Slide 1: First Quarter 2024 Earnings Presentation
First Quarter 2024 EARNINGS PRESENTATION April 23, 2024 © 2024 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 2024 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 2023, unless otherwise noted. • All financial figures for the three months ended March 31, 2024 are unaudited unless otherwise noted. •
Slide 4: MSCI First Quarter 2024 Earnings Call Participants
MSCI First Quarter 2024 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: 1Q24 Financial Results Snapshot
1Q24 Financial Results Snapshot Robust earnings growth reflecting all weather franchise As of March 31, 2024 As of March 31, 2024 1Q24 Operating Revenues 1Q24 Operating Revenues Subscription Run Rate Subscription Run Rate (reported) (organic) Growth (reported) Growth (organic) +15% +10% +14% +9% 1Q2
Slide 7: 1Q24 Regional Performance
1Q24 Regional Performance 1Q24 Recurring Subscription Run Rate by Region Americas EMEA APAC +17% +12% +12% $959M YoY $797M YoY $351M YoY Organic: $875M; +7% YoY Organic : $781M; +9% YoY Organic : $349M; +12% YoY 1Q24 Recurring Net New Subscription Sales by Region Americas EMEA APAC -31% $7M -59% $5M
Slide 8: 1Q24 Operating Highlights
1Q24 Operating Highlights (US$ in millions) +15% +10% Organic Total Run Rate $2,726 Asset-Based Fees Run Rate Private Capital Solutions • $2.7B of Total Run Rate across MSCI $2,379 • Quarterly Retention rate of 92.8%. +12% Organic • Asset Based Fees delivered Run Rate +12% growth of 16% $1,489 $1,33
Slide 9: Durability Across Majority of MSCI Clients
Durability Across Majority of MSCI Clients Organic Subscription Retention Rates by Mix of Clients Purchasing One or More Run Rate Product Lines (Ex. Single Client Event Cancel of $7M) 1Q24 • Strong 1Q24 retention among key client MSCI: +9% YoY segments: • Asset Managers: ~95% MSCI 94.1% • Asset Owne
Slide 10: 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 03/31/2024 as of 03/31/2024 by Geography as of 03/31/2024 by Client Base by Segment by Type Non-Recurring 2% Wealth All Other – Private F&O transacti
Slide 11: Emerging Growth Opportunities
Emerging Growth Opportunities Run Rate $413 (US$ in millions) 03/31/2023 $369 03/31/2024 $254 $148 $117 $96 $104 $89 $84 $93 $91 $79 $58 $56 Insurance Climate 1 Fixed Income 2 Futures & Options 3 Wealth Management 4 Private Assets ESG (ex. Climate) 5 Expanding in attractive additional addressable ma
Slide 12: 1Q24 Summary Financial Results
1Q24 Summary Financial Results (US$ in thousands, except per share data) For the Three Months Ended March 31, (Unaudited) 2024 2023 YoY% Change Operating revenues $ 679,965 $ 592,218 14.8% Operating income $ 339,382 $ 314,602 7.9% Operating margin % 49.9% 53.1% Net income $ 255,954 $ 238,728 7.2% Di
Slide 13: 1Q24 Segment Operating Revenues
1Q24 Segment Operating Revenues (US$ in millions) ESG & Climate All Other – Index Analytics (Reportable Segment) Private Assets 10% +12% +11% 3% Organic Organic Organic Organic 10% $373.9 +11% $339.4 $10.7 +16% $164.0 $77.9 $9.6 +66% $64.2 $147.1 $3.4 $67.1 $1.5 $150.3 $2.7 $1.1 $133.1 $1.3 $38.7 $0
Slide 14: 1Q24: Organic Subscription Run Rate Growth of 9%
1Q24: Organic Subscription Run Rate Growth of 9% (US$ in millions) Index Subscription Analytics ESG & Climate All Other – (Reportable Segment) Private Assets +9% +7% +13% +4% +9% Organic Organic Organic $869.9 Organic +7% +15% $795.6 $101.0 +8% +71% $71.4 $662.1 $93.3 $621.6 $57.4 $127.7 +19% $254.4
Slide 15: Index Segment: Asset-Based Fees Details
Index Segment: Asset-Based Fees Details (US$ 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 16: 1Q24 QoQ AUM Drivers: MSCI-Linked Equity ETFs
1Q24 QoQ AUM Drivers: MSCI-Linked Equity ETFs (US$ in billions) By Geographic Exposure By Product $33.3 ESG & Climate $19.7 U.S. Factors $14.2 DM ex. U.S. $45.4 Market Cap $58.9 Weighted EM $14.1 $(4.6) $(1.0) $11.7 $26.5 $14.3 $92.8 $92.8 $(5.0) $ 1,582.6 $1,582.6 Cash inflows / (outflows): $20.9 C
Slide 17: 1Q24 YoY AUM Drivers: MSCI-Linked Equity ETFs
1Q24 YoY AUM Drivers: MSCI-Linked Equity ETFs (US$ in billions) By Geographic Exposure $82.6 U.S. DM ex. $99.8 U.S. $33.2 EM $18.3 $215.6 $47.4 $(4.1) $ 1,582.6 Cash inflows / (outflows): $61.6 $1,305.4 1Q23 Ending U.S. Developed Markets Emerging Markets Market Change 1Q24 Ending AUM ex. U.S. AUM 17
Slide 18: Market Movement and Momentum in Cash Flows Continues
Market Movement and Momentum in Cash Flows Continues (US$ 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 concerns on g
Slide 19: 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) $58.1 30.8 $55.0 $55.4 $55.7 29.3 29.1 $53.1 24.5 24.2 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23
Slide 20: Adjusted Earnings Per Share Growth Drivers
Adjusted Earnings Per Share Growth Drivers (US$ in per share amounts) +12.1% Business Growth Capital Activities Tax and FX1 YoY $0.40 ($0.01) ($0.01) ($0.54) $0.94 $0.04 ($0.05) $3.52 $0.00 ($0.01) $3.14 1Q23 Revenue Expenses Sharecount Net Interest & Tax Rate Net Fx Impact 1Q24 Adjusted EPS Other E
Slide 21: Strong Balance Sheet Provides Optionality
Strong Balance Sheet Provides Optionality (US$ in millions, unless otherwise noted) • In 1Q24, paid quarterly dividends of approximately $126.8 million. Cash1 and Debt as of 03/31/2024 • Strong balance sheet provides optionality Total Cash $519M – Next maturity is not until 2029 Total Debt2 $4,508M
Slide 22: Full-Year 2024 Guidance
Full-Year 2024 Guidance Full-Year 2024 Guidance Item Current Guidance Operating Expense $1,300 to $1,340 million Adjusted EBITDA Expense $1,130 to $1,160 million Interest Expense1 $185 to $189 million (including amortization of financing fees) Depreciation & Amortization Expense $170 to $180 million
Slide 23: Q&A
Q&A
Slide 24: Additional Information
Additional Information
Slide 25: Continued Resilient Key Operating Metrics
Continued Resilient Key Operating Metrics YoY Recurring Subscription Run Rate Growth (as Reported and Organic) 17% 18% 18% 18% 16% 14% 14% 13% 10%10% 10% 11% 10% 10% 10% 10% 11% 12% 12% 12% 12% 14% 14% 11% 10% 10% 11% 12% 13% 12% 12% 12% 11% 11% 10% 9% 9% 10% 9% 7% 8% 8% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q2
Slide 26: 1Q19 to 1Q24 YoY Segment Run Rate Growth
1Q19 to 1Q24 YoY Segment Run Rate Growth Index 45% 49% 37% 27% 27% 12% 11% 11% 11% 13% 17% 15% 12% 13% 12% 12% 12% 14% 15% 16% 10% 5% 9% 11% 10% 11% 11% 11% 11% 12% 12% 7% 11% 11% 9% 1% 4% 5% -4% -13% -13% -7% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23
Slide 27: 1Q19 to 1Q24 YoY Segment Run Rate Growth
1Q19 to 1Q24 YoY Segment Run Rate Growth ESG & Climate 46% 47% 50% 47% 42% 44% 42% 36% 37% 28% 28% 31% 30% 25% 25% 26% 24% 46% 44% 47% 26% 25% 39% 42% 41% 20% 33% 33% 34% 15% 27% 27% 26% 29% 22% 24% 24% 23% 24% 22% 16% 13% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q
Slide 28: Geographic Market Exposures Of MSCI-Linked ETFs Increasingly Diversified Over Time
Geographic Market Exposures Of MSCI-Linked ETFs Increasingly Diversified Over Time Mix of MSCI linked equity ETF AUM balance by geographic exposure % US DM Ex US EM 22% 26% 27% 26% 26% 33% 30% 29% 32% 29% 30% 26% 42% 44% 44% 45% 46% 47% 58% 51% 46% 43% 50% 51% 47% 53% 46% 43% 23% 25% 27% 30% 28% 28%
Slide 29: Significant Growth Across ESG and Climate Franchise
Significant Growth Across ESG and Climate Franchise AUM in ETFs Linked to MSCI ESG and Climate Equity ESG & Climate Run Rates Across all Segments1 Indexes ESG Subscription Climate Subscription (US$ in billions) ESG ABF Climate ABF U.S. $22.9 +17% $530 $37 +55% DM ex. U.S. $17.1 $453 $80 +33% $24 EM
Slide 30: 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 31: Appendix
Appendix
Slide 32: 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 33: 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 slides 34 through 38 below that reconcile each non-GAAP financial measure with the most comparable GAAP measure. The non-GAAP financ
Slide 34: Reconciliation of Net Income to Adjusted EBITDA
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 35: 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 36: Reconciliation of Operating Expenses to Adjusted EBITDA Expenses
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 37: 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 provided by operating activities for this future period because we believe such a reconciliation would imply a degree of precis
Slide 38: First Quarter 2024 Reconciliation of Operating Revenue Growth to Organic Operating Revenue Growth
First Quarter 2024 Reconciliation of Operating Revenue Growth to Organic Operating Revenue Growth (UNAUDITED) Comparison of the Three Months Ended March 31, 2024 and 2023 Recurring Non-Recurring Total Asset-Based Fees Subscription Revenues Change Change Change Change Index Percentage Percentage Perc