Why Is MSCI (MSCI) Down 0.9% Since Last Earnings Report?

A month has gone by since the last earnings report for MSCI (MSCI). Shares have lost about 0.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MSCI due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for MSCI Inc before we dive into how investors and analysts have reacted as of late.

MSCI Q3 Earnings Beat Estimates, Revenues Rise Y/Y

MSCI’s third-quarter 2025 adjusted earnings of $4.47 per share beat the Zacks Consensus Estimate by 2.29% and increased 15.8% year over year.

MSCI's revenues rose 9.5% year over year to $793.4 million, missing the consensus estimate by 0.72%. The year-over-year improvement was driven by strong growth in recurring subscription revenues and asset-based fees. Organic operating revenues grew 9% year over year.

Recurring subscriptions of $579.1 million increased 7.9% year over year and contributed 73% to revenues. Asset-based fees of $197.5 million jumped 17.1% year over year and contributed 24.9% to revenues. Non-recurring revenues of $16.9 million decreased 13.4% year over year and contributed 2.1% to revenues.

At the end of the reported quarter, average assets under management were $2.211 trillion in ETFs linked to MSCI equity indexes. The total retention rate was 94.7% in the reported quarter.

MSCI’s Top-Line Details

In third-quarter 2025, Index revenues of $451.2 million increased 11.4% year over year. Recurring subscriptions and asset-based fees rose 8.3% and 17.1% on a year-over-year basis, respectively. Non-recurring revenues declined 10.1% year over year. Organically, Index operating revenue growth was 11.4%.

The uptick in recurring subscription revenues was driven by strong growth from market-cap-weighted Index products and ETFs linked to MSCI equity indexes.

Analytics’ operating revenues of $182.2 million increased 5.7% year over year. Recurring subscription revenues jumped 6% and non-recurring revenues decreased 8.2% on a year-over-year basis. Organically, Analytics’ operating revenue growth was 5.6%.

The Sustainability and Climate segment’s (previously titled "ESG and Climate") operating revenues were $90.1 million, rising 7.7% year over year. While recurring subscriptions increased 8.8% year over year, non-recurring revenues declined 31.2% on a year-over-year basis. Organically, Sustainability and Climate operating revenue growth was 5.1%. 

All Other – Private Assets operating revenues, which primarily comprise the Real Assets operating segment and the Private Capital Solutions (formerly known as Burgiss), were $70 million, up 9.7% year over year. Organic operating revenue growth for All Other – Private Assets was 8.3%.

MSCI’s Q3 Operating Details

Adjusted EBITDA increased 9.7% year over year to $494.4 million in the reported quarter. The adjusted EBITDA margin in the third quarter of 2025 was 62.3% compared with 62.2% in the third quarter of 2024.

Adjusted EBITDA expenses were $298.9 million, up 9.1% year over year, reflecting higher compensation and benefits costs due to higher headcount, as well as elevated severance costs.

Total operating expenses increased 6.9% on a year-over-year basis to $345.7 million due to higher compensation costs from a 2.2% increase in headcount.

Operating income improved 11.6% year over year to $447.7 million. The operating margin expanded 100 bps on a year-over-year basis to 56.4%.

MSCI’s Balance Sheet & Cash Flow

Total cash and cash equivalents, as of Sept. 30, 2025, were $400.1 million compared with $347.3 million as of June 30, 2025.

Total debt was $5.6 billion as of Sept. 30, 2025, compared with $4.5 billion as of June 30, 2025. The total debt-to-adjusted EBITDA ratio (based on trailing 12-month-adjusted EBITDA) was 3 times. Management targets total debt to adjusted EBITDA of 3-3.5 times.

As of Sept. 30, 2025, the free cash flow was $423.3 million, up 7.4% year over year from $301.6 million as of June 30, 2025.

As of Oct. 25, 2025, the MSCI board of directors authorized a new $3.0 billion share repurchase program.

The company paid out dividends worth $137.4 million in the third quarter of 2025.

MSCI Maintains 2025 Guidance

For 2025, MSCI expects total operating expenses of $1.415-$1.445 billion.
 
Adjusted EBITDA expenses are anticipated to be between $1.230 billion and $1.250 billion.

Interest expenses are expected to be between $205 million and $209 million.

Net cash provided by operating activities and the free cash flow are expected to be $1.54-$1.59 billion and $1.41-$1.47 billion, respectively.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, MSCI has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, MSCI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

MSCI is part of the Zacks Financial - Investment Management industry. Over the past month, SEI Investments (SEIC), a stock from the same industry, has gained 0.3%. The company reported its results for the quarter ended September 2025 more than a month ago.

SEI reported revenues of $578.51 million in the last reported quarter, representing a year-over-year change of +7.6%. EPS of $1.30 for the same period compares with $1.19 a year ago.

For the current quarter, SEI is expected to post earnings of $1.33 per share, indicating a change of +11.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for SEI. Also, the stock has a VGM Score of D.

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This article originally published on Zacks Investment Research (zacks.com).

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