MSCI Reports Financial Results for Third Quarter and Nine Months 2016
Financial and Operational Highlights for Third Quarter and Nine Months 2016
(Note: Percentage and other changes refer to third quarter 2015 unless otherwise noted.)
- 7.3% increase in operating revenues, combined with a 3.4% increase in operating expenses, drove a 13.0% increase in operating income, with a 15.3% increase in diluted EPS and a 28.3% increase in adjusted EPS.
- Diluted EPS and adjusted EPS up 34.7% and 33.7%, respectively, year-to-date on strong operating results and the impact of share repurchases.
- 11.4% increase in Index revenue driven by growth in core products, factor and thematic products, usage fees and custom products, as well as 10.6% growth in asset-based fees.
- Operating margin increase of approximately 210 basis points to 42.7%; adjusted EBITDA margin increase of approximately 180 basis points to 49.7%.
-
Total
Run Rate grew 8.0%, and total net sales grew 12.4% on a 25.9% increase in gross sales. -
In third quarter 2016 and through
October 21, 2016 , a total of 0.9 million shares were repurchased at an average price of$79.48 per share for a total value of$73.4 million . -
Board approved an additional
$750.0 million of share repurchase authorization, bringing the total available repurchase authorization to$1.1 billion .
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
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|
YoY % |
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|
YoY % | |||||||||||||
| In thousands, except per share data | 2016 | 2015 | 2016 | Change | 2016 | 2015 | Change | ||||||||||||
| Operating revenues | $ | 288,433 | $ | 268,771 | $ | 290,596 | 7.3% | $ | 857,857 | $ | 802,120 | 6.9% | |||||||
| Operating income | $ | 123,260 | $ | 109,102 | $ | 125,691 | 13.0% | $ | 362,092 | $ | 296,355 | 22.2% | |||||||
| Operating margin % | 42.7% | 40.6% | 43.3% | 42.2% | 36.9% | ||||||||||||||
| Diluted EPS | $ | 0.68 | $ | 0.59 | $ | 0.69 | 15.3% | $ | 1.98 | $ | 1.47 | 34.7% | |||||||
| Adjusted EPS | $ | 0.77 | $ | 0.60 | $ | 0.77 | 28.3% | $ | 2.22 | $ | 1.66 | 33.7% | |||||||
| Adjusted EBITDA | $ | 143,324 | $ | 128,861 | $ | 146,027 | 11.2% | $ | 422,500 | $ | 354,783 | 19.1% | |||||||
| Adjusted EBITDA margin % | 49.7% | 47.9% | 50.3% | 49.3% | 44.2% | ||||||||||||||
"We are very pleased with these financial results and believe there are
still many levers to pull to drive growth that we expect to be supported
by strong secular tailwinds. In Index, we are focused on expanding our
leadership position in global indexes, growing our position as a
provider of indexes to the ETF market, and accelerating the adoption of
factor and ESG indexes. In Analytics, we have significantly improved our
delivery and execution, and we are now focused on developing our fixed
income capabilities, the new Analytics platform and our services
offering. Lastly, we are building scale and standardizing our data for
our fast growing ESG products, and in Real Estate we have rationalized
the cost base and have a new go-to-market strategy designed to take our
Real Estate products to the next level," continued
"By continuing to focus on these key areas, we are confident that we
will be well-positioned to deliver strong growth in revenue and
profitability for our shareholders in the quarters and years ahead,"
concluded
Third Quarter 2016 Consolidated Results
Revenues:
Operating revenues for third quarter 2016 increased
For nine months 2016, operating revenues increased
Expenses: Total
operating expenses increased
For nine months 2016, total operating expenses decreased
Headcount: As
of
Other Expense (Income), Net:
Other expense (income), net increased
Tax Rate: The effective tax rate was 33.1% for third quarter 2016 compared to 35.0% for third quarter 2015 and the effective tax rate for nine months 2016 was 33.3%, compared to 35.6% for nine months 2015. The decrease in the effective tax rate for both periods was primarily driven by efforts to better align our tax profile with our global operating footprint.
Net Income: Net
income increased 1.4% to
Adjusted EBITDA:
Adjusted EBITDA, which excludes income (loss) from discontinued
operations, net of income taxes, provision for income taxes, other
expense (income), net, depreciation and amortization, was
For nine months 2016, 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
The increase in both net cash provided by operating activities and free cash flow for third quarter 2016 and nine months 2016 compared to the same periods of the prior year reflects higher billings and collections from customers, a decrease in cash expenses and lower cash payments for income taxes, including the impact of refunds, partially offset by higher interest payments.
Share Count & Capital Return:
Total shares outstanding as of
On
|
Table 1: Third Quarter 2016 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 | ||||||||||||||||||||||||
| Q3'16 | $ | 157,751 | $ | 111,750 | 70.8 | % | $ | 111,291 | $ | 31,501 | 28.3 | % | $ | 19,391 | $ | 73 | 0.4 | % | |||||||||||||||
| Q3'15 | $ | 141,577 | $ | 102,927 | 72.7 | % | $ | 108,341 | $ | 29,216 | 27.0 | % | $ | 18,853 |
$ |
(3,282 |
) | (17.4 | %) | ||||||||||||||
| Q2'16 | $ | 152,117 | $ | 106,518 | 70.0 | % | $ | 112,393 | $ | 33,302 | 29.6 | % | $ | 26,086 | $ | 6,207 | 23.8 | % | |||||||||||||||
| YoY % change | 11.4 | % | 8.6 | % | 2.7 | % | 7.8 | % | 2.9 | % | 102.2 | % | |||||||||||||||||||||
| YTD 2016 | $ | 454,481 | $ | 318,317 | 70.0 | % | $ | 333,947 | $ | 95,163 | 28.5 | % | $ | 69,429 | $ | 9,020 | 13.0 | % | |||||||||||||||
| YTD 2015 | $ | 415,262 | $ | 293,997 | 70.8 | % | $ | 322,756 | $ | 64,560 | 20.0 | % | $ | 64,102 |
$ |
(3,774 |
) | (5.9 | %) | ||||||||||||||
| YoY % change | 9.4 | % | 8.3 | % | 3.5 | % | 47.4 | % | 8.3 | % | 339.0 | % | |||||||||||||||||||||
Index Segment:
Operating revenues for third quarter 2016 increased
The
The increase in asset-based fees was driven by several items, including
a 23.6% increase in revenue from non-ETF passive funds (primarily due to
initial fund fees recognized in the quarter), as well as a 3.6% growth
in revenue from ETFs linked to MSCI Indexes, resulting from an 11.7%
increase in average AUM offset by the impact of a change in the product
mix. In addition, revenues from futures and options contracts based on
Operating revenues for nine months 2016 increased
Index
Analytics Segment:
Operating revenues for third quarter 2016 increased
Operating revenues for nine months 2016 increased
Analytics
All Other Segment:
Operating revenues for third quarter 2016 increased
The decline in All Other revenues compared to second quarter 2016 was
primarily driven by a
Operating revenues for nine months 2016 increased
All Other
Full-Year 2016 Guidance
MSCI's guidance for full-year 2016 is as follows:
-
Full-year 2016 total operating expenses are now expected to be within
the range of
$660 million to$672 million . Full-year 2016 adjusted EBITDA expenses are now expected to be within the range of$580 million to$590 million . Previously, both full-year 2016 total operating expenses and adjusted EBITDA expenses were expected to come in at, or slightly below, the low end of their respective ranges of$680 million to$697 million and$600 million to$615 million . -
Full-year 2016 interest expense, including the amortization of
financing fees, is now expected to be approximately
$102 million compared to the previous$92 million , assuming no additional financings, and reflects the impact of the private offering of the 4.75% senior notes. -
Full-year 2016 Capex is now expected to be in the range of
$40 million to$45 million compared to the previous range of$40 million to$50 million . -
Full-year 2016 net cash provided by operating activities and free cash
flow is now expected to be in the range of
$350 million to$375 million and$305 million to$335 million , respectively, compared to the previous range of$320 million to$350 million and$270 million to$310 million , respectively. - Full-year 2016 effective tax rate is expected to be in the range of 33% to 34%.
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 October 30, 2016, the recording will also be available by
dialing 1-800-585-8367 passcode: 94728228 within the United States or
1-404-537-3406 passcode: 94728228 for international callers. A replay of
the conference call will be archived in the events and presentations
section of
-Ends-
About
For more than 40 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 2016 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
The Run Rate at a particular point in time primarily represents the forward-looking revenues for the next 12 months from then-current subscriptions and investment product licenses we provide to our clients under renewable contracts or agreements assuming all contracts or agreements that come up for renewal are renewed and assuming then-current currency exchange rates. For any license where fees are linked to an investment product's assets or trading volume, the Run Rate calculation reflects, for ETFs, the market value on the last trading day of the period, for futures and options, the most recent quarterly volumes and for non-ETF funds, the most recent client reported assets under such license or subscription. The Run Rate does not include fees associated with "one-time" and other non-recurring transactions. In addition, we remove from the Run Rate the fees associated with any subscription or investment product license agreement with respect to which we have received a notice of termination or non-renewal during the period and determined that such notice evidences the client's final decision to terminate or not renew the applicable subscription or agreement, even though such notice is not effective until a later date.
Notes Regarding the Use of Non-GAAP Financial Measures
"Adjusted EBITDA" is defined as net income before income (loss) from discontinued operations, net of income taxes, plus 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 EPS, respectively, before income from discontinued operations, net of income taxes and the after-tax impact of the amortization of intangible assets.
"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 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 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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YoY % |
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YoY % | ||||||||||||||||||||
| In thousands, except per share data | 2016 | 2015 | 2016 | Change | 2016 | 2015 | Change | |||||||||||||||||||
| Operating revenues | $ | 288,433 | $ | 268,771 | $ | 290,596 | 7.3 | % | $ | 857,857 | $ | 802,120 | 6.9 | % | ||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Cost of revenues | 62,986 | 65,593 | 62,130 | (4.0 | %) | 188,288 | 202,891 | (7.2 | %) | |||||||||||||||||
| Selling and marketing | 41,514 | 38,809 | 41,854 | 7.0 | % | 125,057 | 122,485 | 2.1 | % | |||||||||||||||||
| Research and development | 18,750 | 15,548 | 18,566 | 20.6 | % | 56,244 | 59,544 | (5.5 | %) | |||||||||||||||||
| General and administrative | 21,859 | 19,960 | 22,019 | 9.5 | % | 65,768 | 62,417 | 5.4 | % | |||||||||||||||||
| Amortization of intangible assets | 11,752 | 11,710 | 11,943 | 0.4 | % | 35,535 | 35,107 | 1.2 | % | |||||||||||||||||
|
Depreciation and amortization of property, equipment and |
||||||||||||||||||||||||||
| leasehold improvements | 8,312 | 8,049 | 8,393 | 3.3 |
% |
24,873 | 23,321 | 6.7 | % | |||||||||||||||||
| Total operating expenses1 | 165,173 | 159,669 | 164,905 | 3.4 | % | 495,765 | 505,765 | (2.0 | %) | |||||||||||||||||
| Operating income | 123,260 | 109,102 | 125,691 | 13.0 | % | 362,092 | 296,355 | 22.2 | % | |||||||||||||||||
| Interest income | (799 | ) | (285 | ) | (585 | ) | 180.4 | % | (2,005 | ) | (674 | ) | 197.5 | % | ||||||||||||
| Interest expense | 26,790 | 17,267 | 22,918 | 55.2 | % | 72,612 | 39,491 | 83.9 | % | |||||||||||||||||
| Other expense (income) | (253 | ) | (6,922 | ) | 2,814 | (96.3 | %) | 2,642 | (6,580 | ) | (140.2 | %) | ||||||||||||||
| Other expenses (income), net | 25,738 | 10,060 | 25,147 | 155.8 | % | 73,249 | 32,237 | 127.2 | % | |||||||||||||||||
|
Income from continuing operations before provision for income taxes |
97,522 | 99,042 | 100,544 | (1.5 | %) | 288,843 | 264,118 | 9.4 | % | |||||||||||||||||
| Provision for income taxes | 32,241 | 34,644 | 33,587 | (6.9 | %) | 96,238 | 94,079 | 2.3 | % | |||||||||||||||||
| Income from continuing operations | 65,281 | 64,398 | 66,957 | 1.4 | % | 192,605 | 170,039 | 13.3 | % | |||||||||||||||||
|
Income (loss) from discontinued operations, net of income taxes |
— | — | — | — | % | — | (5,797 | ) | (100.0 | %) | ||||||||||||||||
| Net income | $ | 65,281 | $ | 64,398 | $ | 66,957 | 1.4 | % | $ | 192,605 | $ | 164,242 | 17.3 | % | ||||||||||||
| Earnings per basic common share from: | ||||||||||||||||||||||||||
| Continuing operations | $ | 0.69 | $ | 0.59 | $ | 0.69 | 16.9 | % | $ | 1.99 | $ | 1.53 | 30.1 | % | ||||||||||||
| Discontinued operations | — | — | — | — | % | — | (0.05 | ) | (100.0 | %) | ||||||||||||||||
| Earnings per basic common share | $ | 0.69 | $ | 0.59 | $ | 0.69 | 16.9 | % | $ | 1.99 | $ | 1.48 | 34.5 | % | ||||||||||||
| Earnings per diluted common share from: | ||||||||||||||||||||||||||
| Continuing operations | $ | 0.68 | $ | 0.59 | $ | 0.69 | 15.3 | % | $ | 1.98 | $ | 1.52 | 30.3 | % | ||||||||||||
| Discontinued operations | — | — | — | — | % | — | (0.05 | ) | (100.0 | %) | ||||||||||||||||
| Earnings per diluted common share | $ | 0.68 | $ | 0.59 | $ | 0.69 | 15.3 | % | $ | 1.98 | $ | 1.47 | 34.7 | % | ||||||||||||
|
Weighted average shares outstanding used in computing earnings per share: |
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| Basic | 94,823 | 108,773 | 96,412 | (12.8 | %) | 96,879 | 111,131 | (12.8 | %) | |||||||||||||||||
| Diluted | 95,473 | 109,440 | 96,888 | (12.8 | %) | 97,445 | 111,951 | (13.0 | %) | |||||||||||||||||
|
1 Includes stock-based compensation expense of |
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Table 3: Selected Balance Sheet Items (unaudited) |
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| As of | ||||||||||||||||
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| In thousands |
2016 |
2015 |
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| Cash and cash equivalents | $ | 974,062 | $ | 777,706 | ||||||||||||
| Accounts receivable, net of allowances | $ | 235,803 | $ | 208,239 | ||||||||||||
| Deferred revenue | $ | 343,264 | $ | 317,552 | ||||||||||||
| Long-term debt1 | $ | 2,074,478 | $ | 1,579,404 | ||||||||||||
1 Consists of gross long-term debt, net of deferred financing
fees. Gross long-term debt at
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Table 4: Selected Cash Flows Items (unaudited) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
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|
YoY % |
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|
YoY % | ||||||||||||||||||||
| In thousands | 2016 | 2015 | 2016 | Change | 2016 | 2015 | Change | |||||||||||||||||||
| Cash provided by operating activities | $ | 146,923 | $ | 133,963 | $ | 117,077 | 9.7 | % | $ | 297,030 | $ | 224,672 | 32.2 | % | ||||||||||||
| Cash used in investing activities | (13,071 | ) | (12,250 | ) | (12,905 | ) | 6.7 | % | (31,496 | ) | (30,532 | ) | 3.2 | % | ||||||||||||
| Cash provided by (used in) financing activities | 436,430 | 419,451 | (139,399 | ) | 4.0 | % | (65,278 | ) | 296,033 | (122.1 | %) | |||||||||||||||
| Effect of exchange rate changes | (834 | ) | (2,697 | ) | (5,173 | ) | (69.1 | %) | (3,900 | ) | (5,484 | ) | (28.9 | %) | ||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 569,448 | $ | 538,467 |
$ |
(40,400 |
) | 5.8 | % | $ | 196,356 | $ | 484,689 | (59.5 | %) | |||||||||||
|
Table 5: Operating Results by Segment and Revenue Type (unaudited) |
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| Index | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
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|
YoY % |
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|
YoY % | ||||||||||||||||||||
| In thousands | 2016 | 2015 | 2016 | Change | 2016 | 2015 | Change | |||||||||||||||||||
| Operating revenues: | ||||||||||||||||||||||||||
| Recurring subscriptions | $ | 98,625 | $ | 89,139 | $ | 97,139 | 10.6 | % | $ | 289,409 | $ | 261,729 | 10.6 | % | ||||||||||||
| Asset-based fees | 56,122 | 50,736 | 49,634 | 10.6 | % | 154,455 | 147,776 | 4.5 | % | |||||||||||||||||
| Non-recurring | 3,004 | 1,702 | 5,344 | 76.5 | % | 10,617 | 5,757 | 84.4 | % | |||||||||||||||||
| Total operating revenues | 157,751 | 141,577 | 152,117 | 11.4 | % | 454,481 | 415,262 | 9.4 | % | |||||||||||||||||
| Adjusted EBITDA expenses | 46,001 | 38,650 | 45,599 | 19.0 | % | 136,164 | 121,265 | 12.3 | % | |||||||||||||||||
| Adjusted EBITDA | $ | 111,750 |
|
$ | 102,927 | $ | 106,518 | 8.6 | % | $ | 318,317 | $ | 293,997 | 8.3 | % | |||||||||||
| Adjusted EBITDA margin % |
70.8% |
|
72.7% |
|
70.0% |
|
70.0% |
|
70.8% |
|
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| Analytics | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
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|
YoY % |
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|
YoY % | ||||||||||||||||||||
| In thousands | 2016 | 2015 | 2016 | Change | 2016 | 2015 | Change | |||||||||||||||||||
| Operating revenues: | ||||||||||||||||||||||||||
| Recurring subscriptions | $ | 109,554 | $ | 107,065 | $ | 110,452 | 2.3 | % | $ | 328,636 | $ | 318,871 | 3.1 | % | ||||||||||||
| Non-recurring | 1,737 | 1,276 | 1,941 | 36.1 | % | 5,311 | 3,885 | 36.7 | % | |||||||||||||||||
| Total operating revenues | 111,291 | 108,341 | 112,393 | 2.7 | % | 333,947 | 322,756 | 3.5 | % | |||||||||||||||||
| Adjusted EBITDA expenses | 79,790 | 79,125 | 79,091 | 0.8 | % | 238,784 | 258,196 | (7.5 | %) | |||||||||||||||||
| Adjusted EBITDA | $ | 31,501 | $ | 29,216 | $ | 33,302 | 7.8 | % | $ | 95,163 | $ | 64,560 | 47.4 | % | ||||||||||||
| Adjusted EBITDA margin % |
28.3% |
|
27.0% |
|
29.6% |
|
28.5% |
|
20.0% |
|
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| All Other | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
|
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|
YoY % |
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|
YoY % | ||||||||||||||||||||
| In thousands | 2016 | 2015 | 2016 | Change | 2016 | 2015 | Change | |||||||||||||||||||
| Operating revenues: | ||||||||||||||||||||||||||
| Recurring subscriptions | $ | 18,329 | $ | 17,569 | $ | 25,141 | 4.3 | % | $ | 66,533 | $ | 61,025 | 9.0 | % | ||||||||||||
| Non-recurring | 1,062 | 1,284 | 945 | (17.3 | %) | 2,896 | 3,077 | (5.9 | %) | |||||||||||||||||
| Total operating revenues | 19,391 | 18,853 | 26,086 | 2.9 | % | 69,429 | 64,102 | 8.3 | % | |||||||||||||||||
| Adjusted EBITDA expenses | 19,318 | 22,135 | 19,879 | (12.7 | %) | 60,409 | 67,876 | (11.0 | %) | |||||||||||||||||
| Adjusted EBITDA | $ | 73 |
$ |
(3,282 |
) | $ | 6,207 | 102.2 | % | $ | 9,020 |
$ |
(3,774 |
) | 339.0 | % | ||||||||||
| Adjusted EBITDA margin % |
0.4% |
|
(17.4% |
) |
23.8% |
|
13.0% |
|
(5.9% |
) |
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| Consolidated | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
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|
YoY % |
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|
YoY % | ||||||||||||||||||||
| In thousands | 2016 | 2015 | 2016 | Change | 2016 | 2015 | Change | |||||||||||||||||||
| Operating revenues: | ||||||||||||||||||||||||||
| Recurring subscriptions | $ | 226,508 | $ | 213,773 | $ | 232,732 | 6.0 | % | $ | 684,578 | $ | 641,625 | 6.7 | % | ||||||||||||
| Asset-based fees | 56,122 | 50,736 | 49,634 | 10.6 | % | 154,455 | 147,776 | 4.5 | % | |||||||||||||||||
| Non-recurring | 5,803 | 4,262 | 8,230 | 36.2 | % | 18,824 | 12,719 | 48.0 | % | |||||||||||||||||
| Operating revenues total | 288,433 | 268,771 | 290,596 | 7.3 | % | 857,857 | 802,120 | 6.9 | % | |||||||||||||||||
| Adjusted EBITDA expenses | 145,109 | 139,910 | 144,569 | 3.7 | % | 435,357 | 447,337 | (2.7 | %) | |||||||||||||||||
| Adjusted EBITDA | $ | 143,324 | $ | 128,861 | $ | 146,027 | 11.2 | % | $ | 422,500 | $ | 354,783 | 19.1 | % | ||||||||||||
| Adjusted EBITDA margin % |
49.7% |
|
47.9% |
|
50.3% |
|
49.3% |
|
44.2% |
|
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| Operating margin % |
42.7% |
|
40.6% |
|
43.3% |
|
42.2% |
|
36.9% |
|
||||||||||||||||
|
Table 6: Sales and Aggregate Retention Rate by Segment (unaudited) |
||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| In thousands | 2016 | 2016 | 2016 | 2015 | 2015 | 2016 | 2015 | |||||||||||||||||||||
| Index | ||||||||||||||||||||||||||||
| New recurring subscription sales | $ | 11,758 | $ | 13,139 | $ | 13,162 | $ | 13,702 | $ | 11,810 | $ | 38,059 | $ | 35,819 | ||||||||||||||
| Subscription cancellations |
(3,840) |
|
(4,096) |
|
(3,410) |
|
(6,147) |
|
(3,852) |
|
(11,346) |
|
(10,107) |
|
||||||||||||||
| Net new recurring subscription sales | $ | 7,918 | $ | 9,043 | $ | 9,752 | $ | 7,555 | $ | 7,958 | $ | 26,713 | $ | 25,712 | ||||||||||||||
| Non-recurring sales | $ | 5,468 | $ | 5,379 | $ | 3,542 | $ | 2,779 | $ | 1,719 | $ | 14,389 | $ | 6,185 | ||||||||||||||
| Total Index net sales | $ | 13,386 | $ | 14,422 | $ | 13,294 | $ | 10,334 | $ | 9,677 | $ | 41,102 | $ | 31,897 | ||||||||||||||
| Index Aggregate Retention Rate1 |
95.8% |
|
95.6% |
|
96.3% |
|
92.7% |
|
95.4% |
|
95.9% |
|
96.0% |
|
||||||||||||||
| Analytics | ||||||||||||||||||||||||||||
| New recurring subscription sales | $ | 13,131 | $ | 11,149 | $ | 12,358 | $ | 16,481 | $ | 10,390 | $ | 36,638 | $ | 36,338 | ||||||||||||||
| Subscription cancellations |
(10,530) |
|
(9,015) |
|
(5,911) |
|
(10,593) |
|
(4,898) |
|
(25,456) |
|
(18,769) |
|
||||||||||||||
| Net new recurring subscription sales | $ | 2,601 | $ | 2,134 | $ | 6,447 | $ | 5,888 | $ | 5,492 | $ | 11,182 | $ | 17,569 | ||||||||||||||
| Non-recurring sales | $ | 2,330 | $ | 1,429 | $ | 1,856 | $ | 2,490 | $ | 1,381 | $ | 5,615 | $ | 4,796 | ||||||||||||||
| Total Analytics net sales | $ | 4,931 | $ | 3,563 | $ | 8,303 | $ | 8,378 | $ | 6,873 | $ | 16,797 | $ | 22,365 | ||||||||||||||
| Analytics Aggregate Retention Rate1 |
90.4% |
|
91.7% |
|
94.6% |
|
89.9% |
|
95.3% |
|
92.2% |
|
94.0% |
|
||||||||||||||
| All Other | ||||||||||||||||||||||||||||
| New recurring subscription sales | $ | 3,877 | $ | 4,481 | $ | 5,256 | $ | 4,206 | $ | 3,308 | $ | 13,614 | $ | 12,451 | ||||||||||||||
| Subscription cancellations |
(1,903) |
|
(2,243) |
|
(1,616) |
|
(3,183) |
|
(2,165) |
|
(5,762) |
|
(5,859) |
|
||||||||||||||
| Net new recurring subscription sales | $ | 1,974 | $ | 2,238 | $ | 3,640 | $ | 1,023 | $ | 1,143 | $ | 7,852 | $ | 6,592 | ||||||||||||||
| Non-recurring sales | $ | 774 | $ | 1,132 | $ | 1,202 | $ | 1,592 | $ | 1,054 | $ | 3,108 | $ | 3,288 | ||||||||||||||
| Total All Other net sales | $ | 2,748 | $ | 3,370 | $ | 4,842 | $ | 2,615 | $ | 2,197 | $ | 10,960 | $ | 9,880 | ||||||||||||||
| All Other Aggregate Retention Rate1 |
90.8% |
|
89.2% |
|
92.2% |
|
83.9% |
|
89.1% |
|
90.7% |
|
90.1% |
|
||||||||||||||
| Consolidated | ||||||||||||||||||||||||||||
| New recurring subscription sales | $ | 28,766 | $ | 28,769 | $ | 30,776 | $ | 34,389 | $ | 25,508 | $ | 88,311 | $ | 84,608 | ||||||||||||||
| Subscription cancellations |
(16,273) |
|
(15,354) |
|
(10,937) |
|
(19,923) |
|
(10,915) |
|
(42,564) |
|
(34,735) |
|
||||||||||||||
| Net new recurring subscription sales | $ | 12,493 | $ | 13,415 | $ | 19,839 | $ | 14,466 | $ | 14,593 | $ | 45,747 | $ | 49,873 | ||||||||||||||
| Non-recurring sales | $ | 8,572 | $ | 7,940 | $ | 6,600 | $ | 6,861 | $ | 4,154 | $ | 23,112 | $ | 14,269 | ||||||||||||||
| Total net sales | $ | 21,065 | $ | 21,355 | $ | 26,439 | $ | 21,327 | $ | 18,747 | $ | 68,859 | $ | 64,142 | ||||||||||||||
| Total Aggregate Retention Rate1 |
92.7% |
|
93.1% |
|
95.1% |
|
90.4% |
|
94.8% |
|
93.6% |
|
94.4% |
|
||||||||||||||
|
1 See "Notes Regarding the Use of Operating Metrics" for details regarding the definition of Aggregate Retention Rate. |
||||||||||||||||||||||||||||
|
Table 7: ETF Assets Linked to MSCI Indexes (unaudited)1 |
||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| In billions |
2016 |
2016 | 2016 |
2015 |
2015 |
2016 |
2015 | |||||||||||||||||||||
| Beginning Period AUM in ETFs linked to | ||||||||||||||||||||||||||||
| MSCI Indexes | $ | 439.7 | $ | 438.3 | $ | 433.4 | $ | 390.2 | $ | 435.4 | $ | 433.4 | $ | 373.3 | ||||||||||||||
| Market Appreciation/(Depreciation) | 23.7 | (2.5 | ) | (1.7 | ) | 14.5 | (48.2 | ) | 19.5 | (42.1 | ) | |||||||||||||||||
| Cash Inflows |
|
11.5 | 3.9 | 6.6 | 28.7 | 3.0 | 22.0 | 59.0 | ||||||||||||||||||||
|
Period-End AUM in ETFs linked to MSCI Indexes |
$ | 474.9 | $ | 439.7 | $ | 438.3 | $ | 433.4 | $ | 390.2 | $ | 474.9 | $ | 390.2 | ||||||||||||||
|
Period Average AUM in ETFs linked to MSCI Indexes |
$ | 467.3 | $ | 438.8 | $ | 407.9 | $ | 423.3 | $ | 418.2 | $ | 438.1 | $ | 417.4 | ||||||||||||||
| Avg. Basis Point Fee2 | 3.11 | 3.12 | 3.24 | 3.32 | 3.40 | 3.11 | 3.40 | |||||||||||||||||||||
|
Source: Bloomberg and 1 ETF assets under management calculation methodology is ETF net asset value multiplied by shares outstanding.
2 Based on period-end |
||||||||||||||||||||||||||||
|
Table 8: |
|||||||||||||||
| As of | |||||||||||||||
|
|
|
|
YoY % | ||||||||||||
| In thousands |
2016 |
2015 |
2016 |
Change | |||||||||||
| Index | |||||||||||||||
| Recurring subscriptions | $ | 395,601 | $ | 361,209 | $ | 387,679 | 9.5 | % | |||||||
| Asset-based fees | 212,224 | 187,818 | 195,298 | 13.0 | % | ||||||||||
|
Index |
607,825 | 549,027 | 582,977 | 10.7 | % | ||||||||||
|
Analytics |
452,323 | 430,377 | 449,062 | 5.1 | % | ||||||||||
|
All Other |
86,738 | 82,877 | 86,924 | 4.7 | % | ||||||||||
|
Total |
$ | 1,146,886 | $ | 1,062,281 | $ | 1,118,963 | 8.0 | % | |||||||
| Total recurring subscriptions | $ | 934,662 | $ | 874,463 | $ | 923,665 | 6.9 | % | |||||||
| Total asset-based fees | 212,224 | 187,818 | 195,298 | 13.0 | % | ||||||||||
|
Total |
$ | 1,146,886 | $ | 1,062,281 | $ | 1,118,963 | 8.0 | % | |||||||
|
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) |
||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||
| In thousands |
2016 |
2015 |
2016 |
2016 |
2015 | |||||||||||||||
| Index adjusted EBITDA | $ | 111,750 | $ | 102,927 | $ | 106,518 | $ | 318,317 | $ | 293,997 | ||||||||||
| Analytics adjusted EBITDA | 31,501 | 29,216 | 33,302 | 95,163 | 64,560 | |||||||||||||||
| All Other adjusted EBITDA | 73 | (3,282 | ) | 6,207 | 9,020 | (3,774 | ) | |||||||||||||
| Consolidated adjusted EBITDA | 143,324 | 128,861 | 146,027 | 422,500 | 354,783 | |||||||||||||||
| Amortization of intangible assets | 11,752 | 11,710 | 11,943 | 35,535 | 35,107 | |||||||||||||||
|
Depreciation and amortization of property, equipment and leasehold improvements |
8,312 | 8,049 | 8,393 | 24,873 | 23,321 | |||||||||||||||
| Operating income | 123,260 | 109,102 | 125,691 | 362,092 | 296,355 | |||||||||||||||
| Other expense (income), net | 25,738 | 10,060 | 25,147 | 73,249 | 32,237 | |||||||||||||||
| Provision for income taxes | 32,241 | 34,644 | 33,587 | 96,238 | 94,079 | |||||||||||||||
| Income from continuing operations | 65,281 | 64,398 | 66,957 | 192,605 | 170,039 | |||||||||||||||
|
Income (loss) from discontinued operations, net of income taxes |
— | — | — | — | (5,797 | ) | ||||||||||||||
| Net income | $ | 65,281 | $ | 64,398 | $ | 66,957 | $ | 192,605 | $ | 164,242 | ||||||||||
|
|
||||||||||||||||||||
|
Table 10: Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS (unaudited) |
||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||
| In thousands, except per share data | 2016 | 2015 | 2016 | 2016 | 2015 | |||||||||||||||
| Net income | $ | 65,281 | $ | 64,398 | $ | 66,957 | $ | 192,605 | $ | 164,242 | ||||||||||
|
Less: Income (loss) from discontinued operations, net of income taxes |
— | — | — | — | (5,797 | ) | ||||||||||||||
| Income from continuing operations | 65,281 | 64,398 | 66,957 | 192,605 | 170,039 | |||||||||||||||
| Plus: Amortization of intangible assets | 11,752 | 11,710 | 11,943 | 35,535 | 35,107 | |||||||||||||||
| Less: Gain on sale of investment | — | (6,300 | ) | — | — | (6,300 | ) | |||||||||||||
| Less: Income tax effect | (3,873 | ) | (4,082 | ) | (4,001 | ) | (11,840 | ) | (12,505 | ) | ||||||||||
| Adjusted net income | $ | 73,160 | $ | 65,726 | $ | 74,899 | $ | 216,300 | $ | 186,341 | ||||||||||
| Diluted EPS | $ | 0.68 | $ | 0.59 | $ | 0.69 | $ | 1.98 | $ | 1.47 | ||||||||||
|
Less: Earnings per diluted common share from discontinued operations |
— | — | — | — | (0.05 | ) | ||||||||||||||
|
Earnings per diluted common share from continuing operations |
$ | 0.68 | $ | 0.59 | $ | 0.69 | $ | 1.98 | $ | 1.52 | ||||||||||
| Plus: Amortization of intangible assets | 0.12 | 0.11 | 0.12 | 0.36 | 0.31 | |||||||||||||||
| Less: Gain on sale of investment | — | (0.06 | ) | — | — | (0.06 | ) | |||||||||||||
| Less: Income tax effect | (0.03 | ) | (0.04 | ) | (0.04 | ) | (0.12 | ) | (0.11 | ) | ||||||||||
| Adjusted EPS | $ | 0.77 | $ | 0.60 | $ | 0.77 | $ | 2.22 | $ | 1.66 | ||||||||||
|
Table 11: Reconciliation of Adjusted EBITDA Expenses to Operating Expenses (unaudited) |
||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | Full-Year | ||||||||||||||||||||
|
|
|
|
|
|
2016 | |||||||||||||||||
| In thousands |
2016 |
2015 |
2016 |
2016 |
2015 |
Outlook | ||||||||||||||||
| Index adjusted EBITDA expenses | $ | 46,001 | $ | 38,650 | $ | 45,599 | $ | 136,164 | $ | 121,265 | ||||||||||||
| Analytics adjusted EBITDA expenses | 79,790 | 79,125 | 79,091 | 238,784 | 258,196 | |||||||||||||||||
| All Other adjusted EBITDA expenses | 19,318 | 22,135 | 19,879 | 60,409 | 67,876 | |||||||||||||||||
| Consolidated adjusted EBITDA expenses | 145,109 | 139,910 | 144,569 | 435,357 | 447,337 |
|
||||||||||||||||
| Amortization of intangible assets | 11,752 | 11,710 | 11,943 | 35,535 | 35,107 | |||||||||||||||||
|
Depreciation and amortization of property, |
80,000 - 82,000 |
|||||||||||||||||||||
|
equipment and leasehold improvements |
8,312 | 8,049 | 8,393 | 24,873 | 23,321 |
|
||||||||||||||||
| Total operating expenses | $ | 165,173 | $ | 159,669 | $ | 164,905 | $ | 495,765 | $ | 505,765 |
|
|||||||||||
|
Table 12: Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities (unaudited) |
||||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
Full-Year |
||||||||||||||||||||
|
|
|
|
|
|
2016 |
|||||||||||||||||
| In thousands | 2016 | 2015 | 2016 | 2016 | 2015 |
Outlook |
||||||||||||||||
| Net cash provided by operating activities | $ | 146,923 | $ | 133,963 | $ | 117,077 | $ | 297,030 | $ | 224,672 |
|
|||||||||||
| Capital expenditures | (10,867 | ) | (8,975 | ) | (10,142 | ) | (24,144 | ) | (24,525 | ) | ||||||||||||
| Capitalized software development costs | (2,861 | ) | (3,275 | ) | (2,763 | ) | (7,949 | ) | (6,062 | ) | ||||||||||||
| Capex | (13,728 | ) | (12,250 | ) | (12,905 | ) | (32,093 | ) | (30,587 | ) | (45,000 - 40,000) | |||||||||||
| Free cash flow | $ | 133,195 | $ | 121,713 | $ | 104,172 | $ | 264,937 | $ | 194,085 |
|
|||||||||||
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