MSCI Inc MSCI reported fiscal first-quarter revenue growth of 14.8% year-on-year to $679.97 million, missing the consensus of $684.14 million. 

The adjusted EPS of $3.52 beat the consensus of $3.45. The stock price dipped after the results.

The total run-rate at March 31, 2024, rose 14.6% Y/Y to $2.73 billion. The organic recurring subscription run rate growth was 8.7%. The retention rate was 92.8% compared to 95.2% last year.

Index operating revenues of the investment research firm rose 10.2% Y/Y to $373.9 million, aided by higher recurring subscription revenues and asset-based fees.

Analytics operating revenues increased 11.5% Y/Y to $164.0 million, driven by higher recurring subscription revenues from Equity and Multi-Asset Class Analytics products.

ESG and Climate operating revenues grew 16.1% year over year to $77.9 million, driven by solid growth in Ratings, Screening, and Climate products.

All Other – Private Assets operating revenues improved 66.0% Y/Y to $64.2 million.

Margin: The operating margin declined from 53.1% to 49.9%. The adjusted EBITDA margin reduced from 58.2% to 56.4%.

MSCI generated $275.9 million in free cash flow and held $519.3 million in cash and equivalents as of March 31, 2024.

Henry A. Fernandez, Chairman and CEO of MSCI said, “Elevated cancels reflected a concentration of unusual client events, including a large merger among our banking clients. We are managing through these pressures and do not expect this level of cancels to continue.”

FY24 Outlook: MSCI reiterated operating expense guidance of $1.30 billion – $1.34 billion, capex of $95 million – $105 million, and free cash flow of $1.225 billion – $1.285 billion.

The fiscal revenue and adjusted EPS consensus are $2.85 billion and $14.92.

MSCI stock lost over 5% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Broker-Dealers & Securities Exchanges ETF IAI and Sterling Capital Focus Equity ETF LCG.

Price Action: MSCI shares traded lower by 12.90% at $448.79 at the last check Tuesday.