MSCI Q1 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Fall

Core Insights - MSCI reported first-quarter 2025 adjusted earnings of $4 per share, exceeding the Zacks Consensus Estimate by 3.36% and reflecting a year-over-year increase of 13.6% [1] - Revenues for the quarter rose 9.7% year over year to$ 745.8 million, surpassing the consensus estimate by 0.66%, driven by strong growth in recurring subscription revenues and asset-based fees [1][3] - The company experienced solid growth in various segments, with notable increases in index revenues and operating income [3] Revenue Breakdown - Recurring subscriptions amounted to $552.6 million, up 7.7% year over year, contributing 74.1% to total revenues [2] - Asset-based fees reached$ 177.4 million, an 18.1% increase year over year, contributing 23.8% to revenues [2] - Non-recurring revenues decreased to $15.8 million, down 5.3% year over year, contributing 2.1% to revenues [2] Segment Performance - Index revenues were$ 421.7 million, increasing 12.8% year over year, with organic growth also at 12.8% [3] - Analytics operating revenues grew to $172.2 million, a 5% increase year over year, while non-recurring revenues in this segment declined 28.8% [4] - The Sustainability and Climate segment reported operating revenues of$ 84.6 million, rising 8.6% year over year [5] - Private Assets operating revenues were $67.3 million, up 4.7% year over year [6] Operating Metrics - Adjusted EBITDA increased 11% year over year to$ 425.6 million, with an adjusted EBITDA margin of 57.1% [7] - Total operating expenses rose 8.3% year over year to $368.8 million, driven by higher compensation costs due to a 5.6% increase in headcount [8] - Operating income improved 11.1% year over year to$ 377 million, with an operating margin of 50.6% [8] Balance Sheet and Cash Flow - As of March 31, 2025, total cash and cash equivalents were $360.7 million, down from$ 409.4 million at the end of 2024 [9] - Total debt increased to $4.6 billion, with a debt-to-adjusted EBITDA ratio of 2.6 times, below the management's target [9] - Free cash flow was reported at$ 268.9 million, a decrease of 2.5% year over year [10] 2025 Guidance - MSCI expects total operating expenses for 2025 to be between $1.405 billion and$ 1.445 billion [11] - Adjusted EBITDA expenses are anticipated to be between $1.220 billion and$ 1.250 billion [11] - The company projects net cash provided by operating activities and free cash flow to be between $1.52 billion to$ 1.57 billion and $1.400 billion to$ 1.460 billion, respectively [11]