Company Overview

MSCI Inc. (formerly Morgan Stanley Capital International) is an American finance company headquartered in New York City. MSCI is a global provider of equity, fixed income, real estate indices, multi-asset portfolio analysis tools, ESG and climate finance products. MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data and technology, the company powers better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios.

Business Model and Revenue Streams

MSCI's business model centers around licensing its indices and providing analytics solutions to asset managers, asset owners, and financial institutions worldwide. The company's offerings are highly sticky, with subscription-based products driving 98% recurring revenue, ensuring exceptional predictability and pricing power.

Net sales break down by activity as follows:

• Dissemination of stock market indices (57.4%): Used for the creation of indexed products, comparative performance analysis, rebalancing, and asset allocation.

• Development of market analysis solutions and tools (24.4%): Development of content, applications, and services for risk management, performance attribution, and portfolio management.

• Development of tools for the analysis of environmental, social, and governance criteria (11.4%): Providing ESG and climate-related data and analytics.

• Other (6.8%): Includes contributions from other service areas.

Market Position and Assets Under Management

MSCI maintains a dominant position in the global index market, leveraging its early leadership in non-US indexes. As of Q3 2024, funds worth over US$16.5 trillion were benchmarked against MSCI indices. The company also boasts over US$1.7 trillion in ETF assets linked to MSCI indexes.

Key Assets Under Management (AUM) figures as of Q3 2024:

• Ending AUM in Equity ETFs: $1.76 trillion

• AUM in Non-ETF Passive Products: $3.65 trillion

• Total Benchmarked Assets: Over $17 trillion

Key Business Segments

Index Segment

This is MSCI's crown jewel, accounting for approximately 55% of overall revenue and 70% of operating profit. It operates globally recognized indices such as the MSCI World, MSCI Emerging Markets, and MSCI All Country World (ACWI) indices.

Analytics Segment

The MSCI analytics segment provides sophisticated portfolio management and risk management analytics software to asset managers and asset owners, aiding them in complex decision-making.

ESG and Climate

MSCI is a leading provider of ESG data and climate-related analytics to the investment industry, supporting the growing demand for sustainable investing insights.

Private Assets

In the private assets domain, MSCI offers essential services like real estate reporting, market data, benchmarking, and analytics for investors and real estate managers.

Recent Financial Performance

MSCI delivered strong financial results for the full year 2024 and key quarters.

Full Year 2024 Performance:

• Revenue: $2.86 billion (an increase of 12.94% compared to $2.53 billion in 2023)

• Earnings: $1.11 billion (a decrease of -3.44% compared to the previous year)

Key Q4 2024 Highlights:

• Included best-ever recurring sales in the Index segment.

• 15% Fixed Income run-rate growth across product lines.

• 15% asset-based fees run-rate growth.

• Adjusted EBITDA margin: 60.8% (compared to 60.1% in Q4 2023).

Q3 2024 Performance:

• Total Revenue Growth: 16%

• Adjusted Earnings Per Share (EPS) Growth: 12%

• Free Cash Flow Growth: 46%

• Adjusted EBITDA margin: 62.2% (compared to 61.8% in Q3 2023).

Geographic Distribution

MSCI's net sales are distributed globally, reflecting its international presence:

• United States: 41.3%

• Americas (excluding US): 4.4%

• United Kingdom: 16.1%

• Europe/Middle East/Africa (EMEA): 22.5%

• Japan: 4%

• Other Regions: 11.7%

Growth Outlook

MSCI is well-positioned for continued growth. The company is forecast to grow earnings and revenue by approximately 10.4% and 7.7% per annum, respectively, while EPS is expected to grow by 11.5% per annum. MSCI continues to invest heavily in data, models, and technology to expand its footprint across both established and emerging client segments. This strategic investment aims to drive compounding growth across market cycles and reinforce its role as an essential partner for institutional investors.

Employee Base and Operations

As of September 30, 2024, MSCI employed 6,118 individuals, marking a significant 22.2% increase, largely driven by recent acquisitions. The workforce is distributed as follows:

• Developed Market Locations: Approximately 31.5%

• Emerging Market Locations: Approximately 68.5%

MSCI continues to strengthen its market position through strategic acquisitions and ongoing investments in technology, solidifying its role as an indispensable partner for institutional investors navigating the complexities of global markets.