MSCI Inc

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, ESG and Climate and All Other – Private Assets.

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

Total operating revenues increased 12.9% for the year ended December 31, 2024. Adjusting for the impact of acquisitions and foreign currency exchange rate fluctuations, total operating revenues would have increased 9.6%.

Operating revenues from recurring subscriptions increased 13.0% for the year ended December 31, 2024, primarily driven by growth in Index products, which increased $67.8 million, or 8.3%, growth in ESG and Climate products, which increased $36.5 million, or 12.9%, growth in Analytics products, which increased $55.3 million, or 9.2%, and growth in All Other - Private Assets products, which increased $83.6 million, or 48.9%. Adjusting for the impact of acquisitions and foreign currency exchange rate fluctuations, operating revenues from recurring subscriptions would have increased 8.5%.

Operating revenues from asset-based fees increased 17.9% for the year ended December 31, 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 and non-ETF indexed funds linked to MSCI indexes increased by 20.0% and 19.4%, respectively, primarily driven by an increase in average AUM.

Operating revenues from non-recurring revenues decreased 15.9% for the year ended December 31, 2024, primarily driven by one-time fees for unlicensed usage of our content in historical periods recognized in 2023.

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:

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

(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 athttp://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 Annual Report on Form 10-K 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.

For the year ended December 31, 2024, the average value of AUM in ETFs linked to MSCI equity indexes was up $292.2 billion, or 21.8%.

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

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

Operating Expenses

Total operating expenses increased 16.0% for the year ended December 31, 2024. Adjusting for the impact of foreign currency exchange rate fluctuations, the increase would have been 16.1%.

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

Cost of Revenues

Cost of revenues increased 15.2% for the year ended December 31, 2024, primarily 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 reflecting higher information technology, professional fees and market data costs.

Selling and Marketing

Selling and marketing expenses increased 5.4% for the year ended December 31, 2024, primarily 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.

R&D expenses increased 20.1% for the year ended December 31, 2024, primarily 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.

General and Administrative

G&A expenses increased 18.4% for the year ended December 31, 2024, primarily 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, as well as increases in non-compensation costs reflecting higher professional fees, information technology costs and transaction costs related expenses due to the recent acquisitions.

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

A significant portion of the incentive compensation component of operating expenses is based on the achievement of a number of financial and operating metrics. In a scenario where operating revenue growth and profitability moderate, incentive compensation would be expected to decrease accordingly.

Fixed costs constitute a significant portion of the non-compensation component of operating expenses. The discretionary non-compensation component of operating expenses could, however, be reduced in the near-term in a scenario where operating revenue growth moderates.

We had 6,132 employees as of December 31, 2024 compared to 5,794 employees as of December 31, 2023, reflecting a 5.8% growth 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 December 31, 2024, 69.1% of our employees were located in emerging market centers compared to 66.5% as of December 31, 2023.

Compensation and benefits costs increased 13.8% for the year ended December 31, 2024, 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 recent acquisitions and foreign currency exchange rate fluctuations, compensation and benefits costs would have increased by 5.7%.

Non-compensation expenses increased 13.2% for the year ended December 31, 2024, primarily driven by higher professional fees, information technology, market data costs, transaction and integration costs related to recent acquisitions. Adjusting for the impact of recent acquisitions and foreign currency exchange rate fluctuations non-compensation expenses would have increased by 5.8%.

Amortization of Intangible Assets

Amortization of intangible assets expense increased 43.4% for the year ended December 31, 2024, driven by higher amortization recognized on acquired intangible assets from recent acquisitions and higher amortization of internal use software.

Depreciation and Amortization of Property, Equipment and Leasehold Improvements

Depreciation and amortization of property, equipment and leasehold improvements decreased 19.2% for the year ended December 31, 2024, primarily driven by lower depreciation on computers and related equipment.

Total Other Expense (Income), Net

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

The change in total other expense (income), net for the year ended December 31, 2024, was primarily driven by the non-taxable one-time gain on the remeasurement of our equity method investment in Burgiss of $143.0 million for the year ended December 31, 2023, 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 (as defined below) and the entry into the Credit Agreement.

The following table shows our income tax provision and effective tax rate for the years indicated:

The effective tax rate of 18.2% for the year ended December 31, 2024 reflects the impact of certain favorable discrete items totaling $21.4 million, which relates to $15.7 million of excess tax benefits recognized on share-based compensation vested during the period and $5.7 million related to miscellaneous prior year adjustments.

The effective tax rate of 16.1% for the year ended December 31, 2023 reflects a benefit of $21.5 million from the non-taxable gain on Burgiss, partially offset by the remeasurement of the deferred tax liability on the Company’s previous equity method investment in Burgiss. In addition, the effective tax rate reflects the impact of certain favorable discrete items totaling $29.5 million, consisting of the recognition of $13.9 million of tax basis on intangible assets established under a foreign law change, $11.4 million of excess tax benefits recognized on share-based compensation vested during the period and $4.2 million related to miscellaneous prior year adjustments.

Net Income

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

As a result of the factors described above, net income decreased 3.4% for the year ended December 31, 2024.

Weighted Average Shares and Common Shares Outstanding

The following table shows our weighted average shares and common shares outstanding for the years indicated:

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

The decrease in weighted average shares and common shares outstanding primarily reflects the impact of share repurchases made pursuant to the Company’s stock repurchase program.

Adjusted EBITDA

The following table presents non-GAAP Adjusted EBITDA, Adjusted EBITDA expenses and Adjusted EBITDA margin for the years indicated:

The increase in Adjusted EBITDA reflects growth in operating revenues as compared to Adjusted EBITDA expenses, driven by the factors previously described.

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 years indicated:

(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 years indicated:

(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.