MSCI (MSCI) Tops Q2 EPS by 10c, Revenues Miss

MSCI (NYSE: MSCI) reported Q2 EPS of $1.77, $0.10 better than the analyst estimate of $1.67. Revenue for the quarter came in at $409.6 million versus the consensus estimate of $410.52 million.

Financial and Operational Highlights for Second Quarter 2020

• Operating revenues of $409.6 million, up 6.2%
• Recurring subscription revenues up 7.2%; Asset-based fees up 0.4%; Non-recurring revenues up 34.4%
• Operating margin of 52.5%; Adjusted EBITDA margin of 57.8%
• Diluted EPS of $1.36, down 7.5%; Adjusted EPS of $1.77, up 14.9%
• New recurring subscription sales growth of 15.5%; Organic subscription Run Rate growth of 9.7%; Retention Rate of 93.5%
• Board of Directors approved a 14.7% increase to quarterly dividend to $0.78 per share payable in 3Q2020; payout ratio target maintained at a range of 40% to 50% of Adjusted EPS
• $88.0 million returned to shareholders in second quarter 2020 through a combination of share repurchases and dividends

“MSCI delivered solid results in the second quarter despite the ongoing challenging macroeconomic environment. I am especially pleased with our ability to drive double-digit new recurring subscription sales growth and our focused execution of MSCI’s long-term growth strategy,” said Henry A. Fernandez, Chairman and CEO of MSCI.

“Our team continues to partner with our clients in new and broader ways. As we enter the second half of 2020, we remain very well positioned to help our clients address increasing investment complexity and risk with our content, analytics and technology applications,” added Mr. Fernandez.

Full-Year 2020 Guidance

MSCI's guidance for 2020 is based on assumptions about a number of macroeconomic and capital market factors, in particular related to equity markets. These assumptions are subject to uncertainty, and actual results for the year could differ materially from our current guidance, including as a result of ongoing uncertainty related to the duration, magnitude and impact of the COVID-19 pandemic.

• Operating expense is still expected to be in the range of $790 million to $840 million.
• Adjusted EBITDA expense is still expected to be in the range of $700 million to $750 million.
• Interest expense, including the amortization of financing fees, is still expected to be approximately $158 million. Interest income will continue to be impacted by the lower rates available on cash balances.
• Depreciation and amortization expense is still expected to be approximately $90 million.
• The effective tax rate is now expected to be in the range of 16% to 19% (revised).
• Capex is still expected to be in the range of $50 million to $60 million.
• Net cash provided by operating activities and free cash flow are still expected to be in the ranges of $600 million to $650 million and $540 million to $600 million, respectively, in both cases now toward the upper end of the range.

For earnings history and earnings-related data on MSCI (MSCI) click here.

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