MSCI Q4 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Down

MSCI’s MSCI fourth-quarter 2025 adjusted earnings of $4.66 per share beat the Zacks Consensus Estimate by 0.86% and increased 11.5% year over year.

MSCI’s revenues rose 10.6% year over year to $822.5 million, in line with the Zacks Consensus Estimate. The year-over-year improvement was driven by strong growth in recurring subscription revenues and asset-based fees. Organic operating revenues grew 10.2% year over year.

Recurring subscriptions of $584.2 million increased 7.5% year over year and contributed 71% to revenues. Asset-based fees of $211.7 million jumped 20.7% year over year and contributed 25.7% to revenues. Non-recurring revenues of $26.6 million increased 7.1% year over year and contributed 3.2% to revenues.

At the end of the reported quarter, average assets under management were $2.340 trillion in ETFs linked to MSCI equity indexes. The total retention rate was 93.4% in the reported quarter.

MSCI Inc Price, Consensus and EPS Surprise

MSCI Inc price-consensus-eps-surprise-chart | MSCI Inc Quote

MSCI shares lost 4.99% in the pre-market trading.

MSCI’s Top-Line Details

In fourth-quarter 2025, Index revenues of $479.1 million increased 14% year over year. Recurring subscriptions and asset-based fees rose 7.8% and 20.7% on a year-over-year basis, respectively. Non-recurring revenues increased 28.2% year over year. Organically, Index’s operating revenue growth was 14%.

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 $182.3 million increased 5.5% year over year. Recurring subscription revenues jumped 7.1% and non-recurring revenues decreased 46.1% on a year-over-year basis. Organically, Analytics’ operating revenue growth was 5.5%.

The Sustainability and Climate segment’s (previously titled "ESG and Climate") operating revenues were $90.3 million, rising 5.9% year over year. While recurring subscriptions increased 6.1% year over year, non-recurring revenues declined 1.7% on a year-over-year basis. Organically, Sustainability and Climate operating revenue growth was 3.1%. 

All Other – Private Assets operating revenues, which primarily comprise the Real Assets operating segment and the Private Capital Solutions (formerly known as Burgiss), were $70.9 million, up 8.4% year over year. Organic operating revenue growth for All Other – Private Assets was 6.6%.

MSCI’s Q4 Operating Details

Adjusted EBITDA increased 13.2% year over year to $512 million in the reported quarter. The adjusted EBITDA margin in the fourth quarter of 2025 was 62.2% compared with 60.8% in the fourth quarter of 2024.

Adjusted EBITDA expenses were $310.5 million, up 6.6% year over year, reflecting higher compensation and benefits costs due to higher headcount, as well as elevated severance costs.

Total operating expenses increased 6.1% on a year-over-year basis to $358.9 million due to higher compensation costs from a 2.2% increase in headcount.

Operating income improved 14.4% year over year to $463.6 million. The operating margin expanded 190 bps on a year-over-year basis to 56.4%.

MSCI’s Balance Sheet & Cash Flow

Total cash and cash equivalents, as of Dec. 31, 2025, were $515.3 million compared with $400.1 million as of Sept. 30, 2025.

Total debt was $6.2 billion as of Dec. 31, 2025, compared with $5.6 billion as of Sept 30, 2025. The total debt-to-adjusted EBITDA ratio (based on trailing 12-month-adjusted EBITDA) was 3.3 times. Management targets total debt to adjusted EBITDA of 3-3.5 times.

As of Dec. 31, 2025, the free cash flow was $464.8 million, up 17.8% year over year from $423.3 million as of Sept. 30, 2025.

The company paid out dividends worth $134.7 million in the fourth quarter of 2025.

MSCI Initiates 2026 Guidance

For 2026, MSCI expects total operating expenses in the range of $1.490-$1.530 billion. 

Adjusted EBITDA expenses are anticipated to be between $1.305 billion and $1.335 billion.

Interest expenses are expected to be between $274 million and $280 million.

Net cash provided by operating activities and the free cash flow are expected to be $1.64-$1.69 billion and $1.47-$1.53 billion, respectively.

MSCI’s Zacks Rank & Other Stocks to Consider

MSCI currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Computer and Technology sector are Sandisk Corporation SNDK, Western Digital WDC, and Amkor Technology AMKR. Each stock sports a Zack Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sandisk is set to report second-quarter fiscal 2026 results on Jan. 29. Its shares have skyrocketed 1021.4% in the trailing six-month period.

Western Digital is slated to report second-quarter fiscal 2026 results on Jan. 29. Its shares have skyrocketed 257.8% in the trailing six-month period. 

Amkor Technology is set to report fourth-quarter 2025 results on Feb. 9. Its shares have surged 102.3% in the trailing six-month period.

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

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