Q124 MSCI earnings

earnings summary

Earnings Results: • Organic revenue growth of 10%, adjusted EPS growth of 12%, free cash flow growth of 14% • ABF revenue grew 13%, powered by record AUM in ETFs and non-listed products linked to MSCI indices • Analytics had highest Q1 recurring sales in a decade at $14 million • Elevated cancels in Q1 due to concentration of unusual client events, not expected to continue

Future Guidance: • 2024 guidance across all categories remains unchanged • Assumes AUM declines slightly in Q2 and rebounds gradually in second half of 2024 • Quarterly effective tax rate expected to be 21-22% before discrete items for remainder of year

MSCI delivered solid financial results in Q1 2024, demonstrating the resilience of its business model and ability to maintain profitable growth despite some headwinds. Organic revenue grew 10%, adjusted EPS rose 12%, and free cash flow increased 14%. Asset-based fees revenue grew 13% to a record level. The Analytics segment saw its highest Q1 recurring sales in a decade at $14 million.

However, MSCI also experienced elevated cancellations in Q1, largely due to a concentration of unusual client events such as a merger of two major European banks. These elevated cancels are not expected to persist in coming quarters. Despite this challenging environment, MSCI remains optimistic, seeing strong client engagement across segments and geographies. Secular tailwinds like portfolio customization, indexation, growth of private assets, and sustainability are expected to continue driving long-term growth.

Guidance for 2024 is unchanged, assuming a slight AUM decline in Q2 followed by a gradual rebound in the second half. The quarterly effective tax rate is projected at 21-22% before discrete items.

Notable quotes: “Our all-weather franchise supports our financial resilience. Our diverse mix of clients, products and geographies helped stabilize our performance in difficult environments as we experienced in the first quarter.” - Henry Fernandez, Chairman and CEO

”To the extent and when the pressures begin to alleviate that should translate through into, I think, encouraging growth for us. And as I alluded to in the last question, it’s not just in our core products, but we do see opportunities in newer solutions that we have as well as in many of these client segments that are a little less exposed to some of the cyclical dynamics that we’re talking about.” - Andrew Wiechmann, CFO