10-Q 1 msci-20240331.htm 10-Q msci-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________to____________
Commission file number 001-33812
________________________________________
msci-logo-resized.gif
MSCI INC.
(Exact Name of Registrant as Specified in its Charter)
________________________________________
Delaware13-4038723
(State or other jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification Number)
7 World Trade Center
250 Greenwich Street, 49th Floor
New York, New York
10007
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number, including area code: (212) 804-3900
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareMSCINew York Stock Exchange
________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  x  No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
As of April 16, 2024, there were 79,224,201 shares of the registrant’s common stock, par value $0.01, outstanding.


FOR THE QUARTER ENDED MARCH 31, 2024
TABLE OF CONTENTS
Page
Item 5.
Item 6.
2

AVAILABLE INFORMATION
Our corporate headquarters is located at 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York, 10007, and our telephone number is (212) 804-3900. We maintain a website on the internet at www.msci.com. The contents of our website are not a part of or incorporated by reference in this Quarterly Report on Form 10-Q.
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). The SEC maintains a website that contains reports, proxy and information statements and other information that we file electronically with the SEC at www.sec.gov. We also make available free of charge, on or through our website, these reports, proxy statements and other information as soon as reasonably practicable following the time they are electronically filed with or furnished to the SEC. To access these, click on the “SEC Filings” link under the “Financial Information” tab found on our Investor Relations homepage (http://ir.msci.com).
We also use our Investor Relations homepage and our Corporate Responsibility homepage as channels of distribution of Company information. The information we post through these channels may be deemed material.
Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the “Email Alerts” section of our Investor Relations homepage at https://ir.msci.com/email-alerts. The contents of our website, including our Investor Relations homepage and Corporate Responsibility homepage, and our social media channels are not, however, a part of or incorporated by reference in this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS
We have included in this Quarterly Report on Form 10-Q, and from time to time may make in our public filings, press releases or other public statements, certain statements that constitute forward-looking statements. In addition, our management may make forward-looking statements to analysts, investors, representatives of the media and others. These forward-looking statements are not historical facts and represent only MSCI’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and beyond our control. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements.
In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” or the negative of these terms or other comparable terminology. Statements concerning our financial position, business strategy and plans or objectives for future operations are forward-looking statements. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and that could materially affect our actual results, levels of activity, performance or achievements. Such risks and uncertainties include those set forth under “Risk Factors” in Part I, Item 1A of the 2023 Annual Report on Form 10-K filed with the SEC on February 9, 2024. If any of these risks or uncertainties materialize, or if MSCI’s underlying assumptions prove to be incorrect, actual results may vary significantly from what MSCI projected. Any forward-looking statement reflects our current views with respect to future events, levels of activity, performance or achievements and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. The forward-looking statements in this report speak only as of the time they are made and do not necessarily reflect our outlook at any other point in time. MSCI assumes no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law. Therefore, readers should carefully review the risk factors set forth in our Annual Report on Form 10-K and in other reports or documents we file from time to time with the SEC.
3

PART I – FINANCIAL INFORMATION
Item 1.    Financial Statements
MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except per share and share data)
As of
March 31,December 31,
(unaudited) 20242023
ASSETS
Current assets:
Cash and cash equivalents (includes restricted cash of $3,842 and $3,878 at March 31, 2024 and December 31, 2023, respectively)
$519,315 $461,693 
Accounts receivable (net of allowances of $4,326 and $3,968 at March 31, 2024 and December 31, 2023, respectively)
745,611 839,555 
Prepaid income taxes44,027 59,002 
Prepaid and other assets55,964 57,903 
Total current assets1,364,917 1,418,153 
Property, equipment and leasehold improvements, net 55,802 55,920 
Right of use assets 132,270 115,243 
Goodwill2,890,519 2,887,692 
Intangible assets, net 948,479 956,234 
Deferred tax assets38,886 41,074 
Other non-current assets47,716 43,903 
Total assets$5,478,589 $5,518,219 
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable$12,048 $9,812 
Income taxes payable44,733 24,709 
Accrued compensation and related benefits84,582 219,456 
Current portion of long-term debt 10,902 
Other accrued liabilities173,628 168,282 
Deferred revenue1,053,961 1,083,864 
Total current liabilities1,368,952 1,517,025 
Long-term debt4,507,686 4,496,826 
Long-term operating lease liabilities135,043 120,134 
Deferred tax liabilities17,737 27,028 
Other non-current liabilities99,688 96,970 
Total liabilities6,129,106 6,257,983 
Commitments and Contingencies (see Note 8)
Shareholders’ equity (deficit):
Preferred stock (par value $0.01; 100,000,000 shares authorized; no shares issued)
  
Common stock (par value $0.01; 750,000,000 common shares authorized; 134,070,097 and 133,817,332 common shares issued and 79,224,049 and 79,091,212 common
shares outstanding at March 31, 2024 and December 31, 2023, respectively)
1,341 1,338 
Treasury shares, at cost (54,846,048 and 54,726,120 common shares held at March 31, 2024 and December 31, 2023, respectively)
(6,517,130)(6,447,101)
Additional paid in capital1,622,638 1,587,670 
Retained earnings4,306,191 4,179,681 
Accumulated other comprehensive loss(63,557)(61,352)
Total shareholders’ equity (deficit)(650,517)(739,764)
Total liabilities and shareholders’ equity (deficit)$5,478,589 $5,518,219 
See Notes to Condensed Consolidated Financial Statements (Unaudited)
4

MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended
March 31,
(unaudited) 20242023
Operating revenues$679,965 $592,218 
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)128,514 108,647 
Selling and marketing72,168 66,475 
Research and development40,525 31,323 
General and administrative56,691 41,044 
Amortization of intangible assets38,604 24,667 
Depreciation and amortization of property, equipment and
   leasehold improvements
4,081 5,460 
Total operating expenses340,583 277,616 
Operating income339,382 314,602 
Interest income(6,048)(10,362)
Interest expense46,674 46,206 
Other expense (income)2,863 2,386 
Other expense (income), net43,489 38,230 
Income before provision for income taxes295,893 276,372 
Provision for income taxes39,939 37,644 
Net income$255,954 $238,728 
Earnings per share:
Basic$3.23 $2.98 
Diluted$3.22 $2.97 
Weighted average shares outstanding:
Basic79,19580,041
Diluted79,50880,482
See Notes to Condensed Consolidated Financial Statements (Unaudited)
5

MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Three Months Ended
March 31,
(unaudited) 20242023
Net income$255,954 $238,728 
Other comprehensive income (loss):
Foreign currency translation adjustments(2,542)4,362 
Income tax effect329 (1,108)
Foreign currency translation adjustments, net(2,213)3,254 
Pension and other post-retirement adjustments21 (513)
Income tax effect(13)34 
Pension and other post-retirement adjustments, net8 (479)
Other comprehensive (loss) income, net of tax(2,205)2,775 
Comprehensive income$253,749 $241,503 
See Notes to Condensed Consolidated Financial Statements (Unaudited)
6

MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited) Common
Stock
Treasury
Stock
Additional
Paid in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balance at December 31, 2023
$1,338 $(6,447,101)$1,587,670 $4,179,681 $(61,352)$(739,764)
Net income255,954 255,954 
Dividends declared ($1.60 per common share)
(129,444)(129,444)
Dividends paid in shares74 74 
Other comprehensive income (loss), net of tax(2,205)(2,205)
Common stock issued3 3 
Shares withheld for tax withholding(69,991)(69,991)
Compensation payable in common stock34,894 34,894 
Common stock repurchased and held in treasury 
Common stock issued to Directors and
   (held in)/released from treasury
(38)(38)
Balance at March 31, 2024
$1,341 $(6,517,130)$1,622,638 $4,306,191 $(63,557)$(650,517)
Balance at December 31, 2022
$1,336 $(5,938,116)$1,515,874 $3,473,192 $(60,211)$(1,007,925)
Net income238,728 238,728 
Dividends declared ($1.38 per common share)
(111,986)(111,986)
Dividends paid in shares44 44 
Other comprehensive income (loss), net of tax2,775 2,775 
Common stock issued2 2 
Shares withheld for tax withholding(43,960)(43,960)
Compensation payable in common stock20,988 20,988 
Common stock repurchased and held in treasury 
Common stock issued to Directors and
   (held in)/released from treasury
(30)(30)
Balance at March 31, 2023
$1,338 $(5,982,106)$1,536,906 $3,599,934 $(57,436)$(901,364)



See Notes to Condensed Consolidated Financial Statements (Unaudited)
7

MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31,
(unaudited) 20242023
Cash flows from operating activities
Net income$255,954 $238,728 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets38,604 24,667 
Stock-based compensation expense34,336 21,088 
Depreciation and amortization of property, equipment and leasehold improvements4,081 5,460 
Amortization of right of use assets5,813 5,782 
Amortization of debt origination fees1,280 1,264 
Loss on extinguishment of debt1,510  
Deferred taxes(7,625)(2,254)
Other adjustments(3,533)3,906 
Changes in assets and liabilities:
Accounts receivable91,109 22,489 
Prepaid income taxes14,874 3,396 
Prepaid and other assets1,427 (1,194)
Other non-current assets73 (2,333)
Accounts payable2,045 (6,327)
Income taxes payable22,154 19,179 
Accrued compensation and related benefits(132,328)(108,252)
Other accrued liabilities3,086 8,305 
Deferred revenue(25,949)34,427 
Long-term operating lease liabilities(5,666)(5,047)
Other non-current liabilities(1,108)941 
Other (84)
Net cash provided by operating activities300,137 264,141 
Cash flows from investing activities  
Capitalized software development costs(19,966)(15,351)
Capital expenditures(4,271)(6,225)
Acquisition of a business, net of cash acquired
(7,820) 
Other(276)(186)
Net cash used in investing activities(32,333)(21,762)
Cash flows from financing activities
Repurchase of common stock held in treasury(69,991)(43,960)
Payment of dividends(131,305)(112,145)
Repayment of borrowings(339,063)(2,188)
Proceeds from borrowings336,875  
Payment of debt issuance costs(3,739) 
Net cash (used in) provided by financing activities(207,223)(158,293)
Effect of exchange rate changes(2,959)2,958 
Net (decrease) increase in cash, cash equivalents and restricted cash57,622 87,044 
Cash, cash equivalents and restricted cash, beginning of period461,693 993,564 
Cash, cash equivalents and restricted cash, end of period$519,315 $1,080,608 
Supplemental disclosure of cash flow information:
Cash paid for interest$34,050 $33,803 
Cash paid for income taxes, net of refunds received$11,393 $18,965 
Supplemental disclosure of non-cash investing activities
Property, equipment and leasehold improvements in other accrued liabilities$2,668 $5,156 
Supplemental disclosure of non-cash financing activities
Cash dividends declared, but not yet paid$368 $511 
See Notes to Condensed Consolidated Financial Statements (Unaudited)
8

MSCI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. INTRODUCTION AND BASIS OF PRESENTATION
MSCI Inc., together with its wholly owned subsidiaries (the “Company” or “MSCI”) is a leading provider of critical decision support tools and solutions for the global investment community. Our mission-critical offerings help investors address the challenges of a transforming investment landscape and power better investment decisions. Leveraging our 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 confidently and efficiently build more effective portfolios. Our products and services include indexes; portfolio construction and risk management tools; environmental, social and governance (“ESG”) and climate solutions; and private asset data and analysis.
Basis of Presentation and Use of Estimates
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. If not materially different, certain note disclosures included therein have been omitted from these interim condensed consolidated financial statements.
In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim consolidated financial statements, have been included. The results of operations for interim periods are not necessarily indicative of results for the entire year.
The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The Company makes certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the unaudited condensed consolidated financial statements, as well as the reported amounts of operating revenues and expenses during the periods presented. Significant estimates and judgments made by management include such examples as assessment of impairment of goodwill and intangible assets and income taxes. The Company believes that estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Inter-company balances and transactions are eliminated in consolidation.
Concentrations
For the three months ended March 31, 2024 and 2023, BlackRock, Inc. (“BlackRock”) accounted for 10.0% and 10.2% of the Company’s consolidated operating revenues, respectively. For the three months ended March 31, 2024 and 2023, BlackRock accounted for 17.9% and 17.4% of the Index segment’s operating revenues, respectively. No single customer represented 10.0% or more of operating revenues within the Analytics, ESG and Climate or All Other – Private Assets segments for the three months ended March 31, 2024 and 2023.
Allowance for Credit Losses
Changes in the allowance for credit losses from December 31, 2022 to March 31, 2024 were as follows:
(in thousands) Amount
Balance as of December 31, 2022$2,652 
Addition to credit loss expense2,196 
Write-offs, net of recoveries(880)
Balance as of December 31, 2023$3,968 
Addition to credit loss expense404 
Write-offs, net of recoveries(46)
Balance as of March 31, 2024$4,326 
9

2. RECENT ACCOUNTING PRONOUNCEMENTS
In November 2023, the FASB issued Accounting Standards Update No. 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” or ASU 2023-07. The amendments in ASU 2023-07 aim to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of this update on disclosures within its consolidated financial statements.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” or ASU 2023-09. The amendments in ASU 2023-09 aim to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, with early adoption permitted. The Company is currently evaluating the impact of this update on disclosures within its consolidated financial statements.
3. REVENUE RECOGNITION
MSCI’s operating revenues are reported by product type, which generally reflects the timing of recognition. The Company’s operating revenue types are recurring subscriptions, asset-based fees and non-recurring revenues. The Company also disaggregates operating revenues by segment.
The tables that follow present the disaggregated operating revenues for the periods indicated:
For the Three Months Ended March 31, 2024
Segments
(in thousands)IndexAnalyticsESG and ClimateAll Other - Private AssetsTotal
Operating Revenue Types
Recurring subscriptions$212,952 $160,551 $76,418 $63,134 $513,055 
Asset-based fees150,259    150,259 
Non-recurring10,661 3,415 1,466 1,109 16,651 
Total$373,872 $163,966 $77,884 $64,243 $679,965 
For the Three Months Ended March 31, 2023
Segments
(in thousands)IndexAnalyticsESG and ClimateAll Other - Private AssetsTotal
Operating Revenue Types
Recurring subscriptions$196,678 $144,503 $65,732 $38,334 $445,247 
Asset-based fees133,126    133,126 
Non-recurring9,578 2,567 1,326 374 13,845 
Total$339,382 $147,070 $67,058 $38,708 $592,218 
The tables that follow present the change in accounts receivable, net of allowances, and current deferred revenue between the dates indicated:
(in thousands) Accounts receivable, net of allowancesDeferred revenue
Opening (December 31, 2023)
$839,555 $1,083,864 
Closing (March 31, 2024)
745,611 1,053,961 
Increase/(decrease)$(93,944)$(29,903)
10

(in thousands) Accounts receivable, net of allowancesDeferred revenue
Opening (December 31, 2022)
$663,236 $882,886 
Closing (March 31, 2023)
641,584 920,255 
Increase/(decrease)$(21,652)$37,369 
The amounts of revenues recognized in the periods that were included in the opening current deferred revenue, which reflects contract liability amounts, were $420.3 million and $356.6 million for the three months ended March 31, 2024 and 2023 respectively. The difference between the opening and closing balances of the Company’s deferred revenue was primarily driven by an increase in amortization of deferred revenue to operating revenues, partially offset by an increase in billings. As of March 31, 2024 and December 31, 2023, the Company carried a long-term deferred revenue balance of $28.2 million and $28.8 million, respectively, in “Other non-current liabilities” on the Unaudited Condensed Consolidated Statement of Financial Condition.
For contracts that have a duration of one year or less, the Company has not disclosed either the remaining performance obligation as of the end of the reporting period or when the Company expects to recognize the revenue. The remaining performance obligations for contracts that have a duration of greater than one year and the periods in which they are expected to be recognized are as follows:
As of
March 31,
(in thousands)2024
First 12-month period
$843,534 
Second 12-month period
519,558 
Third 12-month period
246,238 
Periods thereafter171,962 
Total$1,781,292 
4. EARNINGS PER COMMON SHARE
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the assumed conversion of all dilutive securities, including, when applicable, restricted stock units (“RSUs”), performance stock units (“PSUs”) and performance stock options (“PSOs”).
The following table presents the computation of basic and diluted EPS:
Three Months Ended
March 31,
(in thousands, except per share data)20242023
Net income$255,954 $238,728 
Basic weighted average common shares outstanding79,195 80,041 
Effect of dilutive securities:
PSUs, RSUs and PSOs313 441 
Diluted weighted average common shares outstanding79,508 80,482 
Earnings per common share:
Basic$3.23 $2.98 
Diluted$3.22 $2.97 
5. ACQUISITIONS
On October 2, 2023, the Company acquired the remaining 66.4% interest in The Burgiss Group, LLC (“Burgiss”) for $696.8 million in cash (the “step acquisition”). The Company’s existing 33.6% interest in Burgiss had a fair value at acquisition date of
11

$353.2 million which resulted in a non-taxable gain of $143.0 million which the Company recognized during the three months ended December 31, 2023. The acquisition of Burgiss will provide the Company with comprehensive data and deep expertise in private assets, enabling investors to evaluate fundamental information, measure and compare performance, understand exposures, manage risk, and conduct robust analytics.
The step acquisition has been accounted for as a business combination using the acquisition method of accounting and its results are reported within the Private Capital Solutions operating segment within the All Other – Private Assets reportable segment. With the step acquisition, the Company renamed the Burgiss operating segment to Private Capital Solutions. Prior to the step acquisition, Burgiss was accounted for as an equity-method investment. Therefore, MSCI did not recognize the proportionate share of Burgiss’ operating revenues, rather, the Company’s proportionate share of the income or loss of Burgiss was reported as a component of other (expense) income, net. A portion of Burgiss’s client agreements do not have automatic renewal clauses at the end of the subscription period. Due to the historically high retention rate and expectation that a substantial portion of the client agreements will be renewed and the nature of the subscription service, the associated revenue is recorded as recurring subscription revenue.
The table below represents the preliminary purchase price allocation to total assets acquired and liabilities assumed and the associated estimated useful lives as of the acquisition date.
(in thousands) Estimated
Useful Life
Fair Value
Cash and cash equivalents$5,397 
Accounts receivable25,848 
Prepaid Income Taxes30 
Other current assets4,178 
Property, equipment and leasehold improvements, net670 
Right of use assets3,443 
Other non-current assets471 
Deferred revenue(21,479)
Other current liabilities(13,185)
Long-term operating lease liabilities(2,525)
Intangible assets:
Proprietary data11 years229,900 
Customer relationships21 years179,900 
Acquired technology and software3 years19,000 
Trademarks1 year900 
Goodwill617,386 
Net assets acquired$1,049,934 
The Company, with the assistance of third-party valuation experts, calculated the fair values of intangible assets using the relief from royalty method for proprietary data, acquired technology and software and trademarks and the multi-period excess earnings method for customer relationships. The significant assumptions used to estimate the fair value of the acquired intangible assets included forecasted cash flows, which were determined based on certain assumptions that included, among others, projected future revenues, and expected market royalty rates, technology obsolescence rates and discount rates. The weighted average amortization period of the acquired intangible assets was 14.8 years.
The recorded goodwill is primarily attributable to the utilization of the acquired data as well as expanded market opportunities. Goodwill attributable to the acquisition is deductible for federal income tax purposes to the extent of consideration paid.
Revenue of Burgiss recognized within the consolidated financial statements was $24.2 million for the three months ended March 31, 2024.
On November 1, 2023, MSCI completed the acquisition of Trove Research Ltd (“Trove”), a carbon markets intelligence provider. Trove is a part of the ESG and Climate operating segment.
On January 2, 2024, MSCI completed the acquisition of Fabric RQ, Inc. (“Fabric”), a wealth technology platform specializing in portfolio design, customization and analytics for wealth managers and advisors. Fabric is a part of the Analytics
12

operating segment. The contingent consideration related to Fabric is payable based upon the future product sales of the acquired business.
The Company recognizes the fair value of contingent consideration at the date of acquisition at fair value. The liability associated with any contingent consideration is remeasured to fair value at each reporting date subsequent to the acquisition and changes in the fair value are recorded in the Unaudited Condensed Consolidated Statements of Income.
The following table presents the preliminary acquired balances related to the acquisitions of Trove and Fabric:
(in thousands, except weighted average amortization period of intangible asset)
Trove
Fabric
Acquisition Date
November 1, 2023January 2, 2024
Cash payments
$37,473 $7,959 
Contingent consideration liability(1)
 8,146 
Aggregate purchase price
$37,473 $16,105 
Net tangible assets acquired (liabilities assumed)
$(4,787)$(226)
Intangible assets
7,705 11,300 
Goodwill
34,555 5,031 
Aggregate purchase price
$37,473 $16,105 
Weighted average amortization period of intangible assets (years)
13.09.1
___________________________
(1)The fair value of the contingent consideration upon closing of the acquisition of Fabric was $8.1 million. As of March 31, 2024, the fair value of the contingent consideration was $8.3 million, of which $1.8 million is included in “Other accrued liabilities” and $6.5 million is included in “Other non-current liabilities” on the Unaudited Condensed Consolidated Statement of Financial Condition, and is classified as Level 3 within the fair value hierarchy.
The recorded goodwill for Trove is primarily attributable to the utilization of the acquired data as well as expanded market opportunities and for Fabric is primarily attributable to the utilization of the acquired technology platform. Goodwill attributable to the acquisitions of Fabric and Trove are not deductible for federal income tax purposes.
Revenue of Trove and Fabric recognized within the consolidated financial statements was $1.3 million and $0.2 million for the three months ended March 31, 2024, respectively.
6. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET
Property, equipment and leasehold improvements, net consisted of the following as of the dates indicated:
As of
March 31,December 31,
(in thousands)20242023
Computer & related equipment$170,762 $192,008 
Furniture & fixtures15,990 16,169 
Leasehold improvements56,636 58,582 
Work-in-process982 897 
Subtotal244,370 267,656 
Accumulated depreciation and amortization(188,568)(211,736)
Property, equipment and leasehold improvements, net$55,802 $55,920 
Depreciation and amortization expense of property, equipment and leasehold improvements was $4.1 million and $5.5 million for the three months ended March 31, 2024 and 2023, respectively.
13

7. GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
The following table presents goodwill by reportable segment:
(in thousands)IndexAnalyticsESG and ClimateAll Other - Private AssetsTotal
Goodwill at December 31, 2023$1,203,435 $290,976 $84,724 $1,308,557 $2,887,692 
Acquisitions (1)
 5,031 (357)(1,030)3,644 
Foreign exchange translation adjustment(291) (347)(179)(817)
Goodwill at March 31, 2024$1,203,144 $296,007 $84,020 $1,307,348 $2,890,519 
___________________________
(1)Reflects the impact of the acquisitions of Fabric, Trove and Burgiss.
Intangible Assets, Net
The following table presents the amount of amortization expense related to intangible assets by category for the periods indicated:
Three Months Ended
March 31,
(in thousands)20242023
Amortization expense of acquired intangible assets$25,267 $15,831 
Amortization expense of internally developed capitalized software13,337 8,836 
Total amortization of intangible assets expense$38,604 $24,667 
The gross carrying and accumulated amortization amounts related to the Company’s intangible assets were as follows:
March 31, 2024December 31, 2023
(in thousands)
Gross intangible assets:Accumulated amortization:Net intangible assets:Gross intangible assets:Accumulated amortization:Net intangible assets:
Customer relationships$710,995 $(349,868)$361,127 $709,299 $(340,248)$369,051 
Proprietary data452,207 (74,675)377,532 452,543 (64,694)387,849 
Acquired technology and software238,285 (188,492)49,793 228,785 (185,583)43,202 
Trademarks209,090 (174,222)34,868 209,090 (171,715)37,375 
Internally developed capitalized software256,288 (131,129)125,159 237,060 (118,303)118,757 
Total$1,866,865 $(918,386)$948,479 $1,836,777 $(880,543)$956,234 
The following table presents the estimated amortization expense for the remainder of the year ending December 31, 2024 and succeeding years:    
Years Ending December 31,
(in thousands)
Amortization
Expense
Remainder of 2024$119,766 
2025134,968 
202699,687 
202771,025 
202866,577 
Thereafter456,456 
Total$948,479 
14

8. DEBT
As of March 31, 2024, the Company had outstanding an aggregate of $4,200.0 million in senior unsecured notes (collectively, the “Senior Notes”) and $336.9 million under the Revolving Credit Facility (as defined below) as presented in the table below:
Principal
Amount
Outstanding at
Carrying
Value at
Carrying
Value at
Fair
Value at
Fair
Value at
(in thousands)Maturity DateMarch 31, 2024March 31, 2024December 31, 2023March 31, 2024December 31, 2023
Debt
4.000% senior unsecured notes due 2029
November 15, 2029
$1,000,000 $993,909 $993,637 $927,200 $941,090 
3.625% senior unsecured notes due 2030
September 1, 2030
900,000 895,752 895,587 799,911 815,526 
3.875% senior unsecured notes due 2031
February 15, 2031
1,000,000 992,434 992,161 892,390 914,360 
3.625% senior unsecured notes due 2031
November 1, 2031
600,000 595,017 594,852 521,682 529,458 
3.250% senior unsecured notes due 2033
August 15, 2033
700,000 693,699 693,532 578,179 586,509 
Variable rate Tranche A Term Loans due 2027
February 16, 2027
  337,959  337,367 
Variable rate revolving loan commitments (1)
January 26, 2029336,875 336,875  333,506  
Total debt
$4,536,875 $4,507,686 $4,507,728 $4,052,868 $4,124,310 
___________________________
(1)As of March 31, 2024 there were $4.8 million in unamortized deferred financing fees associated with the variable rate revolving loan commitments of which $1.0 million is included in “Prepaid and other assets,” and $3.8 million is included in “Other non-current assets” on the Unaudited Condensed Consolidated Statement of Financial Condition.
Maturities of the Company’s principal debt payments as of March 31, 2024 are as follows:
Maturity of Principal Debt Payments
(in thousands)
Amounts
Remainder of 2024$ 
2025 
2026 
2027 
2028 
Thereafter4,536,875 
Total debt$4,536,875 
Interest payments attributable to the Company’s outstanding indebtedness are due as presented in the following table:
Interest payment frequencyFirst interest
payment date
Senior Notes and Revolving Loan Commitments
4.000% senior unsecured notes due 2029
Semi-AnnualMay 15
3.625% senior unsecured notes due 2030
Semi-AnnualMarch 1
3.875% senior unsecured notes due 2031
Semi-AnnualJune 1
3.625% senior unsecured notes due 2031
Semi-AnnualMay 1
3.250% senior unsecured notes due 2033
Semi-AnnualFebruary 15
Variable rate revolving loan commitments (1)
VariableFebruary 26
___________________________
(1)The first payment occurred on February 26, 2024.
The fair market value of the Company’s debt obligations represent Level 2 valuations. The Company utilized the market approach and obtained security pricing from a vendor who used broker quotes and third-party pricing services to determine fair values.
Credit Agreement. Since November 20, 2014, the Company has maintained a revolving credit agreement with a syndicate of banks. On January 26, 2024, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), amending and restating in its entirety the Company’s prior Amended and Restated Credit Agreement (the “Prior Credit Agreement”). The Credit Agreement makes available to the Company an aggregate of $1,250.0 million of revolving loan commitments under a
15

revolving credit facility (the “Revolving Credit Facility”), which may be drawn until January 26, 2029. At the closing of the Credit Agreement, the Company drew $336.9 million on the Revolving Credit Facility and primarily used the proceeds to prepay all senior unsecured Tranche A Term Loans (the “Tranche A Term Loans”) under the term loan A facility (the “TLA Facility”) under the Prior Credit Agreement. The obligations under the Credit Agreement are general unsecured obligations of the Company. The prepayment of the Tranche A Term Loans and the entry into the Credit Agreement resulted in an approximately $1.5 million loss on extinguishment related to unamortized debt issuance costs. The loss on extinguishment was recorded in “Other expense (income)” on the Unaudited Condensed Consolidated Statement of Income.
Interest on the revolving loans under the Credit Agreement accrues, at a variable rate, based on the secured overnight funding rate (“SOFR”) or the alternate base rate (“Base Rate”), plus, in each case, an applicable margin to be determined based on the credit ratings of the Company’s senior, unsecured long-term debt and will be due on each Interest Payment Date (as defined in the Credit Agreement). So long as the credit rating for the Company’s senior, unsecured long-term debt is set at BBB-/BBB- by each of S&P and Fitch, respectively, the applicable margin is 0.50% for Base Rate loans, and 1.50% for SOFR loans. At March 31, 2024, the interest rate on the revolving loans was 6.93%.
Interest on the Tranche A Term Loans under the TLA Facility accrued, at a variable rate, based on the secured overnight funding rate (“SOFR”) or the alternate base rate (“Base Rate”), plus, in each case, an applicable margin and was due on each Interest Payment Date (as defined in the Prior Credit Agreement). The applicable margin was calculated by reference to the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement) and ranged between 1.50% to 2.00% for SOFR loans, and 0.50% to 1.00% for Base Rate loans.
In connection with the closings of the Senior Notes offerings, entry into the Prior Credit Agreement and the subsequent amendments thereto and entry into the Credit Agreement, the Company paid certain financing fees which, together with the existing fees related to prior credit facilities, are being amortized over their related lives. At March 31, 2024, $33.9 million of the deferred financing fees and premium remain unamortized, $1.0 million of which is included in “Prepaid and other assets,” $3.8 million of which is included in “Other non-current assets” and $29.1 million of which is included in “Long-term debt” on the Unaudited Condensed Consolidated Statement of Financial Condition.
9. LEASES
The components of lease expense (income) of the Company’s operating leases are as follows:
Three Months Ended
March 31,
(in thousands)20242023
Operating lease expenses$7,139 $7,114 
Variable lease costs1,069 891 
Short-term lease costs215 251 
Sublease income(828)(1,276)
Total lease costs$7,595 $6,980 
16

Maturities of the Company’s operating lease liabilities as of March 31, 2024 are as follows:
Maturity of Lease LiabilitiesOperating
(in thousands)Leases
Remainder of 2024$21,777 
202531,114 
202629,499 
202723,649 
202823,095 
Thereafter51,854 
Total lease payments$180,988 
Less: Interest(22,199)
Present value of lease liabilities$158,789 
Other accrued liabilities$23,746 
Long-term operating lease liabilities$135,043 
Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:
As of
March 31,December 31,
Lease Term and Discount Rate20242023
Weighted-average remaining lease term (years)6.687.04
Weighted-average discount rate3.94 %3.66 %
Other information related to the Company’s operating leases are as follows:
Other InformationThree Months Ended
March 31,
(in thousands)20242023
Operating cash flows used for operating leases$7,626 $7,408 
Right of use assets obtained in exchange for new
    operating lease liabilities
$23,237 $3,432 
10. SHAREHOLDERS’ EQUITY (DEFICIT)
Return of capital
On July 28, 2022, the Board of Directors authorized a stock repurchase program (the “2022 Repurchase Program”) for the purchase of up to $1,000.0 million worth of shares of MSCI’s common stock in addition to the $539.1 million of authorization then remaining under a previously existing share repurchase program that was replaced by, and incorporated into, the 2022 Repurchase Program for a total of $1,539.1 million of stock repurchase authorization available under the 2022 Repurchase Program.
Share repurchases made pursuant to the 2022 Repurchase Program may take place in the open market or in privately negotiated transactions from time to time based on market and other conditions. This authorization may be modified, suspended or terminated by the Board of Directors at any time without prior notice. As of March 31, 2024, there was $845.7 million of available authorization remaining under the 2022 Repurchase Program. The Company did not repurchase any of the Company’s common stock on the open market during each of the three months ended March 31, 2024 and 2023.
17

The following table presents dividends declared per common share as well as total amounts declared, distributed and deferred for the periods indicated:
Dividends

(in thousands, except per share data)
Per ShareDeclaredDistributed(Released)/Deferred
Three Months Ended March 31, 2024$1.60 $129,444 $131,378 $(1,934)
Three Months Ended March 31, 2023$1.38 $111,986 $112,189 $(203)
Common Stock
The following table presents activity related to shares of common stock issued and repurchased during the three months ended March 31, 2024:
Common StockTreasury Common Stock
IssuedStockOutstanding
Balance at December 31, 2023
133,817,332(54,726,120)79,091,212
Dividend payable/paid6161
Common stock issued252,637252,637
Shares withheld for tax withholding (119,861)(119,861)
Shares repurchased under stock repurchase programs
Shares issued to directors67(67)
Balance at March 31, 2024
134,070,097(54,846,048)79,224,049
11. INCOME TAXES
The Company’s provision for income taxes was $39.9 million and $37.6 million for the three months ended March 31, 2024 and 2023, respectively.
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.
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.
The Company is under or open to examination by the IRS and other tax authorities in certain jurisdictions, including foreign jurisdictions, such as the United Kingdom, Switzerland and India, and states in the United States in which the Company has significant operations, such as New York and California. The tax years currently under or open to examination vary by jurisdiction but include years from 2008 onwards.
The Company regularly assesses the likelihood of additional assessments in each of the taxing jurisdictions in which it files income tax returns. The Company has established unrecognized tax benefits that the Company believes are adequate in relation to the potential for additional assessments. Once established, the Company adjusts unrecognized tax benefits only when more information is available or when an event occurs necessitating a change. Based on the current status of income tax audits, the Company believes it is reasonably possible that the total amount of unrecognized benefits may decrease by approximately $22.1 million in the next twelve months as a result of the resolution of prior year items.
During the three months ended March 31, 2024, the Company's unrecognized tax benefits decreased by $1.4 million principally due to the resolution of prior year items.
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12. SEGMENT INFORMATION
The Company has five operating segments: Index, Analytics, ESG and Climate, Real Assets and Private Capital Solutions, which are presented as the following four reportable segments: Index, Analytics, ESG and Climate and All Other – Private Assets. During the year ended December 31, 2023, the Company renamed the Burgiss operating segment to Private Capital Solutions. The operating segments of Real Assets and Private Capital Solutions do not individually meet the segment reporting thresholds and have been combined and presented as part of All Other – Private Assets reportable segment.
Prior to the step acquisition of Burgiss on October 2, 2023, the Company’s ownership interest in Burgiss was classified as an equity-method investment. Therefore, prior to the acquisition of Burgiss, the All Other – Private Assets segment did not include the Company’s proportionate share of operating revenues and Adjusted EBITDA related to Burgiss. The Company’s proportionate share of the income or loss from its equity-method investment in Burgiss was not a component of Adjusted EBITDA as it was reported as a component of other (expense) income, net. Following the acquisition, the consolidated results of Burgiss were included in the Company’s Private Capital Solutions operating segment.
The Index operating segment offers equity and fixed income indexes. The indexes are used in many areas of the investment process, including for developing indexed financial products (e.g., Exchange Traded Funds (“ETFs”), mutual funds, annuities, futures, options, structured products and over-the-counter derivatives), performance benchmarking, portfolio construction and rebalancing, and asset allocation.
The Analytics operating segment offers risk management, performance attribution and portfolio management content, applications and services that provide clients with an integrated view of risk and return and tools for analyzing market, credit, liquidity, counterparty and climate risk across all major asset classes, spanning short-, medium- and long-term time horizons. Clients access Analytics tools and content through MSCI’s proprietary applications and application programming interfaces, third-party applications or directly through their own platforms. Additionally, the Analytics operating segment also provides various managed services to help clients operate more efficiently, including consolidation of client portfolio data from various sources, review and reconciliation of input data and results, and customized reporting.
The ESG and Climate operating segment offers products and services that help institutional investors understand how ESG and climate considerations can impact the long-term risk and return of their portfolio and individual security-level investments. In addition, the ESG and Climate operating segment provides data, ratings, research and tools to help investors navigate increasing regulation, meet new client demands and better integrate ESG and climate elements into their investment processes.
The Real Assets operating segment offers data, benchmarks, return-analytics, climate assessments and market insights for tangible assets such as real estate and infrastructure. In addition, Real Assets performance and risk analytics range from enterprise-wide to property-specific analysis. The Real Assets operating segment also provides business intelligence products to real estate owners, managers, developers and brokers worldwide.
The Private Capital Solutions operating segment offers a suite of tools to help private asset investors across mission-critical workflows, such as sourcing terms and conditions, evaluating operating performance of underlying portfolio companies, managing risk and other activities supporting private capital investing.
The Chief Operating Decision Maker (“CODM”) measures and evaluates reportable segments based on segment operating revenues as well as Adjusted EBITDA and other measures. The Company excludes the following items from segment Adjusted EBITDA: provision for income taxes, other expense (income), net, depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or adjustments, including certain acquisition-related integration and transaction costs, that the CODM does not consider for the purposes of making decisions to allocate resources among segments or to assess segment performance. Although these amounts are excluded from segment Adjusted EBITDA, they are included in reported consolidated net income and are included in the reconciliation that follows.
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The following table presents operating revenues by reportable segment for the periods indicated:
Three Months Ended
March 31,
(in thousands)20242023
Operating revenues
Index$373,872 $339,382 
Analytics163,966 147,070 
ESG and Climate77,884 67,058 
All Other - Private Assets64,243 38,708 
Total$679,965 $592,218 
The following table presents segment profitability and a reconciliation to net income for the periods indicated:
Three Months Ended
March 31,
(in thousands)20242023
Index Adjusted EBITDA$277,760 $253,682 
Analytics Adjusted EBITDA72,212 60,780 
ESG and Climate Adjusted EBITDA21,091 17,876 
All Other - Private Assets Adjusted EBITDA12,510 12,391 
Total operating segment profitability383,573 344,729 
Amortization of intangible assets38,604 24,667 
Depreciation and amortization of property, equipment and leasehold improvements4,081 5,460 
Acquisition-related integration and transaction costs(1)
1,506  
Operating income339,382 314,602 
Other expense (income), net43,489 38,230 
Provision for income taxes39,939 37,644 
Net income$255,954 $238,728 
___________________________
(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.
20

Operating revenues by geography are primarily based on the shipping address of the ultimate customer utilizing the product. The following table presents operating revenues by geographic area for the periods indicated:
Three Months Ended
March 31,
(in thousands)20242023
Operating revenues
Americas:
United States$280,675 $238,416 
Other30,358 27,536 
Total Americas311,033 265,952 
Europe, the Middle East and Africa (“EMEA”):
United Kingdom113,294 91,660 
Other151,684 138,319 
Total EMEA264,978 229,979 
Asia & Australia:  
Japan26,573 26,017 
Other77,381 70,270 
Total Asia & Australia103,954 96,287 
Total$679,965 $592,218 
Long-lived assets consist of property, equipment and leasehold improvements, right of use assets and internally developed capitalized software, net of accumulated depreciation and amortization. The following table presents long-lived assets by geographic area on the dates indicated:
As of
March 31,December 31,
(in thousands)20242023
Long-lived assets
Americas:
United States$231,650 $204,238 
Other11,068 11,585 
Total Americas242,718 215,823 
EMEA:
United Kingdom17,913 18,403 
Other20,840 22,072 
Total EMEA38,753 40,475 
Asia & Australia:
Japan1,143 1,321 
Other29,524 31,507 
Total Asia & Australia30,667 32,828 
Total$312,138 $289,126 
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13. SUBSEQUENT EVENTS
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 (“second quarter 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.
22

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, 2023 (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 address the challenges of a transforming investment landscape and power better investment decisions. Leveraging our 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 confidently and efficiently build more effective portfolios. The Company has five operating segments: Index, Analytics, ESG and Climate, Real Assets and Private Capital Solutions (formerly Burgiss), which are presented as the following four reportable segments: Index, Analytics, ESG and Climate and All Other Private Assets.
During the year ended December 31, 2023, we renamed the The Burgiss Group, LLC (“Burgiss”) operating segment to Private Capital Solutions. The operating segments of Real Assets and Private Capital Solutions do not individually meet the segment reporting thresholds and have been combined and presented as part of the All Other – Private Assets reportable segment.
Our growth strategy includes: (a) extending leadership in research-enhanced content across asset classes, (b) leading the enablement of ESG and climate investment integration, (c) enhancing distribution and content-enabling technology, (d) expanding solutions that empower client customization, (e) strengthening client relationships and growing into strategic partnerships with clients and (f) executing strategic relationships 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 March 31, 2024, we served approximately 6,9001 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 ESG 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.
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.
1 Represents the aggregate of all related clients under their respective parent entity. At acquisition, we align an acquired Company’s client count to our methodology.
23

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.
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.
Factors Affecting the Comparability of Results
Acquisitions of Burgiss, Trove and Fabric
On October 2, 2023, the Company acquired the remaining 66.4% interest in Burgiss for $696.8 million in cash. The Company’s existing 33.6% interest had a fair value at acquisition date of $353.2 million which resulted in a non-taxable gain of $143.0 million for the three months ending December 31, 2023.
Prior to the acquisition, the Company’s ownership interest in Burgiss was classified as an equity-method investment. Therefore, the All Other – Private Assets segment did not include the Company’s proportionate share of operating revenues and Adjusted EBITDA related to Burgiss. The Company’s proportionate share of the income or loss from its equity-method investment in Burgiss was reported as a component of other (expense) income, net.
Following the acquisition, the consolidated results of Burgiss are included in the Company’s Private Capital Solutions operating segment (formerly known as Burgiss), which is combined and presented as part of the All Other – Private Assets reportable segment. See Note 5, “Acquisitions,” and Note 12, “Segment Information” of the Notes to the Consolidated Financial Statements included herein for additional information on the acquisition of Burgiss.
On November 1, 2023 MSCI completed the acquisition of Trove Research Ltd (“Trove”), a carbon markets intelligence provider for approximately $37.5 million in cash. Trove is a part of the ESG and Climate operating segment.
On January 2, 2024 MSCI completed the acquisition of Fabric RQ, Inc. (“Fabric”), a wealth technology platform specializing in portfolio design, customization and analytics for wealth managers and advisors for approximately $8.0 million in cash and contingent consideration with an acquisition date fair value of $8.1 million that is payable based on future sales of Fabric’s products. Fabric is a part of the Analytics operating segment.
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 or reportable segment as follows: Index, Analytics, ESG and Climate and All Other – Private Assets.
The following table presents operating revenues by type for the periods indicated:
Three Months Ended
March 31,
% Change
(in thousands)20242023
Recurring subscriptions$513,055 $445,247 15.2 %
Asset-based fees150,259 133,126 12.9 %
Non-recurring16,651 13,845 20.3 %
Total operating revenues$679,965 $592,218 14.8 %
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%.
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%.
24

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.
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
20232024
(in billions)March
31,
June
30,
September
30,
December
31,
March
31,
AUM in ETFs linked to MSCI equity indexes(1), (2)
$1,305.4 $1,372.5 $1,322.8 $1,468.9 $1,582.6 
Sequential Change in Value
Market Appreciation/(Depreciation)$75.1 $48.4 $(56.1)$130.5 $92.8 
Cash Inflows7.4 18.7 6.4 15.6 20.9 
Total Change$82.5 $67.1 $(49.7)$146.1 $113.7 
The following table presents the average value of AUM in ETFs linked to MSCI equity indexes for the periods indicated:
20232024
(in billions)MarchJuneSeptemberDecemberMarch
AUM in ETFs linked to MSCI equity indexes(1), (2)
Quarterly average$1,287.5 $1,333.8 $1,376.5 $1,364.9 $1,508.8 
Year-to-date average$1,287.5 $1,310.7 $1,332.6 $1,340.7 $1,508.8 
___________________________
(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 March 31, 2024, was up $221.3 billion, or 17.2%, compared to the three months ended March 31, 2023.
25

The following table presents operating revenues by reportable segment and revenue type for the periods indicated:
Three Months Ended
March 31,
% Change
(in thousands)20242023
Operating revenues:
Index
Recurring subscriptions$212,952 $196,678 8.3 %
Asset-based fees150,259 133,126 12.9 %
Non-recurring10,661 9,578 11.3 %
Index total373,872 339,382 10.2 %
Analytics
Recurring subscriptions160,551 144,503 11.1 %
Non-recurring3,415 2,567 33.0 %
Analytics total163,966 147,070 11.5 %
ESG and Climate
Recurring subscriptions76,418 65,732 16.3 %
Non-recurring1,466 1,326 10.6 %
ESG and Climate total77,884 67,058 16.1 %
All Other - Private Assets
Recurring subscriptions63,134 38,334 64.7 %
Non-recurring1,109 374 196.5 %
All Other - Private Assets total64,243 38,708 66.0 %
Total operating revenues$679,965 $592,218 14.8 %
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.
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The following table presents operating expenses by activity category for the periods indicated:
Three Months Ended
March 31,
% Change
(in thousands)20242023
Operating expenses:
Cost of revenues$128,514 $108,647 18.3 %
Selling and marketing72,168 66,475 8.6 %
Research and development40,525 31,323 29.4 %
General and administrative56,691 41,044 38.1 %
Amortization of intangible assets38,604 24,667 56.5 %
Depreciation and amortization of property, equipment and leasehold improvements
4,081 5,460 (25.3 %)
Total operating expenses$340,583 $277,616 22.7 %
Total operating expenses increased 22.7%. Adjusting for the impact of foreign currency exchange rate fluctuations, the increase would have been 21.9%.
Cost of Revenues
Cost of revenues expenses consist of costs related to the production and servicing of our products and services and primarily includes related information technology costs, including data center, cloud service, platform and infrastructure costs; costs to acquire, produce and maintain market data information; costs of research to support and maintain existing products; costs of product management teams; costs of client service and consultant teams to support customer needs; as well as other support costs directly attributable to the cost of revenues including certain human resources, finance and legal costs.
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.
Selling and Marketing
Selling and marketing expenses consist of costs associated with acquiring new clients or selling new products or product renewals to existing clients and primarily includes the costs of our sales and marketing teams, as well as costs incurred in other departments associated with acquiring new business, including product management, research, technology and sales operations.
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.
Research and Development
R&D expenses consist of costs to develop new, or enhance existing, products and the costs to develop new or enhanced technologies and service platforms for the delivery of our products and services and primarily include the costs of development, research, product management, project management and the technology support directly associated with these activities.
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.
General and Administrative