MSCI(MSCI) - 2025 Q1 - Quarterly Report

Financial Performance - Total operating revenues for Q1 2025 increased by 9.7% to $745.826 million, compared to$ 679.965 million in Q1 2024[98] - Recurring subscription revenues rose by 7.7% to $552.641 million, while asset-based fees increased by 18.1% to$ 177.415 million[98] - Net income for Q1 2025 was $288.600 million, reflecting a 12.8% increase from$ 255.954 million in Q1 2024[116] - Adjusted EBITDA for the three months ended March 31, 2025, was $425.641 million, an increase of 11.0% from$ 383.573 million in 2024[123] - Operating revenues for the Index segment increased by 12.8% to $421.743 million, driven by a 9.6% increase in recurring subscriptions and an 18.1% increase in asset-based fees[129] - Analytics segment operating revenues grew by 5.0% to$ 172.185 million, primarily due to growth in recurring subscriptions[137] - Sustainability and Climate segment operating revenues increased by 8.6% to $84,619,000, driven by a growth in recurring subscriptions, particularly in EMEA[139] - All Other – Private Assets operating revenues grew by 4.7% to$ 67,279,000, primarily due to recurring subscriptions in Private Capital Solutions[141] - Total Run Rate increased by 9.3% to $2,979,248,000, with recurring subscriptions up by 8.3% and asset-based fees up by 12.6%[146] Expenses and Costs - Operating expenses increased by 8.3% to$ 368.803 million, with research and development expenses rising by 17.4%[102] - Total operating expenses for the three months ended March 31, 2025, were $368.803 million, up from$ 340.583 million in 2024[126] - Adjusted EBITDA expenses for the Index segment increased by 14.6%, primarily due to higher compensation and benefits costs[136] - Adjusted EBITDA expenses for Sustainability and Climate increased by 7.1% to $60,798,000, driven by higher compensation and IT costs[140] Client and Market Information - The largest client, BlackRock, accounted for 10.3% of consolidated operating revenues, with 96.1% of revenues from fees based on assets in BlackRock's ETFs and non-ETF products[94] - As of March 31, 2025, the company served approximately 7,000 clients across more than 95 countries[87] - The average value of AUM in ETFs linked to MSCI equity indexes increased by$ 284.9 billion, or 18.9%, compared to the same period in 2024[135] Employee and Operational Metrics - The company experienced a 5.6% increase in employee count, reaching 6,184 employees as of March 31, 2025[109] - The Retention Rate for the total segment improved to 95.3%, up from 92.8% in the previous year[155] - New recurring subscription sales for the consolidated segment totaled $52,584,000, while subscription cancellations were$ 26,530,000, resulting in net new recurring subscription sales of $26,054,000[154] - Sustainability and Climate segment's net new recurring subscription sales decreased to$ 2,540,000 from $4,120,000 year-over-year[154] Financial Health and Capital Management - The effective tax rate decreased to 12.8% in Q1 2025 from 13.5% in Q1 2024, primarily due to excess tax benefits from stock-based compensation[115] - Weighted average shares outstanding decreased by 2.0% for basic shares and 2.1% for diluted shares compared to the same period in 2024, primarily due to share repurchases[117] - As of March 31, 2025, the company had$ 4,200.0 million in Senior Notes outstanding and $371.9 million in outstanding borrowings under the revolving credit facility[160] - The company entered into a Credit Agreement on January 26, 2024, providing$ 1,250.0 million of revolving loan commitments available until January 26, 2029[161] - The Consolidated Leverage Ratio as of March 31, 2025, was 2.30:1.00, and the Consolidated Interest Coverage Ratio was 10.45:1.00, indicating strong financial health[165] Cash Flow and Dividends - For the three months ended March 31, 2025, net cash provided by operating activities was $301,737,000, compared to$ 300,137,000 for the same period in 2024[171] - Cash and cash equivalents decreased to $360,671,000 as of March 31, 2025, from$ 409,351,000 as of December 31, 2024[169] - The company repurchased 263,000 shares at an average price of $590.60 per share, totaling$ 155,358,000 for the three months ended March 31, 2025[166] - A quarterly cash dividend of $1.80 per share was declared on April 21, 2025, payable on May 30, 2025[167] Foreign Currency and Other Expenses - Total other expense (income), net increased by 5.7% to$ 45.953 million, driven by lower interest income and unfavorable foreign currency exchange rate fluctuations[114] - Approximately 39.5% of operating expenses for the three months ended March 31, 2025, were denominated in foreign currencies[179] - The company recognized total foreign currency exchange losses of $2.4 million for the three months ended March 31, 2025, compared to$ 1.0 million in 2024[180]