MSCI Q1 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Fall

MSCI’s MSCI first-quarter 2025 adjusted earnings of $4 per share beat the Zacks Consensus Estimate by 3.36% and increased 13.6% year over year.MSCI's revenues rose 9.7% year over year to $745.8 million, surpassing the consensus estimate by 0.66%, driven by strong growth in recurring subscription revenues and asset-based fees. Organic operating revenues grew 9.9% year over year.Recurring subscriptions of $552.6 million increased 7.7% year over year and contributed 74.1% to revenues. Asset-based fees of $177.4 million jumped 18.1% year over year and contributed 23.8% to revenues. Non-recurring revenues of $15.8 million decreased 5.3% year over year and contributed 2.1% to revenues.At the end of the reported quarter, average assets under management were $1.783 trillion in ETFs linked to MSCI equity indexes. The total retention rate was 95.3% in the quarter under review.MSCI Inc Price, Consensus and EPS Surprise  MSCI Inc price-consensus-eps-surprise-chart | MSCI Inc QuoteMSCI reported solid growth in the first quarter of 2025, with notable increases in revenues and earnings. However, despite the strong quarterly results, MSCI shares fell 0.84% in the pre-market trading on April 22.MSCI’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the earnings surprise being 3.13%, on average. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)MSCI’s Top-Line DetailsIn first-quarter 2025, Index revenues of $421.7 million increased 12.8% year over year. Recurring subscriptions and asset-based fees rose 9.6% and 18.1% on a year-over-year basis, respectively. Non-recurring revenues grew 3.2% year over year. Organically, Index operating revenue growth was 12.8%.The uptick in recurring subscription revenues was driven by strong growth from market-cap-weighted Index products and ETFs linked to MSCI equity indexes.Analytics operating revenues of $172.2 million increased 5% year over year. Recurring subscription revenues jumped 5.7%. However, non-recurring revenues declined 28.8% on a year-over-year basis. Organically, Analytics’ operating revenue growth was 5.2%.The Sustainability and Climate segment’s (previously titled "ESG and Climate") operating revenues were $84.6 million, rising 8.6% year over year. Recurring subscriptions and non-recurring revenues increased 8.3% and 28.4% on a year-over-year basis, respectively. Organically, Sustainability and Climate operating revenue growth was 9.2%. All Other – Private Assets operating revenues, which primarily comprise the Real Assets operating segment and the Private Capital Solutions (formerly known as Burgiss), were $67.3 million, up 4.7% year over year. Organic operating revenue growth for All Other – Private Assets was 5.2%.MSCI’s Q1 Operating DetailsAdjusted EBITDA increased 11% year over year to $425.6 million in the reported quarter. The adjusted EBITDA margin in the first quarter of 2025 was 57.1% compared with 56.4% in the first quarter of 2024.Adjusted EBITDA expenses were $320.2 million, up 8% year over year, reflecting higher compensation and benefits costs due to higher headcount, as well as elevated severance costs.Total operating expenses increased 8.3% on a year-over-year basis to $368.8 million due to higher compensation costs from a 5.6% increase in headcount.Operating income improved 11.1% year over year to $377 million. The operating margin expanded 60 bps on a year-over-year basis to 50.6%.MSCI’s Balance Sheet & Cash FlowTotal cash and cash equivalents, as of March 31, 2025, were $360.7 million compared with $409.4 million as of Dec. 31, 2024.Total debt was $4.6 billion as of March 31, 2025, compared with $4.5 billion as of Dec. 31, 2024. The total debt-to-adjusted EBITDA ratio (based on trailing 12-month-adjusted EBITDA) was 2.6 times, lower than management’s target of 3-3.5 times.As of March 31, 2025, the free cash flow was $268.9 million, down 2.5% year over year from $394.7 million as of Dec. 31, 2024.MSCI had $1.3 billion outstanding under its share-repurchase authorization as of April 21, 2025.The company paid out dividends worth $139.7 million in the first quarter of 2025.MSCI Maintains 2025 GuidanceFor 2025, MSCI expects total operating expenses of $1.405-$1.445 billion. Adjusted EBITDA expenses are anticipated between $1.220 billion and $1.250 billion.Interest expenses are expected between $182 million and $186 million.Net cash provided by operating activities and the free cash flow are expected to be $1.52-$1.57 billion and $1.400-$1.460 billion, respectively.Zacks Rank & Stocks to ConsiderMSCI currently carries Zacks Rank #3 (Hold).Some better-ranked stocks in the Zacks Finance sector include Apollo Commercial Real Estate Finance ARI, Barclays BCS and Cousins Properties CUZ. Apollo Commercial Real Estate Finance sports a Zacks Rank #1 (Strong Buy), and Barclays and Cousins Properties carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The long-term earnings growth rates for ARI, BCS and CUZ are pegged at 39.57%, 18.17% and 3.69%, respectively.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Barclays PLC (BCS): Free Stock Analysis Report Cousins Properties Incorporated (CUZ): Free Stock Analysis Report MSCI Inc (MSCI): Free Stock Analysis Report Apollo Commercial Real Estate Finance (ARI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks