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MI

MSCI Inc. (MSCI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid top- and bottom-line growth with operating revenues $772.7M (+9.1% YoY), adjusted EPS $4.17 (+14.6% YoY), and adjusted EBITDA margin 61.4% (+70bps YoY) .
  • Both revenue and adjusted EPS were modest beats versus S&P Global consensus; revenue: $772.7M vs $770.2M*, adjusted EPS: $4.17 vs $4.15*; guidance unchanged for FY25 across expense, cash flow, and tax items .
  • Asset-Based Fees (ABF) and Index led performance: Index revenue +9.5% YoY; ABF run-rate +17.1% YoY with equity ETF AUM surpassing $2.0T and $48.5B of Q2 inflows .
  • Operating leverage improved: operating margin 55.0% (+100bps YoY; +440bps QoQ) on disciplined cost growth and favorable ABF mix .
  • Near-term stock reaction catalysts: continued international rotation (DM ex‑US flows, higher ABF yield mix), record ABF revenues, and stable fee yields; risks include softer retention in Analytics/Sustainability and lumpy non-recurring sales .

What Went Well and What Went Wrong

What Went Well

  • Record ABF momentum and ETF AUM: “Total equity index ETF AUM linked to MSCI indices surpassed $2,000,000,000,000… driving our highest ever level of quarterly ABF revenue” (CEO) .
  • Strong client traction in key segments: double‑digit subscription run-rate growth with banks, broker‑dealers, wealth managers, hedge funds, and asset owners (CEO) .
  • Product and sales execution: Analytics delivered its strongest second‑quarter ever for recurring sales; largest deal to date for MSCI Wealth Manager (President/COO) .

What Went Wrong

  • Retention softness and cancel lumpiness: consolidated retention 94.4% (‑40bps YoY) driven by lower retention in Analytics and Sustainability & Climate; hedge fund cancels can skew quarterly growth (CFO) .
  • Sustainability & Climate net sales were down YoY with muted demand persisting; segment net sales fell 62.6% YoY in Q2 .
  • Real Assets: new recurring sales were challenged versus Q2 last year, highlighting continued cyclical headwinds in commercial real estate (CEO) .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Operating Revenues ($USD Millions)$707.9 $745.8 $772.7
Diluted EPS ($)$3.37 $3.71 $3.92
Adjusted EPS ($)$3.64 $4.00 $4.17
Operating Margin (%)54.0% 50.6% 55.0%
Adjusted EBITDA ($USD Millions)$430.0 $425.6 $474.4
Adjusted EBITDA Margin (%)60.7% 57.1% 61.4%

Segment revenues and profitability:

SegmentQ2 2024 Revenue ($MM)Q1 2025 Revenue ($MM)Q2 2025 Revenue ($MM)
Index$397.2 $421.7 $434.8
Analytics$166.0 $172.2 $177.7
Sustainability & Climate$79.9 $84.6 $88.9
All Other – Private Assets$64.9 $67.3 $71.2

Key KPIs and balance sheet/cash flow:

KPIQ2 2024Q1 2025Q2 2025
Total Run Rate ($MM)$2,807.3 $2,979.2 $3,106.7
Subscription Run Rate ($MM)$2,160.5 $2,282.0 $2,349.4
ABF Run Rate ($MM)$646.8 $697.2 $757.3
Consolidated Retention Rate (%)94.8% 95.3% 94.4%
Period‑End ETF AUM ($B; MSCI equity‑linked)$1,631.9 $1,783.1 $2,024.6
Equity ETF Inflows ($B)$28.1 $42.0 $48.5
Free Cash Flow ($MM)$321.9 $268.9 $301.6
Share Repurchases ($MM; quarter)$241.7 $275.4 through 4/21 $131.2
Cash & Cash Equivalents ($MM; period‑end)$451.4 $360.7 $347.3
Total Debt (principal; $MM)—$4,546.9 $4,513.0

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Operating ExpenseFY 2025$1,405–$1,445M $1,405–$1,445M Maintained
Adjusted EBITDA ExpenseFY 2025$1,220–$1,250M $1,220–$1,250M Maintained
Interest ExpenseFY 2025$182–$186M $182–$186M Maintained
Depreciation & AmortizationFY 2025$185–$195M $185–$195M Maintained
Effective Tax RateFY 202517.5%–20.0% 17.5%–20.0% Maintained
Capital ExpendituresFY 2025$115–$125M $115–$125M Maintained
Net Cash from OpsFY 2025$1,525–$1,575M $1,525–$1,575M Maintained
Free Cash FlowFY 2025$1,400–$1,460M $1,400–$1,460M Maintained

CFO commentary indicated that if AUM levels remain around current, expense delivery would likely be toward the middle of ranges .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
ABF secular growth, international rotationABF run-rate +15% (Q4); ABF revenue +18.1% YoY (Q1) $48.5B ETF inflows; 29% share of indexed equity ETF inflows; DM ex‑US drove >$32B; basis point fee stable at 2.43 Improving
Index franchise/product innovationQ4: best‑ever recurring Index sales ; Q1: custom index & market‑cap products growth New data solutions (constituent AUM, liquidity datasets); custom index demand intact Positive/stable
Analytics momentumQ4: margin expansion; steady run-rate growth ; Q1: MAC and Equity Analytics growth Strongest Q2 ever for recurring sales; large wins with banks/hedge funds; equity risk models Improving
Wealth management strategyQ4: direct indexing AUM growing Largest MSCI Wealth Manager deal; direct indexing AUM $135B (+20%) Improving
Private assets expansionQ4: PCS growth; integration of Burgiss data ; Q1: toolkit expansion with indexes PCS run-rate growth; asset/deal metrics; Moody’s private credit risk assessments coming Improving (early)
Sustainability & Climate demandQ4: strong revenue, but retention challenges ; Q1: muted demand persists Segment net sales down; expectation of continued cyclical slowdown; wins in climate mandates Challenged
Pricing environment—Pricing approach unchanged; slight price contribution in Analytics; stable ETF fee yields Stable

Management Commentary

  • CEO: “MSCI captured more indexed equity ETF cash flows than any other index provider… Total equity index ETF AUM linked to MSCI indices surpassed $2,000,000,000,000… highest ever level of quarterly ABF revenue.”
  • President/COO: “We completed our largest MSCI Wealth deal ever, a 7‑figure deal… Direct indexing AUM based on MSCI indexes grew 20% globally to $135B.”
  • CFO: “Equity ETFs linked to MSCI indexes experienced $49B of inflows… capturing 29% of all inflows into indexed equity ETFs… fixed income and factor index products also saw solid inflows.”

Q&A Highlights

  • International rotation: Management expects ABF to benefit immediately; subscription uplift should be incremental over time as products launch and budgets normalize .
  • Active asset managers: Growth steady at mid‑single digits; transformation toward active ETFs presents opportunity where MSCI can provide universes, indexes, and data .
  • Retention dynamics: Lower retention versus 2022 driven by Real Assets and Sustainability & Climate; hedge funds naturally run lower retention; asset manager retention ~96% remains solid .
  • Sales environment: Q2 YoY comparisons affected by prior‑year Moody’s ESG partnership contribution; overall client engagement and pipeline remain healthy despite volatility .
  • Expense ranges: If AUM stays at current highs, expect expenses toward the middle of guidance ranges; fee yields broadly stable with positive international mix .

Estimates Context

MetricQ1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 Actual
Revenue ($USD)$744.47M*$745.83M $770.25M*$772.68M
Primary EPS ($)$3.90*$4.00 (Adj.) $4.15*$4.17 (Adj.)
EBITDA ($USD)$423.63M*$425.64M (Adj. EBITDA) $468.95M*$474.38M (Adj. EBITDA)
  • Q2 2025 was a modest beat on both revenue and adjusted EPS versus S&P Global consensus; adjusted EBITDA also exceeded the EBITDA consensus mean.
  • Note: Consensus “Primary EPS” aligns to MSCI’s adjusted EPS presentation; EBITDA consensus may reflect differing definitions vs. MSCI’s adjusted EBITDA.
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • ABF remains a structural growth engine; international rotation is boosting mix and fee yields while MSCI’s share of indexed ETF inflows is rising, supporting near-term upside .
  • Index subscription and custom solutions continue to scale across banks, hedge funds, and wealth; integrated datasets (liquidity, constituent AUM) deepen moat .
  • Analytics momentum (record Q2 recurring sales) and the largest Wealth Manager deal add durable recurring revenue drivers amid volatile markets .
  • Sustainability & Climate is cyclically soft; expect continued choppiness in net sales and retention; climate index mandates and insurance use cases provide offset .
  • Private assets ramp (PCS tools, Moody’s partnership) targets a large addressable market; commercialization takes time but early traction improves medium‑term optionality .
  • Guidance stability plus potential mid‑range expense realization (if AUM remains elevated) points to continued operating leverage and cash generation in FY25 .
  • Trading lens: Positive catalysts include sustained DM ex‑US flows, ETF share gains, and fee stability; watch for retention trends in Analytics/Sustainability and lumpy non‑recurring sales .

Additional Sources Read

  • Q2 2025 earnings press release and 8‑K exhibit – –.
  • Q2 2025 earnings call transcript –.
  • Q1 2025 earnings press release –.
  • Q4 2024 earnings press release –.
  • Global ETF assets press release (July 16, 2025) .