MSCI's Impressive Growth and Strategic Acquisitions
2024-02-02
The MSCI earnings conference call took place to discuss the company's financial results for the fourth quarter of 2023. The call was attended by key participants, including Henry Fernandez (Chairman and CEO), Baer Pettit (President and COO), and Andy Wiechmann (CFO). During the call, they delved into various financial and operating metrics achieved by MSCI in the fourth quarter.
In terms of financial metrics, MSCI experienced impressive growth, with adjusted earnings-per-share increasing by nearly 30%, organic revenue growing by 15%, and free cash flow seeing a growth of 24%. They also highlighted the fact that a significant portion of their revenue, 96% to be precise, comes from subscription-based or recurring revenue sources. Furthermore, they mentioned that 90% of their run rate in 2023 was comprised of clients purchasing from multiple product lines.
During the conference call, MSCI also shed light on their capabilities in providing data on companies and issuers. They mentioned their provision of climate data on approximately 73,000 companies and issuers, location data on about 1 million asset locations, and physical risk assessment on nearly 80% of these locations using their Climate Value-at-Risk models. Notably, MSCI recently acquired Trove Research, a leading provider of global intelligence on carbon credit, which has allowed them to expand their climate data coverage to over 3,000 companies through Trove.
The importance of customization in the global investment landscape was emphasized by MSCI. They highlighted their recent acquisition of Fabric, a wealth technology platform that offers portfolio design, customization, and analytics. Additionally, they mentioned the acquisition of Burgiss, which has provided them with an industry-leading platform for total portfolio solutions.
In terms of their Index segment, MSCI offers a wide range of modules across various dimensions, including market cap, factor, ESG, climate, thematic, fixed income, and custom dimensions. They revealed that 20% of their clients license five or more different modules, and their Index revenues experienced a 16% year-over-year increase. The discussion also touched upon the growth of equity ETFs linked to MSCI indexes, particularly in developed markets ex U.S. and emerging markets products.
The Analytics segment of MSCI has seen notable successes in areas such as enterprise risk and performance, liquidity analytics, equity analytics, and risk insights. They acknowledged that the heightened period of uncertainty and risk has presented opportunities for the Analytics business.
Overall, MSCI remains focused on driving long-term growth, investing in new solutions and technology-enabled capabilities, and creating value for their clients. They expressed optimism about the opportunities that lie ahead and continue to expand their client coverage organization while strengthening their client relationships.