reflecting all weather franchise As of September 30, 2023 As of September 30, 2023 3Q23 Operating Revenues 3Q23 Operating Revenues Subscription Run Rate Subscription Run Rate (reported) (organic) Growth (reported) Growth (organic) +12% +11% +12%
Slide 7: Strong Performance Across Regions
Strong Performance Across Regions 3Q23 Subscription Run Rate by Region Americas EMEA APAC +8% +15% +13% $849M YoY $743M YoY $331M YoY Organic: $849M; +8% YoY Organic : $728M; +13% YoY Organic : $332M; +13% YoY 3Q23 Recurring Net New Subscription Sales by Region Americas EMEA APAC -26% $15M -20% $10M
Slide 8: 3Q23 Operating Highlights
3Q23 Operating Highlights (US$ in millions) +11% Total Run Rate Organic • $2.5B of Total Run Rate across MSCI +12% Asset-Based Fees • 39th consecutive quarter of double-digit $2,468 Run Rate growth for Index subscription run rate. $2,203 +12% Organic • Quarterly Retention rate of 95.4%. +12% • Doubl
Slide 9: Significant Recurring Revenue Model with Global Client Base
Significant Recurring Revenue Model with Global Client Base Operating Revenues Mix MSCI Subscription Run Rate MSCI Subscription Run Rate Quarter Ended 09/30/2023 as of 09/30/2023 by Geography as of 09/30/2023 by Client Base by Segment by Type Wealth All Other – Private Assets 6% Non-Recurring 3% F&O
Slide 10: Emerging Growth Opportunities
Emerging Growth Opportunities Run Rate (US$ in millions) $387 09/30/2022 09/30/2023 $319 $151 $137 $92 $98 $98 $80 $85 $82 $65 $64 $60 $53 Insurance Climate 1 Fixed Income 2 Futures & Options 3 Wealth Management 4 Private Assets ESG (ex. Climate) 5 Expanding in attractive additional addressable mark
Slide 11: 3Q23 Summary Financial Results
3Q23 Summary Financial Results (US$ in thousands, except per share data) For the Three Months Ended September 30, (Unaudited) 2023 2022 YoY% Change Operating revenues $ 625,439 $ 560,639 11.6 % Operating income $ 353,309 $ 309,531 14.1 % Operating margin % 56.5 % 55.2 % Net income $ 259,659 $ 216,59
Slide 12: 3Q23 Segment Operating Revenues
3Q23 Segment Operating Revenues (US$ in millions) ESG & Climate All Other – Index Analytics (Reportable Segment) Private Assets 13% +7% +20% (1)% Organic Organic Organic Organic 12% $362.1 $14.6 +6% +27% $73.0 $322.2 $154.3 +0% $11.1 $144.9 $3.0 $1.3 $35.9 $36.0 $2.2 $0.3 $0.5 $141.1 $57.6 $125.6 $1
Slide 13: 3Q23: Organic Subscription Run Rate Growth of 11%
3Q23: Organic Subscription Run Rate Growth of 11% (US$ in millions) Index Subscription Analytics ESG & Climate All Other – (Reportable Segment) Private Assets +11% +6% +22% +8% +11% Organic Organic Organic $835.3 Organic +7% +25% $750.8 $98.2 $71.4 +14% $639.5 $86.2 $597.8 +10% $57.4 $116.8 +19% $97
Slide 14: Index Segment: Asset-Based Fees Details
Index Segment: Asset-Based Fees Details (US$ in millions, except AUM in billions and Average BPS) Asset-based Fees (ABF) Revenue Quarterly Average AUM and Period-End Basis Point Quarter-End AUM by Market Exposure3 of Fee2 of ETFs linked to MSCI Equity Indexes ETFs linked to MSCI Equity Indexes Futur
Slide 15: 3Q23 QoQ AUM Drivers: MSCI-Linked Equity ETFs
3Q23 QoQ AUM Drivers: MSCI-Linked Equity ETFs (US$ in billions) By Geographic Exposure By Product $4.9 $(0.9) $(1.6) $2.9 ESG & Climate $2.4 $5.0 $(10.9) $(15.7) U.S. $(5.4) Factors $(27.4) DM ex. U.S. Market Cap $(13.0) $(39.8) EM Weighted Cash inflows / (outflows): $6.4 $(56.1) Cash inflows / (out
Slide 16: 3Q23 YoY AUM Drivers: MSCI-Linked Equity ETFs
3Q23 YoY AUM Drivers: MSCI-Linked Equity ETFs (US$ in billions) By Geographic Exposure $51.1 U.S. DM ex. $103.6 U.S. $31.5 EM $27.7 $186.2 $(7.6) $35.4 $ 1,322.8 Cash inflows / (outflows): $55.5 $1,081.2 3Q22 Ending U.S. Developed Markets Emerging Markets Market Change 3Q23 Ending AUM ex. U.S. AUM 1
Slide 17: Strong Market Movement and Momentum in Cashflows Continues
Strong Market Movement and Momentum in Cashflows Continues (US$ in billions) 9M22: MSCI-linked equity ETF AUM 4Q18: MSCI-linked equity ETF balance declined 26% vs Dec-21 amid AUM of ETFs linked to MSCI Equity Indexes AUM balance declined 9% high inflation, interest rate hikes, Total QoQ amid concern
Slide 18: Listed Futures & Options Linked to MSCI Indexes
Listed Futures & Options Linked to MSCI Indexes Run Rate From Listed Futures & Options Futures & Options Volume Linked Linked to MSCI Indexes to MSCI Indexes (US$ in millions) (in millions of contracts traded1) $60.3 $59.0 $58.1 31.5 30.8 $55.0 28.0 29.3 29.1 $53.1 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22
Slide 19: Adjusted Earnings Per Share Growth Drivers
Adjusted Earnings Per Share Growth Drivers (US$ in per share amounts) +21.1% Business Growth Capital Activities Tax and FX1 YoY $0.44 $0.11 ($0.05) $3.45 $0.05 ($0.00) ($0.16) $0.06 $0.05 $0.60 $2.85 3Q22 Revenue Expenses Sharecount Net Interest & Tax Rate Net Fx Impact 3Q23 Adjusted EPS Other Expen
Slide 20: Strong Balance Sheet Provides Optionality
Strong Balance Sheet Provides Optionality (US$ in millions, unless otherwise noted) Cash1 and Debt as of 09/30/2023 • In 3Q23, returned $127.1M to shareholders through share repurchases of $17.9M and quarterly dividends of $109.2M. Total Cash $929M Total Debt2 $4,509M • Strong balance sheet provides
Slide 21: Full-Year 2023 Guidance
Full-Year 2023 Guidance Full-Year 2023 Guidance Item Previous Guidance Current Guidance Operating Expense $1,090 to $1,130 million $1,135 to $1,165 million Adjusted EBITDA Expense $965 to $995 million $1,000 to $1,020 million Interest Expense1 $185 to $187 million $187 million (including amortizatio
Slide 22: Q&A
Q&A
Slide 23: Additional Information
Additional Information
Slide 24: Continued Resilient Key Operating Metrics
Continued Resilient Key Operating Metrics YoY Recurring Subscription Run Rate Growth (as Reported and Organic) 17% 18% 18% 18% 14% 13% 10%10% 10% 10% 10% 11% 10% 10% 10% 10% 11% 12% 12% 12% 12% 14% 14% 11% 10% 10% 11% 12% 13% 12% 12% 12% 11% 11% 9% 9% 9% 10% 7% 7% 8% 8% 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
Slide 25: 3Q18 to 3Q23 YoY Segment Run Rate Growth
3Q18 to 3Q23 YoY Segment Run Rate Growth Index 45% 49% 37% 27% 27% 13% 11% 12% 11% 11% 11% 13% 17% 15% 12% 13% 12% 12% 12% 14% 10% 11% 5% 9% 11% 10% 11% 11% 11% 11% 12% 12% 7% 11% 1% 4% 5% -2% -4% -13% -13% -7% 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22
Slide 26: 3Q18 to 3Q23 YoY Segment Run Rate Growth
3Q18 to 3Q23 YoY Segment Run Rate Growth ESG & Climate 44% 46% 47% 50% 47% 42% 42% 36% 37% 29% 25% 28% 28% 31% 30% 25% 25% 26% 24% 42% 46% 44% 47% 26% 25% 39% 41% 33% 33% 34% 28% 23% 24% 27% 23% 27% 26% 29% 24% 22% 24% 22% 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q
Slide 27: Geographic Market Exposures Of MSCI-Linked ETFs Increasingly Diversified Over Time
Geographic Market Exposures Of MSCI-Linked ETFs Increasingly Diversified Over Time Mix of MSCI linked equity ETF AUM balance by geographic exposure % US DM Ex US EM 22% 26% 27% 26% 33% 30% 29% 32% 29% 30% 26% 42% 44% 44% 45% 46% 58% 51% 46% 43% 50% 51% 47% 53% 46% 43% 23% 25% 27% 30% 28% 28% 20% 20%
Slide 28: Significant Growth Across ESG and Climate Franchise
Significant Growth Across ESG and Climate Franchise AUM in ETFs Linked to MSCI ESG and Climate Equity ESG & Climate Run Rates Across all Segments1 Indexes ESG Subscription Climate Subscription (US$ in billions) ESG ABF Climate ABF U.S. $15.8 +26% $485 DM ex. U.S. $15.9 $30 +52% EM $4.9 $68 +49% $385
Slide 29: Long-term Targets
Long-term Targets Revenue Adj. EBITDA Expense Adj. EBITDA Adj. EBITDA Growth Rate1 Growth Rate Growth Rate Margin % High Single Digit MSCI Low Double Digit to Low Double Low to Mid Teens High 50s Digit Index Low Double Digit Low Double Digit Analytics High Single Digit Mid Single Digit ESG & Climate
Slide 30: Appendix
Appendix
Slide 31: Use of Operating Metrics
Use of Operating Metrics • MSCI has presented supplemental key operating metrics as part of this earnings presentation, including Retention Rate, Run Rate, subscription sales, subscription cancellations and non- recurring sales. • Retention Rate is an important metric because subscription cancellati
Slide 32: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures • MSCI has presented supplemental non-GAAP financial measures as part of this earnings presentation. Reconciliations are provided in the following slides below that reconcile each non-GAAP financial measure with the most comparable GAAP measure. The non-GAAP financ
Slide 33: Reconciliation of Net Income to Adjusted EBITDA (UNAUDITED)
Reconciliation of Net Income to Adjusted EBITDA (UNAUDITED) (1) Represents transaction expenses and other costs directly related to the acquisition and integration of acquired businesses, including professional fees, severance expenses, regulatory filing fees and other costs, in each case that are i
Slide 34: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS
Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS (UNAUDITED) (1) Represents transaction expenses and other costs directly related to the acquisition and integration of acquired businesses, including professional fees, severance expenses, regulatory filing fees and
Slide 35: Reconciliation of Operating Expenses to Adjusted EBITDA Expenses (UNAUDITED)
Reconciliation of Operating Expenses to Adjusted EBITDA Expenses (UNAUDITED) (1) We have not provided a full line-item reconciliation for total operating expenses to adjusted EBITDA expenses for this future period because we believe such a reconciliation would imply a degree of precision and certain
Slide 36: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (UNAUDITED) (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 believe such a reconciliation would imply a degree of precision and
Slide 37: Third Quarter 2023 Reconciliation of Operating Revenue Growth to Organic
Third Quarter 2023 Reconciliation of Operating Revenue Growth to Organic Operating Revenue Growth (UNAUDITED) 37
Slide 38: Nine Months 2023 Reconciliation of Operating Revenue Growth to Organic
Nine Months 2023 Reconciliation of Operating Revenue Growth to Organic Operating Revenue Growth (UNAUDITED) 38