MSCI Inc. (NYSE:MSCI) reported strong second-quarter earnings on Tuesday, with adjusted EPS of $4.94, slightly above the $4.93 analyst estimate.
Operating revenue increased 12.2% year over year (Y/Y) to $867 million, exceeding expectations of $866.4 million.
Revenue was driven by organic growth, with recurring subscription revenue rising 9% Y/Y and asset-based fees increasing 26.6% Y/Y.
On Tuesday, MSCI stock lost 10%, closing at $561.74 despite record inflows in MSCI-linked ETFs.
Earnings Snapshot
Organic revenue grew above 12% Y/Y, and adjusted EBITDA grew 14% Y/Y in the quarter. Organic recurring subscription run rate growth was 8.1%, while retention improved to 95.3% from 94.4% a year ago, supported by strong demand across asset managers, hedge funds, and banking clients.
The Analytics segment posted 7% organic subscription run-rate growth, supported by strong demand for factor content, factor solutions, and multi-asset portfolio offerings.
The company continues to focus on AI-driven product innovation and expanding its private assets offerings, including a new partnership with UBS to strengthen wealth management solutions.
Key Metrics
Total run-rate growth reached 12% Y/Y, supported by a 25% Y/Y increase in asset-based fee run rate, driven by record ETF and non-ETF assets under management.
Asset-based fee (ABF) run rate reached a record $948 million, up 25% year over year (Y/Y), driven by record AUM in ETF and non-ETF products tracking MSCI indexes.
The second quarter ETF inflows totaled nearly $40 billion, lifting MSCI-linked ETF AUM above $2.8 trillion.
Buyback & Dividend
MSCI repurchased $147.2 million worth of shares, or 264,043 shares, through July 20, 2026, at an average price of $557.66.
The company also returned approximately $149.2 million to shareholders through dividends in the second quarter and declared a third-quarter cash dividend of $2.05 per share.
Outlook
Management remains optimistic, supported by a strong sales pipeline and continued investments in AI and sustainability-focused solutions.
MSCI raised its full-year 2026 expense outlook, reflecting recent acquisitions, including First Street, stronger AUM growth in MSCI-linked products, higher incentive compensation, and additional investments to support future growth.
The company raised its operating cash flow forecast to $1.655 billion–$1.705 billion and free cash flow outlook to $1.485 billion–$1.545 billion, up from prior ranges of $1.640 billion–$1.690 billion and $1.470 billion–$1.530 billion, respectively.
MSCI Price Action: MSCI shares were down 0.17% at $560.79 at the time of publication on Wednesday, according to Benzinga Pro data.
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