MSCI Inc
For the period ended Jun 30, 2024. Filed Jul 23, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 23, 2024
MSCI$641.01-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-23.
0001408198-24-000075
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-23.
0001408198-24-000131
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 177 previous paragraphs and 181 current paragraphs.
108 unchanged; 43 reworded; 25 added; 26 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 23 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
On April 16, 2024, MSCI completed the acquisition of Foxberry Ltd. (“Foxberry”), a front-office index technology platform for approximately $23.5 million in cash and contingent consideration with an acquisition date fair value of $19.1 million that is payable based upon the achievement of metrics related to the operation of the platform. Foxberry is a part of the Index operating segment. We collectively refer to the acquisitions of Burgiss, Trove, Fabric and Foxberry as the “recent acquisitions”.
Current report
Operating revenues from asset-based fees increased 18.2% for the three months ended June 30, 2024, mainly 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 19.0%, primarily driven by an increase in average AUM. Operating revenues from non-ETF indexed funds linked to MSCI indexes increased by 22.2%, primarily driven by an increase in average AUM. Operating revenues from exchange traded futures and options contracts linked to MSCI indexes increased by 4.6%, driven by volume increases.
Current report
Operating revenues from non-recurring revenues decreased 15.0% for the three months ended June 30, 2024, as the three months ended June 30, 2023 included one-time fees related to unlicensed usage of our content in historical periods.
Current report
Total operating revenues increased 14.4% for the six months ended June 30, 2024. Adjusting for the impact of foreign currency exchange rate fluctuations and recent acquisitions, total operating revenues would have increased 10.0%.
Current report
Operating revenues from recurring subscriptions increased 14.8% for the six months ended June 30, 2024, driven by growth in All Other - Private Assets products, which increased $51.7 million, or 68.2%, which included $51.0 million of Burgiss revenue; Index products, which increased $32.6 million, or 8.2%; Analytics products, which increased $30.7 million, or 10.5%; and ESG and Climate products, which increased $18.6 million, or 13.7%. Adjusting for the impact of foreign currency exchange rate fluctuations and recent acquisitions, operating revenues from recurring subscriptions would have increased 8.9%.
Current report
Operating revenues from non-recurring revenues decreased 3.2% for the six months ended June 30, 2024, as the six months ended June 30, 2023 included one-time fees related to unlicensed usage of our content in historical periods.
Current report
Selling and marketing expenses increased 6.8% for the six months ended June 30, 2024, reflecting increases across the All Other - Private Assets, Index and Analytics reportable segments, partially offset by decreases in the ESG and Climate reportable segment. The change was driven by increases in compensation and benefits costs, primarily relating to higher incentive compensation and wages and salaries as a result of increased headcount.
Current report
R&D expenses increased 36.3% for the three months ended June 30, 2024, reflecting increases across all reportable segments. The change was driven by increases in compensation and benefits costs, relating to higher wages and salaries, incentive compensation and benefits costs as a result of increased headcount.
Current report
G&A expenses increased 11.4% for the three months ended June 30, 2024, reflecting increases across the All Other - Private Assets and ESG and Climate reportable segments, partially offset by decreases in the Index and Analytics reportable segments. The increase was driven by higher transaction and integration costs related to recent acquisitions, as well as increased compensation and benefits costs, relating to higher wages and salaries as a result of increased headcount. The increase was also driven by higher non-compensation costs, reflecting higher information technology and insurance costs.
Current report
G&A expenses increased 25.7% for the six months ended June 30, 2024, reflecting increases across all reportable segments. The change was driven by increases in compensation and benefits costs, relating to higher incentive compensation, wages and salaries and benefits costs as a result of increased headcount, as well as increases in non-compensation costs, reflecting higher transaction related expenses due to recent acquisitions, professional fees and information technology costs.
Current report
Non-compensation expenses increased 14.4% for the three months ended June 30, 2024, driven by higher professional fees, transaction and integration costs related to recent acquisitions, information technology and market data costs.
Current report
Depreciation and amortization of property, equipment and leasehold improvements decreased 18.7% and 22.1% for the three and six months ended June 30, 2024, respectively, primarily driven by lower depreciation on computer and related equipment.
Current report
The effective tax rate of 21.5% for the three months ended June 30, 2024 reflects the Company’s estimate of the effective tax rate for the period and was impacted by certain unfavorable discrete items totaling $4.2 million, primarily related to prior-year items.
Current report
The effective tax rate of 19.6% for the three months ended June 30, 2023 reflects the Company’s estimate of the effective tax rate for the period. The level of discrete items was not impactful to the effective tax rate for the period.
Current report
Index operating revenues increased 9.6% for the three months ended June 30, 2024, primarily driven by strong growth from asset-based fees as well as growth from recurring subscriptions, partially offset by a decrease in non-recurring revenues. Adjusting for the impact of the acquisition of Foxberry and foreign currency exchange rate fluctuations, Index operating revenues would have increased 9.8%.
Current report
Operating revenues from asset-based fees increased 18.2% for the three months ended June 30, 2024, mainly 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 19.0%, primarily driven by an increase in average AUM. Operating revenues from non-ETF indexed funds linked to MSCI indexes increased by 22.2%, primarily driven by increases in average AUM and average basis point fees. Operating revenues from exchange traded futures and options contracts linked to MSCI indexes increased by 4.6%, driven by volume increases.
Current report
Operating revenues from non-recurring revenues decreased 28.0% for the three months ended June 30, 2024, as the three months ended June 30, 2023 included one-time fees related to unlicensed usage of our content in historical periods.
Current report
Index segment Adjusted EBITDA expenses increased 5.8% for the three months ended June 30, 2024, primarily driven by higher compensation costs in R&D, selling and marketing and cost of revenues expense activity categories, partially offset by decreases in compensation costs in the G&A expense activity category. The increase in compensation costs was driven by higher wages and salaries and incentive compensation costs. The increase was also driven by higher non-compensation expenses across cost of revenues, G&A and R&D expense activity categories, partially offset by a decrease in the selling and marketing expense activity category. This increase was primarily driven by higher professional fees. Adjusting for the impact of the acquisition of Foxberry and foreign currency exchange rate fluctuations, Index segment Adjusted EBITDA expenses would have increased by 5.1%.
Current report
Operating revenues from recurring subscriptions increased 8.2% for the six months ended June 30, 2024, primarily driven by growth from market cap-weighted Index products.
Current report
Operating revenues from non-recurring revenues decreased 16.6% for the six months ended June 30, 2024, as the six months ended June 30, 2023 included one-time fees related to unlicensed usage of our content in historical periods.
Current report
Analytics operating revenues increased 10.8% for the three months ended June 30, 2024, primarily driven by growth from recurring subscriptions related to both Multi-Asset Class and Equity Analytics products. The increase was also driven by an increase in non-recurring revenues driven by one-time sales related to both Multi-Asset Class and Equity products as well as a number of implementations which were completed in the three months ended June 30, 2024. Adjusting for the impact of the acquisition of Fabric and foreign currency exchange rate fluctuations, Analytics operating revenues would have increased 11.2%.
Current report
Analytics segment Adjusted EBITDA expenses decreased 0.5% for the three months ended June 30, 2024, primarily driven by lower compensation expenses across the cost of revenues, G&A and selling and marketing expense activity categories, partially offset by higher compensation expense in the R&D expense activity category. The decrease was primarily driven by increased capitalization of expenses related to internally developed software projects. The decrease was partially offset by an increase in non-compensation costs in the cost of revenues and selling and marketing expense activity categories. The increase was primarily driven by higher information technology costs. Adjusting for the impact of the acquisition of Fabric and foreign currency exchange rate fluctuations, Analytics segment Adjusted EBITDA expenses would have decreased 1.0%.
Current report
ESG and Climate operating revenues increased 12.1% for the three months ended June 30, 2024, primarily driven by growth from recurring subscriptions related to Climate, Screening and Ratings products. Adjusting for the impact of the acquisition of Trove and foreign currency exchange rate fluctuations, ESG and Climate operating revenues would have increased 10.0%.
Current report
ESG and Climate segment Adjusted EBITDA expenses increased 15.5% for the six months ended June 30, 2024, primarily driven by higher compensation expense across R&D, cost of revenues and G&A expense activity categories, partially offset by lower compensation expense in the selling and marketing expense activity category. The increase reflects higher incentive compensation, wages and salaries and benefits costs. Adjusting for the impact of the acquisition of Trove and foreign currency exchange rate fluctuations, ESG and Climate segment Adjusted EBITDA expenses would have increased 7.0%.
Current report
All Other – Private Assets segment Adjusted EBITDA expenses increased 91.8% for the six months ended June 30, 2024, driven by higher compensation and non-compensation expenses across all expense activity categories, primarily due to the step acquisition of Burgiss. Adjusting for the impact of the step acquisition of Burgiss and foreign currency exchange rate fluctuations, All Other - Private Assets segment Adjusted EBITDA expenses would have decreased 4.9%.
Removed paragraphs (26)
Previous report
Liquidity and Capital Resources
Previous report
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.
Previous report
Senior Notes and Credit Agreement
Previous report
As of March 31, 2024, we had an aggregate of $4,200.0 million in Senior Notes outstanding. In addition, under the Credit Agreement, we had as of March 31, 2024 an aggregate of $336.9 million in outstanding borrowings under the revolving credit facility. See Note 8, “Debt,” of the Notes to Condensed Consolidated Financial Statements (Unaudited) included herein for additional information on our outstanding indebtedness and revolving credit facility.
Previous report
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 Revolving Credit Facility under the Credit Agreement was drawn at closing in an amount sufficient to prepay all term loans outstanding under the TLA Facility under the Prior Credit Agreement. The obligations under the Credit Agreement are general unsecured obligations of the Company.
Previous report
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”).
Previous report
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.
Previous report
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.
Previous report
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 March 31, 2024, our Consolidated Leverage Ratio was 2.56:1.00 and our Consolidated Interest Coverage Ratio was 9.16:1.00.
Previous report
Share Repurchases
Previous report
We made no repurchases of the Company’s common stock pursuant to open market repurchases during the three months ended March 31, 2024 or 2023.
Previous report
As of March 31, 2024, there was $845.7 million of available authorization remaining under the 2022 Repurchase Program. This authorization may be modified, suspended or terminated by the Board of Directors at any time without prior notice.
Previous report
Cash Dividends
Previous report
On April 22, 2024, the Board of Directors declared a quarterly cash dividend of $1.60 per share for the three months ending June 30, 2024. The second quarter 2024 dividend is payable on May 31, 2024 to shareholders of record as of the close of trading on May 17, 2024.
Previous report
Cash Flows
Previous report
The following table presents the Company’s cash and cash equivalents, including restricted cash, as of the dates indicated:
Previous report
We typically seek to maintain minimum cash balances globally of approximately $225.0 million to $275.0 million for general operating purposes. As of March 31, 2024 and December 31, 2023, $209.8 million and $285.2 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.
Previous report
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.
Previous report
Net Cash Provided by (Used In) Operating, Investing and Financing Activities
Previous report
Cash Flows From Operating Activities
Previous report
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 cash collections from customers, partially offset by higher payments for cash expenses.
Previous report
Our primary uses of cash from operating activities are for the payment of cash compensation expenses, interest expenses, income taxes, 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.
Previous report
Cash Flows From Investing Activities
Previous report
The year-over-year change was primarily driven by higher capitalized software development costs and the acquisition of Fabric.
Previous report
Cash Flows From Financing Activities
Previous report
The year-over-year change was primarily driven by the impact of higher dividend payments and higher share repurchases on vested share-based awards.
Reworded paragraphs (43)
Previous wording
As of March 31, 2024, we served approximately 6,9001 clients in more than 95 countries.
Current wording
As of June 30, 2024, we served approximately 7,0001 clients in more than 95 countries.
Previous wording
For the three months ended March 31, 2024, our largest client organization by revenue, BlackRock, accounted for 10.0% of our consolidated operating revenues, with 95.7% 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.
Current wording
For the six months ended June 30, 2024, our largest client organization by revenue, BlackRock, accounted for 10.1% of our consolidated operating revenues, with 95.8% 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.
Previous wording
The discussion of our results of operations for the three months ended March 31, 2024 and 2023 are presented below. The results of operations for interim periods may not be indicative of future results.
Current wording
The discussion of our results of operations for the three and six months ended June 30, 2024 and 2023 are presented below. The results of operations for interim periods may not be indicative of future results.
Previous wording
Acquisitions of Burgiss, Trove and Fabric
Current wording
Acquisitions of Burgiss, Trove, Fabric and Foxberry
Previous wording
Total operating revenues increased 14.8%. Adjusting for the impact of foreign currency exchange rate fluctuations and acquisitions, total operating revenues would have increased 10.3%.
Current wording
Total operating revenues increased 14.0% for the three months ended June 30, 2024. Adjusting for the impact of foreign currency exchange rate fluctuations and recent acquisitions, total operating revenues would have increased 9.7%.
Previous wording
Operating revenues from recurring subscriptions increased 15.2%, driven by growth in All Other – Private Assets which increased $24.8 million, or 64.7% and included $24.2 million of Burgiss revenue, Index products, which increased $16.3 million, or 8.3%, and strong growth in both Analytics products, which increased $16.0 million, or 11.1%, and ESG and Climate products, which increased $10.7 million, or 16.3%. Adjusting for the impact of foreign currency exchange rate fluctuations and acquisitions, operating revenues from recurring subscriptions would have increased 9.3%.
Current wording
Operating revenues from recurring subscriptions increased 14.4% for the three months ended June 30, 2024, driven by growth in All Other - Private Assets products, which increased $26.9 million, or 71.8%, which included $26.8 million of Burgiss revenue; Index products, which increased $16.3 million, or 8.1%; Analytics products, which increased $14.6 million, or 9.9%, and ESG and Climate products, which increased $8.0 million, or 11.4%. Adjusting for the impact of foreign currency exchange rate fluctuations and recent acquisitions, operating revenues from recurring subscriptions would have increased 8.6%.
Previous wording
Operating revenues from asset-based fees increased 12.9%, mainly driven by growth in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes, partially offset by a decrease in revenue from exchange traded futures and options contracts linked to MSCI indexes. Operating revenues from ETFs linked to MSCI equity indexes increased 15.0%, primarily driven by an increase in average AUM, partially offset by decreases in average basis point fees. Operating revenues from non-ETF indexed funds linked to MSCI indexes increased by 14.4%, primarily driven by an increase in average AUM, partially offset by decreases in average basis point fees. Operating revenues from exchange traded futures and options contracts linked to MSCI Indexes decreased by 7%, driven by volume decreases.
Current wording
Operating revenues from asset-based fees increased 15.6% for the six months ended June 30, 2024, mainly driven by growth in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI equity indexes. Operating revenues from ETFs linked to MSCI equity indexes increased by 17.0%, primarily driven by an increase in average AUM, partially offset by a decrease in average basis point fees. Operating revenues from non-ETF indexed funds linked to MSCI indexes increased by 18.5%, primarily driven by increases in average AUM, partially offset by a decrease in average basis point fees. Operating revenues from exchange traded futures and options contracts linked to MSCI indexes remained flat.
Previous wording
The average value of AUM in ETFs linked to MSCI equity indexes for the three months ended March 31, 2024, was up $221.3 billion, or 17.2%, compared to the three months ended March 31, 2023.
Current wording
The average value of AUM in ETFs linked to MSCI equity indexes for the three months ended June 30, 2024, was up $256.8 billion, or 19.3%. For the six months ended June 30, 2024, the average value of AUM in ETFs linked to MSCI equity indexes was up $239.0 billion, or 18.2%.
Previous wording
Total operating expenses increased 22.7%. Adjusting for the impact of foreign currency exchange rate fluctuations, the increase would have been 21.9%.
Current wording
Total operating expenses increased 18.2% for the three months ended June 30, 2024. Adjusting for the impact of foreign currency exchange rate fluctuations, the increase would have been 18.8%.
Previous wording
G&A expenses increased 38.1%, reflecting increases across all reportable segments. The change was driven by increases in compensation and benefits costs, primarily related to higher incentive compensation,wages and salaries and benefits costs as a result of increased headcount, as well as increases in non-compensation costs, primarily reflecting higher professional fees. The increase was also driven by higher transaction and integration costs primarily related to the step acquisition of Burgiss.
Current wording
Cost of revenues increased 16.4% for the three months ended June 30, 2024, reflecting increases across the All Other - Private Assets, Index and ESG and Climate reportable segments, partially offset by decreases in the Analytics reportable segment. The change was driven by increases in compensation and benefits costs, primarily relating to higher wages and salaries, incentive compensation and benefits costs as a result of increased headcount, as well as increases in non-compensation costs, primarily reflecting higher information technology, professional fees and market data costs.
Previous wording
Cost of revenues increased 18.3%, reflecting increases across all reportable segments. The change was driven by increases in compensation and benefits costs, primarily relating to higher wages and salaries, incentive compensation and benefits costs as a result of increased headcount, as well as increases in non-compensation costs, primarily reflecting higher information technology and market data costs.
Current wording
Cost of revenues increased 17.3% for the six months ended June 30, 2024, reflecting increases across all reportable segments. The change was driven by increases in compensation and benefits costs, primarily relating to higher wages and salaries, incentive compensation and benefits costs as a result of increased headcount, as well as increases in non-compensation costs, primarily reflecting higher information technology, professional fees and market data costs.
Previous wording
Selling and marketing expenses increased 8.6%, reflecting increases across the All Other- Private Assets, Index and Analytics reportable segments, partially offset by decreases in the ESG and Climate reportable segment. The change was driven by increases in compensation and benefits costs, primarily relating to higher incentive compensation, wages and salaries and benefits costs as a result of increased headcount.
Current wording
Selling and marketing expenses increased 5.1% for the three months ended June 30, 2024, reflecting increases across the All Other - Private Assets, Index and Analytics reportable segments, partially offset by decreases in the ESG and Climate reportable segment. The change was driven by increases in compensation and benefits costs, primarily relating to higher incentive compensation and wages and salaries as a result of increased headcount.
Previous wording
R&D expenses increased 29.4%, reflecting increases across all reportable segments. The change was driven by increases in compensation and benefits costs, primarily relating to higher wages and salaries, incentive compensation and benefits costs as a result of increased headcount, partially offset by increased capitalization of costs related to internally developed software projects.
Current wording
R&D expenses increased 32.8% for the six months ended June 30, 2024, reflecting increases across all reportable segments. The change was driven by increases in compensation and benefits costs, relating to higher wages and salaries, incentive compensation and benefits costs as a result of increased headcount, partially offset by increased capitalization of costs related to internally developed software projects.
Previous wording
We had 5,858 employees as of March 31, 2024, compared to 4,846 employees as of March 31, 2023, reflecting a 20.9% increase in the number of employees which is primarily related to acquisitions. 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 March 31, 2024, 67.2% of our employees were located in emerging market centers compared to 65.4% as of March 31, 2023.
Current wording
We had 6,059 employees as of June 30, 2024, compared to 4,980 employees as of June 30, 2023, reflecting a 21.7% growth in the number of employees which is primarily related to recent acquisitions. 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, 2024, 68.5% of our employees were located in emerging market centers compared to 66.2% as of June 30, 2023.
Previous wording
Compensation and benefits costs increased 22.8%, primarily driven by an increase in wages and salaries, incentive compensation and benefits costs due to headcount growth, partially offset by increased capitalization of expenses related to internally developed software projects. Adjusting for the impact of foreign currency exchange rate fluctuations and the step acquisition of Burgiss, and the Trove and Fabric acquisitions, compensation and benefits costs would have increased by 10.9%.
Current wording
Compensation and benefits costs increased 15.2% and 19.1%, for the three and six months ended June 30, 2024, driven by an increase in wages and salaries, incentive compensation and benefits costs due to headcount growth, partially offset by increased capitalization of expenses related to internally developed software projects. Adjusting for the impact of foreign currency exchange rate fluctuations and recent acquisitions, compensation and benefits costs would have increased by 4.2% and increased by 7.7%, respectively, for the three and six months ended June 30, 2024.
Previous wording
Non-compensation expenses increased 13.6%, primarily driven by higher professional fees, information technology and market data costs. The increase was also driven by higher non-recurring transaction and integration costs primarily related to the step acquisition of Burgiss. Adjusting for the impact of foreign currency exchange rate fluctuations and the step acquisition of Burgiss, and the Trove and Fabric acquisitions, non-compensation expenses would have increased by 4.3%.
Current wording
Non-compensation expenses increased 14.0% for the six months ended June 30, 2024, driven by higher professional fees, information technology, transaction and integration costs related to recent acquisitions, as well as market data costs. Adjusting for the impact of foreign currency exchange rate fluctuations and recent acquisitions, non-compensation expenses would have increased by 5.5% and increased by 4.9%, respectively, for the three and six months ended June 30, 2024.
Previous wording
Amortization of intangible assets expense relates to definite-lived intangible assets arising from past acquisitions and capitalization of internally developed software projects recognized over their estimated useful lives. Amortization of intangible assets expense increased 56.5%, primarily driven by higher amortization recognized on acquired intangible assets from recent acquisitions and amortization of internal use software.
Current wording
Amortization of intangible assets expense relates to definite-lived intangible assets arising from past acquisitions and capitalization of internally developed software projects recognized over their estimated useful lives.
Previous wording
Depreciation and amortization of property, equipment and leasehold improvements consists of expenses related to depreciating or amortizing the cost of computer and related equipment, leasehold improvements, software and furniture and fixtures over the estimated useful life of the assets. Depreciation and amortization of property, equipment and leasehold improvements decreased 25.3%, primarily driven by lower depreciation on computer and related equipment.
Current wording
Depreciation and amortization of property, equipment and leasehold improvements consists of expenses related to depreciating or amortizing the cost of computer and related equipment, leasehold improvements, software and furniture and fixtures over the estimated useful life of the assets.
Previous wording
Total other expense (income), net increased 13.8%, primarily driven by lower interest income reflecting lower average cash balances as well as loss on extinguishment related to unamortized debt issuance costs associated with the prepayment of the Tranche A Term Loans and the entry into the Credit Agreement, partially offset by favorable foreign currency exchange rate fluctuations.
Current wording
Total other expense (income), net increased 11.8% for the six months ended June 30, 2024, primarily driven by lower interest income, reflecting lower average cash balances as well as loss on extinguishment related to unamortized debt issuance costs associated with the prepayment of the Tranche A Term Loans and the entry into the Credit Agreement, partially offset by the impact of foreign currency exchange rate fluctuations.
Previous wording
The effective tax rate of 13.6% for the three months ended March 31, 2023 reflects the Company's estimate of the effective tax rate for the period and was impacted by certain favorable discrete items totaling $16.5 million, primarily related to $11.1 million of excess tax benefits recognized on share-based compensation vested during the period and $4.6 million of tax benefits related to the resolution of prior year items.
Current wording
The effective tax rate of 17.8% for the six months ended June 30, 2024 reflects the Company’s estimate of the effective tax rate for the period and was impacted by certain favorable discrete items totaling $16.0 million, related to $15.7 million of excess tax benefits recognized on share-based compensation vested during the period and $0.3 million related to prior-year items.
Previous wording
The effective tax rate of 13.5% for the three months ended March 31, 2024 reflects the Company's estimate of the effective tax rate for the period and was impacted by certain favorable discrete items totaling $20.2 million, primarily related to $13.0 million of excess tax benefits recognized on share-based compensation vested during the period and $7.2 million of tax benefits related to prior year items.
Current wording
The effective tax rate of 16.8% for the six months ended June 30, 2023 reflects the Company’s estimate of the effective tax rate for the period and was impacted by certain favorable discrete items totaling $16.4 million, primarily related to $11.2 million of excess tax benefits recognized on share-based compensation vested during the period and $5.2 million related to prior-year items.
Previous wording
As a result of the factors described above, net income increased 7.2%.
Current wording
As a result of the factors described above, net income increased 8.1% for the three months ended June 30, 2024, and increased 7.7% for the six months ended June 30, 2024.
Previous wording
The decrease in weighted average shares outstanding primarily reflects the impact of share repurchases made pursuant to the stock repurchase program during the twelve months ended December 31, 2023. The increase in common shares outstanding primarily reflects the vesting of certain share-based awards during the three months ended March 31, 2024.
Current wording
The decrease in weighted average shares and common shares outstanding for the three and six months ended June 30, 2024 primarily reflects the impact of share repurchases made pursuant to the Company’s stock repurchase program.
Previous wording
“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.
Current wording
“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, impairment related to sublease of leased property and certain acquisition-related integration and transaction costs.
Previous wording
Operating revenues from recurring subscriptions increased 8.3%, primarily driven by strong growth from market cap-weighted Index products.
Current wording
Operating revenues from recurring subscriptions increased 8.1% for the three months ended June 30, 2024, primarily driven by growth from market cap-weighted Index products.
Previous wording
Index operating revenues increased 10.2%, driven by strong growth from asset-based fees as well as revenue growth from recurring subscriptions. Adjusting for the impact of foreign currency exchange rate fluctuations, Index operating revenues would have increased 10.4%.
Current wording
Index operating revenues increased 9.9% for the six months ended June 30, 2024, primarily driven by strong growth from asset-based fees as well as growth from recurring subscriptions, partially offset by a decrease in non-recurring revenue. Adjusting for the impact of the acquisition of Foxberry and foreign currency exchange rate fluctuations, Index operating revenues would have increased 10.1%.
Previous wording
Operating revenues from asset-based fees increased 12.9%, mainly driven by growth in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes, partially offset by a decrease in revenue from exchange traded futures and options contracts linked to MSCI indexes. Operating revenues from ETFs linked to MSCI equity indexes increased 15.0%, primarily driven by an increase in average AUM, partially offset by decreases in average basis point fees. Operating revenues from non-ETF indexed funds linked to MSCI indexes increased by 14.4%, primarily driven by an increase in average AUM, partially offset by decreases in average basis point fees. Operating revenues from exchange traded futures and options contracts linked to MSCI indexes decreased by 7.0%, driven by volume decreases.
Current wording
Operating revenues from asset-based fees increased 15.6% for the six months ended June 30, 2024, mainly driven by strong growth in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI equity indexes. Operating revenues from ETFs linked to MSCI equity indexes increased by 17.0%, primarily driven by an increase in average AUM, partially offset by a decrease in average basis point fees. Operating revenues from non-ETF indexed funds linked to MSCI indexes increased by 18.5%, primarily driven by an increases in average AUM, partially offset by a decrease in average basis point fees. Operating revenues from exchange traded futures and options contracts linked to MSCI indexes remained flat.
Previous wording
Index segment Adjusted EBITDA expenses increased 12.1%, primarily driven by higher compensation expenses across all expense activity categories. The increase reflects higher incentive compensation, wages and salaries and benefits costs. The change was also driven by higher non-compensation expenses across the G&A, cost of revenues and R&D expense activity categories, partially offset by lower non-compensation expenses in the selling and marketing expense activity category. The increase in non-compensation expenses is primarily due to higher professional fees. Adjusting for the impact of foreign currency exchange rate fluctuations, Index segment Adjusted EBITDA expenses would have increased by 11.2%.
Current wording
Index segment Adjusted EBITDA expenses increased 9.0% for the six months ended June 30, 2024, primarily driven by higher compensation expenses across all expense activity categories. The increase reflects higher incentive compensation, wages and salaries and benefits costs. The increase was also driven by higher non-compensation expenses across cost of revenues, G&A and R&D expense activity categories, partially offset by lower non-compensation expenses in the selling and marketing expense activity category. This increase is primarily due to higher professional fees and transaction fees related to the acquisition of Foxberry. Adjusting for the impact of the acquisition of Foxberry and foreign currency exchange rate fluctuations, Index segment Adjusted EBITDA expenses would have increased by 8.1%.
Previous wording
Analytics operating revenues increased 11.5%, primarily driven by growth from recurring subscriptions related to both Multi-Asset Class and Equity Analytics products. Adjusting for the impact of the acquisition of Fabric and foreign currency exchange rate fluctuations, Analytics operating revenues would have increased 11.9%.
Current wording
Analytics operating revenues increased 11.1% for the six months ended June 30, 2024, primarily driven by growth from recurring subscriptions related to both Multi-Asset Class and Equity Analytics products. The increase was also driven by an increase in non-recurring revenues driven by one-time sales related to both Multi-Asset Class and Equity products as well as a number of implementations which were completed in six months ended June 30, 2024. Adjusting for the impact of the acquisition of Fabric and foreign currency exchange rate fluctuations, Analytics operating revenues would have increased 11.6%.
Previous wording
Analytics segment Adjusted EBITDA expenses increased 6.3%, primarily driven by higher compensation expenses across all expense activity categories. The increase reflects higher incentive compensation, wages and salaries and severance costs. The increase was also driven by higher non-compensation expenses across the G&A, selling and marketing and R&D expense activity categories, partially offset by lower non-compensation expenses in the cost of revenues expense activity category. The increase in non-compensation expenses is primarily due to higher professional fees and information technology costs. Adjusting for the impact of the acquisition of Fabric and foreign currency exchange rate fluctuations, Analytics segment Adjusted EBITDA expenses would have increased 4.8%.
Current wording
Analytics segment Adjusted EBITDA expenses increased 3.0% for the six months ended June 30, 2024, primarily driven by higher non-compensation expense across all expense activity categories. The increase reflects higher information technology costs. The increase was also driven by higher compensation expenses across the R&D, G&A and cost of revenues expense activity categories, partially offset by lower compensation expenses in the selling and marketing expense activity category. The increase reflects higher incentive compensation costs, partially offset by increased capitalization of expenses related to internally developed software projects. Adjusting for the impact of the acquisition of Fabric and foreign currency exchange rate fluctuations, Analytics segment Adjusted EBITDA expenses would have increased 1.9%.
Previous wording
ESG and Climate segment Adjusted EBITDA expenses increased 15.5%, primarily driven by higher compensation expenses across cost of revenues, R&D and G&A expense activity categories, partially offset by lower compensation expense in the selling and marketing expense activity category. The increase reflects higher incentive compensation, wages and salaries, and benefits costs, primarily driven by the acquisition of Trove. The increase was partially offset by increased capitalization of expenses related to internally developed software projects. Adjusting for the impact of the acquisition of Trove and foreign currency exchange rate fluctuations, ESG and Climate segment Adjusted EBITDA expenses would have increased 6.9%.
Current wording
ESG and Climate segment Adjusted EBITDA expenses increased 15.5% for the three months ended June 30, 2024, primarily driven by higher compensation expenses across R&D, cost of revenues and G&A expense activity categories, partially offset by lower compensation expenses in the selling and marketing expense activity category. The increase reflects higher wages and salaries and incentive compensation costs. Adjusting for the impact of the acquisition of Trove and foreign currency exchange rate fluctuations, ESG and Climate segment Adjusted EBITDA expenses would have increased 7.0%.
Previous wording
ESG and Climate operating revenues increased 16.1%, primarily driven by growth from recurring subscriptions related to Ratings, Climate and Screening products. Adjusting for the impact of the acquisition of Trove and foreign currency exchange rate fluctuations, ESG and Climate operating revenues would have increased 11.0%.
Current wording
ESG and Climate operating revenues increased 14.1% for the six months ended June 30, 2024, primarily driven by growth from recurring subscriptions related to Ratings, Climate and Screening products. Adjusting for the impact of the acquisition of Trove and foreign currency exchange rate fluctuations, ESG and Climate operating revenues would have increased 10.5%.
Previous wording
All Other – Private Assets segment Adjusted EBITDA expenses increased 96.6%, reflecting higher compensation and non-compensation expenses across all expense activity categories, primarily driven by the step acquisition of Burgiss. The increase reflects higher wages and salaries, incentive compensation, benefits and information technology costs, partially offset by increased capitalization of expenses related to internally developed software projects. Adjusting for the impact of the step acquisition of Burgiss and foreign currency exchange rate fluctuations, All Other - Private Assets segment Adjusted EBITDA expenses would have decreased 3.7%.
Current wording
All Other – Private Assets segment Adjusted EBITDA expenses increased 86.8% for the three months ended June 30, 2024, driven by higher compensation and non-compensation expenses across all expense activity categories primarily due to the step acquisition of Burgiss. Adjusting for the impact of the step acquisition of Burgiss and foreign currency exchange rate fluctuations, All Other - Private Assets segment Adjusted EBITDA expenses would have decreased 6.3%.
Previous wording
All Other – Private Assets operating revenues increased 66.0%, primarily driven by revenues attributable to the acquisition of Burgiss as well as growth in recurring subscriptions related to Index Intel products and favorable foreign currency exchange rate fluctuations, partially offset by a decrease in recurring subscriptions related to our Property Intel product. Adjusting for the impact of the step acquisition of Burgiss and foreign currency exchange rate fluctuations, All Other – Private Assets operating revenues would have increased 2.6%.
Current wording
All Other – Private Assets operating revenues increased 68.9% for the six months ended June 30, 2024, primarily driven by revenues attributable to the step acquisition of Burgiss as well as growth in recurring subscriptions from Index Intel and RCA products. Adjusting for the impact of the step acquisition of Burgiss and foreign currency exchange rate fluctuations, All Other – Private Assets operating revenues would have increased 2.0%.
Previous wording
“Run Rate” estimates at a particular point in time the annualized value of the recurring revenues under our client license agreements (“Client Contracts”) for the next 12 months, assuming all Client Contracts that come up for renewal, or reach the end of the committed subscription period, are renewed and assuming then-current currency exchange rates, subject to the adjustments and exclusions described below. For any Client Contract where fees are linked to an investment product’s assets or trading volume/fees, the Run Rate calculation reflects, for ETFs, the market value on the last trading day of the period, for futures and options, the most recent quarterly volumes and/or reported exchange fees, and for other non-ETF products, the most recent client-reported assets. Run Rate does not include fees associated with “one-time” and other non-recurring transactions. In addition, we add to Run Rate the annualized fee value of recurring new sales, whether to existing or new clients, when we execute Client Contracts, even though the license start date, and associated revenue recognition, may not be effective until a later date. We remove from Run Rate the annualized fee value associated with products or services under any Client Contract with respect to which we have received a notice of termination, non-renewal or an indication the client does not intend to continue their subscription during the period and have determined that such notice evidences the client’s final decision to terminate or not renew the applicable products or services, even though such notice is not effective until a later date.
Current wording
“Run Rate” estimates at a particular point in time the annualized value of the recurring revenues under our client license agreements (“Client Contracts”) for the next 12 months, assuming all Client Contracts that come up for renewal, or reach the end of the committed subscription period, are renewed and assuming then-current currency exchange rates, subject to the adjustments and exclusions described below. For any Client Contract where fees are linked to an investment product’s assets or trading volume/fees, the Run Rate calculation reflects, for ETFs, the market value on the last trading day of the period, for futures and options, the most recent quarterly volumes and/or reported exchange fees, and for other non-ETF products, the most recent client-reported assets. Run Rate does not include fees associated with “one-time” and other non-recurring transactions. In addition, we add to Run Rate the annualized fee value of recurring new sales, whether to existing or new clients, when we execute Client Contracts, even though the license start date, and associated revenue recognition, may not be effective until a later date. We remove from Run Rate the annualized fee value associated with products or services under any Client Contract when we (i) have received a notice of termination, non-renewal or an indication the client does not intend to continue their subscription during the period and (ii) have determined that such notice evidences the client’s final decision to terminate or not renew the applicable products or services, even though such termination or non-renewal may not be effective until a later date.
Previous wording
Total Run Rate increased 14.6%, driven by a 14.2% increase from recurring subscriptions and a 15.9% increase from asset-based fees. Adjusting for the impact of acquisitions and foreign currency exchange rate fluctuations, recurring subscriptions Run Rate would have increased 8.7%.
Current wording
Total Run Rate increased 14.6%, driven by a 14.2% increase from recurring subscriptions and a 16.0% increase from asset-based fees. Adjusting for the impact of recent acquisitions and foreign currency exchange rate fluctuations, recurring subscriptions Run Rate would have increased 8.6%.
Previous wording
Run Rate from Index recurring subscriptions increased 9.3%, primarily driven by growth from market cap-weighted and custom Index products and special packages. The increase reflected growth across all regions.
Current wording
Run Rate from Index recurring subscriptions increased 8.9%, primarily driven by growth from market cap-weighted and custom Index products and special packages. The increase reflected growth across all regions. Adjusting for the impact of the acquisition of Foxberry and foreign currency exchange rate fluctuations, Index Run Rate would have increased 8.8%.
Previous wording
Run Rate from Index asset-based fees increased 15.9%, primarily driven by higher AUM in ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes.
Current wording
Run Rate from Index asset-based fees increased 16.0%, primarily driven by higher AUM in both ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes.
Previous wording
Run Rate from Analytics products increased 6.5%, driven by growth in both Multi-Asset Class and Equity Analytics products, and reflected growth across all regions and client segments. Adjusting for the impact of the acquisition of Fabric and foreign currency exchange rate fluctuations, Analytics Run Rate would have increased 7.0%.
Current wording
Run Rate from Analytics products increased 6.9%, primarily driven by growth in both Multi-Asset Class and Equity Analytics products, and reflected growth across all regions and client segments. Adjusting for the impact of the acquisition of Fabric and foreign currency exchange rate fluctuations, Analytics Run Rate would have increased 7.4%.
Previous wording
Run Rate from ESG and Climate products increased 14.9%, driven by strong growth in Ratings, Climate and Screening products with contributions across all all regions and client segments. Adjusting for the impact of the acquisition of Trove and foreign currency exchange rate fluctuations, ESG and Climate Run Rate would have increased 13.3%.
Current wording
Run Rate from ESG and Climate products increased 14.4%, driven by strong growth in Ratings, Climate and Screening products with contributions across all regions and client segments. Adjusting for the impact of the acquisition of Trove and foreign currency exchange rate fluctuations, ESG and Climate Run Rate would have increased 13.4%.
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Current report — wording carried from elsewhere
Total operating expenses increased 20.5% for the six months ended June 30, 2024. Adjusting for the impact of foreign currency exchange rate fluctuations, the increase would have been 20.4%.
Current report — wording carried from elsewhere
Amortization of intangible assets expense increased 55.9% and 56.2% for the three and six months ended June 30, 2024, respectively, primarily driven by higher amortization recognized on acquired intangible assets from recent acquisitions
Current report — wording carried from elsewhere
and higher amortization of internal use software.
Current report — wording carried from elsewhere
Total other expense (income), net increased 9.8% for the three months ended June 30, 2024, primarily driven by lower interest income reflecting lower average cash balances.
Current report — wording carried from elsewhere
All Other – Private Assets operating revenues increased 72.0% for the three months ended June 30, 2024, primarily driven by revenues attributable to the step acquisition of Burgiss as well as growth in recurring subscriptions related to Performance Insights products. Adjusting for the impact of the step acquisition of Burgiss and foreign currency exchange rate fluctuations, All Other – Private Assets operating revenues would have increased 1.3%.