Item 1. Financial Statements

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except per share and share data)

						As of
						March 31,						December 31,
(unaudited)						2023						2022
ASSETS
Current assets:
Cash and cash equivalents (includes restricted cash of $3,871 and $368 at March 31, 2023 and December 31, 2022, respectively)						$	1,080,608					$	993,564
Accounts receivable, net of allowances						641,584						663,236
Prepaid income taxes						33,487						36,654
Prepaid and other assets						54,888						54,520
Total current assets						1,810,567						1,747,974
Property, equipment and leasehold improvements, net						58,839						53,853
Right of use assets						125,596						126,584
Goodwill						2,231,037						2,229,670
Intangible assets, net						551,012						558,517
Equity method investment						211,924						214,389
Deferred tax assets						28,857						29,207
Other non-current assets						40,868						37,341
Total assets						$	5,058,700					$	4,997,535
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable						$	10,746					$	15,039
Income taxes payable						27,481						8,058
Accrued compensation and related benefits						75,553						182,370
Current portion of long-term debt						8,715						8,713
Other accrued liabilities						165,840						153,461
Deferred revenue						920,255						882,886
Total current liabilities						1,208,590						1,250,527
Long-term debt						4,502,176						4,503,233
Long-term operating lease liabilities						130,571						131,575
Deferred tax liabilities						27,433						29,098
Other non-current liabilities						91,294						91,027
Total liabilities						5,960,064						6,005,460
Commitments and Contingencies (see Note 7)
Shareholders’ equity (deficit):
Preferred stock (par value $0.01, 100,000,000 shares authorized; no shares issued)						—						—
Common stock (par value $0.01; 750,000,000 common shares authorized; 133,804,962 and 133,623,005 common shares issued and 80,063,044 and 79,959,989 common shares outstanding at March 31, 2023 and December 31, 2022, respectively)						1,338						1,336
Treasury shares, at cost (53,741,918 and 53,663,016 common shares held at March 31, 2023 and December 31, 2022, respectively)						(5,982,106)						(5,938,116)
Additional paid in capital						1,536,906						1,515,874
Retained earnings						3,599,934						3,473,192
Accumulated other comprehensive loss						(57,436)						(60,211)
Total shareholders’ equity (deficit)						(901,364)						(1,007,925)
Total liabilities and shareholders’ equity (deficit)						$	5,058,700					$	4,997,535

See Notes to Condensed Consolidated Financial Statements (Unaudited)

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

						Three Months Ended March 31,
(unaudited)						2023						2022
Operating revenues						$	592,218					$	559,945
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)						108,647						102,771
Selling and marketing						66,475						66,053
Research and development						31,323						28,322
General and administrative						41,044						45,567
Amortization of intangible assets						24,667						21,720
Depreciation and amortization of property, equipment and leasehold improvements						5,460						6,534
Total operating expenses						277,616						270,967
Operating income						314,602						288,978
Interest income						(10,362)						(298)
Interest expense						46,206						40,714
Other expense (income)						2,386						(381)
Other expense (income), net						38,230						40,035
Income before provision for income taxes						276,372						248,943
Provision for income taxes						37,644						20,520
Net income						$	238,728					$	228,423
Earnings per share:
Basic						$	2.98					$	2.80
Diluted						$	2.97					$	2.78
Weighted average shares outstanding:
Basic						80,041						81,591
Diluted						80,482						82,286

See Notes to Condensed Consolidated Financial Statements (Unaudited)

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

						Three Months Ended March 31,
(unaudited)						2023						2022
Net income						$	238,728					$	228,423
Other comprehensive income (loss):
Foreign currency translation adjustments						4,362						(2,950)
Income tax effect						(1,108)						862
Foreign currency translation adjustments, net						3,254						(2,088)
Pension and other post-retirement adjustments						(513)						110
Income tax effect						34						(44)
Pension and other post-retirement adjustments, net						(479)						66
Other comprehensive (loss) income, net of tax						2,775						(2,022)
Comprehensive income						$	241,503					$	226,401

See Notes to Condensed Consolidated Financial Statements (Unaudited)

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(in thousands)

(unaudited)						Common Stock						Treasury Stock						Additional Paid in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Total
Balance at December 31, 2022						$	1,336					$	(5,938,116)					$	1,515,874					$	3,473,192					$	(60,211)					$	(1,007,925)
Net income																								238,728												238,728
Dividends declared ($1.38 per common share)																								(111,986)												(111,986)
Dividends paid in shares																		44																		44
Other comprehensive income (loss), net of tax																														2,775						2,775
Common stock issued						2																														2
Shares withheld for tax withholding												(43,960)																								(43,960)
Compensation payable in common stock																		20,988																		20,988
Common stock repurchased and held in treasury																																				—
Common stock issued to Directors and (held in)/released from treasury												(30)																								(30)
Balance at March 31, 2023						$	1,338					$	(5,982,106)					$	1,536,906					$	3,599,934					$	(57,436)					$	(901,364)
Balance at December 31, 2021						$	1,332					$	(4,540,144)					$	1,457,623					$	2,976,517					$	(58,795)					$	(163,467)
Net income																								228,423												228,423
Dividends declared ($1.04 per common share)																								(87,280)												(87,280)
Dividends paid in shares																		77																		77
Other comprehensive income (loss), net of tax																														(2,022)						(2,022)
Common stock issued						4																														4
Shares withheld for tax withholding												(105,000)																								(105,000)
Compensation payable in common stock																		22,754																		22,754
Common stock repurchased and held in treasury												(772,657)																								(772,657)
Common stock issued to Directors and (held in)/released from treasury												(21)																								(21)
Balance at March 31, 2022						$	1,336					$	(5,417,822)					$	1,480,454					$	3,117,660					$	(60,817)					$	(879,189)

See Notes to Condensed Consolidated Financial Statements (Unaudited)

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

						Three Months Ended March 31,
(unaudited)						2023						2022
Cash flows from operating activities
Net income						$	238,728					$	228,423
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets						24,667						21,720
Stock-based compensation expense						21,088						22,857
Depreciation and amortization of property, equipment and leasehold improvements						5,460						6,534
Amortization of right of use assets						5,782						6,292
Amortization of debt origination fees						1,264						1,403
Deferred taxes						(2,254)						(12,961)
Other adjustments						3,906						933
Changes in assets and liabilities:
Accounts receivable						22,489						70,417
Prepaid income taxes						3,396						(7,170)
Prepaid and other assets						(1,194)						3,062
Other non-current assets						(2,333)						(5,005)
Accounts payable						(6,327)						(2,060)
Income taxes payable						19,179						24,257
Accrued compensation and related benefits						(108,252)						(135,148)
Other accrued liabilities						8,305						15,161
Deferred revenue						34,427						10,932
Long-term operating lease liabilities						(5,047)						(5,542)
Other non-current liabilities						941						1,695
Other						(84)						(1,616)
Net cash provided by operating activities						264,141						244,184
Cash flows from investing activities
Capitalized software development costs						(15,351)						(14,084)
Capital expenditures						(6,225)						(1,254)
Other						(186)						28
Net cash used in investing activities						(21,762)						(15,310)
Cash flows from financing activities
Payment of dividends						(112,145)						(87,769)
Repurchase of common stock held in treasury						(43,960)						(877,657)
Repayment of borrowings						(2,188)						(5,000)
Proceeds from borrowings, inclusive of premium						—						5,000
Payment of debt issuance costs in connection with debt						—						(559)
Payment of contingent consideration						—						(132)
Net cash (used in) provided by financing activities						(158,293)						(966,117)
Effect of exchange rate changes						2,958						(4,891)
Net (decrease) increase in cash, cash equivalents and restricted cash						87,044						(742,134)
Cash, cash equivalents and restricted cash, beginning of period						993,564						1,421,449
Cash, cash equivalents and restricted cash, end of period						$	1,080,608					$	679,315
Supplemental disclosure of cash flow information:
Cash paid for interest						$	33,803					$	27,776
Cash paid for income taxes, net of refunds received						$	18,965					$	17,645
Supplemental disclosure of non-cash investing activities
Property, equipment and leasehold improvements in other accrued liabilities						$	5,156					$	6,118
Supplemental disclosure of non-cash financing activities
Cash dividends declared, but not yet paid						$	511					$	2,361

See Notes to Condensed Consolidated Financial Statements (Unaudited)

MSCI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. INTRODUCTION AND BASIS OF PRESENTATION

MSCI Inc., together with its wholly owned subsidiaries (the “Company” or “MSCI”) is a leading provider of critical decision support tools and solutions for the global investment community. Our mission-critical offerings help investors address the challenges of a transforming investment landscape and power better investment decisions. Leveraging our knowledge of the global investment process and our expertise in research, data and technology, we enable our clients to understand and analyze key drivers of risk and return and confidently and efficiently build more effective portfolios. Our products and services include indexes; portfolio construction and risk management tools; environmental, social and governance (“ESG”) and climate solutions; and real estate market and transaction data and analysis.

Basis of Presentation and Use of Estimates

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. If not materially different, certain note disclosures included therein have been omitted from these interim condensed consolidated financial statements.

In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim consolidated financial statements, have been included. The results of operations for interim periods are not necessarily indicative of results for the entire year.

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The Company makes certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the unaudited condensed consolidated financial statements, as well as the reported amounts of operating revenues and expenses during the periods presented. Significant estimates and judgments made by management include such examples as assessment of impairment of goodwill and intangible assets and income taxes. The Company believes that estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Inter-company balances and transactions are eliminated in consolidation.

Concentrations

For the three months ended March 31, 2023 and 2022, BlackRock, Inc. (“BlackRock”) accounted for 10.2% and 10.9% of the Company’s consolidated operating revenues, respectively. For the three months ended March 31, 2023 and 2022, BlackRock accounted for 17.4% and 18.0% of the Index segment’s operating revenues, respectively. No single customer represented 10.0% or more of operating revenues within the Analytics, ESG and Climate or All Other – Private Assets segments for the three months ended March 31, 2023 and 2022.

Restricted Cash

Restricted cash primarily relates to security deposits for certain operating leases that are legally restricted and unavailable for our general operations.

Allowance for Credit Losses

Changes in the allowance for credit losses from December 31, 2021 to March 31, 2023 were as follows:

(in thousands)						Amount
Balance as of December 31, 2021						$	2,337
Addition (reduction) to credit loss expense						910
Write-offs, net of recoveries						(595)
Balance as of December 31, 2022						$	2,652
Addition (reduction) to credit loss expense						320
Write-offs, net of recoveries						(191)
Balance as of March 31, 2023						$	2,781

2. RECENT ACCOUNTING PRONOUNCEMENTS

There are no recently issued accounting standards updates that are currently expected to have a material impact on the Company.

3. REVENUE RECOGNITION

MSCI’s operating revenues are reported by product type, which generally reflects the timing of recognition. The Company’s operating revenue types are recurring subscriptions, asset-based fees and non-recurring revenues. The Company also disaggregates operating revenues by segment.

The tables that follow present the disaggregated operating revenues for the periods indicated:

						For the Three Months Ended March 31, 2023
						Segments
(in thousands)						Index						Analytics						ESG and Climate						All Other - Private Assets						Total
Operating Revenue Types
Recurring subscriptions						$	196,678					$	144,503					$	65,732					$	38,334					$	445,247
Asset-based fees						133,126						—						—						—						133,126
Non-recurring						9,578						2,567						1,326						374						13,845
Total						$	339,382					$	147,070					$	67,058					$	38,708					$	592,218

						For the Three Months Ended March 31, 2022
						Segments
(in thousands)						Index						Analytics						ESG and Climate						All Other - Private Assets						Total
Operating Revenue Types
Recurring subscriptions						$	174,498					$	137,799					$	50,572					$	36,891					$	399,760
Asset-based fees						145,053						—						—						—						145,053
Non-recurring						11,208						1,998						1,457						469						15,132
Total						$	330,759					$	139,797					$	52,029					$	37,360					$	559,945

The tables that follow present the change in accounts receivable, net of allowances, and current deferred revenue between the dates indicated:

(in thousands)						Accounts receivable, net of allowances						Deferred revenue
Opening (December 31, 2022)						$	663,236					$	882,886
Closing (March 31, 2023)						641,584						920,255
Increase/(decrease)						$	(21,652)					$	37,369

(in thousands)						Accounts receivable, net of allowances						Deferred revenue
Opening (December 31, 2021)						$	664,511					$	824,912
Closing (March 31, 2022)						592,326						832,203
Increase/(decrease)						$	(72,185)					$	7,291

The amounts of revenues recognized in the periods that were included in the opening current deferred revenue, which reflects contract liability amounts, were $356.6 million and $339.7 million for the three months ended March 31, 2023 and 2022 respectively. The difference between the opening and closing balances of the Company’s deferred revenue was primarily driven by an increase in billings, partially offset by an increase in amortization of deferred revenue to operating revenues. As of March 31, 2023 and December 31, 2022, the Company carried a long-term deferred revenue balance of $30.0 million and $29.4 million, respectively, in “Other non-current liabilities” on the Unaudited Condensed Consolidated Statement of Financial Condition.

For contracts that have a duration of one year or less, the Company has not disclosed either the remaining performance obligation as of the end of the reporting period or when the Company expects to recognize the revenue. The remaining performance obligations for contracts that have a duration of greater than one year and the periods in which they are expected to be recognized are as follows:

						As of
						March 31,
(in thousands)						2023
First 12-month period						$	673,206
Second 12-month period						408,154
Third 12-month period						188,184
Periods thereafter						126,279
Total						$	1,395,823

4. EARNINGS PER COMMON SHARE

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the assumed conversion of all dilutive securities, including, when applicable, restricted stock units (“RSUs”), performance stock units (“PSUs”) and performance stock options (“PSOs”).

The following table presents the computation of basic and diluted EPS:

						Three Months Ended March 31,
(in thousands, except per share data)						2023						2022
Net income						$	238,728					$	228,423
Basic weighted average common shares outstanding						80,041						81,591
Effect of dilutive securities:
PSUs, RSUs and PSOs						441						695
Diluted weighted average common shares outstanding						80,482						82,286
Earnings per common share:
Basic						$	2.98					$	2.80
Diluted						$	2.97					$	2.78

5. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

Property, equipment and leasehold improvements, net consisted of the following as of the dates indicated:

						As of
						March 31,						December 31,
(in thousands)						2023						2022
Computer & related equipment						$	183,739					$	181,710
Furniture & fixtures						14,429						14,078
Leasehold improvements						54,662						54,040
Work-in-process						9,409						2,373
Subtotal						262,239						252,201
Accumulated depreciation and amortization						(203,400)						(198,348)
Property, equipment and leasehold improvements, net						$	58,839					$	53,853

Depreciation and amortization expense of property, equipment and leasehold improvements was $5.5 million and $6.5 million for the three months ended March 31, 2023 and 2022, respectively.

6. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The following table presents goodwill by reportable segment:

(in thousands)						Index						Analytics						ESG and Climate						All Other - Private Assets						Total
Goodwill at December 31, 2022						$	1,201,622					$	290,976					$	48,047					$	689,025					$	2,229,670
Foreign exchange translation adjustment						846						—						—						521						1,367
Goodwill at March 31, 2023						$	1,202,468					$	290,976					$	48,047					$	689,546					$	2,231,037

Intangible Assets, Net

The following table presents the amount of amortization expense related to intangible assets by category for the periods indicated:

						Three Months Ended March 31,
(in thousands)						2023						2022
Amortization expense of acquired intangible assets						$	15,831					$	15,898
Amortization expense of internally developed capitalized software						8,836						5,822
Total amortization of intangible assets expense						$	24,667					$	21,720

The gross carrying and accumulated amortization amounts related to the Company’s intangible assets were as follows:

						As of
						March 31,						December 31,
(in thousands)						2023						2022
Gross intangible assets:
Customer relationships						$	532,500					$	532,500
Proprietary data						220,778						220,778
Acquired technology and software						209,220						209,220
Trademarks						208,190						208,190
Internally developed capitalized software						182,400						165,928
Subtotal						1,353,088						1,336,616
Foreign exchange translation adjustment						(11,550)						(13,214)
Total gross intangible assets						$	1,341,538					$	1,323,402
Accumulated amortization:
Customer relationships						$	(316,078)					$	(308,437)
Proprietary data						(46,550)						(41,783)
Acquired technology and software						(180,862)						(179,833)
Trademarks						(164,438)						(162,044)
Internally developed capitalized software						(86,095)						(77,259)
Subtotal						(794,023)						(769,356)
Foreign exchange translation adjustment						3,497						4,471
Total accumulated amortization						$	(790,526)					$	(764,885)
Net intangible assets:
Customer relationships						$	216,422					$	224,063
Proprietary data						174,228						178,995
Acquired technology and software						28,358						29,387
Trademarks						43,752						46,146
Internally developed capitalized software						96,305						88,670
Subtotal						559,065						567,260
Foreign exchange translation adjustment						(8,053)						(8,743)
Total net intangible assets						$	551,012					$	558,517

The following table presents the estimated amortization expense for the remainder of the year ending December 31, 2023 and succeeding years:

Years Ending December 31, (in thousands)						Amortization Expense
Remainder of 2023						$	78,701
2024						97,591
2025						72,243
2026						39,846
2027						36,275
Thereafter						226,356
Total						$	551,012

7. COMMITMENTS AND CONTINGENCIES

As of March 31, 2023, the Company had outstanding an aggregate of $4,200.0 million in senior unsecured notes (collectively, the “Senior Notes”) and an aggregate of $345.6 million in senior unsecured tranche A term loans (the “Tranche A Term Loans”) under the term loan A facility (the “TLA Facility”), as presented in the table below:

												Principal Amount Outstanding at						Carrying Value at						Carrying Value at						Fair Value at						Fair Value at
(in thousands)						Maturity Date						March 31, 2023						March 31, 2023						December 31, 2022						March 31, 2023						December 31, 2022
Debt
4.000% senior unsecured notes due 2029						November 15, 2029						$	1,000,000					$	992,818					$	992,546					$	913,500					$	876,240
3.625% senior unsecured notes due 2030						September 1, 2030						900,000						895,091						894,925						783,216						751,113
3.875% senior unsecured notes due 2031						February 15, 2031						1,000,000						991,340						991,067						891,050						833,130
3.625% senior unsecured notes due 2031						November 1, 2031						600,000						594,359						594,195						514,356						500,880
3.250% senior unsecured notes due 2033						August 15, 2033						700,000						693,030						692,862						576,072						542,696
Variable rate Tranche A Term Loans due 2027						February 16, 2027						345,625						344,253						346,352						343,897						346,073
Total debt(1)												$	4,545,625					$	4,510,891					$	4,511,947					$	4,022,091					$	3,850,132

---

(1) Includes $8.7 million of current-portion of long-term debt.

Maturities of the Company’s principal debt payments as of March 31, 2023 are as follows:

Maturity of Principal Debt Payments (in thousands)						Amounts
Remainder of 2023						$	6,562
2024						10,938
2025						19,687
2026						26,250
2027						282,188
Thereafter						4,200,000
Total debt						$	4,545,625

Interest payments attributable to the Company’s outstanding indebtedness are due as presented in the following table:

						Interest payment frequency						First interest payment date
Senior Notes and Tranche A Term Loans
4.000% senior unsecured notes due 2029						Semi-Annual						May 15
3.625% senior unsecured notes due 2030						Semi-Annual						March 1
3.875% senior unsecured notes due 2031						Semi-Annual						June 1
3.625% senior unsecured notes due 2031						Semi-Annual						May 1
3.250% senior unsecured notes due 2033						Semi-Annual						February 15
Variable rate Tranche A Term Loans due 2027						Variable						July 11

The fair market value of the Company’s debt obligations represent Level 2 valuations. The Company utilized the market approach and obtained security pricing from a vendor who used broker quotes and third-party pricing services to determine fair values.

Credit Agreement. Since November 20, 2014, the Company has maintained a revolving credit agreement with a syndicate of banks. On June 9, 2022, the Company, the guarantors party thereto and the lenders and agents party thereto, entered into an Amended and Restated Credit Agreement (the “Credit Agreement”), amending and restating in its entirety the Company’s prior revolving credit agreement (the “Prior Revolving Credit Agreement”). The Credit Agreement makes available to the Company an aggregate of $500.0 million of revolving loan commitments, which may be drawn until February 16, 2027, and the TLA Facility. At March 31, 2023, the revolving loan commitments were undrawn. As noted above, at March 31, 2023, the commitments under the TLA Facility were drawn in full, and the resulting Tranche A Term Loans mature on February 16, 2027. The obligations under the Credit Agreement are general unsecured obligations of the Company and the guarantors.

Interest on the Tranche A Term Loans under the TLA Facility accrues, at a variable rate, based on the secured overnight funding rate (“SOFR”) or the alternate base rate (“Base Rate”), plus, in each case, an applicable margin and will be due on each Interest Payment Date (as defined in the Credit Agreement). The applicable margin is calculated by reference to the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement) and ranges between 1.50% to 2.00% for SOFR loans, and 0.50% to 1.00% for Base Rate loans. At March 31, 2023, the interest rate on the TLA Facility was 6.84%.

In connection with the closings of the Senior Notes offerings, entry into the Prior Revolving Credit Agreement and the subsequent amendments thereto and entry into the Credit Agreement, the Company paid certain financing fees which, together with the existing fees related to prior credit facilities, are being amortized over their related lives. At March 31, 2023, $36.8 million of the deferred financing fees and premium remain unamortized, $0.5 million of which is included in “Prepaid and other assets,” $1.5 million of which is included in “Other non-current assets” and $34.8 million of which is included in “Long-term debt” on the Unaudited Condensed Consolidated Statement of Financial Condition.

8. LEASES

The Company recognized $7.1 million and $7.7 million of operating lease expenses for the three months ended March 31, 2023 and 2022, respectively. The amounts associated with variable lease costs, short-term lease costs and sublease income were not material for any of the three months ended March 31, 2023 and 2022.

Maturities of the Company’s operating lease liabilities as of March 31, 2023 are as follows:

Maturity of Lease Liabilities						Operating
(in thousands)						Leases
Remainder of 2023						$	21,258
2024						25,085
2025						23,817
2026						22,133
2027						17,288
Thereafter						66,535
Total lease payments						$	176,116
Less: Interest						(22,725)
Present value of lease liabilities						$	153,391
Other accrued liabilities						$	22,820
Long-term operating lease liabilities						$	130,571

Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:

						As of
						March 31,						December 31,
Lease Term and Discount Rate						2023						2022
Weighted-average remaining lease term (years)						7.66						7.86
Weighted-average discount rate						3.45		%				3.40		%

Other information related to the Company’s operating leases are as follows:

Other Information						Three Months Ended March 31,
(in thousands)						2023						2022
Operating cash flows used for operating leases						$	7,408					$	7,152
Right of use assets obtained in exchange for new operating lease liabilities						$	3,432					$	—

9. SHAREHOLDERS’ EQUITY (DEFICIT)

Return of capital

On July 28, 2022, the Board of Directors authorized a stock repurchase program (the “2022 Repurchase Program”) for the purchase of up to $1,000.0 million worth of shares of MSCI’s common stock in addition to the $539.1 million of authorization then remaining under a previously existing share repurchase program that was replaced by, and incorporated into, the 2022 Repurchase Program for a total of $1,539.1 million of stock repurchase authorization available under the 2022 Repurchase Program.

Share repurchases made pursuant to the 2022 Repurchase Program may take place in the open market or in privately negotiated transactions from time to time based on market and other conditions. This authorization may be modified, suspended or terminated by the Board of Directors at any time without prior notice. As of March 31, 2023, there was $1,304.4 million of available authorization remaining under the 2022 Repurchase Program.

The following table provides information with respect to repurchases of the Company’s common stock made on the open market:

Three Months Ended (in thousands, except per share data)						Average Price Paid Per Share						Total Number of Shares Repurchased						Dollar Value of Shares Repurchased
March 31, 2023						$	—					—						$	—
March 31, 2022						$	515.74					1,498						$	772,657

The following table presents dividends declared per common share as well as total amounts declared, distributed and deferred for the periods indicated:

						Dividends
(in thousands, except per share data)						Per Share						Declared						Distributed						(Released)/Deferred
Three Months Ended March 31, 2023						$	1.38					$	111,986					$	112,189					$	(203)
Three Months Ended March 31, 2022						$	1.04					$	87,280					$	87,846					$	(566)

Common Stock.

The following table presents activity related to shares of common stock issued and repurchased during the three months ended March 31, 2023:

						Common Stock						Treasury						Common Stock
						Issued			Stock			Outstanding
Balance at December 31, 2022						133,623,005						(53,663,016)						79,959,989
Dividend payable/paid						24						—						24
Common stock issued						181,875						—						181,875
Shares withheld for tax withholding						—						(78,844)						(78,844)
Shares repurchased under stock repurchase programs						—						—						—
Shares issued to directors						58						(58)						—
Balance at March 31, 2023						133,804,962						(53,741,918)						80,063,044

10. INCOME TAXES

The Company’s provision for income taxes was $37.6 million and $20.5 million for the three months ended March 31, 2023 and 2022, respectively.

The effective tax rate of 13.6% for the three months ended March 31, 2023 reflects the Company’s estimate of the effective tax rate for the period and was impacted by certain favorable discrete items totaling $16.5 million, primarily related to $11.1 million of excess tax benefits recognized on share-based compensation vested during the period and $4.6 million of tax benefits related to the resolution of prior year items.

The effective tax rate of 8.2% for the three months ended March 31, 2022 reflects the Company’s estimate of the effective tax rate for the period and was impacted by certain favorable discrete items totaling $28.1 million, primarily related to $28.3 million of excess tax benefits recognized on share-based compensation vested during the period.

The Company is under or open to examination by the IRS and other tax authorities in certain jurisdictions, including foreign jurisdictions, such as the United Kingdom, Switzerland and India, and states in the United States in which the Company has significant operations, such as New York and California. The tax years currently under or open to examination vary by jurisdiction but include years from 2008 onwards.

The Company regularly assesses the likelihood of additional assessments in each of the taxing jurisdictions in which it files income tax returns. The Company has established unrecognized tax benefits that the Company believes are adequate in relation to the potential for additional assessments. Once established, the Company adjusts unrecognized tax benefits only when more information is

available or when an event occurs necessitating a change. Based on the current status of income tax audits, the Company believes it is reasonably possible that the total amount of unrecognized benefits may decrease by approximately $24.0 million in the next twelve months as a result of the resolution of prior year items.

During the three months ended March 31, 2023, the Company's unrecognized tax benefits decreased by $3.8 million principally due to the resolution of prior year items.

11. SEGMENT INFORMATION

The Company has five operating segments: Index, Analytics, ESG and Climate, Real Assets and The Burgiss Group, LLC (“Burgiss”), which are presented as the following four reportable segments: Index, Analytics, ESG and Climate and All Other – Private Assets.

The Index operating segment offers equity and fixed income indexes. The indexes are used in many areas of the investment process, including for developing indexed financial products (e.g., Exchange Traded Funds (“ETFs”), mutual funds, annuities, futures, options, structured products and over-the-counter derivatives), performance benchmarking, portfolio construction and rebalancing, and asset allocation.

The Analytics operating segment offers risk management, performance attribution and portfolio management content, applications and services that provide clients with an integrated view of risk and return and tools for analyzing market, credit, liquidity, counterparty and climate risk across all major asset classes, spanning short-, medium- and long-term time horizons. Clients access Analytics tools and content through MSCI’s proprietary applications and application programming interfaces, third-party applications or directly through their own platforms. Additionally, the Analytics operating segment also provides various managed services to help clients operate more efficiently, including consolidation of client portfolio data from various sources, review and reconciliation of input data and results, and customized reporting.

The ESG and Climate operating segment offers products and services that help institutional investors understand how ESG and climate considerations can impact the long-term risk and return of their portfolio and individual security-level investments. In addition, the ESG and Climate operating segment provides data, ratings, research and tools to help investors navigate increasing regulation, meet new client demands and better integrate ESG and climate elements into their investment processes.

The Real Assets operating segment offers data, benchmarks, return-analytics, climate assessments and market insights for tangible assets such as real estate and infrastructure. In addition, Real Assets performance and risk analytics range from enterprise-wide to property-specific analysis. The Real Assets operating segment also provides business intelligence products to real estate owners, managers, developers and brokers worldwide.

The Burgiss operating segment represents the Company’s equity method investment in Burgiss, a global provider of investment decision support tools for private capital.

The Chief Operating Decision Maker (“CODM”) measures and evaluates reportable segments based on segment operating revenues as well as Adjusted EBITDA and other measures. The Company excludes the following items from segment Adjusted EBITDA: provision for income taxes, other expense (income), net, depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or adjustments, including certain non-recurring acquisition-related integration and transaction costs, that the CODM does not consider for the purposes of making decisions to allocate resources among segments or to assess segment performance. Although these amounts are excluded from segment Adjusted EBITDA, they are included in reported consolidated net income and are included in the reconciliation that follows.

The following table presents operating revenues by reportable segment for the periods indicated:

						Three Months Ended March 31,
(in thousands)						2023						2022
Operating revenues
Index						$	339,382					$	330,759
Analytics						147,070						139,797
ESG and Climate						67,058						52,029
All Other - Private Assets						38,708						37,360
Total						$	592,218					$	559,945

The following table presents segment profitability and a reconciliation to net income for the periods indicated:

						Three Months Ended March 31,
(in thousands)						2023						2022
Index Adjusted EBITDA						$	253,682					$	245,875
Analytics Adjusted EBITDA						60,780						50,889
ESG and Climate Adjusted EBITDA						17,876						12,092
All Other - Private Assets Adjusted EBITDA						12,391						9,688
Total operating segment profitability						344,729						318,544
Amortization of intangible assets						24,667						21,720
Depreciation and amortization of property, equipment and leasehold improvements						5,460						6,534
Acquisition-related integration and transaction costs(1)						—						1,312
Operating income						314,602						288,978
Other expense (income), net						38,230						40,035
Provision for income taxes						37,644						20,520
Net income						$	238,728					$	228,423

---

(1)Incremental and non-recurring costs attributable to acquisitions directly related to the execution of the transaction and integration of the acquired business that have occurred no later than 12 months after the close of the transaction.

Operating revenues by geography are primarily based on the shipping address of the ultimate customer utilizing the product. The following table presents operating revenues by geographic area for the periods indicated:

						Three Months Ended March 31,
(in thousands)						2023						2022
Operating revenues
Americas:
United States						$	238,416					$	233,356
Other						27,536						22,467
Total Americas						265,952						255,823
Europe, the Middle East and Africa (“EMEA”):
United Kingdom						91,660						86,986
Other						138,319						131,573
Total EMEA						229,979						218,559
Asia & Australia:
Japan						26,017						23,190
Other						70,270						62,373
Total Asia & Australia						96,287						85,563
Total						$	592,218					$	559,945

Long-lived assets consist of property, equipment and leasehold improvements, right of use assets and internally developed capitalized software, net of accumulated depreciation and amortization. The following table presents long-lived assets by geographic area on the dates indicated:

						As of
						March 31,						December 31,
(in thousands)						2023						2022
Long-lived assets
Americas:
United States						$	189,687					$	179,453
Other						12,132						11,971
Total Americas						201,819						191,424
EMEA:
United Kingdom						19,270						19,674
Other						22,764						23,099
Total EMEA						42,034						42,773
Asia & Australia:
Japan						1,585						652
Other						34,282						32,962
Total Asia & Australia						35,867						33,614
Total						$	279,720					$	267,811

12. SUBSEQUENT EVENTS

On April 24, 2023, the Board of Directors declared a quarterly cash dividend of $1.38 per share for the three months ending June 30, 2023 (“second quarter 2023”). The second quarter 2023 dividend is payable on May 31, 2023 to shareholders of record as of the close of trading on May 12, 2023.