MSCI Inc. (NYSE:MSCI) announced second-quarter adjusted earnings on Tuesday that outpaced analyst forecasts, fueled by robust growth in asset-based fees as ETFs tracking its indexes hit record asset levels. Following the news, MSCI’s shares gained 0.91% in pre-market trading.
The company reported adjusted earnings per share of $4.17, slightly above the expected $4.14, while revenue rose 9.1% year-over-year to $772.7 million, beating the consensus estimate of $769.56 million.
Asset-based fees, linked to investment vehicles that track MSCI indexes, surged 12.7% to $184.1 million. Assets under management for ETFs connected to MSCI equity indexes reached an all-time high of $2.02 trillion by the quarter’s close, up from $1.63 trillion a year earlier.
“MSCI delivered another quarter of strong financial performance, along with 17% asset-based-fee run-rate growth fueled by record AUM levels in ETF products linked to our indexes,” said Henry A. Fernandez, Chairman and CEO of MSCI. “In fact, we saw more cash flows into equity ETFs tied to our indexes than any other index provider.”
The company sustained an operating margin of 55.0%, an improvement from 54.0% in the prior year, while adjusted EBITDA margin climbed to 61.4% from 60.7%.
Recurring subscription revenue, which provides MSCI with steady income, increased 7.9% to $562.8 million. The firm maintained a strong retention rate of 94.4%, a slight decline from 94.8% the previous year.
MSCI’s largest division, the Index segment, experienced a 9.5% revenue increase to $434.8 million. Meanwhile, the Sustainability and Climate segment recorded the highest growth, with revenue rising 11.3% to $88.9 million.
During the quarter, MSCI bought back around 251,000 shares at an average cost of $523.20 each, spending $131.2 million, and returned $139.3 million to shareholders in dividends.
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