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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________to____________
Commission file number 001-33812
________________________________________
msci-logo-resized.gif
MSCI INC.
(Exact Name of Registrant as Specified in its Charter)
________________________________________
Delaware13-4038723
(State or other jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification Number)
7 World Trade Center
250 Greenwich Street, 49th Floor
New York, New York
10007
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number, including area code: (212) 804-3900
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareMSCINew York Stock Exchange
________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  x  No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
As of October 24, 2023, there were 79,091,190 shares of the registrant’s common stock, par value $0.01, outstanding.


Table of Contents
FOR THE QUARTER ENDED SEPTEMBER 30, 2023
TABLE OF CONTENTS
Page
Item 5.
Item 6.
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AVAILABLE INFORMATION
Our corporate headquarters is located at 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York, 10007, and our telephone number is (212) 804-3900. We maintain a website on the internet at www.msci.com. The contents of our website are not a part of or incorporated by reference in this Quarterly Report on Form 10-Q.
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). The SEC maintains a website that contains reports, proxy and information statements and other information that we file electronically with the SEC at www.sec.gov. We also make available free of charge, on or through our website, these reports, proxy statements and other information as soon as reasonably practicable following the time they are electronically filed with or furnished to the SEC. To access these, click on the “SEC Filings” link under the “Financial Information” tab found on our Investor Relations homepage (http://ir.msci.com).
We also use our Investor Relations homepage, Corporate Responsibility homepage and corporate X (formerly Twitter) account (@MSCI_Inc) as channels of distribution of Company information. The information we post through these channels may be deemed material.
Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the “Email Alerts” section of our Investor Relations homepage at https://ir.msci.com/email-alerts. The contents of our website, including our Investor Relations homepage and Corporate Responsibility homepage, and our social media channels are not, however, a part of or incorporated by reference in this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS
We have included in this Quarterly Report on Form 10-Q, and from time to time may make in our public filings, press releases or other public statements, certain statements that constitute forward-looking statements. In addition, our management may make forward-looking statements to analysts, investors, representatives of the media and others. These forward-looking statements are not historical facts and represent only MSCI’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and beyond our control. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements.
In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” or the negative of these terms or other comparable terminology. Statements concerning our financial position, business strategy and plans or objectives for future operations are forward-looking statements. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and that could materially affect our actual results, levels of activity, performance or achievements. Such risks and uncertainties include those set forth under “Risk Factors” in Part I, Item 1A of the 2022 Annual Report on Form 10-K filed with the SEC on February 10, 2023. If any of these risks or uncertainties materialize, or if MSCI’s underlying assumptions prove to be incorrect, actual results may vary significantly from what MSCI projected. Any forward-looking statement reflects our current views with respect to future events, levels of activity, performance or achievements and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. The forward-looking statements in this report speak only as of the time they are made and do not necessarily reflect our outlook at any other point in time. MSCI assumes no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law. Therefore, readers should carefully review the risk factors set forth in the Annual Report on Form 10-K and in other reports or documents we file from time to time with the SEC.
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PART I – FINANCIAL INFORMATION
Item 1.    Financial Statements
MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except per share and share data)
As of
September 30,December 31,
(unaudited) 20232022
ASSETS
Current assets:
Cash and cash equivalents (includes restricted cash of $3,839 and $368 at September 30, 2023 and December 31, 2022, respectively)
$928,552 $993,564 
Accounts receivable (net of allowances of $3,030 and $2,652 at September 30, 2023 and December 31, 2022, respectively)
603,266 663,236 
Prepaid income taxes54,544 36,654 
Prepaid and other assets52,967 54,520 
Total current assets1,639,329 1,747,974 
Property, equipment and leasehold improvements, net 58,036 53,853 
Right of use assets 117,533 126,584 
Goodwill2,230,389 2,229,670 
Intangible assets, net 536,129 558,517 
Equity method investment210,657 214,389 
Deferred tax assets34,790 29,207 
Other non-current assets38,631 37,341 
Total assets$4,865,494 $4,997,535 
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable$10,224 $15,039 
Income taxes payable19,536 8,058 
Accrued compensation and related benefits157,227 182,370 
Current portion of long-term debt8,719 8,713 
Other accrued liabilities171,458 153,461 
Deferred revenue837,479 882,886 
Total current liabilities1,204,643 1,250,527 
Long-term debt4,500,063 4,503,233 
Long-term operating lease liabilities121,941 131,575 
Deferred tax liabilities4,220 29,098 
Other non-current liabilities83,723 91,027 
Total liabilities5,914,590 6,005,460 
Commitments and Contingencies (see Note 7)
Shareholders’ equity (deficit):
Preferred stock (par value $0.01; 100,000,000 shares authorized; no shares issued)
  
Common stock (par value $0.01; 750,000,000 common shares authorized; 133,817,103
and 133,623,005 common shares issued and 79,091,098 and 79,959,989 common
shares outstanding at September 30, 2023 and December 31, 2022, respectively)
1,338 1,336 
Treasury shares, at cost (54,726,005 and 53,663,016 common shares held at September 30, 2023 and December 31, 2022, respectively)
(6,447,042)(5,938,116)
Additional paid in capital1,571,442 1,515,874 
Retained earnings3,886,188 3,473,192 
Accumulated other comprehensive loss(61,022)(60,211)
Total shareholders’ equity (deficit)(1,049,096)(1,007,925)
Total liabilities and shareholders’ equity (deficit)$4,865,494 $4,997,535 
See Notes to Condensed Consolidated Financial Statements (Unaudited)
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MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(unaudited) 2023202220232022
Operating revenues$625,439 $560,639 $1,838,814 $1,672,390 
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)105,311 98,418 324,024 301,957 
Selling and marketing66,581 65,545 201,044 192,671 
Research and development31,438 25,941 92,901 78,179 
General and administrative36,826 30,702 113,527 112,993 
Amortization of intangible assets26,722 23,375 77,543 67,274 
Depreciation and amortization of property, equipment and
   leasehold improvements
5,252 7,127 15,911 20,426 
Total operating expenses272,130 251,108 824,950 773,500 
Operating income353,309 309,531 1,013,864 898,890 
Interest income(10,314)(3,938)(31,079)(5,160)
Interest expense46,902 44,162 139,725 125,961 
Other expense (income)(935)103 4,032 (90)
Other expense (income), net35,653 40,327 112,678 120,711 
Income before provision for income taxes317,656 269,204 901,186 778,179 
Provision for income taxes57,997 52,612 155,974 122,577 
Net income$259,659 $216,592 $745,212 $655,602 
Earnings per share:
Basic$3.28 $2.69 $9.36 $8.09 
Diluted$3.27 $2.68 $9.32 $8.05 
Weighted average shares outstanding:
Basic79,11680,50079,58081,001
Diluted79,50080,87479,95981,481


See Notes to Condensed Consolidated Financial Statements (Unaudited)
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MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(unaudited) 2023202220232022
Net income$259,659 $216,592 $745,212 $655,602 
Other comprehensive income (loss):
Foreign currency translation adjustments(5,832)(10,978)1,046 (25,724)
Income tax effect771 1,453 (660)3,921 
Foreign currency translation adjustments, net(5,061)(9,525)386 (21,803)
Pension and other post-retirement adjustments756 293 (1,338)7,779 
Income tax effect(72)(79)141 (1,193)
Pension and other post-retirement adjustments, net684 214 (1,197)6,586 
Other comprehensive (loss) income, net of tax(4,377)(9,311)(811)(15,217)
Comprehensive income$255,282 $207,281 $744,401 $640,385 
See Notes to Condensed Consolidated Financial Statements (Unaudited)
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MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited) Common
Stock
Treasury
Stock
Additional
Paid in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balance at December 31, 2022
$1,336 $(5,938,116)$1,515,874 $3,473,192 $(60,211)$(1,007,925)
Net income238,728 238,728 
Dividends declared ($1.38 per common share)
(111,986)(111,986)
Dividends paid in shares44 44 
Other comprehensive income (loss), net of tax2,775 2,775 
Common stock issued2 2 
Shares withheld for tax withholding(43,960)(43,960)
Compensation payable in common stock20,988 20,988 
Common stock repurchased and held in treasury 
Common stock issued to Directors and
   (held in)/released from treasury
(30)(30)
Balance at March 31, 2023
1,338 (5,982,106)1,536,906 3,599,934 (57,436)(901,364)
Net income246,825 246,825 
Dividends declared ($1.38 per common share)
(110,383)(110,383)
Dividends paid in shares 33 33 
Other comprehensive income (loss), net of tax791 791 
Common stock issued  
Shares withheld for tax withholding(611)(611)
Compensation payable in common stock16,426 16,426 
Common stock repurchased and held in treasury(444,655)(444,655)
Common stock issued to Directors and
   (held in)/released from treasury
(730)(730)
Balance at June 30, 2023
1,338 (6,428,102)1,553,365 3,736,376 (56,645)(1,193,668)
Net income259,659 259,659 
Dividends declared ($1.38 per common share)
(109,847)(109,847)
Dividends paid in shares30 30 
Other comprehensive income (loss), net of tax(4,377)(4,377)
Common stock issued 
Shares withheld for tax withholding and exercises(871)(871)
Compensation payable in common stock18,047 18,047 
Common stock repurchased and held in treasury(18,039)(18,039)
Common stock issued to Directors and
   (held in)/released from treasury
(30)(30)
Balance at September 30, 2023
$1,338 $(6,447,042)$1,571,442 $3,886,188 $(61,022)$(1,049,096)
See Notes to Condensed Consolidated Financial Statements (Unaudited)
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MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited) Common
Stock
Treasury
Stock
Additional
Paid in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balance at December 31, 2021
$1,332 $(4,540,144)$1,457,623 $2,976,517 $(58,795)$(163,467)
Net income228,423 228,423 
Dividends declared ($1.04 per common share)
(87,280)(87,280)
Dividends paid in shares77 77 
Other comprehensive income (loss), net of tax(2,022)(2,022)
Common stock issued4 4 
Shares withheld for tax withholding and exercises(105,000)(105,000)
Compensation payable in common stock22,754 22,754 
Common stock repurchased and held in treasury(772,657)(772,657)
Common stock issued to Directors and
   (held in)/released from treasury
(21)(21)
Balance at March 31, 2022
1,336 (5,417,822)1,480,454 3,117,660 (60,817)(879,189)
Net income210,587 210,587 
Dividends declared ($1.04 per common share)
(84,593)(84,593)
Dividends paid in shares22 22 
Other comprehensive income (loss), net of tax(3,884)(3,884)
Common stock issued 
Shares withheld for tax withholding and exercises(3,862)(3,862)
Compensation payable in common stock11,858 11,858 
Common stock repurchased and held in treasury(276,994)(276,994)
Common stock issued to Directors and
   (held in)/released from treasury
(391)(391)
Balance at June 30, 2022
1,336 (5,699,069)1,492,334 3,243,654 (64,701)(1,026,446)
Net income216,592 216,592 
Dividends declared ($1.25 per common share)
(101,354)(101,354)
Dividends paid in shares27 27 
Other comprehensive income (loss), net of tax(9,311)(9,311)
Common stock issued 
Shares withheld for tax withholding and exercises(3,741)(3,741)
Compensation payable in common stock11,913 11,913 
Common stock repurchased and held in treasury(165,044)(165,044)
Common stock issued to Directors and
   (held in)/released from treasury
(27)(27)
Balance at September 30, 2022
$1,336 $(5,867,881)$1,504,274 $3,358,892 $(74,012)$(1,077,391)
See Notes to Condensed Consolidated Financial Statements (Unaudited)
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MSCI INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
(unaudited) 20232022
Cash flows from operating activities
Net income$745,212 $655,602 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets77,543 67,274 
Stock-based compensation expense55,375 46,432 
Depreciation and amortization of property, equipment and leasehold improvements15,911 20,426 
Amortization of right of use assets17,484 18,555 
Loss on impairment of right of use assets, net 705 
Amortization of debt origination fees3,791 3,868 
Deferred taxes(30,973)59,324 
Other adjustments1,199 (3,654)
Changes in assets and liabilities:
Accounts receivable58,132 127,043 
Prepaid income taxes(17,654)(77,908)
Prepaid and other assets1,687 (1,678)
Other non-current assets(4,837)32,547 
Accounts payable(5,719)(8,144)
Income taxes payable11,425 (52,939)
Accrued compensation and related benefits(25,599)(58,042)
Other accrued liabilities15,118 31,297 
Deferred revenue(43,571)(66,982)
Long-term operating lease liabilities(16,027)(19,492)
Other non-current liabilities(11,195)6,105 
Other(226)(397)
Net cash provided by operating activities847,076 779,942 
Cash flows from investing activities  
Capitalized software development costs(50,080)(44,425)
Capital expenditures(18,942)(8,012)
Other(389)24 
Net cash used in investing activities(69,411)(52,413)
Cash flows from financing activities
Repurchase of common stock held in treasury(504,161)(1,327,298)
Payment of dividends(331,640)(272,759)
Repayment of borrowings(6,563)(5,000)
Proceeds from borrowings, inclusive of premium 355,000 
Payment of debt issuance costs in connection with debt (2,559)
Payment of contingent consideration (211)
Net cash (used in) provided by financing activities(842,364)(1,252,827)
Effect of exchange rate changes(313)(29,039)
Net (decrease) increase in cash, cash equivalents and restricted cash(65,012)(554,337)
Cash, cash equivalents and restricted cash, beginning of period993,564 1,421,449 
Cash, cash equivalents and restricted cash, end of period$928,552 $867,112 
Supplemental disclosure of cash flow information:
Cash paid for interest$125,068 $107,162 
Cash paid for income taxes, net of refunds received$197,746 $154,725 
Supplemental disclosure of non-cash investing activities
Property, equipment and leasehold improvements in other accrued liabilities$4,734 $1,926 
Supplemental disclosure of non-cash financing activities
Cash dividends declared, but not yet paid$1,453 $3,270 
See Notes to Condensed Consolidated Financial Statements (Unaudited)
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MSCI INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. INTRODUCTION AND BASIS OF PRESENTATION
MSCI Inc., together with its wholly owned subsidiaries (the “Company” or “MSCI”) is a leading provider of critical decision support tools and solutions for the global investment community. Our mission-critical offerings help investors address the challenges of a transforming investment landscape and power better investment decisions. Leveraging our knowledge of the global investment process and our expertise in research, data and technology, we enable our clients to understand and analyze key drivers of risk and return and confidently and efficiently build more effective portfolios. Our products and services include indexes; portfolio construction and risk management tools; environmental, social and governance (“ESG”) and climate solutions; and real estate market and transaction data and analysis.
Basis of Presentation and Use of Estimates
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. If not materially different, certain note disclosures included therein have been omitted from these interim condensed consolidated financial statements.
In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim consolidated financial statements, have been included. The results of operations for interim periods are not necessarily indicative of results for the entire year.
The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The Company makes certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the unaudited condensed consolidated financial statements, as well as the reported amounts of operating revenues and expenses during the periods presented. Significant estimates and judgments made by management include such examples as assessment of impairment of goodwill and intangible assets and income taxes. The Company believes that estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Inter-company balances and transactions are eliminated in consolidation.
Concentrations
For the nine months ended September 30, 2023 and 2022, BlackRock, Inc. (“BlackRock”) accounted for 10.1% and 10.5% of the Company’s consolidated operating revenues, respectively. For the nine months ended September 30, 2023 and 2022, BlackRock accounted for 17.0% and 17.7% of the Index segment’s operating revenues, respectively. No single customer represented 10.0% or more of operating revenues within the Analytics, ESG and Climate or All Other – Private Assets segments for the nine months ended September 30, 2023 and 2022.
Restricted Cash
Restricted cash primarily relates to security deposits for certain operating leases that are legally restricted and unavailable for our general operations.
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Allowance for Credit Losses
Changes in the allowance for credit losses from December 31, 2021 to September 30, 2023 were as follows:
(in thousands) Amount
Balance as of December 31, 2021$2,337 
Addition (reduction) to credit loss expense910 
Write-offs, net of recoveries(595)
Balance as of December 31, 2022$2,652 
Addition (reduction) to credit loss expense1,300 
Write-offs, net of recoveries(922)
Balance as of September 30, 2023$3,030 
2. RECENT ACCOUNTING PRONOUNCEMENTS
There are no recently issued accounting standards updates that are currently expected to have a material impact on the Company.
3. REVENUE RECOGNITION
MSCI’s operating revenues are reported by product type, which generally reflects the timing of recognition. The Company’s operating revenue types are recurring subscriptions, asset-based fees and non-recurring revenues. The Company also disaggregates operating revenues by segment.
The tables that follow present the disaggregated operating revenues for the periods indicated:
For the Three Months Ended September 30, 2023
Segments
(in thousands)IndexAnalyticsESG and ClimateAll Other - Private AssetsTotal
Operating Revenue Types
Recurring subscriptions$206,453 $151,269 $71,744 $35,531 $464,997 
Asset-based fees141,066    141,066 
Non-recurring14,603 2,999 1,294 480 19,376 
Total$362,122 $154,268 $73,038 $36,011 $625,439 
For the Nine Months Ended September 30, 2023
Segments
(in thousands)IndexAnalyticsESG and ClimateAll Other - Private AssetsTotal
Operating Revenue Types
Recurring subscriptions$603,845 $443,276 $207,523 $111,292 $1,365,936 
Asset-based fees412,354    412,354 
Non-recurring47,621 7,943 3,792 1,168 60,524 
Total$1,063,820 $451,219 $211,315 $112,460 $1,838,814 
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For the Three Months Ended September 30, 2022
Segments
(in thousands)IndexAnalyticsESG and ClimateAll Other - Private AssetsTotal
Operating Revenue Types
Recurring subscriptions$185,531 $142,751 $56,353 $35,581 $420,216 
Asset-based fees125,620    125,620 
Non-recurring11,089 2,164 1,242 308 14,803 
Total$322,240 $144,915 $57,595 $35,889 $560,639 
For the Nine Months Ended September 30, 2022
Segments
(in thousands)IndexAnalyticsESG and ClimateAll Other - Private AssetsTotal
Operating Revenue Types
Recurring subscriptions$539,740 $420,047 $160,962 $106,276 $1,227,025 
Asset-based fees402,889    402,889 
Non-recurring31,319 6,349 3,790 1,018 42,476 
Total$973,948 $426,396 $164,752 $107,294 $1,672,390 
The tables that follow present the change in accounts receivable, net of allowances, and current deferred revenue between the dates indicated:
(in thousands) Accounts receivable, net of allowancesDeferred revenue
Opening (December 31, 2022)
$663,236 $882,886 
Closing (September 30, 2023)
603,266 837,479 
Increase/(decrease)$(59,970)$(45,407)
(in thousands) Accounts receivable, net of allowancesDeferred revenue
Opening (December 31, 2021)
$664,511 $824,912 
Closing (September 30, 2022)
525,360 735,710 
Increase/(decrease)$(139,151)$(89,202)
The amounts of revenues recognized in the periods that were included in the opening current deferred revenue, which reflects contract liability amounts, were $171.8 million and $798.0 million for the three and nine months ended September 30, 2023, respectively and $149.4 million and $722.0 million for the three and nine months ended September 30, 2022, respectively. The difference between the opening and closing balances of the Company’s deferred revenue is primarily driven by an increase in the amortization of deferred revenue to operating revenues, partially offset by an increase in billings. As of September 30, 2023 and December 31, 2022, the Company carried a long-term deferred revenue balance of $28.0 million and $29.4 million, respectively, in “Other non-current liabilities” on the Unaudited Condensed Consolidated Statement of Financial Condition.
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For contracts that have a duration of one year or less, the Company has not disclosed either the remaining performance obligation as of the end of the reporting period or when the Company expects to recognize the revenue. The remaining performance obligations for contracts that have a duration of greater than one year and the periods in which they are expected to be recognized are as follows:
As of
September 30,
(in thousands)2023
First 12-month period$695,027 
Second 12-month period420,056 
Third 12-month period182,375 
Periods thereafter135,442 
Total$1,432,900 
4. EARNINGS PER COMMON SHARE
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the assumed conversion of all dilutive securities, including, when applicable, restricted stock units (“RSUs”), performance stock units (“PSUs”) and performance stock options (“PSOs”).
The following table presents the computation of basic and diluted EPS:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except per share data)2023202220232022
Net income$259,659 $216,592 $745,212 $655,602 
Basic weighted average common shares outstanding79,116 80,500 79,580 81,001 
Effect of dilutive securities:
PSUs, RSUs and PSOs384 374 379 480 
Diluted weighted average common shares outstanding79,500 80,874 79,959 81,481 
Earnings per common share:
Basic$3.28 $2.69 $9.36 $8.09 
Diluted$3.27 $2.68 $9.32 $8.05 
5. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET
Property, equipment and leasehold improvements, net consisted of the following as of the dates indicated:
As of
September 30,December 31,
(in thousands)20232022
Computer & related equipment$193,113 $181,710 
Furniture & fixtures15,643 14,078 
Leasehold improvements58,019 54,040 
Work-in-process860 2,373 
Subtotal267,635 252,201 
Accumulated depreciation and amortization(209,599)(198,348)
Property, equipment and leasehold improvements, net$58,036 $53,853 
Depreciation and amortization expense of property, equipment and leasehold improvements was $5.3 million and $7.1 million for the three months ended September 30, 2023 and 2022, respectively.
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Depreciation and amortization expense of property, equipment and leasehold improvements was $15.9 million and $20.4 million for the nine months ended September 30, 2023 and 2022, respectively.
6. GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
The following table presents goodwill by reportable segment:
(in thousands)IndexAnalyticsESG and ClimateAll Other - Private AssetsTotal
Goodwill at December 31, 2022$1,201,622 $290,976 $48,047 $689,025 $2,229,670 
Foreign exchange translation adjustment445   274 719 
Goodwill at September 30, 2023$1,202,067 $290,976 $48,047 $689,299 $2,230,389 
The Company completed its annual goodwill impairment test as of July 1, 2023 on its Index, Analytics, ESG and Climate, and Real Assets reporting units, which are also four of the Company’s operating segments, and no impairments were noted. The Company determined that it was not more likely than not that the fair value of its reporting units is less than their respective carrying values. See Note 11, “Segment Information,” for further descriptions of the Company’s operating segments.
Intangible Assets, Net
The following table presents the amount of amortization expense related to intangible assets by category for the periods indicated:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2023202220232022
Amortization expense of acquired intangible assets$15,748 $15,810 $47,430 $47,562 
Amortization expense of internally developed capitalized software10,974 7,565 30,113 19,712 
Total amortization of intangible assets expense$26,722 $23,375 $77,543 $67,274 
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The gross carrying and accumulated amortization amounts related to the Company’s intangible assets were as follows:
As of
September 30,December 31,
(in thousands)20232022
Gross intangible assets:
Customer relationships$532,500 $532,500 
Proprietary data220,778 220,778 
Acquired technology and software209,220 209,220 
Trademarks208,190 208,190 
Internally developed capitalized software220,251 165,928 
Subtotal1,390,939 1,336,616 
Foreign exchange translation adjustment(12,478)(13,214)
Total gross intangible assets$1,378,461 $1,323,402 
Accumulated amortization:
Customer relationships$(331,275)$(308,437)
Proprietary data(56,125)(41,783)
Acquired technology and software(182,920)(179,833)
Trademarks(169,207)(162,044)
Internally developed capitalized software(106,888)(77,259)
Subtotal(846,415)(769,356)
Foreign exchange translation adjustment4,083 4,471 
Total accumulated amortization$(842,332)$(764,885)
Net intangible assets:
Customer relationships$201,225 $224,063 
Proprietary data164,653 178,995 
Acquired technology and software26,300 29,387 
Trademarks38,983 46,146 
Internally developed capitalized software113,363 88,670 
Subtotal544,524 567,260 
Foreign exchange translation adjustment(8,395)(8,743)
Total net intangible assets$536,129 $558,517 
The following table presents the estimated amortization expense for the remainder of the year ending December 31, 2023 and succeeding years:    
Years Ending December 31,
(in thousands)
Amortization
Expense
Remainder of 2023$28,555 
2024109,796 
202584,575 
202649,965 
202736,755 
Thereafter226,483 
Total$536,129 
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7. COMMITMENTS AND CONTINGENCIES
As of September 30, 2023, the Company had outstanding an aggregate of $4,200.0 million in senior unsecured notes (collectively, the “Senior Notes”) and an aggregate of $341.3 million in senior unsecured tranche A term loans (the “Tranche A Term Loans”) under the term loan A facility (the “TLA Facility”), as presented in the table below:
Principal
Amount
Outstanding at
Carrying
Value at
Carrying
Value at
Fair
Value at
Fair
Value at
(in thousands)Maturity DateSeptember 30, 2023September 30, 2023December 31, 2022September 30, 2023December 31, 2022
Debt
4.000% senior unsecured notes due 2029
November 15, 2029
$1,000,000 $993,364 $992,546 $872,670 $876,240 
3.625% senior unsecured notes due 2030
September 1, 2030
900,000 895,421 894,925 755,433 751,113 
3.875% senior unsecured notes due 2031
February 15, 2031
1,000,000 991,887 991,067 867,600 833,130 
3.625% senior unsecured notes due 2031
November 1, 2031
600,000 594,688 594,195 491,928 500,880 
3.250% senior unsecured notes due 2033
August 15, 2033
700,000 693,364 692,862 537,551 542,696 
Variable rate Tranche A Term Loans due 2027
February 16, 2027
341,250 340,057 346,352 339,544 346,073 
Total debt(1)
$4,541,250 $4,508,781 $4,511,947 $3,864,726 $3,850,132 
___________________________
(1)    Includes $8.7 million of current-portion of long-term debt.
Maturities of the Company’s principal debt payments as of September 30, 2023 are as follows:
Maturity of Principal Debt Payments
(in thousands)
Amounts
Remainder of 2023$2,187 
202410,938 
202519,687 
202626,250 
2027282,188 
Thereafter4,200,000 
Total debt$4,541,250 
Interest payments attributable to the Company’s outstanding indebtedness are due as presented in the following table:
Interest payment frequencyFirst interest
payment date
Senior Notes and Tranche A Term Loans
4.000% senior unsecured notes due 2029
Semi-AnnualMay 15
3.625% senior unsecured notes due 2030
Semi-AnnualMarch 1
3.875% senior unsecured notes due 2031
Semi-AnnualJune 1
3.625% senior unsecured notes due 2031
Semi-AnnualMay 1
3.250% senior unsecured notes due 2033
Semi-AnnualFebruary 15
Variable rate Tranche A Term Loans due 2027
VariableJuly 11
The fair market value of the Company’s debt obligations represent Level 2 valuations. The Company utilized the market approach and obtained security pricing from a vendor who used broker quotes and third-party pricing services to determine fair values.
Credit Agreement. Since November 20, 2014, the Company has maintained a revolving credit agreement with a syndicate of banks. On June 9, 2022, the Company, the guarantors party thereto and the lenders and agents party thereto, entered into an Amended and Restated Credit Agreement (the “Credit Agreement”), amending and restating in its entirety the Company’s prior revolving credit agreement (the “Prior Revolving Credit Agreement”). The Credit Agreement makes available to the Company an aggregate of $500.0 million of revolving loan commitments, which may be drawn until February 16, 2027, and the TLA Facility. At September 30, 2023, the revolving loan commitments were undrawn. As noted above, at September 30, 2023, the commitments under the TLA Facility were drawn in full, and the resulting Tranche A Term Loans mature on February 16, 2027. The obligations under the Credit Agreement are general unsecured obligations of the Company and the guarantors.
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Interest on the Tranche A Term Loans under the TLA Facility accrues, at a variable rate, based on the secured overnight funding rate (“SOFR”) or the alternate base rate (“Base Rate”), plus, in each case, an applicable margin and will be due on each Interest Payment Date (as defined in the Credit Agreement). The applicable margin is calculated by reference to the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement) and ranges between 1.50% to 2.00% for SOFR loans, and 0.50% to 1.00% for Base Rate loans. At September 30, 2023, the interest rate on the TLA Facility was 7.42%.
In connection with the closings of the Senior Notes offerings, entry into the Prior Revolving Credit Agreement and the subsequent amendments thereto and entry into the Credit Agreement, the Company paid certain financing fees which, together with the existing fees related to prior credit facilities, are being amortized over their related lives. At September 30, 2023, $34.2 million of the deferred financing fees and premium remain unamortized, $0.5 million of which is included in “Prepaid and other assets,” $1.2 million of which is included in “Other non-current assets” and $32.5 million of which is included in “Long-term debt” on the Unaudited Condensed Consolidated Statement of Financial Condition.
8. LEASES
The components of lease expense (income) of the Company’s operating leases are as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2023202220232022
Operating lease expenses$7,278 $7,308 $21,570 $22,439 
Variable lease costs1,022 808 2,843 2,411 
Short-term lease costs108 123 547 333 
Sublease income(1,276)$(1,251)$(3,827)$(3,354)
Total lease costs$7,132 $6,988 $21,133 $21,829 
Maturities of the Company’s operating lease liabilities as of September 30, 2023 are as follows:
Maturity of Lease LiabilitiesOperating
(in thousands)Leases
Remainder of 2023$6,098 
202427,182 
202524,202 
202622,408 
202717,691 
Thereafter67,096 
Total lease payments$164,677 
Less: Interest(20,632)
Present value of lease liabilities$144,045 
Other accrued liabilities$22,104 
Long-term operating lease liabilities$121,941 
Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:
As of
September 30,December 31,
Lease Term and Discount Rate20232022
Weighted-average remaining lease term (years)7.307.86
Weighted-average discount rate3.58 %3.40 %
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Other information related to the Company’s operating leases are as follows:
Other InformationNine Months Ended
September 30,
(in thousands)20232022
Operating cash flows used for operating leases$22,918 $22,025 
Right of use assets obtained in exchange for new
    operating lease liabilities
$8,896 $14,929 
9. SHAREHOLDERS’ EQUITY (DEFICIT)
Return of capital
On July 28, 2022, the Board of Directors authorized a stock repurchase program (the “2022 Repurchase Program”) for the purchase of up to $1,000.0 million worth of shares of MSCI’s common stock in addition to the $539.1 million of authorization then remaining under a previously existing share repurchase program that was replaced by, and incorporated into, the 2022 Repurchase Program for a total of $1,539.1 million of stock repurchase authorization available under the 2022 Repurchase Program.
Share repurchases made pursuant to the 2022 Repurchase Program may take place in the open market or in privately negotiated transactions from time to time based on market and other conditions. This authorization may be modified, suspended or terminated by the Board of Directors at any time without prior notice. As of September 30, 2023, there was $845.7 million of available authorization remaining under the 2022 Repurchase Program.
The following table provides information with respect to repurchases of the Company’s common stock made on the open market:
Nine months ended
(in thousands, except per share data)
Average
Price
Paid Per
Share
Total
Number of
Shares
Repurchased
Dollar
Value of
Shares
Repurchased(1)
September 30, 2023$468.26 980 $458,721 
September 30, 2022$473.26 2,567 $1,214,695 
___________________________
(1)     As of January 1, 2023, the Company’s share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. The values in this column exclude the 1% excise tax incurred on share repurchases. Any excise tax incurred is recognized as part of the cost of the shares acquired in the Unaudited Condensed Consolidated Statement of Shareholders’ Equity (Deficit)
The following table presents dividends declared per common share as well as total amounts declared, distributed and deferred for the periods indicated:
Dividends
(in thousands, except per share data)Per ShareDeclaredDistributed(Released)/Deferred
2023
Three Months Ended March 31,$1.38 $111,986 $112,189 $(203)
Three Months Ended June 30,1.38 110,383 110,147 236 
Three Months Ended September 30,1.38 109,847 109,408 439 
Total