MSCI O3 2024 $MSCI (+0.09%)

Financial performance:

MSCI Inc. demonstrated strong financial performance with total operating revenues of $724.7 million for the third quarter of 2024, representing an increase of 15.9% compared to the same period in 2023. This growth was driven by increases in all segments, particularly in recurring subscriptions and fee-based assets.

Balance sheet analysis:

The balance sheet as of September 30, 2024 shows total assets of USD 5.41 billion compared to USD 5.52 billion at the end of 2023. Cash and cash equivalents increased to USD 501.0 million, while receivables decreased significantly to USD 643.8 million. Total liabilities amounted to USD 6.16 billion, resulting in an equity deficit of USD 750.998 million.

Income statement:

The income statement shows a net profit of USD 280.9 million for the third quarter of 2024, an increase of 8.2% compared to the previous year. Earnings per diluted share rose to USD 3.57, which represents an increase of 9.2 %.

Cash flow analysis:

Net cash flow from operating activities increased by 44.8 % to USD 421.6 million in the third quarter of 2024, which is attributable to higher incoming payments from customers. Free cash flow also recorded a significant increase of 45.8% to USD 394.0 million.

Key figures and profitability:

The adjusted EBITDA margin improved to 62.2 % compared to 61.8 % in the previous year, reflecting increased operational efficiency. The ratio of total debt to adjusted EBITDA amounted to 2.7x and was therefore within the company's target range of 3.0x to 3.5x.

Segment analysis:

• Index segment: Operating revenues increased 11.8% to $404.9 million, driven by higher fee-based assets and recurring subscription revenues.
• Analytics segment: Revenues increased 11.7% to USD 172.4 million, mainly due to growth in multi-asset class and equity analytics products.
• ESG and Climate segment: Revenues increased by 14.5% to USD 83.6 million, with significant contributions coming from ratings, climate and screening products.
• Other - Private Assets segment: Sales increased by 77.2% to USD 63.8 million, mainly due to the acquisition of Burgiss.

Competitive analysis:

MSCI is strengthening its market position through strategic acquisitions and product diversification, particularly in the ESG and climate segment, which is gaining traction in the investment community.

Management forecasts and comments:

Management is optimistic about future growth and is focusing on continued investment in product development and customer retention. The company strives to maintain its competitiveness through innovation and strategic acquisitions.

Risks and opportunities:

The main risks include possible fluctuations in exchange rates and changes in the regulatory environment. However, opportunities exist in the expansion of the ESG offering and the use of technological advances to improve the product range.

Summary and strategic implications:

MSCI Inc. exhibits strong financial stability and growth potential, supported by robust revenue growth across all segments and improved profitability metrics. The company's strategic focus on ESG and technological innovation positions it well for future expansion. However, careful management of foreign exchange risks and regulatory changes is crucial to sustain this growth. A clear buy and hold for me. A cash machine.

Positive statements

• Revenue growth in operating business: MSCI Inc. reported a significant increase in operating revenues, which totaled $724.7 million for the three months ended September 30, 2024, an increase of 15.9% compared to the same period in 2023.
• Increase in net profit: Net profit for the third quarter of 2024 was USD 280.9 million, an increase of 8.2% year-on-year.
• Growth in adjusted EBITDA: Consolidated Adjusted EBITDA increased to USD 450.7 million in the third quarter of 2024, compared to USD 386.3 million in the same period last year.
• Earnings per share improvement: Earnings per diluted common share increased to $3.57, representing a 9.2% year-over-year increase.
• Operating cash flow: Net cash flow from operating activities reached USD 1,070.9 million in the first nine months of 2024, up significantly from USD 847.1 million in the same period of 2023.

Negative statements

• Decrease in receivables: Receivables decreased from USD 839.6 million as at December 31, 2023 to USD 643.8 million as at September 30, 2024.
• Increase in operating expenses: Operating expenses increased by 18.8% to USD 323.4 million in the third quarter of 2024 compared to the same period in 2023.
• Decrease in cash and cash equivalents: Cash and cash equivalents decreased from USD 461.7 million at the end of 2023 to USD 501.0 million at September 30, 2024, indicating lower liquidity.
• Higher amortization costs: Amortization of intangible assets increased by 56.9% in the third quarter of 2024 compared to the same period of the previous year.
• Increased negative cash flow from financing activities: Net cash flow from financing activities amounted to USD -926.1 million in the first nine months of 2024, a significant increase compared to USD -842.4 million in the same period of the previous year.