MSCI's Q4 Profit Declines Amid Higher Expenses

MSCI Inc., a leading provider of critical decision support tools and services for the global investment community, reported a 24.3% fall in fourth-quarter profit on Wednesday, hurt by higher costs and tougher comparisons to a year earlier, when the index provider had recorded a $143 million one-time gain. The company's results often reflect sentiment in the broader market, as clients use its stock indexes and other tools to help them evaluate their investments.

Operating revenue rose 7.7% to $743.5 million, driven by a $53.4 million increase in recurring subscription revenues and a $30.2 million increase in asset-based fees. However, operating expenses increased 5.9% to $338.3 million, primarily reflecting higher compensation and incentive compensation expenses related to a 5.8% increase in headcount to support business growth, as well as increases in non-compensation costs, primarily reflecting higher professional fees, information technology, and market data costs.

The company also spent more on compensation and incentives for its employees, as it raised its headcount by 5.8% to 6,132 as of Dec. 31, 2024. Comparisons to the prior year were challenging as MSCI had recognized a one-time gain tied to its investment in private asset data analytics firm Burgiss Group in the fourth quarter of 2023.

MSCI posted a profit of $305.5 million for the quarter ending Dec. 31, 2024, or $3.90 per share, compared with $403.4 million, or $5.07 per share, a year earlier. The company's shares fell 5.3% to $595.95 in premarket trading.



MSCI's fourth-quarter results highlight the challenges faced by financial services companies in managing expenses while maintaining revenue growth. Despite the increase in expenses, MSCI's operating income margin remained strong at 54.5%, up from 53.7% in the same period last year. This indicates that the company's revenue growth has outpaced its expenses, allowing it to maintain profitability despite the increased costs.

MSCI's guidance for the year ending Dec. 31, 2025, is based on assumptions about a number of factors, in particular related to macroeconomic factors and the capital markets. These assumptions are subject to uncertainty, and actual results for the year could differ materially from MSCI's current guidance, including as a result of the uncertainties, risks, and assumptions discussed in the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" sections of its Annual Report on Form 10-K, as updated in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC.

MSCI's senior management will review the fourth-quarter and full-year 2024 results on Wednesday, Jan. 29, 2025, at 11:00 AM Eastern Time. To listen to the live event via webcast, visit the events and presentations section of MSCI's Investor Relations website, . Participants who wish to join via telephone can click here to register in advance and will receive an email confirmation with a unique PIN to access the conference call. The earnings call webcast will include an accompanying slide presentation that can be accessed through MSCI's Investor Relations website.

MSCI's Revenue and Expense Growth (2023-2024)

In conclusion, MSCI's fourth-quarter profit decline reflects the challenges of managing expenses while maintaining revenue growth in the financial services sector. Despite the increase in expenses, MSCI's strong operating income margin indicates that the company's revenue growth has outpaced its expenses. As MSCI continues to invest in data, models, and technology to drive growth and maintain its competitive edge, it is well-positioned to expand its footprint among established and newer client segments alike.