Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

92K characters. Original on sec.gov · Markdown

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

INDEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS

Page
Overview22
Critical Accounting Estimates23
Results of Operations23
Segment Results29
Liquidity and Capital Resources37
Cash Flows38

The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in “Item 1A.—Risk Factors,” in our Form 10-K.

Except as the context otherwise indicates, the terms “MSCI,” the “Company,” “we,” “our” and “us” refer to MSCI Inc., together with its subsidiaries.

Overview

We are a leading provider of critical decision support tools and solutions for the global investment community. Our mission-critical offerings help investors navigate the complexities of a dynamic and evolving investment landscape. Leveraging our deep 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 build portfolios more effectively. The Company has five operating segments: Index, Analytics, Sustainability and Climate, Real Assets and Private Capital Solutions which are presented as the following three reportable segments: Index, Analytics, and Sustainability and Climate. For reporting purposes, the Real Assets and Private Capital Solutions operating segments are combined and presented as All Other – Private Assets, as they did not meet the required thresholds for separate reportable segment disclosure.

Our growth strategy includes: (a) extending leadership in research-enhanced content across asset classes, (b) leading the enablement of sustainability and climate investment integration, (c) enhancing distribution and content-enabling technology, (d) expanding solutions that empower client customization, (e) strengthening client relationships and expanding our presence in key geographic areas and (f) executing strategic partnerships and acquisitions with complementary data, content and technology companies. For more information about our Company’s operations, see “Item 1: Business” in our Form 10-K.

As of June 30, 2025, we served approximately 7,0001 clients in more than 95 countries.

Our principal business model is generally to license annual, recurring subscriptions for the majority of our Index, Analytics and Sustainability and Climate products and services for a fee due in advance of the service period. Private Assets products are also licensed annually through subscriptions, which are generally recurring, for a fee which is paid in advance when products are generally delivered ratably over the subscription period or in arrears after the product is delivered. A portion of our fees comes from clients who use our indexes as the basis for index-linked investment products. Such fees are primarily based on a client’s assets under management (“AUM”), trading volumes and fee levels.

In evaluating our financial performance, we focus on revenue and profit growth, including results accounted for under generally accepted accounting principles in the United States (“GAAP”), as well as non-GAAP measures, for the Company as a whole and by operating segment.

We present revenues disaggregated by types and by segments, which represent our major product lines. We also review expenses by activity, which provides more transparency into how resources are being deployed. In addition, we utilize operating metrics including Run Rate, subscription sales and Retention Rate to manage and assess performance and to provide deeper insights into the recurring portion of our business.

1Represents the aggregate of all related clients under their respective parent entity. At acquisition, we align an acquired company’s client count to our methodology.

In the first quarter of 2025, we renamed our “ESG and Climate” operating and reportable segment to “Sustainability and Climate” to reflect the breadth of our product offerings. There were no changes to the composition of our reportable segments or information reviewed by the chief operating decision maker and no impact on our historical segment operating results.

In the discussion that follows, we provide certain variances excluding the impact of foreign currency exchange rate fluctuations and acquisitions. Foreign currency exchange rate fluctuations reflect the difference between the current period results as reported compared to the current period results recalculated using the foreign currency exchange rates in effect for the comparable prior period. While operating revenues adjusted for the impact of foreign currency fluctuations includes asset-based fees that have been adjusted for the impact of foreign currency fluctuations, the underlying AUM, which is the primary component of asset-based fees, is not adjusted for foreign currency fluctuations. Approximately three-fifths of the AUM is invested in securities denominated in currencies other than the U.S. dollar, and accordingly, any such impact is excluded from the disclosed foreign currency-adjusted variances.

For the six months ended June 30, 2025, our largest client organization by revenue, BlackRock, accounted for 10.3% of our consolidated operating revenues, with 96.3% of the operating revenues from BlackRock coming from fees based on the assets in BlackRock’s ETFs and non-ETF products that are based on our indexes.

The discussion of our results of operations for the three and six months ended June 30, 2025 and 2024 are presented below. The results of operations for interim periods may not be indicative of future results.

Critical Accounting Policies and Estimates

We describe our significant accounting policies in Note 1, “Introduction and Basis of Presentation,” of the Notes to Consolidated Financial Statements included in our Form 10-K. There have been no significant changes in our accounting policies or critical accounting estimates during the six months ended June 30, 2025.

Results of Operations

Operating Revenues

Our operating revenues are grouped by the following types: recurring subscriptions, asset-based fees and non-recurring. We also group operating revenues by major product as follows: Index, Analytics, Sustainability and Climate and All Other – Private Assets.

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

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Operating revenues:
Index
Recurring subscriptions$235,647$217,0328.6%$468,977$429,9849.1%
Asset-based fees184,072163,28112.7%361,487313,54015.3%
Non-recurring15,11416,879(10.5%)26,11227,540(5.2%)
Index total434,833397,1929.5%856,576771,06411.1%
Analytics
Recurring subscriptions169,781162,1284.7%339,536322,6795.2%
Non-recurring7,9223,867104.9%10,3527,28242.2%
Analytics total177,703165,9957.1%349,888329,9616.0%
Sustainability and Climate
Recurring subscriptions87,02778,00011.6%169,764154,4189.9%
Non-recurring1,8841,8551.6%3,7663,32113.4%
Sustainability and Climate total88,91179,85511.3%173,530157,73910.0%
All Other - Private Assets
Recurring subscriptions70,31364,3099.3%137,132127,4437.6%
Non-recurring91959853.7%1,3791,707(19.2%)
All Other - Private Assets total71,23264,9079.7%138,511129,1507.2%
Recurring subscriptions total562,768521,4697.9%1,115,4091,034,5247.8%
Asset-based fees184,072163,28112.7%361,487313,54015.3%
Non-recurring25,83923,19911.4%41,60939,8504.4%
Total operating revenues$772,679$707,9499.1%$1,518,505$1,387,9149.4%

Total operating revenues increased 9.1% for the three months ended June 30, 2025. Adjusting for the impact of foreign currency exchange rate fluctuations, total operating revenues would have increased 8.3%.

Total operating revenues increased 9.4% for the six months ended June 30, 2025. Adjusting for the impact of foreign currency exchange rate fluctuations, total operating revenues would have increased 9.1%.

Refer to the section titled “Segment Results” that follows for further discussion of segment revenues.

Operating Expenses

We group our operating expenses into the following activity categories:

  • Cost of revenues;

  • Selling and marketing;

  • Research and development (“R&D”);

  • General and administrative (“G&A”);

  • Amortization of intangible assets; and

  • Depreciation and amortization of property, equipment and leasehold improvements.

Costs are assigned to these activity categories based on the nature of the expense or, when not directly attributable, an estimated allocation based on the type of effort involved. Cost of revenues, selling and marketing, R&D and G&A all include both compensation as well as non-compensation related expenses.

The following table presents operating expenses by activity category for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Operating expenses:
Cost of revenues$137,667$128,1097.5%$274,457$256,6236.9%
Selling and marketing78,21071,4549.5%156,917143,6229.3%
Research and development44,07441,0737.3%91,66581,59812.3%
General and administrative38,34939,706(3.4%)95,44696,397(1.0%)
Amortization of intangible assets43,76040,7737.3%87,63279,37710.4%
Depreciation and amortization of property, equipment and leasehold improvements5,3854,22627.4%10,1318,30722.0%
Total operating expenses$347,445$325,3416.8%$716,248$665,9247.6%

Total operating expenses increased 6.8% for the three months ended June 30, 2025. Adjusting for the impact of foreign currency exchange rate fluctuations, the increase would have been 6.1%.

Total operating expenses increased 7.6% for the six months ended June 30, 2025. Adjusting for the impact of foreign currency exchange rate fluctuations, the increase would have been 8.0%.

Descriptions of MSCI’s operating expense categories are provided in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K. The discussion below focuses on year-over-year changes and key drivers.

Cost of Revenues

Cost of revenues increased 7.5% and 6.9% for the three and six months ended June 30, 2025, respectively, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs and higher severance costs, as well as increases in non-compensation costs reflecting higher information technology costs.

Selling and Marketing

Selling and marketing expenses increased 9.5% and 9.3% for the three and six months ended June 30, 2025, respectively, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs.

Research and Development

R&D expenses increased 7.3% for the three months ended June 30, 2025, primarily driven by increases in non-compensation costs reflecting higher information technology costs and professional fees.

R&D expenses increased 12.3% for the six months ended June 30, 2025, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs, partially offset by increased capitalization of costs related to internally developed software projects. The increase is also driven by increases in non-compensation costs reflecting higher information technology costs.

General and Administrative

G&A expenses decreased 3.4% for the three months ended June 30, 2025, primarily driven by decreases in non-compensation costs reflecting an adjustment to the fair value of contingent consideration related to the Fabric acquisition (the “Contingent Consideration Adjustment”) as well as lower transaction costs, partially offset by increases in compensation and benefits costs as a result of increased headcount cost.

G&A expenses decreased 1.0% for the six months ended June 30, 2025, primarily driven by decreases in non-compensation costs reflecting the Contingent Consideration Adjustment as well as lower transaction costs, partially offset by increases in compensation and benefits costs as a result of increased headcount cost.

The following table presents operating expenses using compensation and non-compensation categories, rather than using activity categories, for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Compensation and benefits$216,927$200,6188.1%$457,173$423,6127.9%
Non-compensation expenses81,37379,7242.1%161,312154,6284.3%
Amortization of intangible assets43,76040,7737.3%87,63279,37710.4%
Depreciation and amortization of property, equipment and leasehold improvements5,3854,22627.4%10,1318,30722.0%
Total operating expenses$347,445$325,3416.8%$716,248$665,9247.6%

Compensation and Benefits

We had 6,208 employees as of June 30, 2025, compared to 6,059 employees as of June 30, 2024, reflecting a 2.5% increase in the number of employees. Continued growth of our emerging market centers around the world is an important factor in our ability to manage and control the growth of our compensation and benefits costs. As of June 30, 2025, 70.4% of our employees were located in emerging market centers compared to 68.5% as of June 30, 2024.

Compensation and benefits costs increased 8.1% and 7.9%, for the three and six months ended June 30, 2025, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs.

Adjusting for the impact of foreign currency exchange rate fluctuations, compensation and benefits costs would have increased by 7.2% and increased by 8.6%, respectively, for the three and six months ended June 30, 2025.

Non-Compensation Expenses

Non-compensation expenses increased 2.1% for the three months ended June 30, 2025, primarily driven by higher information technology costs and professional fees, partially offset by the Contingent Consideration Adjustment.

Non-compensation expenses increased 4.3% for the six months ended June 30, 2025, primarily driven by higher information technology costs and professional fees, partially offset by the Contingent Consideration Adjustment.

Adjusting for the impact of foreign currency exchange rate fluctuations, non-compensation expenses would have increased by 1.7% and increased by 4.5%, respectively, for the three and six months ended June 30, 2025.

Amortization of Intangible Assets

Amortization of intangible assets expense increased 7.3% and 10.4% for the three and six months ended June 30, 2025, respectively, primarily driven by higher amortization recognized on internal use software.

Depreciation and Amortization of Property, Equipment and Leasehold Improvements

Depreciation and amortization of property, equipment and leasehold improvements increased 27.4% and 22.0% for the three and six months ended June 30, 2025, respectively, primarily driven by higher depreciation on computer and related equipment.

Total Other Expense (Income), Net

The following table shows our other expense (income), net for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Interest income$(2,929)$(6,110)(52.1%)$(6,805)$(12,158)(44.0%)
Interest expense46,18446,633(1.0%)92,67693,307(0.7%)
Other expense (income)4,1392,09197.9%7,4764,95450.9%
Total other expense (income), net$47,394$42,61411.2%$93,347$86,1038.4%

Total other expense (income), net increased 11.2% and 8.4% for the three and six months ended June 30, 2025, respectively, primarily driven by lower interest income reflecting lower average cash balances as well as unfavorable foreign currency exchange rate fluctuations.

Income Taxes

The effective tax rate for the three months ended June 30, 2025 and 2024 was 19.6% and 21.5%, respectively. The rate is driven lower by the non-taxable adjustments on contingent consideration related to prior acquisitions, compared to unfavorable discrete items in the prior year.

The effective tax rate for the six months ended June 30, 2025 and 2024 was 16.5% and 17.8%, respectively. The decrease is primarily driven by the benefit of prior year refund claims in the current year, and unfavorable discrete items in the prior year.

Net Income

The following table shows our net income for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Net income$303,650$266,75813.8%$592,250$522,71213.3%

As a result of the factors described above, net income increased 13.8% for the three months ended June 30, 2025, and increased 13.3% for the six months ended June 30, 2025.

Weighted Average Shares and Common Shares Outstanding

The following table shows our weighted average shares outstanding for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Weighted average shares outstanding:
Basic77,40079,085(2.1%)77,51479,140(2.1%)
Diluted77,49679,245(2.2%)77,65179,377(2.2%)

The following table shows our common shares outstanding for the periods indicated:

As of% Change
(in thousands)June 30, 2025December 31, 2024
Common shares outstanding77,36577,745(0.5%)

The decrease in weighted average shares and common shares outstanding for the three and six months ended June 30, 2025 primarily reflects the impact of share repurchases made pursuant to the Company’s stock repurchase program, partially offset by the vesting of certain stock-based awards.

Non-GAAP Financial Measures

Adjusted EBITDA

“Adjusted EBITDA,” a non-GAAP measure used by management to assess operating performance, is defined as net income before (1) provision for income taxes, (2) other expense (income), net, (3) depreciation and amortization of property, equipment and leasehold improvements, (4) amortization of intangible assets and, at times, (5) certain other transactions or adjustments, including, when applicable, certain acquisition-related integration and transaction costs.

“Adjusted EBITDA expenses,” a non-GAAP measure used by management to assess operating performance, is defined as operating expenses less depreciation and amortization of property, equipment and leasehold improvements and amortization of intangible assets and, at times, certain other transactions or adjustments, including, when applicable, certain acquisition-related integration and transaction costs.

“Adjusted EBITDA margin” is defined as Adjusted EBITDA divided by operating revenues.

Adjusted EBITDA, Adjusted EBITDA expenses and Adjusted EBITDA margin are believed to be meaningful measures for management to assess the operating performance of the Company because they adjust for significant one-time, unusual or non-recurring items as well as eliminate the accounting effects of certain capital spending and acquisitions that do not directly affect what management considers to be the Company’s ongoing operating performance in the period. All companies do not calculate adjusted EBITDA, adjusted EBITDA expenses and adjusted EBITDA margin in the same way. These measures can differ significantly from company to company depending on, among other things, long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Accordingly, the Company’s computation of the Adjusted EBITDA, Adjusted EBITDA expenses and Adjusted EBITDA margin measures may not be comparable to similarly titled measures computed by other companies.

The following table presents non-GAAP Adjusted EBITDA for the periods indicated:

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2025202420252024
Operating revenues$772,679$707,949$1,518,505$1,387,914
Adjusted EBITDA expenses298,300277,994618,485574,386
Adjusted EBITDA$474,379$429,955$900,020$813,528
Operating margin %55.0%54.0%52.8%52.0%
Adjusted EBITDA margin %61.4%60.7%59.3%58.6%

Reconciliation of Net Income to Adjusted EBITDA and Operating Expenses to Adjusted EBITDA Expenses

The following table presents the reconciliation of net income to Adjusted EBITDA for the periods indicated:

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2025202420252024
Net income$303,650$266,758$592,250$522,712
Provision for income taxes74,19073,236116,660113,175
Other expense (income), net47,39442,61493,34786,103
Operating income425,234382,608802,257721,990
Amortization of intangible assets43,76040,77387,63279,377
Depreciation and amortization of property, equipment and leasehold improvements5,3854,22610,1318,307
Acquisition-related integration and transaction costs(1)—2,348—3,854
Consolidated Adjusted EBITDA$474,379$429,955$900,020$813,528
Index Adjusted EBITDA330,158306,990641,729584,750
Analytics Adjusted EBITDA92,60681,672168,636153,884
Sustainability and Climate Adjusted EBITDA31,67723,93055,49845,021
All Other - Private Assets Adjusted EBITDA19,93817,36334,15729,873
Consolidated Adjusted EBITDA$474,379$429,955$900,020$813,528

(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.

The following table presents the reconciliation of operating expenses to Adjusted EBITDA expenses for the periods indicated:

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2025202420252024
Total operating expenses$347,445$325,341$716,248$665,924
Amortization of intangible assets43,76040,77387,63279,377
Depreciation and amortization of property, equipment and leasehold improvements5,3854,22610,1318,307
Acquisition-related integration and transaction costs(1)—2,348—3,854
Consolidated Adjusted EBITDA expenses$298,300$277,994$618,485$574,386
Index Adjusted EBITDA expenses$104,675$90,202$214,847$186,314
Analytics Adjusted EBITDA expenses85,09784,323181,252176,077
Sustainability and Climate Adjusted EBITDA expenses57,23455,925118,032112,718
All Other - Private Assets Adjusted EBITDA expenses51,29447,544104,35499,277
Consolidated Adjusted EBITDA expenses$298,300$277,994$618,485$574,386

(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.

Segment Results

Index Segment

The following table presents the results for the Index segment for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Operating revenues:
Recurring subscriptions$235,647$217,0328.6%$468,977$429,9849.1%
Asset-based fees184,072163,28112.7%361,487313,54015.3%
Non-recurring15,11416,879(10.5%)26,11227,540(5.2%)
Operating revenues total434,833397,1929.5%856,576771,06411.1%
Adjusted EBITDA expenses104,67590,20216.0%214,847186,31415.3%
Adjusted EBITDA$330,158$306,9907.5%$641,729$584,7509.7%
Adjusted EBITDA margin %75.9%77.3%74.9%75.8%

Index operating revenues increased 9.5% for the three months ended June 30, 2025, driven by growth from asset-based fees as well as recurring subscriptions. Adjusting for the impact of foreign currency exchange rate fluctuations, Index operating revenues would have increased 9.3%.

Operating revenues from recurring subscriptions increased 8.6% for the three months ended June 30, 2025, primarily driven by growth from market cap-weighted Index products.

Operating revenues from asset-based fees increased 12.7% for the three months ended June 30, 2025, primarily driven by growth in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes. Operating revenues from ETFs linked to MSCI equity indexes increased by 16.1%, primarily driven by an increase in average AUM. Operating revenues from non-ETF indexed funds linked to MSCI indexes increased by 7.4%, primarily driven by an increase in average AUM.

Index operating revenues increased 11.1% for the six months ended June 30, 2025, primarily driven by growth from asset-based fees as well as recurring subscriptions. Adjusting for the impact of foreign currency exchange rate fluctuations, Index operating revenues would have increased 11.0%.

Operating revenues from recurring subscriptions increased 9.1% for the six months ended June 30, 2025, primarily driven by growth from market cap-weighted Index products.

Operating revenues from asset-based fees increased 15.3% for the six months ended June 30, 2025, primarily driven by growth in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes. Operating revenues from ETFs linked to MSCI equity indexes increased by 16.1%, primarily driven by an increase in average AUM. Operating revenues from non-ETF indexed funds linked to MSCI indexes increased 16.8%, primarily driven by an increase in average AUM and average basis point fees.

The following table presents the value of AUM in ETFs linked to MSCI equity indexes and the sequential change of such assets as of the end of each of the periods indicated:

Period Ended
20242025
(in billions)March 31,June 30,September 30,December 31,March 31,June 30,
AUM in ETFs linked to MSCI equity indexes(1) (2)$1,582.6$1,631.9$1,761.8$1,724.7$1,783.1$2,024.6
Sequential Change in Value
Market Appreciation/(Depreciation)$92.8$21.2$111.3$(85.3)$16.4$193.0
Cash Inflows20.928.118.648.242.048.5
Total Change$113.7$49.3$129.9$(37.1)$58.4$241.5

The following table presents the average value of AUM in ETFs linked to MSCI equity indexes for the periods indicated:

20242025
(in billions)MarchJuneSeptemberDecemberMarchJune
AUM in ETFs linked to MSCI equity indexes(1) (2)
Quarterly average$1,508.8$1,590.6$1,677.0$1,755.4$1,793.7$1,868.7
Year-to-date average$1,508.8$1,549.7$1,592.1$1,632.9$1,793.7$1,831.2

(1)The historical values of the AUM in ETFs linked to our equity indexes as of the last day of the month and the monthly average balance can be found under the link “AUM in ETFs Linked to MSCI Equity Indexes” on our Investor Relations homepage at http://ir.msci.com. This information is updated mid-month each month. Information contained on our website is not deemed part of or incorporated by reference into this Quarterly Report on Form 10-Q or any other report filed with the SEC. The AUM in ETFs also includes AUM in Exchange Traded Notes, the value of which is less than 1.0% of the AUM amounts presented.

(2)The value of AUM in ETFs linked to MSCI equity indexes is calculated by multiplying the equity ETF net asset value by the number of shares outstanding.

The average value of AUM in ETFs linked to MSCI equity indexes for the three months ended June 30, 2025, was up $278.1 billion, or 17.5%. For the six months ended June 30, 2025, the average value of AUM in ETFs linked to MSCI equity indexes was up $281.5 billion, or 18.2%.

Index segment Adjusted EBITDA expenses increased 16.0% for the three months ended June 30, 2025, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs. The increase was also driven by non-compensation expenses reflecting higher information technology costs. Adjusting for the impact of foreign currency exchange rate fluctuations, Index segment Adjusted EBITDA expenses would have increased by 15.3%.

Index segment Adjusted EBITDA expenses increased 15.3% for the six months ended June 30, 2025, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs. The increase was also driven by non-compensation expenses reflecting higher information technology costs. Adjusting for the impact of foreign currency exchange rate fluctuations, Index segment Adjusted EBITDA expenses would have increased by 15.9%.

Analytics Segment

The following table presents the results for the Analytics segment for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Operating revenues:
Recurring subscriptions$169,781$162,1284.7%$339,536$322,6795.2%
Non-recurring7,9223,867104.9%10,3527,28242.2%
Operating revenues total177,703165,9957.1%349,888329,9616.0%
Adjusted EBITDA expenses85,09784,3230.9%181,252176,0772.9%
Adjusted EBITDA$92,606$81,67213.4%$168,636$153,8849.6%
Adjusted EBITDA margin %52.1%49.2%48.2%46.6%

Analytics operating revenues increased 7.1% for the three months ended June 30, 2025, primarily driven by growth from recurring subscriptions related to both Multi-Asset Class and Equity Analytics products. The increase was also driven by growth in non-recurring revenues primarily driven by certain one-time contract items, timing of implementation revenue and overage fees. Adjusting for the impact of foreign currency exchange rate fluctuations, Analytics operating revenues would have increased 6.6%.

Analytics segment Adjusted EBITDA expenses increased 0.9% for the three months ended June 30, 2025, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs, partially offset by the Contingent Consideration Adjustment. Adjusting for the impact of foreign currency exchange rate fluctuations, Analytics segment Adjusted EBITDA expenses would have increased 0.7%.

Analytics operating revenues increased 6.0% for the six months ended June 30, 2025, primarily driven by growth from recurring subscriptions related to both Equity Analytics and Multi-Asset Class products. The increase was also driven by growth in

non-recurring revenues primarily driven by certain one-time contract items, timing of implementation revenue and overage fees. Adjusting for the impact of foreign currency exchange rate fluctuations, Analytics operating revenues would have increased 5.9%.

Analytics segment Adjusted EBITDA expenses increased 2.9% for the six months ended June 30, 2025, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs, partially offset by the Contingent Consideration Adjustment. Adjusting for the impact of foreign currency exchange rate fluctuations, Analytics segment Adjusted EBITDA expenses would have increased 3.8%.

Sustainability and Climate Segment

The following table presents the results for the Sustainability and Climate segment for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Operating revenues:
Recurring subscriptions$87,027$78,00011.6%$169,764$154,4189.9%
Non-recurring1,8841,8551.6%3,7663,32113.4%
Operating revenues total88,91179,85511.3%173,530157,73910.0%
Adjusted EBITDA expenses57,23455,9252.3%118,032112,7184.7%
Adjusted EBITDA$31,677$23,93032.4%$55,498$45,02123.3%
Adjusted EBITDA margin %35.6%30.0%32.0%28.5%

Sustainability and Climate operating revenues increased 11.3% for the three months ended June 30, 2025, primarily driven by growth from recurring subscriptions related to Ratings and Climate products, with growth primarily attributable to EMEA. Adjusting for the impact of foreign currency exchange rate fluctuations, Sustainability and Climate operating revenues would have increased 7.1%.

Sustainability and Climate segment Adjusted EBITDA expenses increased 2.3% for the three months ended June 30, 2025, primarily driven by increases in non-compensation expense reflecting higher information technology costs. Adjusting for the impact of foreign currency exchange rate fluctuations, Sustainability and Climate segment Adjusted EBITDA expenses would have increased 1.1%.

Sustainability and Climate operating revenues increased 10.0% for the six months ended June 30, 2025, primarily driven by growth from recurring subscriptions related to Ratings and Climate products, with growth primarily attributable to EMEA. Adjusting for the impact of foreign currency exchange rate fluctuations, Sustainability and Climate operating revenues would have increased 8.1%.

Sustainability and Climate segment Adjusted EBITDA expenses increased 4.7% for the six months ended June 30, 2025, primarily driven by increases in non-compensation expense relating to information technology costs. The increase was also driven by compensation and benefits costs as a result of increased headcount costs as well as higher severance costs. Adjusting for the impact of foreign currency exchange rate fluctuations, Sustainability and Climate segment Adjusted EBITDA expenses would have increased 5.2%.

All Other – Private Assets

The following table presents the results for All Other – Private Assets for the periods indicated:

Three Months Ended June 30,% ChangeSix Months Ended June 30,% Change
(in thousands)2025202420252024
Operating revenues:
Recurring subscriptions$70,313$64,3099.3%$137,132$127,4437.6%
Non-recurring91959853.7%1,3791,707(19.2%)
Operating revenues total71,23264,9079.7%138,511129,1507.2%
Adjusted EBITDA expenses51,29447,5447.9%104,35499,2775.1%
Adjusted EBITDA$19,938$17,36314.8%$34,157$29,87314.3%
Adjusted EBITDA margin %28.0%26.8%24.7%23.1%

All Other – Private Assets operating revenues increased 9.7% for the three months ended June 30, 2025, primarily driven by growth from recurring subscriptions in Private Capital Solutions related to Private Capital Intel, Total Plan Portfolio Management and Transparency Data products, as well as growth from recurring subscriptions in Real Assets related to Index Intel product. Adjusting for the impact of foreign currency exchange rate fluctuations, All Other – Private Assets operating revenues would have increased 8.2%.

All Other – Private Assets Adjusted EBITDA expenses increased 7.9% for the three months ended June 30, 2025, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs. Adjusting for the impact of foreign currency exchange rate fluctuations, All Other - Private Assets Adjusted EBITDA expenses would have increased 6.5%.

All Other – Private Assets operating revenues increased 7.2% for the six months ended June 30, 2025, primarily driven by growth from recurring subscriptions in Private Capital Solutions related to Transparency Data and Private Capital Intel products, as well as growth from recurring subscription in Real Assets related to Index Intel products. Adjusting for the impact of foreign currency exchange rate fluctuations, All Other – Private Assets operating revenues would have increased 6.7%.

All Other – Private Assets Adjusted EBITDA expenses increased 5.1% for the six months ended June 30, 2025, primarily driven by increases in compensation and benefits costs as a result of increased headcount costs as well as higher severance costs. Adjusting for the impact of foreign currency exchange rate fluctuations, All Other - Private Assets Adjusted EBITDA expenses would have increased 5.2%.

Operating Metrics

A substantial portion of MSCI’s operating revenues is derived from recurring subscriptions or licenses for products and services that are ongoing in nature and provided over contractually agreed periods, which are subject to renewal or cancellation upon the expiration of the then-current term. In addition, we generate non-recurring revenues from one-time sales and other transactions or services that are discrete in nature or that have a defined life. The operating metrics defined below help management assess the stability and growth of this recurring-revenue base and track non-recurring revenues. There have been no changes to the methodologies used to compute these metrics compared with prior periods.

Run Rate

Run Rate estimates, at a specific point in time, the annualized value of the recurring portion of executed client contracts (“Client Contracts”) expected to generate revenues over the next 12 months, assuming that all such Client Contracts are renewed and using foreign exchange rates at such point in time. Run Rate includes new Client Contracts upon execution, even if the license start date and related revenue recognition occur later.

For Client Contracts where fees are linked to an investment product’s assets or trading volume or fees (referred to as “Asset-based Fees”), the Run Rate calculation is based on:

  • For exchange-traded funds (“ETFs”): assets under management as of the last trading day of the period;

  • For non-ETF products: the most recent client-reported assets under management; and

  • For listed futures and options contracts: the most recent quarterly volumes and/or reported exchange fees.

Run Rate excludes fees associated with one-time or other non-recurring transactions.

We remove from Run Rate the annualized fee value associated with products or services under any Client Contracts when (i) we have received a notice of termination, reduction in fees, non-renewal or other clear indication that the client does not intend to continue its subscription at then current fees; and (ii) management has determined that such notice or indication reflects the client’s final decision to terminate, not renew or renew at a lower fee the applicable products or services, even if such termination or non-renewal is not yet effective (each such event, a “Subscription Cancellation”).

In general, when a client reduces the fees paid to MSCI associated with a reduction in the number of products or services to which it subscribes within a segment, or a switch between products or services within a segment, unless the client switches to a product or service that management considers a replacement, such reduction or switch is treated as a Subscription Cancellation, including for purposes of calculating MSCI’s Retention Rate (as detailed below). In the cases where the client switches products or services to a replacement service, only the net decrease, if any, is reported as a cancellation.

  • In the Analytics and Sustainability and Climate operating segments, substantially all such product or service switches are treated as replacements and are netted accordingly.

  • In contrast, in the Index, Real Assets, and Private Capital Solutions operating segments, such netting treatment is applied only in limited circumstances.

Run Rate may differ from revenues recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Changes in our recurring revenues typically lag changes in Run Rate. Key factors include, but are not limited to:

  • Immediate recognition of the annualized value of newly executed recurring Client Contracts;

  • Immediate removal of the annualized value of Subscription Cancellations on Client Contracts;

  • Immediate updates to reflect modifications to existing Client Contracts, including changes in price or scope of services;

  • Timing differences between the effective date of service delivery and contract execution (e.g., Client Contracts with implementation periods, fee waivers or future-dated start terms);

  • Variability in revenues driven by exogenous factors, such as changes in reference asset values, currency exchange rates or investment flows;

  • Variability in revenues tied to trading volumes of futures and options contracts linked to MSCI indexes; and

  • The effects of acquisitions and divestitures.

  • Multi-period agreements with contractual price escalators where the total revenue is recognized ratably over the contract period.

Organic recurring subscription Run Rate growth is defined as the period-over-period growth in Run Rate, excluding:

  • The impact of changes in foreign currency exchange rates;

  • The impact of acquisitions during the first 12 months following the transaction date; and

  • The impact of divestitures, where Run Rate from divested businesses are excluded from prior period Run Rates.

The following table presents Run Rates as of the dates indicated and the growth percentages over the periods indicated:

As of
(in thousands)June 30, 2025June 30, 2024Run Rate Growth %Organic Run Rate Growth %
Index:
Recurring subscriptions$968,712$891,6338.6%8.6%
Asset-based fees757,298646,81117.1%17.1%
Index total1,726,0101,538,44412.2%12.2%
Analytics730,640674,6098.3%6.8%
Sustainability and Climate369,759333,68310.8%6.5%
All Other - Private Assets280,313260,5567.6%6.0%
Total Run Rate$3,106,722$2,807,29210.7%9.6%
Recurring subscriptions total$2,349,424$2,160,4818.7%7.4%
Asset-based fees757,298646,81117.1%17.1%
Total Run Rate$3,106,722$2,807,29210.7%9.6%

Total Run Rate increased 10.7%, driven by a 8.7% increase from recurring subscriptions, primarily driven by increases in the asset manager, banks and broker-dealer, asset owner and hedge fund client segments, as well as a 17.1% increase from asset-based fees.

Run Rate from Index recurring subscriptions increased 8.6%, primarily driven by growth from market cap-weighted and custom Index products. The increase reflected growth across all regions and client segments.

Run Rate from Index asset-based fees increased 17.1%, primarily driven by higher AUM in both ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes.

Run Rate from Analytics products increased 8.3%, primarily driven by growth in both Multi-Asset Class and Equity Analytics products, and reflected growth across all regions and client segments.

Run Rate from Sustainability and Climate products increased 10.8%, driven by growth in Climate and Ratings products with contributions across all regions. The increase is primarily driven by growth in asset manager, wealth manager and asset owner client segments.

Run Rate from All Other - Private Assets increased 7.6%, primarily driven by growth from Private Capital Solutions related to Private Capital Intel, Transparency Data and Total Plan Portfolio Management products, and reflected growth across all regions. The increase is primarily driven by growth in asset owner and asset manager client segments.

Sales

Sales represents the annualized value of products and services that clients have committed to purchase from MSCI and that are expected to result in additional operating revenues.

Non-recurring sales represent the aggregate value of client agreements entered into during the period that generate non-recurring fees and are not included in Run Rate (as defined elsewhere herein), even if such agreements span multiple periods or years.

New recurring subscription sales represent the annualized value of additional client commitments entered into during the period - such as new Client Contracts, expansions of existing Client Contracts or price increases - that contribute to Run Rate.

Net new recurring subscription sales represent new recurring subscription sales minus the impact of Subscription Cancellations, capturing the net impact to Run Rate for the period.

Total gross sales is the sum of new recurring subscription sales and non-recurring sales.

Total net sales is total gross sales minus the impact of Subscription Cancellations.

Changes in foreign currency are calculated by applying the exchange rates from the prior comparable period to the current period’s foreign currency-denominated Run Rate.

The following table presents our recurring subscription sales, cancellations and non-recurring sales for the periods indicated:

Three Months EndedSix Months Ended
(in thousands)June 30, 2025June 30, 2024June 30, 2025June 30, 2024
Index
New recurring subscription sales$29,274$31,297$51,698$54,810
Subscription cancellations(9,241)(10,312)(17,495)(25,014)
Net new recurring subscription sales$20,033$20,985$34,203$29,796
Non-recurring sales$17,473$17,993$29,847$30,804
Total gross sales$46,747$49,290$81,545$85,614
Total Index net sales$37,506$38,978$64,050$60,600
Analytics
New recurring subscription sales$25,744$21,269$38,962$35,357
Subscription cancellations(10,915)(6,900)(18,857)(17,694)
Net new recurring subscription sales$14,829$14,369$20,105$17,663
Non-recurring sales$5,839$4,057$8,041$6,519
Total gross sales$31,583$25,326$47,003$41,876
Total Analytics net sales$20,668$18,426$28,146$24,182
Sustainability and Climate
New recurring subscription sales$10,301$18,557$17,535$30,028
Subscription cancellations(5,332)(4,570)(10,026)(11,921)
Net new recurring subscription sales$4,969$13,987$7,509$18,107
Non-recurring sales$1,327$2,835$3,241$4,507
Total gross sales$11,628$21,392$20,776$34,535
Total Sustainability and Climate net sales$6,296$16,822$10,750$22,614
All Other - Private Assets
New recurring subscription sales$9,869$11,654$19,577$19,918
Subscription cancellations(5,858)(5,580)(11,498)(10,502)
Net new recurring subscription sales$4,011$6,074$8,079$9,416
Non-recurring sales$757$752$1,818$1,841
Total gross sales$10,626$12,406$21,395$21,759
Total All Other - Private Assets net sales$4,768$6,826$9,897$11,257
Consolidated
New recurring subscription sales$75,188$82,777$127,772$140,113
Subscription cancellations(31,346)(27,362)(57,876)(65,131)
Net new recurring subscription sales$43,842$55,415$69,896$74,982
Non-recurring sales$25,396$25,637$42,947$43,671
Total gross sales$100,584$108,414$170,719$183,784
Total net sales$69,238$81,052$112,843$118,653

Retention Rate

The following table presents our Retention Rate for the periods indicated:

Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Index96.0%95.2%96.3%94.2%
Analytics93.7%95.8%94.6%94.7%
Sustainability and Climate93.8%94.3%94.2%92.5%
All Other - Private Assets91.2%91.2%91.4%91.7%
Total94.4%94.8%94.8%93.8%

Retention Rate is a key performance metric that provides insight into the stability and durability of MSCI’s recurring revenue base. Subscription cancellations reduce Run Rate and, over time, lower future operating revenues.

For full-year periods, Retention Rate is calculated as the retained subscription Run Rate, which is defined as the subscription Run Rate at the beginning of the fiscal year minus actual subscription cancellations during the fiscal year, expressed as a percentage of the subscription Run Rate at the beginning of the fiscal year.

For interim (non-annual) periods, Retention Rate is presented on an annualized basis. The annualized Retention Rate is calculated by:

1.Dividing annualized subscription cancellations in the period by the subscription Run Rate at the beginning of the fiscal year, to determine a cancellation rate; and

2.Subtracting that rate from 100%, to derive the annualized Retention Rate.

Retention Rate is calculated by operating segment and is based on an individual product or service level within each segment. We do not calculate Retention Rate for the portion of Run Rate attributable to Asset-based Fees.

Liquidity and Capital Resources

We require capital to fund ongoing operations, internal growth initiatives and acquisitions. Our primary sources of liquidity are cash flows generated from our operations, existing cash and cash equivalents and credit capacity under our existing credit facility. In addition, we believe we have access to additional funding in the public and private markets. We intend to use these sources of liquidity to, among other things, service our existing and future debt obligations, fund our working capital requirements for capital expenditures, investments, acquisitions and dividend payments, and make repurchases of our common stock. In connection with our business strategy, we regularly evaluate acquisition and strategic partnership opportunities. We believe our liquidity, along with other financing alternatives, will provide the necessary capital to fund these transactions and achieve our planned growth.

Senior Notes and Credit Agreement

As of June 30, 2025, we had an aggregate of $4,200.0 million in Senior Notes outstanding. In addition, under the Credit Agreement, we had as of June 30, 2025 an aggregate of $337.0 million in outstanding borrowings under the revolving credit facility. See Note 7, “Debt” of the Notes to Condensed Consolidated Financial Statements (Unaudited) included herein for additional information on our outstanding indebtedness and revolving credit facility.

On January 26, 2024, we entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) amending and restating in its entirety the Prior Credit Agreement. The Credit Agreement makes available an aggregate of $1,250.0 million of revolving loan commitments under the Revolving Credit Facility, which may be drawn until January 26, 2029. The obligations under the Credit Agreement are general unsecured obligations of the Company.

The Senior Notes and the Prior Credit Agreement were previously fully and unconditionally, and jointly and severally, guaranteed by our direct or indirect wholly owned domestic subsidiaries that account for more than 5% of our and our subsidiaries’ consolidated assets, other than certain excluded subsidiaries (the “subsidiary guarantors”). Upon the closing of the Credit Agreement on January 26, 2024, the subsidiary guarantors’ were released from their guarantees under the Prior Credit Agreement and the indentures governing our Senior Notes (the “Indentures”).

The Indentures among us and Computershare, National Association, as trustee and successor to Wells Fargo Bank, National Association, contain covenants that limit our and our subsidiaries’ ability to, among other things, incur liens, enter into sale/leaseback transactions and consolidate, merge or sell all or substantially all of our assets, and that limit the ability of our subsidiaries to incur certain indebtedness. The Credit Agreement also contains covenants that limit our and our subsidiaries’ ability to, among other things, incur liens, enter into sale/leaseback transactions and consolidate, merge or sell all or substantially all of our assets, and that limit the ability of our subsidiaries to incur certain indebtedness.

The Credit Agreement and the Indentures also contain customary events of default, including those relating to non-payment, breach of representations, warranties or covenants, cross-default and cross-acceleration, and bankruptcy and insolvency events, and, in the case of the Credit Agreement, invalidity or impairment of loan documentation, change of control and customary ERISA defaults in addition to the foregoing. None of the restrictions above are expected to impact our ability to effectively operate the business.

The Credit Agreement also requires us and our subsidiaries to achieve financial and operating results sufficient to maintain compliance with the following financial ratios on a consolidated basis through the termination of the Credit Agreement: (1) the maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) measured quarterly on a rolling four-quarter basis not to exceed 4.25:1.00 (or 4.50:1.00 for four fiscal quarters following a material acquisition) and (2) the minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) measured quarterly on a rolling four-quarter basis of at least 4.00:1.00. As of June 30, 2025, our Consolidated Leverage Ratio was 2.24:1.00 and our Consolidated Interest Coverage Ratio was 10.70:1.00.

Share Repurchases

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

Six months ended (in thousands except per share data)Average Price Paid Per ShareTotal Number of Shares RepurchasedDollar Value of Shares Repurchased**(1)**
June 30, 2025$557.70514$286,585
June 30, 2024$483.79499$241,518

(1)The values in this column exclude the 1% excise tax incurred on share repurchases pursuant to the Inflation Reduction Act. 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).

As of June 30, 2025, there was $1,248.9 million of available authorization remaining under the 2024 Repurchase Program. This authorization may be modified, suspended or terminated by the Board of Directors at any time without prior notice.

Cash Dividends

On July 21, 2025, the Board of Directors declared a quarterly cash dividend of $1.80 per share for the three months ending September 30, 2025. The third quarter 2025 dividend is payable on August 29, 2025 to shareholders of record as of the close of trading on August 15, 2025.

Cash Flows

The following table presents the Company’s cash and cash equivalents, including restricted cash, as of the dates indicated:

As of
(in thousands)June 30, 2025December 31, 2024
Cash and cash equivalents (includes restricted cash of $3,635 and $3,497 at June 30, 2025 and December 31, 2024, respectively)$347,318$409,351

We typically seek to maintain minimum cash balances globally of approximately $225.0 million to $275.0 million for general operating purposes. As of June 30, 2025 and December 31, 2024, $199.1 million and $265.5 million, respectively, of the Company’s cash and cash equivalents were held by foreign subsidiaries. Repatriation of some foreign cash may be subject to certain withholding taxes in local jurisdictions and other distribution restrictions. We believe the global cash and cash equivalent balances that are maintained will be available to meet our global needs whether for general corporate purposes or other needs, including acquisitions or expansion of our products.

We believe that global cash flows from operations, together with existing cash and cash equivalents and funds available under our existing revolving credit facility and our ability to access bank debt, private debt and the capital markets for additional funds, will continue to be sufficient to fund our global operating activities and cash commitments for investing and financing activities, such as material capital expenditures and share repurchases, for at least the next 12 months and for the foreseeable future thereafter. In addition, we expect that foreign cash flows from operations, together with existing cash and cash equivalents, will continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities, such as material capital expenditures, for at least the next 12 months and for the foreseeable future thereafter.

Net Cash Provided by (Used In) Operating, Investing and Financing Activities

Six Months Ended June 30,
(in thousands)20252024
Net cash provided by operating activities$637,875$649,385
Net cash (used in) investing activities(67,467)(79,458)
Net cash (used in) provided by financing activities(642,824)(575,859)
Effect of exchange rate changes10,383(4,360)
Net increase (decrease) in cash, cash equivalents and restricted cash$(62,033)$(10,292)

Cash Flows From Operating Activities

Cash flows from operating activities consist of net income adjusted for certain non-cash items and changes in assets and liabilities. The year-over-year change was primarily driven by higher payments for cash expenses, partially offset by higher cash collections from customers.

Our primary uses of cash from operating activities are for the payment of cash compensation expenses, income taxes, interest expenses, technology costs, professional fees, market data costs and office rent. Historically, the payment of cash for compensation and benefits is at its highest level in the first quarter when we pay discretionary employee compensation related to the previous fiscal year.

Cash Flows From Investing Activities

The year-over-year change was due to prior year acquisitions partially offset by increased capital expenditures.

Cash Flows From Financing Activities

The year-over-year change was primarily driven by the impact of higher share repurchases, dividend payments and contingent consideration payments related to acquisitions.

Previous: Item 1. Financial Statements · Next: Item 3. Quantitative and Qualitative Disclosures about Market Risk