MSCI (NYSE: MSCI) reported Q4 EPS of $1.31, $0.01 better than the analyst estimate of $1.30. Revenue for the quarter came in at $361.69 million versus the consensus estimate of $359.37 million.

• Organic subscription Run Rate growth as of December 31, 2018 of 10.0% with Index up 11.4%, Analytics up 6.5% and All Other up 18.6%.
• Full-year 2018 operating revenues up 12.5%; recurring subscription revenues up 9.6%; asset-based fees up 21.9%; non-recurring revenues up 23.3%.
• Fourth quarter 2018 operating revenues up 8.0%; recurring subscription revenues up 9.0%; asset-based fees up 3.8%; non-recurring revenues up 19.9%.
• Fourth quarter 2018 diluted EPS up 142.9%, and full-year 2018 diluted EPS up 71.0%; fourth quarter 2018 adjusted EPS of $1.31, up 13.9%, resulting in full-year 2018 adjusted EPS of $5.35, up 34.4%.
• Fourth quarter and full-year 2018 operating income growth of 10.2% and 18.5%, respectively; fourth quarter 2018 operating margin of 47.0%, and 47.9% for full-year 2018.
• Fourth quarter and full-year 2018 adjusted EBITDA growth of 9.2%, and 17.1%, respectively; fourth quarter 2018 adjusted EBITDA margin of 52.5%, and 53.9% for the full-year 2018.
• Continued strong retention with full-year 2018 total Retention Rate at 94.1%.
• During fourth quarter 2018 and through January 25, 2019, a total of 5.1 million shares were repurchased at an average price of $147.71 per share for a total value of $754.5 million.

“During a year of volatility in international markets and a heightened level of uncertainty in the U.S. market over the last several months, the remarkable financial and operating successes achieved in the fourth quarter and the full year 2018 highlight the resiliency of our franchise, the mission-critical nature of our differentiated content and capabilities, as well as the strong secular tailwinds fueling our business. We have shown that we have the ability to take advantage of opportunities even in times of volatility and uncertainty in the markets,” commented Henry A. Fernandez, Chairman and CEO of MSCI.

“While we are witnessing a rapid pace of change across the investment industry, coupled with a volatile market environment, the continued double-digit organic growth in our core subscription business together with the robust demand for equity ETFs linked to our indexes reflect our increasing ability to provide tools that help clients adapt for the future. As we head into 2019, we are well-positioned to continue to capitalize on the tremendous opportunities in front of us and drive increasingly attractive subscription growth,” added Mr. Fernandez.

Full-Year 2019 Guidance

MSCI’s guidance for full-year 2019 is as follows:

• Total operating expenses are expected to be in the range of $772 million to $800 million.
• Adjusted EBITDA expenses1 are expected to be in the range of $685 million to $705 million.
• Interest expense, including the amortization of financing fees, is expected to be approximately $144 million, assuming no additional financings.
• Capex is expected to be in the range of $45 million to $55 million.
• Net cash provided by operating activities and free cash flow are expected to be in the ranges of $600 million to $630 million and $545 million to $585 million, respectively.
• The effective tax rate2 is expected to be in the range of 11.5 to 14.5 percentage points.

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