Goldman Sachs analysts cut Indonesian stocks to underweight, warning that MSCI’s concerns over investability could trigger more than $13 billion in outflows if the market were downgraded to frontier status https://t.co/f3qLpg5SUo ...

Core Viewpoint - The analysis indicates an improved outlook for MSCI Inc. after a previously bearish stance, focusing on high-quality companies with competitive advantages and defensibility in the market [1]. Group 1: Company Analysis - MSCI Inc. is highlighted as a company that can outperform the market over the long term due to its economic moat and high levels of defensibility [1]. - The analysis emphasizes a focus on both European and North American companies, without constraints on market capitalization, ranging from large cap to small cap [1]. Group 2: Analyst Background - The analyst has a Master's Degree in Sociology with a focus on organizational and economic sociology, and a Bachelor's Degree in Sociology and History, providing a strong academic foundation for the analysis [1].

Core Insights - MSCI's fourth-quarter 2025 adjusted earnings per share (EPS) were $4.66, surpassing the Zacks Consensus Estimate by 0.86% and reflecting an 11.5% year-over-year increase [1][10] - Revenues for MSCI rose 10.6% year over year to $822.5 million, aligning with the Zacks Consensus Estimate, driven by strong growth in recurring subscription revenues and asset-based fees [1][10] Revenue Breakdown - Recurring subscriptions amounted to $584.2 million, a 7.5% increase year over year, contributing 71% to total revenues [2] - Asset-based fees reached $211.7 million, up 20.7% year over year, contributing 25.7% to total revenues [2] - Non-recurring revenues were $26.6 million, increasing 7.1% year over year, contributing 3.2% to total revenues [2] Segment Performance - Index revenues were $479.1 million, a 14% year-over-year increase, with recurring subscriptions and asset-based fees rising 7.8% and 20.7%, respectively [4] - Analytics operating revenues were $182.3 million, up 5.5% year over year, with recurring subscriptions increasing 7.1% [5] - The Sustainability and Climate segment generated $90.3 million in operating revenues, a 5.9% year-over-year increase [6] - All Other – Private Assets operating revenues were $70.9 million, reflecting an 8.4% year-over-year increase [7] Operating Metrics - Adjusted EBITDA increased 13.2% year over year to $512 million, with an adjusted EBITDA margin of 62.2% [8] - Total operating expenses rose 6.1% year over year to $358.9 million, driven by higher compensation costs [9] - Operating income improved 14.4% year over year to $463.6 million, with an operating margin expansion of 190 basis points to 56.4% [11] Balance Sheet and Cash Flow - Total cash and cash equivalents as of December 31, 2025, were $515.3 million, up from $400.1 million as of September 30, 2025 [12] - Total debt increased to $6.2 billion as of December 31, 2025, from $5.6 billion as of September 30, 2025 [12] - Free cash flow was $464.8 million, a 17.8% year-over-year increase from $423.3 million [13] 2026 Guidance - For 2026, MSCI anticipates total operating expenses between $1.490 billion and $1.530 billion [14] - Adjusted EBITDA expenses are expected to range from $1.305 billion to $1.335 billion [14] - Net cash provided by operating activities and free cash flow are projected to be between $1.64 billion and $1.69 billion, and $1.47 billion to $1.53 billion, respectively [14]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved organic revenue growth of over 10%, adjusted EBITDA growth of over 13%, and adjusted EPS growth of almost 12% for the quarter and nearly 14% for the full year [6][7] - The total run rate reached over $3.3 billion, growing 13%, with total asset-based fees (ABF) run rate of $852 million, growing 26%, and recurring subscription run rate of over $2.4 billion, growing over 9% [8][9] - The company has delivered 11 consecutive years of double-digit adjusted EPS growth [7] Business Line Data and Key Metrics Changes - In the Index segment, Q4 was the best quarter ever for new recurring subscription sales, with a growth rate of 18% [9] - Analytics posted the second-best Q4 on record for new subscription sales, with subscription run rate growth of over 8% [19] - Private Capital Solutions saw recurring sales growth of 86%, supported by innovative new products [9][20] - Sustainability and climate new subscription sales were lower than last year's levels, particularly in the Americas [10] Market Data and Key Metrics Changes - Total ETF and non-ETF AUM linked to MSCI indices reached approximately $7 trillion, driven by record inflows into clients' ETF products linked to MSCI indices, especially in Europe [9] - Equity ETFs linked to MSCI indexes captured a record $67 billion of inflows during Q4, totaling $204 billion for the full year [17] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance its capabilities across various product lines, including analytics and custom index creation [11][35] - MSCI aims to have a fully integrated company where each product line benefits from and contributes to every other product line, amplifying financial growth [23][24] - The company is committed to delivering long-term targets of low double-digit revenue growth and adjusted EBITDA growth of low to mid-teens [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on favorable long-term secular trends and the momentum across product lines and client segments [6][11] - The company is seeing significant opportunities in high-growth client segments, particularly among hedge funds and wealth managers [11][13] - There is optimism regarding the recovery of ESG-related sales in Europe, although challenges remain in the Americas [70] Other Important Information - The company repurchased nearly $958 million of its shares in Q4 at an average price of about $560 per share, reflecting strong conviction in its prospects [7] - Baer Pettit, the president, announced his retirement, effective March 1, which may impact future leadership dynamics [25][26] Q&A Session Summary Question: AI Adoption and Growth Impact - Management highlighted that AI has been integrated into various operations and products, enhancing efficiency and client service [31][35] Question: International Flows and Sales Opportunities - Management confirmed that there has been a significant uptick in activity in Europe and EMEA, with subscription run rates now higher than in the Americas [42][43] Question: Private Assets and Trends - The company noted strong sales in Private Capital Solutions, driven by new offerings and increased client interest [48][49] Question: Free Cash Flow Dynamics - Management discussed the impact of higher cash taxes and interest expenses on free cash flow, while projecting strong double-digit collection growth [54][56] Question: ESG Market Recovery - Management indicated that recovery in Europe is underway, albeit slower than desired, while challenges persist in the U.S. market [67][70]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved organic revenue growth of over 10%, adjusted EBITDA growth of over 13%, and adjusted EPS growth of almost 12% for the quarter and nearly 14% for the full year [6][7] - The total run rate reached over $3.3 billion, growing 13%, with total asset-based fees (ABF) run rate of $852 million, growing 26%, and recurring subscription run rate of over $2.4 billion, growing over 9% [8][9] - The company has delivered 11 consecutive years of double-digit adjusted EPS growth [7] Business Line Data and Key Metrics Changes - The index business had its best quarter ever for new recurring subscription sales, with a growth rate of 18% [8] - In analytics, the company posted its second-best Q4 on record for new subscription sales, with subscription run rate growth of over 8% [19] - Private Capital Solutions saw recurring sales growth of 86%, supported by innovative new products [9][19] Market Data and Key Metrics Changes - Total ETF and non-ETF AUM linked to MSCI indices reached approximately $7 trillion, driven by record inflows into clients' ETF products, particularly in Europe [9] - Equity ETFs linked to MSCI indexes captured a record $67 billion of inflows during Q4, totaling $204 billion for the full year [17] - The company observed significant uptick in activity in Europe and EMEA, with subscription run rate in EMEA now higher than in the Americas [39] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance its capabilities across various product lines, including analytics and custom index creation [10][31] - MSCI aims to have a fully integrated company where each product line benefits from and contributes to every other product line, amplifying financial growth [22] - The company will no longer maintain product line-specific long-term targets to better reflect its focus on integrated growth [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on favorable long-term secular trends and the resilience of its all-weather franchise [6][7] - The company is optimistic about the recovery in Europe and the potential for growth in sustainability and climate solutions, despite current challenges [66][70] - Management highlighted the importance of adapting to emerging risks and opportunities beyond traditional ESG factors, including AI and supply chain disruptions [10][70] Other Important Information - The company repurchased nearly $958 million of its shares at an average price of about $560 per share in Q4 [7] - Baer Pettit, the president, announced his retirement, effective March 1, and will be succeeded by Alvise Munari and Jorge Mina [24][26] Q&A Session Questions and Answers Question: Discussion on AI adoption and its impact on growth - Management highlighted that AI has been integrated into various operations and product lines, with significant projects aimed at enhancing analytics and custom index capabilities [30][31][34] Question: Insights on international flows and pricing opportunities - Management confirmed that there has been a significant uptick in activity in Europe and EMEA, with subscription run rates exceeding those in the Americas, indicating a positive trend in international flows [39][40] Question: Performance of private assets and future trends - Management noted strong sales in Private Capital Solutions, driven by new offerings and a positive outlook for growth in this segment [46][49] Question: Free cash flow dynamics and projections - Management discussed expected increases in cash taxes and interest expenses impacting free cash flow in 2026, but emphasized strong underlying business dynamics [51][54][56] Question: Recovery in ESG market and future expectations - Management indicated that while recovery in Europe is underway, the U.S. market remains challenging, but there is potential for growth in sustainability solutions [66][70]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved organic revenue growth of over 10%, adjusted EBITDA growth of over 13%, and adjusted EPS growth of almost 12% for the quarter and nearly 14% for the full year [4][5] - The company has delivered 11 consecutive years of double-digit adjusted EPS growth [5] - The total run rate reached over $3.3 billion, growing 13%, with total asset-based fees (ABF) run rate of $852 million, growing 26%, and recurring subscription run rate of over $2.4 billion, growing over 9% [6][8] Business Line Data and Key Metrics Changes - The index business had its best quarter ever for new recurring subscription sales, with a growth rate of 18% [6][8] - In analytics, the company posted its second-best Q4 on record for new subscription sales [8] - Private Capital Solutions saw recurring sales growth of 86%, supported by innovative new products [8][11] - Wealth managers achieved nearly 11% subscription run rate growth, including 15% recurring sales growth [11] - Active asset managers experienced recurring net new sales growth of 13%, primarily driven by index products [12] Market Data and Key Metrics Changes - Total ETF and non-ETF AUM linked to MSCI indices reached approximately $7 trillion, driven by record inflows into clients' ETF products linked to MSCI indices, particularly in Europe [8] - Equity ETFs linked to MSCI indexes captured a record $67 billion of inflows during Q4, totaling $204 billion for the full year [15] - The company noted significant uptick in activity in Europe and EMEA, with subscription run rates in EMEA now higher than in the Americas [40] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance its capabilities across various product lines, including analytics and custom index creation [10][31] - MSCI aims to have a fully integrated company where each product line benefits from and contributes to every other product line, amplifying financial growth [20][22] - The company is committed to delivering long-term targets of low double-digit revenue growth and adjusted EBITDA growth of low to mid-teens [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on favorable long-term trends and the resilience of its all-weather franchise [4][5] - The company is optimistic about the recovery in international flows and the potential for pricing power in the future [39][40] - Management highlighted the importance of adapting to emerging risks and opportunities beyond traditional ESG factors, including AI and supply chain disruptions [9][68] Other Important Information - The company repurchased nearly $958 million of its shares in Q4 at an average price of about $560 per share, reflecting strong conviction in its prospects [5] - The company is undergoing a technology-powered transformation with a total embrace of AI, which is expected to enhance the value of its tools for clients [10][34] Q&A Session Summary Question: AI Adoption and Growth Impact - Management discussed the extensive use of AI in operations and product development, highlighting its potential to enhance client insights and operational efficiency [29][30][31][34] Question: International Flows and Pricing Opportunities - Management confirmed that there has been a significant uptick in activity in Europe and EMEA, with positive implications for new sales and pricing strategies [39][40] Question: Private Assets Growth and Trends - Management noted strong sales in Private Capital Solutions and emphasized the ongoing investment in innovative products to capture market opportunities [46][49] Question: Free Cash Flow Dynamics - Management explained the expected increase in cash taxes and interest expenses impacting free cash flow, while projecting strong double-digit collection growth [51][53][56] Question: ESG Market Recovery - Management indicated that recovery in Europe is underway, albeit slower than desired, and highlighted the shift towards analyzing emerging non-traditional risks [64][66][68]

Core Insights - MSCI Inc. reported quarterly results that exceeded Wall Street expectations, driven by steady subscription momentum and stronger asset-linked fees, which enhanced profitability [1] Quarterly Metrics - Adjusted earnings per share for the fourth quarter were $4.66, surpassing the analyst consensus estimate of $4.57 [2] - Quarterly sales reached $822.528 million, exceeding the expected $819.352 million, with operating revenues increasing by 10.6% and organic operating revenue growth at 10.2% [2] - Recurring subscription revenues grew by 7.8%, while asset-based fees rose by 20.7%, reflecting strong market-driven inflows and valuations [2] Operating Performance - Operating income was reported at $463.6 million, a 14.4% increase, with the operating margin expanding to 56.4% from 54.5% [3] - Adjusted EBITDA totaled $512.002 million, up from $452.254 million a year ago, with the adjusted EBITDA margin increasing to 62.2% from 60.8% [3] - The total run rate as of December 31, 2025, was $3.3016 billion, marking a 13.0% increase, and the retention rate improved to 93.4% from 93.1% year-over-year [3] Employee and Cash Flow Metrics - As of December 31, 2025, the company employed 6,268 individuals, reflecting a 2.2% increase [4] - Capital expenditures were $36.3 million, while net cash provided by operating activities rose by 16.4% to $501.1 million, primarily due to higher cash collections [4] - Free cash flow for the fourth quarter increased by 17.8% to $464.8 million, with cash and equivalents totaling $515.3 million [4] Strategic Milestones - The company achieved its 11th consecutive year of double-digit adjusted EPS growth and recorded a peak asset-based-fee run rate driven by inflows into ETF products linked to its indexes [5] - MSCI is focusing on emerging client segments and leveraging AI to enhance the value of its solutions, positioning itself as a critical intelligence layer in global investing [6] Dividend Declaration - The MSCI Board of Directors declared a cash dividend of $2.05 per share for the first quarter of 2026, payable on February 27 [7] Financial Outlook - For full-year 2026, the company guided operating expenses between $1.49 billion and $1.53 billion, with adjusted EBITDA expenses projected at $1.305 billion to $1.335 billion [8] - Interest expenses are expected to range from $274 million to $280 million, with depreciation and amortization forecasted at $185 million to $195 million [8] - The effective tax rate is anticipated to be between 18% and 20%, with planned capital expenditures of $160 million to $170 million [8] - Projected net cash provided by operating activities is between $1.64 billion and $1.69 billion, translating into free cash flow of $1.47 billion to $1.53 billion for the year [9] Stock Performance - MSCI shares increased by 3.48% to $601.98 at the time of publication [9]

Fourth Quarter 2025 Earnings Presentation January 28, 2026 © 2026 MSCI Inc. All rights reserved. 2 → 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 2026 guidance and MSCI's long-term targets. These forward-looking statements relate to future events or to future financial performance and involve underlying assumptions, as well as known and unknown risks, uncertainties an ...

MSCI (MSCI) came out with quarterly earnings of $4.66 per share, beating the Zacks Consensus Estimate of $4.62 per share. This compares to earnings of $4.18 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +0.86%. A quarter ago, it was expected that this maker of software tools to help portfolio managers make investment decisions would post earnings of $4.37 per share when it actually produced earnings of $4.47, delivering a su ...

Financial Performance - Operating revenues for Q4 2025 were $822.5 million, an increase of 10.6% compared to Q4 2024[5] - Adjusted EPS for Q4 2025 was $4.66, up 11.5% year-over-year, while diluted EPS decreased by 2.3% to $3.81[5] - Operating income for Q4 2025 was $463.6 million, up 14.4%, with an operating margin of 56.4%[9] - Adjusted EBITDA for Q4 2025 was $512.0 million, a 13.2% increase, with an adjusted EBITDA margin of 62.2%[13] - Net income for Q4 2025 was $284,669,000, a decrease of 6.8% from $305,515,000 in Q4 2024[72] - Total operating revenues for Q4 2025 reached $822,528,000, reflecting a 10.6% increase from $743,509,000 in Q4 2024[74] - Adjusted EBITDA for Q4 2025 was $512,002,000, up 13.2% from $452,254,000 in Q4 2024[74] - Net income for the year ended December 31, 2025, was $1,202,305, compared to $1,109,128 in 2024, reflecting an increase of about 8.4%[70] - Free cash flow for the year ended December 31, 2025, was $1.458585 billion, an increase from $1.386509 billion in 2024, with a forecast of $1.470 billion to $1.530 billion for 2026[87] Revenue Breakdown - Recurring subscription revenues increased by 7.5%, and asset-based fees rose by 20.7% in Q4 2025[5] - New recurring subscription sales grew by 11.7%, with an organic recurring subscription Run Rate growth of 7.7%[5] - Sustainability and Climate segment revenues were $90.3 million, up 5.9%, driven by growth in recurring subscriptions related to Ratings and Climate products[22] - The Index segment's operating revenues reached $479.1 million, a 14.0% increase, with organic operating revenue growth also at 14.0%[15] - Total operating revenues for All Other – Private Assets reached $70.9 million, an increase of 8.4% year-over-year, driven by growth in recurring subscriptions[23] - Recurring subscriptions contributed $70.3 million to operating revenues, up 9.4% from the previous year, with organic operating revenue growth at 6.6%[23] Cash and Debt Management - Cash and cash equivalents stood at $515.3 million, with a target minimum cash balance of $225.0 million to $275.0 million for operational purposes[26] - Total outstanding debt was $6.2 billion, with a total debt to adjusted EBITDA ratio of 3.3x, within the target range of 3.0x to 3.5x[27] - Capital expenditures (Capex) for the quarter were $36.3 million, while net cash provided by operating activities increased by 16.4% to $501.1 million[29] - The company declared a cash dividend of $2.05 per share for Q1 2026, with approximately $134.7 million in dividends paid in Q4 2025[31] Future Guidance - Full-Year 2026 guidance includes operating expenses of $1,490 to $1,530 million and free cash flow of $1,470 to $1,530 million[34] - The company anticipates consolidated adjusted EBITDA expenses for 2026 to be between $1.305 billion and $1.335 billion[85] Customer Metrics - The annualized retention rate is derived by subtracting the cancellation rate from 100%, providing insight into customer loyalty and subscription stability[55] - The total retention rate improved to 93.4% for the three months ended December 31, 2025, up from 93.1% in 2024[79] Asset Management - Total assets as of December 31, 2025, amounted to $5,702,459, an increase from $5,445,439 in 2024, showing a growth of approximately 4.7%[71] - Long-term debt increased to $6,202,286 as of December 31, 2025, compared to $4,510,816 in 2024, indicating a significant rise in leverage[71] - Deferred revenue as of December 31, 2025, was $1,231,776, up from $1,123,423 in 2024, indicating growth in future revenue recognition[71] - Approximately three-fifths of the assets under management (AUM) are invested in securities denominated in currencies other than the U.S. dollar, which may impact revenue due to foreign currency fluctuations[68] Capital Expenditures - Total capital expenditures for the year ended December 31, 2025, were $129.861 million, with capitalized software development costs at $90.542 million[87]