MSCI Reports Financial Results for Third Quarter and Nine Months 2017
Financial and Operational Highlights for Third Quarter 2017
(Note:
Percentage and other changes refer to third quarter 2016 unless
otherwise noted.)
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11.7% increase in operating revenues to
$322.1 million . - 17.0% increase in Index revenues driven by a 29.8% increase in asset-based fees and a 9.5% increase in recurring subscription revenues.
-
Record quarter-end AUM of
$674.3 billion in ETFs linked toMSCI indexes; increase of 42.0% compared to third quarter 2016 AUM. All time high of$701.2 billion onOctober 31, 2017 . - Diluted and adjusted earnings per share increased 36.8% and 29.9%, respectively.
-
Net new recurring subscription sales increased 68.2% to
$21.0 million , driven by stronger Analytics net new sales. - Total Aggregate Retention Rate at 94.0% and Index Aggregate Retention Rate at 95.5%.
-
13.8% increase in total
Run Rate to$1,305.0 million driven by a 36.6% increase in asset-based feesRun Rate and an 8.6% increase in subscriptionRun Rate .
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
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| In thousands, except per share data | 2017 | 2016 | 2017 | Change | 2017 | 2016 | Change | |||||||||||||||||||||||
| Operating revenues | $ | 322,097 | $ | 288,433 | $ | 316,089 | 11.7 | % | $ | 939,393 | $ | 857,857 | 9.5 | % | ||||||||||||||||
| Operating income | $ | 148,663 | $ | 123,260 | $ | 145,968 | 20.6 | % | $ | 425,233 | $ | 362,092 | 17.4 | % | ||||||||||||||||
| Operating margin % | 46.2 | % | 42.7 | % | 46.2 | % | 45.3 | % | 42.2 | % | ||||||||||||||||||||
| Net income | $ | 85,153 | $ | 65,281 | $ | 81,266 | 30.4 | % | $ | 239,370 | $ | 192,605 | 24.3 | % | ||||||||||||||||
| Diluted EPS | $ | 0.93 | $ | 0.68 | $ | 0.89 | 36.8 | % | $ | 2.61 | $ | 1.98 | 31.8 | % | ||||||||||||||||
| Adjusted EPS | $ | 1.00 | $ | 0.77 | $ | 0.95 | 29.9 | % | $ | 2.83 | $ | 2.22 | 27.5 | % | ||||||||||||||||
| Adjusted EBITDA | $ | 168,602 | $ | 143,324 | $ | 166,249 | 17.6 | % | $ | 485,542 | $ | 422,500 | 14.9 | % | ||||||||||||||||
| Adjusted EBITDA margin % | 52.3 | % | 49.7 | % | 52.6 | % | 51.7 | % | 49.3 | % | ||||||||||||||||||||
"We are increasingly working closely with some of the largest
participants in the investment industry in ways that provide them with
the means to differentiate themselves and attract assets. This
solutions-based approach is enabled by our focus on research, which is
at the heart of the innovative, world-class products and services we
deliver to our clients every day. It is exactly this focus on our
clients, our integrated model and the strong execution of our strategy
that helped us deliver another strong quarter, with a 12% increase in
revenue, and 37% and 30% increases in diluted EPS and adjusted EPS,
respectively," commented
"Our research and product development capabilities allow us to create
innovative content that we can integrate across the Company. This cycle
of content enhancement, creation and integration will provide a wide
range of compelling organic opportunities that will drive our continued
growth in the quarters and years ahead," concluded
Third Quarter and Nine Months 2017 Consolidated Results
Revenues:
Operating revenues for third quarter 2017 increased
For nine months 2017, operating revenues increased
Expenses: Total
operating expenses for third quarter 2017 increased
For nine months 2017, total operating expenses increased
Headcount: As
of
Amortization and Depreciation Expenses:
Amortization and depreciation expenses decreased by
Other Expense (Income), Net:
Other expense (income), net increased
Tax Rate: The
effective tax rate was 29.5% for third quarter 2017, compared to 33.1%
for third quarter 2016 and the effective tax rate for nine months 2017
was 29.6%, compared to 33.3% for nine months 2016. The lower effective
tax rate for both periods was primarily driven by the ongoing efforts to
better align our tax profile with our global operating footprint and the
impact of discrete items. For nine months 2017, the discrete items
included the impact of stock-based compensation excess tax benefits (the
"windfall benefit") resulting from the adoption of new accounting
guidance. The positive impact of the windfall benefit totaled
Net Income: Net
income increased 30.4% to
Adjusted EBITDA:
Adjusted EBITDA was
Cash Balances & Outstanding Debt:
Total cash and cash equivalents as of
Cash Flow & Capex:
Net cash provided by operating activities was
Net cash provided by operating activities was
Share Count & Capital Return:
The weighted average diluted shares outstanding in third quarter 2017
declined 3.8% to 91.9 million, compared to 95.5 million in third quarter
2016. The lower share count, driven by buybacks under the share
repurchase program, increased diluted and adjusted earnings per share
each by
On
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Table 1: Third Quarter 2017 Results by Segment (unaudited) |
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| Index | Analytics | All Other | |||||||||||||||||||||||||||||
| Adjusted | Adjusted | Adjusted | |||||||||||||||||||||||||||||
| Operating | Adjusted | EBITDA | Operating | Adjusted | EBITDA | Operating | Adjusted | EBITDA | |||||||||||||||||||||||
| In thousands | Revenues | EBITDA | Margin | Revenues | EBITDA | Margin | Revenues | EBITDA | Margin | ||||||||||||||||||||||
| Q3'17 | $ | 184,594 | $ | 134,299 | 72.8 | % | $ | 114,972 | $ | 33,013 | 28.7 | % | $ | 22,531 | $ | 1,290 | 5.7 | % | |||||||||||||
| Q3'16 | $ | 157,751 | $ | 111,750 | 70.8 | % | $ | 111,291 | $ | 31,501 | 28.3 | % | $ | 19,391 | $ | 73 | 0.4 | % | |||||||||||||
| Q2'17 | $ | 177,156 | $ | 129,476 | 73.1 | % | $ | 113,367 | $ | 31,741 | 28.0 | % | $ | 25,566 | $ | 5,032 | 19.7 | % | |||||||||||||
| YoY % change | 17.0 | % | 20.2 | % | 3.3 | % | 4.8 | % | 16.2 | % | n/m | ||||||||||||||||||||
| YTD 2017 | $ | 525,185 | $ | 379,412 | 72.2 | % | $ | 340,759 | $ | 94,290 | 27.7 | % | $ | 73,449 | $ | 11,840 | 16.1 | % | |||||||||||||
| YTD 2016 | $ | 454,481 | $ | 318,317 | 70.0 | % | $ | 333,947 | $ | 95,163 | 28.5 | % | $ | 69,429 | $ | 9,020 | 13.0 | % | |||||||||||||
| YoY % change | 15.6 | % | 19.2 | % | 2.0 | % | (0.9 | %) | 5.8 | % | 31.3 | % | |||||||||||||||||||
| n/m: not meaningful. | |||||||||||||||||||||||||||||||
Index Segment:
Operating revenues for third quarter 2017 increased
The
The
Operating revenues for nine months 2017 increased
Index
Analytics Segment:
Operating revenues for third quarter 2017 increased
Operating revenues for nine months 2017 increased
Analytics
All Other Segment:
Operating revenues for third quarter 2017 increased by
Operating revenues for nine months 2017 increased
All Other
Full-Year 2017 Guidance
MSCI's guidance for full-year 2017 is as follows:
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Total operating expenses are expected to be in the range of
$690 million to$700 million . Adjusted EBITDA expenses are now expected to be towards the higher end of the previously announced range of$605 million to$615 million , primarily reflecting higher severance in the fourth quarter associated with certain efficiency initiatives. -
Interest expense, including the amortization of financing fees, is
expected to be approximately
$116 million , assuming no additional financings. -
Capex is expected to be in the range of
$40 million to$50 million . -
Net cash provided by operating activities and free cash flow is
expected to be in the range of
$360 million to$410 million and$310 million to$370 million , respectively. - The effective tax rate is now expected to be at the lower end of the previously announced range of 30.0% to 31.0%.
Conference Call Information
An audio recording of the conference call will be available on our
Investor Relations website, http://ir.msci.com/events.cfm,
beginning approximately two hours after the conclusion of the live
event. Through November 5, 2017, the recording will also be available by
dialing 1-800-585-8367 passcode: 96492216 within the United States or
1-404-537-3406 passcode: 96492216 for international callers. A replay of
the conference call will be archived in the events and presentations
section of
-Ends-
About
For more than 45 years,
Our line of products and services includes indexes, analytical models, data, real estate benchmarks and ESG research.
For more information, visit us at www.msci.com. MSCI#IR
Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, our full-year 2017 guidance. These forward-looking statements relate to future events or to future financial performance and 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. 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.
Other factors that could materially affect actual results, levels of
activity, performance or achievements can be found in MSCI's Annual
Report on Form 10-K for the fiscal year ended
Website and Social Media Disclosure
Notes Regarding the Use of Operating Metrics
The Aggregate Retention Rate for a period is calculated by annualizing
the cancellations for which we have received a notice of termination or
for which we believe there is an intention not to renew during the
period, and we believe that such notice or intention evidences the
client's final decision to terminate or not renew the applicable
agreement, even though such notice is not effective until a later date.
This annualized cancellation figure is then divided by the subscription
Organic subscription
Notes Regarding the Use of Non-GAAP Financial Measures
"Adjusted EBITDA" is defined as net income before provision for income taxes, other expense (income), net, depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or adjustments.
"Adjusted EBITDA expenses" is defined as operating expenses less depreciation and amortization of property, equipment and leasehold improvements and amortization of intangible assets.
"Adjusted net income" and "adjusted EPS" are defined as net income and diluted EPS, respectively, before the after-tax impact of the amortization of acquired intangible assets and, at times, certain other transactions or adjustments. For periods prior to first quarter 2017, the amortization associated with capitalized software development costs was included as an adjustment to adjusted net income and adjusted EPS as it was not material.
"Capex" is defined as capital expenditures plus capitalized software development costs.
"Free cash flow" is defined as net cash provided by operating activities, less Capex.
We believe adjusted EBITDA and adjusted EBITDA expenses are meaningful
measures of the operating performance of
We believe adjusted net income and adjusted EPS are meaningful measures
of the performance of
We believe that free cash flow is useful to investors because it relates
the operating cash flow of
We believe that the non-GAAP financial measures presented in this earnings release facilitate meaningful period-to-period comparisons and provide a baseline for the evaluation of future results.
Adjusted EBITDA expenses, adjusted EBITDA, adjusted net income, adjusted EPS, Capex and free cash flow are not defined in the same manner by all companies and may not be comparable to similarly-titled non-GAAP financial measures of other companies.
Notes Regarding Adjusting for the Impact of Foreign Currency Exchange Rate Fluctuations
Foreign currency exchange rate fluctuations are calculated to be the difference between the current period results as reported compared to the current period results recalculated using the foreign currency exchange rates in effect for the comparable prior period.
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Table 2: Condensed Consolidated Statements of Income (unaudited) |
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| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
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| In thousands, except per share data | 2017 | 2016 | 2017 | Change | 2017 | 2016 | Change | ||||||||||||||||||||
| Operating revenues | $ | 322,097 | $ | 288,433 | $ | 316,089 | 11.7 | % | $ | 939,393 | $ | 857,857 | 9.5 | % | |||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||
| Cost of revenues | 68,491 | 62,986 | 68,595 | 8.7 | % | 204,607 | 188,288 | 8.7 | % | ||||||||||||||||||
| Selling and marketing | 44,918 | 41,514 | 41,594 | 8.2 | % | 129,526 | 125,057 | 3.6 | % | ||||||||||||||||||
| Research and development | 17,983 | 18,750 | 18,203 | (4.1 | %) | 55,163 | 56,244 | (1.9 | %) | ||||||||||||||||||
| General and administrative | 22,103 | 21,859 | 21,448 | 1.1 | % | 64,555 | 65,768 | (1.8 | %) | ||||||||||||||||||
| Amortization of intangible assets | 10,614 | 11,752 | 11,122 | (9.7 | %) | 32,987 | 35,535 | (7.2 | %) | ||||||||||||||||||
| Depreciation and amortization of property, | |||||||||||||||||||||||||||
| equipment and leasehold improvements | 9,325 | 8,312 | 9,159 | 12.2 | % | 27,322 | 24,873 | 9.8 | % | ||||||||||||||||||
| Total operating expenses(1) | 173,434 | 165,173 | 170,121 | 5.0 | % | 514,160 | 495,765 | 3.7 | % | ||||||||||||||||||
| Operating income | 148,663 | 123,260 | 145,968 | 20.6 | % | 425,233 | 362,092 | 17.4 | % | ||||||||||||||||||
| Interest income | (1,835 | ) | (799 | ) | (1,310 | ) | 129.7 | % | (4,077 | ) | (2,005 | ) | 103.3 | % | |||||||||||||
| Interest expense | 29,020 | 26,790 | 29,027 | 8.3 | % | 87,071 | 72,612 | 19.9 | % | ||||||||||||||||||
| Other expense (income) | 675 | (253 | ) | 740 | n/m | 2,300 | 2,642 | (12.9 | %) | ||||||||||||||||||
| Other expense (income), net | 27,860 | 25,738 | 28,457 | 8.2 | % | 85,294 | 73,249 | 16.4 | % | ||||||||||||||||||
| Income before provision for income taxes | 120,803 | 97,522 | 117,511 | 23.9 | % | 339,939 | 288,843 | 17.7 | % | ||||||||||||||||||
| Provision for income taxes | 35,650 | 32,241 | 36,245 | 10.6 | % | 100,569 | 96,238 | 4.5 | % | ||||||||||||||||||
| Net income | $ | 85,153 | $ | 65,281 | $ | 81,266 | 30.4 | % | $ | 239,370 | $ | 192,605 | 24.3 | % | |||||||||||||
| Earnings per basic common share | $ | 0.94 | $ | 0.69 | $ | 0.90 | 36.2 | % | $ | 2.65 | $ | 1.99 | 33.2 | % | |||||||||||||
| Earnings per diluted common share | $ | 0.93 | $ | 0.68 | $ | 0.89 | 36.8 | % | $ | 2.61 | $ | 1.98 | 31.8 | % | |||||||||||||
| Weighted average shares outstanding used | |||||||||||||||||||||||||||
| in computing earnings per share: | |||||||||||||||||||||||||||
| Basic | 90,112 | 94,823 | 90,404 | (5.0 | %) | 90,406 | 96,879 | (6.7 | %) | ||||||||||||||||||
| Diluted | 91,868 | 95,473 | 91,708 | (3.8 | %) | 91,731 | 97,445 | (5.9 | %) | ||||||||||||||||||
| n/m: not meaningful. | |||||||||||||||||||||||||||
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(1) Includes stock-based compensation expense of |
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Table 3: Selected Balance Sheet Items (unaudited) |
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| In thousands | 2017 | 2016 | |||
| Cash and cash equivalents |
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| Accounts receivable, net of allowances |
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| Deferred revenue |
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| Long-term debt(1) |
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(1) Consists of gross long-term debt, net of deferred financing
fees. Gross long-term debt at both |
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Table 4: Selected Cash Flow Items (unaudited) |
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| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
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| In thousands | 2017 | 2016 | 2017 | Change | 2017 | 2016 | Change | ||||||||||||||||||||||
| Cash provided by operating activities | $ | 101,773 | $ | 148,527 | $ | 122,217 | (31.5 | %) | $ | 261,005 | $ | 303,510 | (14.0 | %) | |||||||||||||||
| Cash used in investing activities | (11,553 | ) | (13,071 | ) | (6,264 | ) | (11.6 | %) | (27,446 | ) | (31,496 | ) | (12.9 | %) | |||||||||||||||
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Cash (used in) provided by financing activities |
(43,251 | ) | 434,826 | (65,398 | ) | (109.9 | %) | (233,875 | ) | (71,758 | ) | 225.9 | % | ||||||||||||||||
| Effect of exchange rate changes | 1,465 | (834 | ) | 3,054 | (275.7 | %) | 7,497 | (3,900 | ) | (292.2 | %) | ||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 48,434 | $ | 569,448 | $ | 53,609 | (91.5 | %) | $ | 7,181 | $ | 196,356 | (96.3 | %) | |||||||||||||||
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(1) Excess tax benefits related to share-based compensation are now
included in operating cash flows rather than financing cash flows in
accordance with the adoption of recent accounting guidance. This
change has been applied retrospectively and resulted in increases of
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Table 5: Operating Results by Segment and Revenue Type (unaudited) |
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| In thousands | 2017 | 2016 | 2017 | Change | 2017 | 2016 | Change | ||||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||||||||
| Recurring subscriptions | $ | 107,963 | $ | 98,625 | $ | 105,645 | 9.5 | % | $ | 315,786 | $ | 289,409 | 9.1 | % | |||||||||||||||
| Asset-based fees | 72,861 | 56,122 | 67,230 | 29.8 | % | 197,599 | 154,455 | 27.9 | % | ||||||||||||||||||||
| Non-recurring | 3,770 | 3,004 | 4,281 | 25.5 | % | 11,800 | 10,617 | 11.1 | % | ||||||||||||||||||||
| Total operating revenues | 184,594 | 157,751 | 177,156 | 17.0 | % | 525,185 | 454,481 | 15.6 | % | ||||||||||||||||||||
| Adjusted EBITDA expenses | 50,295 | 46,001 | 47,680 | 9.3 | % | 145,773 | 136,164 | 7.1 | % | ||||||||||||||||||||
| Adjusted EBITDA | $ | 134,299 | $ | 111,750 | $ | 129,476 | 20.2 | % | $ | 379,412 | $ | 318,317 | 19.2 | % | |||||||||||||||
| Adjusted EBITDA margin % | 72.8 | % | 70.8 | % | 73.1 | % | 72.2 | % | 70.0 | % | |||||||||||||||||||
| Analytics | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
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| In thousands | 2017 | 2016 | 2017 | Change | 2017 | 2016 | Change | ||||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||||||||
| Recurring subscriptions | $ | 113,574 | $ | 109,554 | $ | 112,061 | 3.7 | % | $ | 336,904 | $ | 328,636 | 2.5 | % | |||||||||||||||
| Non-recurring | 1,398 | 1,737 | 1,306 | (19.5 | %) | 3,855 | 5,311 | (27.4 | %) | ||||||||||||||||||||
| Total operating revenues | 114,972 | 111,291 | 113,367 | 3.3 | % | 340,759 | 333,947 | 2.0 | % | ||||||||||||||||||||
| Adjusted EBITDA expenses | 81,959 | 79,790 | 81,626 | 2.7 | % | 246,469 | 238,784 | 3.2 | % | ||||||||||||||||||||
| Adjusted EBITDA | $ | 33,013 | $ | 31,501 | $ | 31,741 | 4.8 | % | $ | 94,290 | $ | 95,163 | (0.9 | %) | |||||||||||||||
| Adjusted EBITDA margin % | 28.7 | % | 28.3 | % | 28.0 | % | 27.7 | % | 28.5 | % | |||||||||||||||||||
| All Other | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
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| In thousands | 2017 | 2016 | 2017 | Change | 2017 | 2016 | Change | ||||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||||||||
| Recurring subscriptions | $ | 21,865 | $ | 18,329 | $ | 24,739 | 19.3 | % | $ | 71,256 | $ | 66,533 | 7.1 | % | |||||||||||||||
| Non-recurring | 666 | 1,062 | 827 | (37.3 | %) | 2,193 | 2,896 | (24.3 | %) | ||||||||||||||||||||
| Total operating revenues | 22,531 | 19,391 | 25,566 | 16.2 | % | 73,449 | 69,429 | 5.8 | % | ||||||||||||||||||||
| Adjusted EBITDA expenses | 21,241 | 19,318 | 20,534 | 10.0 | % | 61,609 | 60,409 | 2.0 | % | ||||||||||||||||||||
| Adjusted EBITDA | $ | 1,290 | $ | 73 | $ | 5,032 | n/m | $ | 11,840 | $ | 9,020 | 31.3 | % | ||||||||||||||||
| Adjusted EBITDA margin % | 5.7 | % | 0.4 | % | 19.7 | % | 16.1 | % | 13.0 | % | |||||||||||||||||||
| Consolidated | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
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| In thousands | 2017 | 2016 | 2017 | Change | 2017 | 2016 | Change | ||||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||||||||
| Recurring subscriptions | $ | 243,402 | $ | 226,508 | $ | 242,445 | 7.5 | % | $ | 723,946 | $ | 684,578 | 5.8 | % | |||||||||||||||
| Asset-based fees | 72,861 | 56,122 | 67,230 | 29.8 | % | 197,599 | 154,455 | 27.9 | % | ||||||||||||||||||||
| Non-recurring | 5,834 | 5,803 | 6,414 | 0.5 | % | 17,848 | 18,824 | (5.2 | %) | ||||||||||||||||||||
| Operating revenues total | 322,097 | 288,433 | 316,089 | 11.7 | % | 939,393 | 857,857 | 9.5 | % | ||||||||||||||||||||
| Adjusted EBITDA expenses | 153,495 | 145,109 | 149,840 | 5.8 | % | 453,851 | 435,357 | 4.2 | % | ||||||||||||||||||||
| Adjusted EBITDA | $ | 168,602 | $ | 143,324 | $ | 166,249 | 17.6 | % | $ | 485,542 | $ | 422,500 | 14.9 | % | |||||||||||||||
| Adjusted EBITDA margin % | 52.3 | % | 49.7 | % | 52.6 | % | 51.7 | % | 49.3 | % | |||||||||||||||||||
| Operating margin % | 46.2 | % | 42.7 | % | 46.2 | % | 45.3 | % | 42.2 | % | |||||||||||||||||||
| n/m: not meaningful. | |||||||||||||||||||||||||||||
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Table 6: Sales and Aggregate Retention Rate by Segment (unaudited) |
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| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
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| In thousands | 2017 | 2017 | 2017 | 2016 | 2016 | 2017 | 2016 | ||||||||||||||||||||||
| Index | |||||||||||||||||||||||||||||
| New recurring subscription sales | $ | 15,499 | $ | 13,636 | $ | 14,193 | $ | 17,220 | $ | 11,758 | $ | 43,328 | $ | 38,059 | |||||||||||||||
| Subscription cancellations | (4,605 | ) | (3,045 | ) | (3,165 | ) | (6,071 | ) | (3,840 | ) | (10,815 | ) | (11,346 | ) | |||||||||||||||
| Net new recurring subscription sales | $ | 10,894 | $ | 10,591 | $ | 11,028 | $ | 11,149 | $ | 7,918 | $ | 32,513 | $ | 26,713 | |||||||||||||||
| Non-recurring sales | $ | 3,704 | $ | 4,555 | $ | 4,374 | $ | 3,461 | $ | 5,468 | $ | 12,633 | $ | 14,389 | |||||||||||||||
| Total gross sales(1) | $ | 19,203 | $ | 18,191 | $ | 18,567 | $ | 20,681 | $ | 17,226 | $ | 55,961 | $ | 52,448 | |||||||||||||||
| Total Index net sales | $ | 14,598 | $ | 15,146 | $ | 15,402 | $ | 14,610 | $ | 13,386 | $ | 45,146 | $ | 41,102 | |||||||||||||||
| Index Aggregate Retention Rate(2) | 95.5 | % | 97.0 | % | 96.9 | % | 93.4 | % | 95.8 | % | 96.5 | % | 95.9 | % | |||||||||||||||
| Analytics | |||||||||||||||||||||||||||||
| New recurring subscription sales | $ | 15,036 | $ | 12,050 | $ | 11,874 | $ | 18,617 | $ | 13,131 | $ | 38,960 | $ | 36,638 | |||||||||||||||
| Subscription cancellations | (7,444 | ) | (6,940 | ) | (7,611 | ) | (13,749 | ) | (10,530 | ) | (21,995 | ) | (25,456 | ) | |||||||||||||||
| Net new recurring subscription sales | $ | 7,592 | $ | 5,110 | $ | 4,263 | $ | 4,868 | $ | 2,601 | $ | 16,965 | $ | 11,182 | |||||||||||||||
| Non-recurring sales | $ | 2,792 | $ | 1,609 | $ | 2,163 | $ | 3,215 | $ | 2,330 | $ | 6,564 | $ | 5,615 | |||||||||||||||
| Total gross sales(1) | $ | 17,828 | $ | 13,659 | $ | 14,037 | $ | 21,832 | $ | 15,461 | $ | 45,524 | $ | 42,253 | |||||||||||||||
| Total Analytics net sales | $ | 10,384 | $ | 6,719 | $ | 6,426 | $ | 8,083 | $ | 4,931 | $ | 23,529 | $ | 16,797 | |||||||||||||||
| Analytics Aggregate Retention Rate(2) | 93.4 | % | 93.9 | % | 93.3 | % | 87.4 | % | 90.4 | % | 93.5 | % | 92.2 | % | |||||||||||||||
| All Other | |||||||||||||||||||||||||||||
| New recurring subscription sales | $ | 4,576 | $ | 5,456 | $ | 4,121 | $ | 6,364 | $ | 3,877 | $ | 14,153 | $ | 13,614 | |||||||||||||||
| Subscription cancellations | (2,050 | ) | (2,030 | ) | (1,683 | ) | (2,526 | ) | (1,903 | ) | (5,763 | ) | (5,762 | ) | |||||||||||||||
| Net new recurring subscription sales | $ | 2,526 | $ | 3,426 | $ | 2,438 | $ | 3,838 | $ | 1,974 | $ | 8,390 | $ | 7,852 | |||||||||||||||
| Non-recurring sales | $ | 829 | $ | 958 | $ | 609 | $ | 1,139 | $ | 774 | $ | 2,396 | $ | 3,108 | |||||||||||||||
| Total gross sales(1) | $ | 5,405 | $ | 6,414 | $ | 4,730 | $ | 7,503 | $ | 4,651 | $ | 16,549 | $ | 16,722 | |||||||||||||||
| Total All Other net sales | $ | 3,355 | $ | 4,384 | $ | 3,047 | $ | 4,977 | $ | 2,748 | $ | 10,786 | $ | 10,960 | |||||||||||||||
| All Other Aggregate Retention Rate(2) | 90.7 | % | 90.8 | % | 92.4 | % | 87.8 | % | 90.8 | % | 91.3 | % | 90.7 | % | |||||||||||||||
| Consolidated | |||||||||||||||||||||||||||||
| New recurring subscription sales | $ | 35,111 | $ | 31,142 | $ | 30,188 | $ | 42,201 | $ | 28,766 | $ | 96,441 | $ | 88,311 | |||||||||||||||
| Subscription cancellations | (14,099 | ) | (12,015 | ) | (12,459 | ) | (22,346 | ) | (16,273 | ) | (38,573 | ) | (42,564 | ) | |||||||||||||||
| Net new recurring subscription sales | $ | 21,012 | $ | 19,127 | $ | 17,729 | $ | 19,855 | $ | 12,493 | $ | 57,868 | $ | 45,747 | |||||||||||||||
| Non-recurring sales | $ | 7,325 | $ | 7,122 | $ | 7,146 | $ | 7,815 | $ | 8,572 | $ | 21,593 | $ | 23,112 | |||||||||||||||
| Total gross sales(1) | $ | 42,436 | $ | 38,264 | $ | 37,334 | $ | 50,016 | $ | 37,338 | $ | 118,034 | $ | 111,423 | |||||||||||||||
| Total net sales | $ | 28,337 | $ | 26,249 | $ | 24,875 | $ | 27,670 | $ | 21,065 | $ | 79,461 | $ | 68,859 | |||||||||||||||
| Total Aggregate Retention Rate(2) | 94.0 | % | 94.9 | % | 94.7 | % | 89.9 | % | 92.7 | % | 94.6 | % | 93.6 | % | |||||||||||||||
| (1) Total gross sales equal new recurring subscription sales plus non-recurring sales. |
| (2) See "Notes Regarding the Use of Operating Metrics" for details regarding the definition of Aggregate Retention Rate. |
|
Table 7: AUM in ETFs Linked to |
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| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
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|
|
|
|
|
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| In billions | 2017 | 2017 | 2017 | 2016 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Beginning Period AUM in ETFs linked to | ||||||||||||||||||||||||||||
|
|
$ | 624.3 | $ | 555.7 | $ | 481.4 | $ | 474.9 | $ | 439.7 | $ | 481.4 | $ | 433.4 | ||||||||||||||
| Market Appreciation/(Depreciation) | 32.2 | 23.6 | 35.8 | (8.7 | ) | 23.7 | 91.6 | 19.5 | ||||||||||||||||||||
| Cash Inflows | 17.8 | 45.0 | 38.5 | 15.2 | 11.5 | 101.3 | 22.0 | |||||||||||||||||||||
| Period-End AUM in ETFs linked to | ||||||||||||||||||||||||||||
|
|
$ | 674.3 | $ | 624.3 | $ | 555.7 | $ | 481.4 | $ | 474.9 | $ | 674.3 | $ | 474.9 | ||||||||||||||
| Period Average AUM in ETFs linked to | ||||||||||||||||||||||||||||
|
|
$ | 654.4 | $ | 595.0 | $ | 524.1 | $ | 471.1 | $ | 467.3 | $ | 591.1 | $ | 438.1 | ||||||||||||||
| Avg. Basis Point Fee(2) | 3.05 | 3.07 | 3.08 | 3.10 | 3.11 | 3.05 | 3.11 | |||||||||||||||||||||
|
Source: Bloomberg and |
| (1) ETF assets under management calculation methodology is ETF net asset value multiplied by shares outstanding. |
|
(2) Based on period-end |
| AUM: Assets under management. |
|
Table 8: |
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| As of | |||||||||||||||||
|
|
|
|
YoY % | ||||||||||||||
| In thousands | 2017 | 2016 | 2017 | Change | |||||||||||||
| Index | |||||||||||||||||
| Recurring subscriptions | $ | 439,251 | $ | 395,601 | $ | 428,367 | 11.0 | % | |||||||||
| Asset-based fees | 289,812 | 212,224 | 269,595 | 36.6 | % | ||||||||||||
|
Index |
729,063 | 607,825 | 697,962 | 19.9 | % | ||||||||||||
|
Analytics |
474,721 | 452,323 | 465,339 | 5.0 | % | ||||||||||||
|
All Other |
101,253 | 86,738 | 97,057 | 16.7 | % | ||||||||||||
|
Total |
$ | 1,305,037 | $ | 1,146,886 | $ | 1,260,358 | 13.8 | % | |||||||||
| Total recurring subscriptions | $ | 1,015,225 | $ | 934,662 | $ | 990,763 | 8.6 | % | |||||||||
| Total asset-based fees | 289,812 | 212,224 | 269,595 | 36.6 | % | ||||||||||||
|
Total |
$ | 1,305,037 | $ | 1,146,886 | $ | 1,260,358 | 13.8 | % | |||||||||
|
(1) See "Notes Regarding the Use of Operating Metrics" for details
regarding the definition of |
|
Table 9: Reconciliation of Adjusted EBITDA to Net Income (unaudited) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||||||
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|
|
|
|
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| In thousands | 2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||
| Index adjusted EBITDA | $ | 134,299 | $ | 111,750 | $ | 129,476 | $ | 379,412 | $ | 318,317 | ||||||||||
| Analytics adjusted EBITDA | 33,013 | 31,501 | 31,741 | 94,290 | 95,163 | |||||||||||||||
| All Other adjusted EBITDA | 1,290 | 73 | 5,032 | 11,840 | 9,020 | |||||||||||||||
| Consolidated adjusted EBITDA | 168,602 | 143,324 | 166,249 | 485,542 | 422,500 | |||||||||||||||
| Amortization of intangible assets | 10,614 | 11,752 | 11,122 | 32,987 | 35,535 | |||||||||||||||
| Depreciation and amortization of property, | ||||||||||||||||||||
| equipment and leasehold improvements | 9,325 | 8,312 | 9,159 | 27,322 | 24,873 | |||||||||||||||
| Operating income | 148,663 | 123,260 | 145,968 | 425,233 | 362,092 | |||||||||||||||
| Other expense (income), net | 27,860 | 25,738 | 28,457 | 85,294 | 73,249 | |||||||||||||||
| Provision for income taxes | 35,650 | 32,241 | 36,245 | 100,569 | 96,238 | |||||||||||||||
| Net income | $ | 85,153 | $ | 65,281 | $ | 81,266 | $ | 239,370 | $ | 192,605 | ||||||||||
|
Table 10: Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS (unaudited) |
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| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
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|
|
|
|
|
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| In thousands, except per share data | 2017 | 2016 | 2017 | 2017 | 2016 | ||||||||||||||||
| Net income | $ | 85,153 | $ | 65,281 | $ | 81,266 | $ | 239,370 | $ | 192,605 | |||||||||||
| Plus: Amortization of acquired intangible assets | 9,270 | 11,752 | 10,119 | 29,919 | 35,535 | ||||||||||||||||
| Less: Gain on sale of investment | — | — | (771 | ) | (771 | ) | — | ||||||||||||||
| Less: Income tax effect | (2,732 | ) | (3,873 | ) | (3,146 | ) | (8,850 | ) | (11,840 | ) | |||||||||||
| Adjusted net income | $ | 91,691 | $ | 73,160 | $ | 87,468 | $ | 259,668 | $ | 216,300 | |||||||||||
| Diluted EPS | $ | 0.93 | $ | 0.68 | $ | 0.89 | $ | 2.61 | $ | 1.98 | |||||||||||
| Plus: Amortization of acquired intangible assets | 0.10 | 0.12 | 0.11 | 0.33 | 0.36 | ||||||||||||||||
| Less: Gain on sale of investment | — | — | (0.01 | ) | (0.01 | ) | — | ||||||||||||||
| Less: Income tax effect | (0.03 | ) | (0.03 | ) | (0.04 | ) | (0.10 | ) | (0.12 | ) | |||||||||||
| Adjusted EPS | $ | 1.00 | $ | 0.77 | $ | 0.95 | $ | 2.83 | $ | 2.22 | |||||||||||
|
Table 11: Reconciliation of Adjusted EBITDA Expenses to Operating Expenses (unaudited) |
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| Three Months Ended | Nine Months Ended | Full-Year | |||||||||||||||||||||
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|
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|
|
2017 | ||||||||||||||||||
| In thousands | 2017 | 2016 | 2017 | 2017 | 2016 | Outlook(1) | |||||||||||||||||
| Index adjusted EBITDA expenses | $ | 50,295 | $ | 46,001 | $ | 47,680 | $ | 145,773 | $ | 136,164 | |||||||||||||
| Analytics adjusted EBITDA expenses | 81,959 | 79,790 | 81,626 | 246,469 | 238,784 | ||||||||||||||||||
| All Other adjusted EBITDA expenses | 21,241 | 19,318 | 20,534 | 61,609 | 60,409 | ||||||||||||||||||
| Consolidated adjusted EBITDA expenses | 153,495 | 145,109 | 149,840 | 453,851 | 435,357 |
|
|||||||||||||||||
| Amortization of intangible assets | 10,614 | 11,752 | 11,122 | 32,987 | 35,535 | ||||||||||||||||||
| Depreciation and amortization of property, | 80,000 | ||||||||||||||||||||||
| equipment and leasehold improvements | 9,325 | 8,312 | 9,159 | 27,322 | 24,873 | ||||||||||||||||||
| Total operating expenses | $ | 173,434 | $ | 165,173 | $ | 170,121 | $ | 514,160 | $ | 495,765 |
|
||||||||||||
| (1) We have not provided a line-item reconciliation for adjusted EBITDA expenses to total operating expenses for this future period because we do not provide guidance on the individual reconciling items between total operating expenses and adjusted EBITDA expenses. |
|
Table 12: Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities (unaudited) |
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| Three Months Ended | Nine Months Ended | Full-Year | |||||||||||||||||||||
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2017 | ||||||||||||||||||
| In thousands | 2017 | 2016 | 2017 | 2017 | 2016 | Outlook(1) | |||||||||||||||||
| Net cash provided by operating activities | $ | 101,774 | $ | 148,527 | $ | 122,217 | $ | 261,005 | $ | 303,510 |
|
||||||||||||
| Capital expenditures | (6,390 | ) | (10,867 | ) | (3,729 | ) | (17,440 | ) | (24,144 | ) | |||||||||||||
| Capitalized software development costs | (5,164 | ) | (2,861 | ) | (3,306 | ) | (10,777 | ) | (7,949 | ) | |||||||||||||
| Capex | (11,554 | ) | (13,728 | ) | (7,035 | ) | (28,217 | ) | (32,093 | ) | (50,000 - 40,000) | ||||||||||||
| Free cash flow | $ | 90,220 | $ | 134,799 | $ | 115,182 | $ | 232,788 | $ | 271,417 |
|
||||||||||||
| (1) We have not provided a line-item reconciliation for free cash flow to net cash from operating activities for this future period because we do not provide guidance on the individual reconciling items between net cash from operating activities and free cash flow. |
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