Item 1. Financial Statements

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Item 1. Financial Statements

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except per share and share data)


	As of
	September 30,		December 31,
(unaudited)	2023		2022
ASSETS
Current assets:
Cash and cash equivalents (includes restricted cash of $3,839 and $368 at September 30, 2023 and December 31, 2022, respectively)	$	928,552	$	993,564
Accounts receivable (net of allowances of $3,030 and $2,652 at September 30, 2023 and December 31, 2022, respectively)	603,266		663,236
Prepaid income taxes	54,544		36,654
Prepaid and other assets	52,967		54,520
Total current assets	1,639,329		1,747,974

Property, equipment and leasehold improvements, net	58,036		53,853
Right of use assets	117,533		126,584
Goodwill	2,230,389		2,229,670
Intangible assets, net	536,129		558,517
Equity method investment	210,657		214,389
Deferred tax assets	34,790		29,207
Other non-current assets	38,631		37,341
Total assets	$	4,865,494	$	4,997,535


LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	10,224	$	15,039
Income taxes payable	19,536		8,058
Accrued compensation and related benefits	157,227		182,370
Current portion of long-term debt	8,719		8,713
Other accrued liabilities	171,458		153,461
Deferred revenue	837,479		882,886
Total current liabilities	1,204,643		1,250,527

Long-term debt	4,500,063		4,503,233
Long-term operating lease liabilities	121,941		131,575
Deferred tax liabilities	4,220		29,098
Other non-current liabilities	83,723		91,027
Total liabilities	5,914,590		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; 133,817,103 and 133,623,005 common shares issued and 79,091,098 and 79,959,989 common shares outstanding at September 30, 2023 and December 31, 2022, respectively)	1,338		1,336
Treasury shares, at cost (54,726,005 and 53,663,016 common shares held at September 30, 2023 and December 31, 2022, respectively)	(6,447,042)		(5,938,116)
Additional paid in capital	1,571,442		1,515,874
Retained earnings	3,886,188		3,473,192
Accumulated other comprehensive loss	(61,022)		(60,211)
Total shareholders’ equity (deficit)	(1,049,096)		(1,007,925)

Total liabilities and shareholders’ equity (deficit)	$	4,865,494	$	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 September 30,				Nine Months Ended September 30,
(unaudited)	2023		2022		2023		2022
Operating revenues	$	625,439	$	560,639	$	1,838,814	$	1,672,390

Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)	105,311		98,418		324,024		301,957
Selling and marketing	66,581		65,545		201,044		192,671
Research and development	31,438		25,941		92,901		78,179
General and administrative	36,826		30,702		113,527		112,993
Amortization of intangible assets	26,722		23,375		77,543		67,274
Depreciation and amortization of property, equipment and leasehold improvements	5,252		7,127		15,911		20,426
Total operating expenses	272,130		251,108		824,950		773,500


Operating income	353,309		309,531		1,013,864		898,890

Interest income	(10,314)		(3,938)		(31,079)		(5,160)
Interest expense	46,902		44,162		139,725		125,961
Other expense (income)	(935)		103		4,032		(90)

Other expense (income), net	35,653		40,327		112,678		120,711


Income before provision for income taxes	317,656		269,204		901,186		778,179
Provision for income taxes	57,997		52,612		155,974		122,577
Net income	$	259,659	$	216,592	$	745,212	$	655,602


Earnings per share:
Basic	$	3.28	$	2.69	$	9.36	$	8.09
Diluted	$	3.27	$	2.68	$	9.32	$	8.05

Weighted average shares outstanding:
Basic	79,116		80,500		79,580		81,001
Diluted	79,500		80,874		79,959		81,481

See Notes to Condensed Consolidated Financial Statements (Unaudited)

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
(unaudited)	2023		2022		2023		2022
Net income	$	259,659	$	216,592	$	745,212	$	655,602
Other comprehensive income (loss):
Foreign currency translation adjustments	(5,832)		(10,978)		1,046		(25,724)
Income tax effect	771		1,453		(660)		3,921
Foreign currency translation adjustments, net	(5,061)		(9,525)		386		(21,803)


Pension and other post-retirement adjustments	756		293		(1,338)		7,779
Income tax effect	(72)		(79)		141		(1,193)
Pension and other post-retirement adjustments, net	684		214		(1,197)		6,586

Other comprehensive (loss) income, net of tax	(4,377)		(9,311)		(811)		(15,217)

Comprehensive income	$	255,282	$	207,281	$	744,401	$	640,385

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)

Net income							246,825				246,825
Dividends declared ($1.38 per common share)							(110,383)				(110,383)
Dividends paid in shares					33						33
Other comprehensive income (loss), net of tax									791		791
Common stock issued											—
Shares withheld for tax withholding			(611)								(611)
Compensation payable in common stock					16,426						16,426
Common stock repurchased and held in treasury			(444,655)								(444,655)
Common stock issued to Directors and (held in)/released from treasury			(730)								(730)
Balance at June 30, 2023	1,338		(6,428,102)		1,553,365		3,736,376		(56,645)		(1,193,668)

Net income							259,659				259,659
Dividends declared ($1.38 per common share)							(109,847)				(109,847)
Dividends paid in shares					30						30
Other comprehensive income (loss), net of tax									(4,377)		(4,377)
Common stock issued											—
Shares withheld for tax withholding and exercises			(871)								(871)
Compensation payable in common stock					18,047						18,047
Common stock repurchased and held in treasury			(18,039)								(18,039)
Common stock issued to Directors and (held in)/released from treasury			(30)								(30)
Balance at September 30, 2023	$	1,338	$	(6,447,042)	$	1,571,442	$	3,886,188	$	(61,022)	$	(1,049,096)

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, 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 and exercises			(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)

Net income							210,587				210,587
Dividends declared ($1.04 per common share)							(84,593)				(84,593)
Dividends paid in shares					22						22
Other comprehensive income (loss), net of tax									(3,884)		(3,884)
Common stock issued											—
Shares withheld for tax withholding and exercises			(3,862)								(3,862)
Compensation payable in common stock					11,858						11,858
Common stock repurchased and held in treasury			(276,994)								(276,994)
Common stock issued to Directors and (held in)/released from treasury			(391)								(391)
Balance at June 30, 2022	1,336		(5,699,069)		1,492,334		3,243,654		(64,701)		(1,026,446)

Net income							216,592				216,592
Dividends declared ($1.25 per common share)							(101,354)				(101,354)
Dividends paid in shares					27						27
Other comprehensive income (loss), net of tax									(9,311)		(9,311)
Common stock issued											—
Shares withheld for tax withholding and exercises			(3,741)								(3,741)
Compensation payable in common stock					11,913						11,913
Common stock repurchased and held in treasury			(165,044)								(165,044)
Common stock issued to Directors and (held in)/released from treasury			(27)								(27)
Balance at September 30, 2022	$	1,336	$	(5,867,881)	$	1,504,274	$	3,358,892	$	(74,012)	$	(1,077,391)

See Notes to Condensed Consolidated Financial Statements (Unaudited)

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Nine Months Ended September 30,
(unaudited)	2023		2022
Cash flows from operating activities
Net income	$	745,212	$	655,602
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets	77,543		67,274
Stock-based compensation expense	55,375		46,432
Depreciation and amortization of property, equipment and leasehold improvements	15,911		20,426
Amortization of right of use assets	17,484		18,555
Loss on impairment of right of use assets, net	—		705
Amortization of debt origination fees	3,791		3,868
Deferred taxes	(30,973)		59,324
Other adjustments	1,199		(3,654)
Changes in assets and liabilities:
Accounts receivable	58,132		127,043
Prepaid income taxes	(17,654)		(77,908)
Prepaid and other assets	1,687		(1,678)
Other non-current assets	(4,837)		32,547
Accounts payable	(5,719)		(8,144)
Income taxes payable	11,425		(52,939)
Accrued compensation and related benefits	(25,599)		(58,042)
Other accrued liabilities	15,118		31,297
Deferred revenue	(43,571)		(66,982)
Long-term operating lease liabilities	(16,027)		(19,492)
Other non-current liabilities	(11,195)		6,105
Other	(226)		(397)
Net cash provided by operating activities	847,076		779,942


Cash flows from investing activities
Capitalized software development costs	(50,080)		(44,425)
Capital expenditures	(18,942)		(8,012)
Other	(389)		24
Net cash used in investing activities	(69,411)		(52,413)


Cash flows from financing activities
Repurchase of common stock held in treasury	(504,161)		(1,327,298)
Payment of dividends	(331,640)		(272,759)
Repayment of borrowings	(6,563)		(5,000)
Proceeds from borrowings, inclusive of premium	—		355,000
Payment of debt issuance costs in connection with debt	—		(2,559)
Payment of contingent consideration	—		(211)
Net cash (used in) provided by financing activities	(842,364)		(1,252,827)


Effect of exchange rate changes	(313)		(29,039)

Net (decrease) increase in cash, cash equivalents and restricted cash	(65,012)		(554,337)

Cash, cash equivalents and restricted cash, beginning of period	993,564		1,421,449
Cash, cash equivalents and restricted cash, end of period	$	928,552	$	867,112


Supplemental disclosure of cash flow information:
Cash paid for interest	$	125,068	$	107,162
Cash paid for income taxes, net of refunds received	$	197,746	$	154,725

Supplemental disclosure of non-cash investing activities
Property, equipment and leasehold improvements in other accrued liabilities	$	4,734	$	1,926

Supplemental disclosure of non-cash financing activities
Cash dividends declared, but not yet paid	$	1,453	$	3,270

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 nine months ended September 30, 2023 and 2022, BlackRock, Inc. (“BlackRock”) accounted for 10.1% and 10.5% of the Company’s consolidated operating revenues, respectively. For the nine months ended September 30, 2023 and 2022, BlackRock accounted for 17.0% and 17.7% 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 nine months ended September 30, 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 September 30, 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	1,300
Write-offs, net of recoveries	(922)
Balance as of September 30, 2023	$	3,030

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 September 30, 2023
	Segments
(in thousands)	Index		Analytics		ESG and Climate		All Other - Private Assets		Total
Operating Revenue Types
Recurring subscriptions	$	206,453	$	151,269	$	71,744	$	35,531	$	464,997
Asset-based fees	141,066		—		—		—		141,066
Non-recurring	14,603		2,999		1,294		480		19,376
Total	$	362,122	$	154,268	$	73,038	$	36,011	$	625,439


	For the Nine Months Ended September 30, 2023
	Segments
(in thousands)	Index		Analytics		ESG and Climate		All Other - Private Assets		Total
Operating Revenue Types
Recurring subscriptions	$	603,845	$	443,276	$	207,523	$	111,292	$	1,365,936
Asset-based fees	412,354		—		—		—		412,354
Non-recurring	47,621		7,943		3,792		1,168		60,524
Total	$	1,063,820	$	451,219	$	211,315	$	112,460	$	1,838,814


	For the Three Months Ended September 30, 2022
	Segments
(in thousands)	Index		Analytics		ESG and Climate		All Other - Private Assets		Total
Operating Revenue Types
Recurring subscriptions	$	185,531	$	142,751	$	56,353	$	35,581	$	420,216
Asset-based fees	125,620		—		—		—		125,620
Non-recurring	11,089		2,164		1,242		308		14,803
Total	$	322,240	$	144,915	$	57,595	$	35,889	$	560,639


	For the Nine Months Ended September 30, 2022
	Segments
(in thousands)	Index		Analytics		ESG and Climate		All Other - Private Assets		Total
Operating Revenue Types
Recurring subscriptions	$	539,740	$	420,047	$	160,962	$	106,276	$	1,227,025
Asset-based fees	402,889		—		—		—		402,889
Non-recurring	31,319		6,349		3,790		1,018		42,476
Total	$	973,948	$	426,396	$	164,752	$	107,294	$	1,672,390

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 (September 30, 2023)	603,266		837,479
Increase/(decrease)	$	(59,970)	$	(45,407)


(in thousands)	Accounts receivable, net of allowances		Deferred revenue
Opening (December 31, 2021)	$	664,511	$	824,912
Closing (September 30, 2022)	525,360		735,710
Increase/(decrease)	$	(139,151)	$	(89,202)

The amounts of revenues recognized in the periods that were included in the opening current deferred revenue, which reflects contract liability amounts, were $171.8 million and $798.0 million for the three and nine months ended September 30, 2023, respectively and $149.4 million and $722.0 million for the three and nine months ended September 30, 2022, respectively. The difference between the opening and closing balances of the Company’s deferred revenue is primarily driven by an increase in the amortization of deferred revenue to operating revenues, partially offset by an increase in billings. As of September 30, 2023 and December 31, 2022, the Company carried a long-term deferred revenue balance of $28.0 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
	September 30,
(in thousands)	2023
First 12-month period	$	695,027
Second 12-month period	420,056
Third 12-month period	182,375
Periods thereafter	135,442
Total	$	1,432,900

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 September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Net income	$	259,659	$	216,592	$	745,212	$	655,602

Basic weighted average common shares outstanding	79,116		80,500		79,580		81,001
Effect of dilutive securities:
PSUs, RSUs and PSOs	384		374		379		480
Diluted weighted average common shares outstanding	79,500		80,874		79,959		81,481


Earnings per common share:
Basic	$	3.28	$	2.69	$	9.36	$	8.09
Diluted	$	3.27	$	2.68	$	9.32	$	8.05

5. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

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


	As of
	September 30,		December 31,
(in thousands)	2023		2022
Computer & related equipment	$	193,113	$	181,710
Furniture & fixtures	15,643		14,078
Leasehold improvements	58,019		54,040
Work-in-process	860		2,373
Subtotal	267,635		252,201

Accumulated depreciation and amortization	(209,599)		(198,348)
Property, equipment and leasehold improvements, net	$	58,036	$	53,853

Depreciation and amortization expense of property, equipment and leasehold improvements was $5.3 million and $7.1 million for the three months ended September 30, 2023 and 2022, respectively.

Depreciation and amortization expense of property, equipment and leasehold improvements was $15.9 million and $20.4 million for the nine months ended September 30, 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	445		—		—		274		719
Goodwill at September 30, 2023	$	1,202,067	$	290,976	$	48,047	$	689,299	$	2,230,389

The Company completed its annual goodwill impairment test as of July 1, 2023 on its Index, Analytics, ESG and Climate, and Real Assets reporting units, which are also four of the Company’s operating segments, and no impairments were noted. The Company determined that it was not more likely than not that the fair value of its reporting units is less than their respective carrying values. See Note 11, “Segment Information,” for further descriptions of the Company’s operating segments.

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 September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Amortization expense of acquired intangible assets	$	15,748	$	15,810	$	47,430	$	47,562
Amortization expense of internally developed capitalized software	10,974		7,565		30,113		19,712
Total amortization of intangible assets expense	$	26,722	$	23,375	$	77,543	$	67,274

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


	As of
	September 30,		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	220,251		165,928
Subtotal	1,390,939		1,336,616

Foreign exchange translation adjustment	(12,478)		(13,214)
Total gross intangible assets	$	1,378,461	$	1,323,402

Accumulated amortization:
Customer relationships	$	(331,275)	$	(308,437)
Proprietary data	(56,125)		(41,783)
Acquired technology and software	(182,920)		(179,833)
Trademarks	(169,207)		(162,044)
Internally developed capitalized software	(106,888)		(77,259)
Subtotal	(846,415)		(769,356)

Foreign exchange translation adjustment	4,083		4,471
Total accumulated amortization	$	(842,332)	$	(764,885)

Net intangible assets:
Customer relationships	$	201,225	$	224,063

Proprietary data	164,653		178,995

Acquired technology and software	26,300		29,387

Trademarks	38,983		46,146

Internally developed capitalized software	113,363		88,670

Subtotal	544,524		567,260

Foreign exchange translation adjustment	(8,395)		(8,743)
Total net intangible assets	$	536,129	$	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	$	28,555
2024	109,796
2025	84,575
2026	49,965
2027	36,755
Thereafter	226,483
Total	$	536,129

7. COMMITMENTS AND CONTINGENCIES

As of September 30, 2023, the Company had outstanding an aggregate of $4,200.0 million in senior unsecured notes (collectively, the “Senior Notes”) and an aggregate of $341.3 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	September 30, 2023		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Debt
4.000% senior unsecured notes due 2029	November 15, 2029	$	1,000,000	$	993,364	$	992,546	$	872,670	$	876,240
3.625% senior unsecured notes due 2030	September 1, 2030	900,000		895,421		894,925		755,433		751,113
3.875% senior unsecured notes due 2031	February 15, 2031	1,000,000		991,887		991,067		867,600		833,130
3.625% senior unsecured notes due 2031	November 1, 2031	600,000		594,688		594,195		491,928		500,880
3.250% senior unsecured notes due 2033	August 15, 2033	700,000		693,364		692,862		537,551		542,696
Variable rate Tranche A Term Loans due 2027	February 16, 2027	341,250		340,057		346,352		339,544		346,073
Total debt(1)		$	4,541,250	$	4,508,781	$	4,511,947	$	3,864,726	$	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 September 30, 2023 are as follows:


Maturity of Principal Debt Payments (in thousands)	Amounts
Remainder of 2023	$	2,187
2024	10,938
2025	19,687
2026	26,250
2027	282,188
Thereafter	4,200,000
Total debt	$	4,541,250

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 September 30, 2023, the revolving loan commitments were undrawn. As noted above, at September 30, 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 September 30, 2023, the interest rate on the TLA Facility was 7.42%.

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 September 30, 2023, $34.2 million of the deferred financing fees and premium remain unamortized, $0.5 million of which is included in “Prepaid and other assets,” $1.2 million of which is included in “Other non-current assets” and $32.5 million of which is included in “Long-term debt” on the Unaudited Condensed Consolidated Statement of Financial Condition.

8. LEASES

The components of lease expense (income) of the Company’s operating leases are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Operating lease expenses	$	7,278	$	7,308	$	21,570	$	22,439
Variable lease costs	1,022		808		2,843		2,411
Short-term lease costs	108		123		547		333
Sublease income	(1,276)		$	(1,251)	$	(3,827)	$	(3,354)
Total lease costs	$	7,132	$	6,988	$	21,133	$	21,829

Maturities of the Company’s operating lease liabilities as of September 30, 2023 are as follows:


Maturity of Lease Liabilities	Operating
(in thousands)	Leases
Remainder of 2023	$	6,098
2024	27,182
2025	24,202
2026	22,408
2027	17,691
Thereafter	67,096
Total lease payments	$	164,677

Less: Interest	(20,632)
Present value of lease liabilities	$	144,045


Other accrued liabilities	$	22,104
Long-term operating lease liabilities	$	121,941

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


	As of
	September 30,		December 31,
Lease Term and Discount Rate	2023		2022
Weighted-average remaining lease term (years)	7.30		7.86
Weighted-average discount rate	3.58	%	3.40	%

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


Other Information	Nine Months Ended September 30,
(in thousands)	2023		2022
Operating cash flows used for operating leases	$	22,918	$	22,025
Right of use assets obtained in exchange for new operating lease liabilities	$	8,896	$	14,929

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 September 30, 2023, there was $845.7 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:


Nine months ended (in thousands, except per share data)	Average Price Paid Per Share		Total Number of Shares Repurchased	Dollar Value of Shares Repurchased(1)
September 30, 2023	$	468.26	980	$	458,721
September 30, 2022	$	473.26	2,567	$	1,214,695

(1) As of January 1, 2023, the Company’s share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. The values in this column exclude the 1% excise tax incurred on share repurchases. Any excise tax incurred is recognized as part of the cost of the shares acquired in the Unaudited Condensed Consolidated Statement of Shareholders’ Equity (Deficit)

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
2023
Three Months Ended March 31,	$	1.38	$	111,986	$	112,189	$	(203)
Three Months Ended June 30,	1.38		110,383		110,147		236
Three Months Ended September 30,	1.38		109,847		109,408		439

Total	$	4.14	$	332,216	$	331,744	$	472

2022
Three Months Ended March 31,	$	1.04	$	87,280	$	87,846	$	(566)
Three Months Ended June 30,	1.04		84,593		84,189		404
Three Months Ended September 30,	1.25		101,354		100,849		505

Total	$	3.33	$	273,227	$	272,884	$	343

Common Stock

The following table presents activity related to shares of common stock issued and repurchased during the nine months ended September 30, 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

Dividend payable/paid	—		—	—
Common stock issued	2,698		—	2,698
Shares withheld for tax withholding	—		(1,270)	(1,270)
Shares repurchased under stock repurchase programs	—		(941,360)	(941,360)
Shares issued to directors	5,306		(1,515)	3,791
Balance at June 30, 2023	133,812,966		(54,686,063)	79,126,903

Dividend payable/paid	—		—	—
Common stock issued	4,081		—	4,081
Shares withheld for tax withholding	—		(1,623)	(1,623)
Shares repurchased under stock repurchase programs	—		(38,263)	(38,263)
Shares issued to directors	56		(56)	—
Balance at September 30, 2023	133,817,103		(54,726,005)	79,091,098

10. INCOME TAXES

The Company’s provision for income taxes was $156.0 million and $122.6 million for the nine months ended September 30, 2023 and 2022, respectively.

The effective tax rate of 17.3% for the nine months ended September 30, 2023 reflects the Company’s estimate of the effective tax rate for the period and was impacted by certain favorable discrete items totaling $19.8 million, related to $11.4 million of excess tax benefits recognized on share-based compensation vested during the period and $8.4 million related to prior-year items.

The effective tax rate of 15.8% for the nine months ended September 30, 2022 reflects the Company’s estimate of the effective tax rate for the period and was impacted by certain favorable discrete items totaling $28.2 million, primarily related to $28.4 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 $22.9 million in the next twelve months as a result of the resolution of prior-year items.

During the three and nine months ended September 30, 2023, the Company’s unrecognized tax benefits increased $0.4 million and decreased $4.4 million, respectively, 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.

As of September 30, 2023, the Burgiss operating segment represents the Company’s equity method investment in Burgiss, a global provider of investment decision support tools for private capital. See Note 12, “Subsequent Events” for additional information on the Company’s acquisition of the remaining interest in Burgiss.

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 September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Operating revenues
Index	$	362,122	$	322,240	$	1,063,820	$	973,948
Analytics	154,268		144,915		451,219		426,396
ESG and Climate	73,038		57,595		211,315		164,752
All Other - Private Assets	36,011		35,889		112,460		107,294
Total	$	625,439	$	560,639	$	1,838,814	$	1,672,390

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Index Adjusted EBITDA	$	277,672	$	245,967	$	808,424	$	737,012
Analytics Adjusted EBITDA	71,781		67,634		197,710		181,484
ESG and Climate Adjusted EBITDA	25,440		15,910		66,114		42,334
All Other - Private Assets Adjusted EBITDA	11,396		11,450		36,076		29,819
Total operating segment profitability	386,289		340,961		1,108,324		990,649

Amortization of intangible assets	26,722		23,375		77,543		67,274
Depreciation and amortization of property, equipment and leasehold improvements	5,252		7,127		15,911		20,426
Acquisition-related integration and transaction costs(1)	1,006		928		1,006		4,059
Operating income	353,309		309,531		1,013,864		898,890

Other expense (income), net	35,653		40,327		112,678		120,711
Provision for income taxes	57,997		52,612		155,974		122,577
Net income	$	259,659	$	216,592	$	745,212	$	655,602

(1)Represents transaction expenses and other costs directly related to the acquisition and integration of acquired businesses, including professional fees, severance expenses, regulatory filing fees and other costs, in each case that are incurred no later than 12 months after the close of the relevant acquisition.

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 September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Operating revenues
Americas:
United States	$	246,089	$	233,196	$	740,939	$	696,284
Other	28,243		24,450		83,353		70,559
Total Americas	274,332		257,646		824,292		766,843


Europe, the Middle East and Africa ("EMEA"):
United Kingdom	105,036		88,681		296,388		264,854
Other	142,826		125,607		420,996		379,695
Total EMEA	247,862		214,288		717,384		644,549


Asia & Australia:
Japan	24,956		21,784		75,258		67,817
Other	78,289		66,921		221,880		193,181
Total Asia & Australia	103,245		88,705		297,138		260,998


Total	$	625,439	$	560,639	$	1,838,814	$	1,672,390

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
	September 30,		December 31,
(in thousands)	2023		2022
Long-lived assets
Americas:
United States	$	201,309	$	179,453
Other	11,974		11,971
Total Americas	213,283		191,424


EMEA:
United Kingdom	18,346		19,674
Other	21,808		23,099
Total EMEA	40,154		42,773


Asia & Australia:
Japan	1,268		652
Other	33,017		32,962
Total Asia & Australia	34,285		33,614


Total	$	287,722	$	267,811

12. SUBSEQUENT EVENTS

On October 30, 2023, the Board of Directors declared a quarterly cash dividend of $1.38 per share for the three months ending December 31, 2023 (“fourth quarter 2023”). The fourth quarter 2023 dividend is payable on November 30, 2023 to shareholders of record as of the close of trading on November 9, 2023.

On October 2, 2023, the Company acquired the remaining 66.4% interest in Burgiss for $696.8 million in cash. The Company’s existing 33.6% interest had a fair value at acquisition date of $353.2 million which resulted non-taxable gain of approximately $140 million, to be recorded during the three months ending December 31, 2023. The results of Burgiss will be included in the Company’s All Other - Private Assets reportable segment.

The acquisition of Burgiss will provide the Company with comprehensive data and deep expertise in all private assets, enabling investors to evaluate fundamental information, measure and compare performance, understand exposures, manage risk, and conduct robust analytics. The acquisition will also expand the Company’s robust suite of multi-asset class technology solutions with the industry leading Burgiss Caissa Platform, developed exclusively for institutional investors and providing a comprehensive view of the drivers of performance and risk in both public and private investments in total portfolios.

Due to the proximity of the closing date of the acquisition of the remaining interest in Burgiss to the date of this filing, the initial accounting for the business combination is incomplete. As a result, the Company is unable to disclose certain information including the provisional fair value estimates of the identifiable net assets acquired and goodwill at this time.

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