MSCI Inc. Reports Second Quarter 2010 Financial Results

MSCI Inc. (NYSE: MXB), a leading global provider of investment decision support tools, including indices, portfolio risk and performance analytics and corporate governance services, today announced results for the second quarter and first half ended May 31, 2010.

(Note: Percentage changes are referenced to the comparable period in fiscal year 2009, unless otherwise noted.)

• Operating revenues increased 14.4% to $125.2 million in second quarter 2010 and 14.7% to $246.9 million for first half 2010.
• Adjusted EBITDA ² increased 15.8% to $61.8 million in second quarter 2010 for an Adjusted EBITDA margin of 49.4%. First half 2010 Adjusted EBITDA grew by 18.9% to $121.1 million. See Table 11 titled "Reconciliation of Adjusted EBITDA to Net Income."
• Diluted EPS for the second quarter 2010 increased 15.8% to $0.22. For the first six months of 2010, Diluted EPS rose 37.1% to $0.48.
• Second quarter 2010 Adjusted EPS ¹ rose 29.6% to $0.35. First half 2010 Adjusted EPS rose 29.4% to $0.66. See Table 12 titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS."

Henry A. Fernandez, Chairman and CEO, said, “We delivered a strong first half of fiscal 2010, with double digit revenue and Adjusted EBITDA growth in both the first and second quarters. Our second quarter revenues and Adjusted EBITDA grew 14.4% and 15.8%, respectively, and our Adjusted EBITDA margin expanded to 49.4%. Demand for our products has continued to strengthen, as evidenced by our record level of quarterly new sales and the year-over-year improvement in our retention rate.”

“At the beginning of June, we completed our acquisition of RiskMetrics. We are excited to have begun the work of bringing together two great companies to deliver a suite of products unmatched in the risk management analytics marketplace. With annualized revenues of more than $750 million and 2,000 employees worldwide, our increased scale and scope will enable us to invest more in developing new products and capabilities for our clients which, in turn, should lead to additional revenue growth,” added Mr. Fernandez.

Table 1: MSCI Inc. Selected Financial Information (unaudited)
					Three Months Ended												Change from				Six Months Ended												Change from
					May 31,												May 31,				May 31,												May 31,
In thousands, except per share data					2010						2009						2009				2010						2009						2009
Operating revenues					$		125,170				$		109,375				14.4%				$		246,850				$		215,290				14.7%
Operating expenses					$		78,473				$		72,721				7.9%				$		152,896				$		145,852				4.8%
Net income					$		24,067				$		19,618				22.7%				$		51,585				$		36,342				41.9%
% Margin							19.2%						17.9%										20.9%						16.9%
Diluted EPS					$		0.22				$		0.19				15.8%				$		0.48				$		0.35				37.1%
Adjusted EPS 1					$		0.35				$		0.27				29.6%				$		0.66				$		0.51				29.4%
Adjusted EBITDA 2					$		61,834				$		53,392				15.8%				$		121,083				$		101,857				18.9%
% Margin							49.4%						48.8%										49.1%						47.3%

1 Per share net income before after-tax impact of amortization of intangibles, founders grant, third party transaction expenses associated with the acquisition of RiskMetrics and debt repayment expenses. See Table 12 titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS" and information about the use of non-GAAP financial information provided under "Notes Regarding the Use of Non-GAAP Financial Measures.”

2 Income before interest income, interest expense, other expense (income), provision for taxes, depreciation, amortization, founders grant and third party transaction expenses associated with the acquisition of RiskMetrics. See Table 11 titled "Reconciliation of Adjusted EBITDA to Net Income" and information about the use of non-GAAP financial information provided under "Notes Regarding the Use of Non-GAAP Financial Measures.”

Summary of Results for Fiscal Second quarter 2010

Operating Revenues – See Table 4

Total operating revenues for the three months ended May 31, 2010 (second quarter 2010) increased $15.8 million, or 14.4%, to $125.2 million compared to $109.4 million for the three months ended May 31, 2009 (second quarter 2009). Subscription revenues increased by 5.6% to $99.5 million while equity index asset based fees rose 68.8% to $25.7 million. Subscription revenue growth resulted from increases in revenues related to equity index subscriptions and Multi-Asset Class Analytics, which were up 14.7% and 16.0%, respectively, in second quarter 2010 offset, in part, by decreases of 8.0% in Equity Portfolio Analytics and 10.8% in Other Products. Non-recurring subscription revenues increased $1.6 million to $4.2 million in the quarter. The company recorded revenue growth in all regions, most notably in EMEA and in Asia Pacific. Revenue growth from asset managers, asset owners, and others helped offset declines from broker dealers and hedge funds.