NEW YORK - Shares of MSCI Inc . (NYSE:MSCI), a leading provider of critical decision support tools and services for the global investment community, dropped 7% after the company reported its first-quarter revenue fell short of Wall Street expectations.
For the first quarter ended March 31, 2024, MSCI announced revenue of $679.96 million, a 14.8% increase from the same quarter last year but below the analyst consensus estimate of $684.19 million. Adjusted earnings per share (EPS) reached $3.52, surpassing analyst predictions by $0.07.
Henry A. Fernandez, Chairman and CEO of MSCI, commented on the results, highlighting the company's ability to deliver solid earnings despite operating environment challenges. "Record AUM balances in MSCI-linked index products drove strong revenue growth from asset-based fees, which helped offset lower subscription revenue. This highlights the underlying strength and stability of our all-weather franchise," Fernandez stated.
Despite the earnings beat, the revenue miss prompted a negative market response, with MSCI's stock falling 7%. The company's operating margin for the quarter was 49.9%, down from 53.1% in the first quarter of 2023. MSCI's net income rose 7.2% to $256.0 million, and adjusted EBITDA increased by 11.3% to $383.6 million.
MSCI's first-quarter financial results reflect resilience in new recurring sales, particularly in Analytics, which marked the highest first quarter in a decade. However, increased cancellations, partly due to a large merger among banking clients, impacted the overall performance. Fernandez assured that the company is managing these pressures and does not expect this level of cancellations to continue.
Looking ahead, MSCI's guidance for the full year 2024 includes operating expenses ranging from $1.3 to $1.34 billion and an adjusted EBITDA expense of $1.13 to $1.16 billion. The company expects an effective tax rate of 18% to 21% and capital expenditures between $95 to $105 million.
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