Business Wire | Oct 27, 2020 06:45AM EDT

MSCI Reports Financial Results for Third Quarter and Nine Months 2020

Oct. 27, 2020

NEW YORK--(BUSINESS WIRE)--Oct. 27, 2020--MSCI Inc. ("MSCI" or the "Company") (NYSE: MSCI), a leading provider of critical decision support tools and services for the global investment community, today announced its financial results for the three months ended September 30, 2020 ("third quarter 2020") and nine months ended September 30, 2020 ("nine months 2020").

Financial and Operational Highlights for Third Quarter 2020(Note: Percentage and other changes are relative to the three months ended September 30, 2019 ("third quarter 2019") unless otherwise noted).

* Operating revenues of $425.3 million, up 7.9% * Recurring subscription revenues up 8.7%; Asset-based fees up 4.5%; Non-recurring revenues up 16.2% * Operating margin of 53.5%; Adjusted EBITDA margin of 58.6% * Diluted EPS of $2.16, up 35.0%; Adjusted EPS of $2.20, up 31.0% * New recurring subscription sales growth of 7.4%; Organic subscription Run Rate growth of 9.4%; Retention Rate of 94.5% * During third quarter 2020 and through October 23, 2020, a total of 745,032 shares were repurchased at an average price of $345.78 per share for a total value of $257.6 million * Approximately $65.3 million in dividends were paid to shareholders in third quarter 2020; Cash dividend of $0.78 per share declared by MSCI Board of Directors for fourth quarter 2020

Three Months Ended Nine Months Ended

In Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY % thousands,

except pershare data 2020 2019 Change 2020 2019 Change (unaudited)

Operating $ 425,333 $ 394,251 7.9 % $ 1,251,729 $ 1,151,190 8.7 %revenues

Operating $ 227,620 $ 201,219 13.1 % $ 650,679 $ 556,272 17.0 %income

Operating 53.5 % 51.0 % 52.0 % 48.3 % margin %



Net income $ 182,358 $ 136,983 33.1 % $ 445,606 $ 440,865 1.1 %



Diluted EPS $ 2.16 $ 1.60 35.0 % $ 5.26 $ 5.15 2.1 %

Adjusted $ 2.20 $ 1.68 31.0 % $ 5.87 $ 4.77 23.1 %EPS



Adjusted $ 249,447 $ 220,789 13.0 % $ 715,374 $ 630,292 13.5 %EBITDA

AdjustedEBITDA 58.6 % 56.0 % 57.2 % 54.8 % margin %

"In the midst of a global pandemic which has resulted in economic turmoil and significant changes in how we and our clients work, we are proud of our team's delivery of another quarter of over 10% growth in recurring subscription Run Rate. MSCI's third quarter results reflect our clients' continued demand for our mission-critical solutions and the resilience of our franchise," said Henry A. Fernandez, Chairman and CEO of MSCI.

"We have returned nearly $800 million in capital to our shareholders year-to-date through October 23, 2020, including opportunistic repurchases of our shares at an average price of $283.33 and quarterly dividends. We also continue to invest in a number of attractive 'Triple Crown' opportunities across our franchise, as we remain highly confident in our long-term growth prospects," added Mr. Fernandez.

Third Quarter Consolidated Results

Operating Revenues: Operating revenues were $425.3 million, up 7.9%. The $31.1 million increase was driven by $25.1 million in higher recurring subscription revenues, $4.4 million in higher asset-based fees and $1.6 million in additional non-recurring revenues.

Run Rate and Retention Rate: Total Run Rate at September 30, 2020 was $1,719.6 million, up 10.9% compared to September 30, 2019. The $168.9 million increase was driven by a $123.7 million increase in recurring subscription Run Rate and a $45.2 million increase in asset-based fees Run Rate. Organic subscription Run Rate growth was 9.4%, driven by increases across all three reporting segments. Retention Rate was 94.5%, compared to 95.0% in third quarter 2019 and 93.5% in second quarter 2020.

Expenses: Total operating expenses were $197.7 million, up slightly from third quarter 2019. Adjusted EBITDA expenses were $175.9 million, also up slightly, reflecting higher compensation costs partially offset by lower travel and entertainment expense and professional fees. Total operating expenses excluding the impact of foreign currency exchange rate fluctuations ("ex-FX") and adjusted EBITDA expenses ex-FX increased 2.2% and 1.1%, respectively.

Headcount: As of September 30, 2020, headcount was 3,545 employees, with approximately 36% and approximately 64% of employees located in developed market and emerging market locations, respectively.

Other Expense (Income), Net: Other expense (income), net was $38.6 million, up 18.8%. The increase primarily reflected lower interest income due to lower rates earned on cash balances and higher interest expense associated with a higher debt balance for third quarter 2020 compared to third quarter 2019.

Income Taxes:The effective tax rate was 3.5% in third quarter 2020, compared to 18.8% in third quarter 2019. The decline was primarily due to an approximately $27.5 million favorable impact of final regulations released during the third quarter 2020 clarifying certain provisions established in the Tax Cuts and Jobs Act that was enacted on December 22, 2017 and an approximately $5.5 million income tax benefit related to the revaluation of the cost of deemed repatriation of foreign earnings, partially offset by an approximately $3.5 million lower benefit associated with other prior year adjustments.

Net Income: As a result of the factors described above, net income was $182.4 million, up 33.1%.

Adjusted EBITDA: Adjusted EBITDA was $249.4 million, up 13.0%. Adjusted EBITDA margin in third quarter 2020 was 58.6%, compared to 56.0% in third quarter 2019.

Index Segment:

Table 1A: Results (unaudited)

Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY %

In thousands 2020 2019 Change 2020 2019 Change

Operating revenues:

Recurring $146,387 $133,403 9.7% $431,631 $393,222 9.8%subscriptions

Asset-based fees 100,371 96,013 4.5% 288,642 265,554 8.7%

Non-recurring 8,933 8,011 11.5% 27,582 18,974 45.4%

Total operating 255,691 237,427 7.7% 747,855 677,750 10.3%revenues

Adjusted EBITDA 60,971 59,747 2.0% 186,292 183,944 1.3%expenses

Adjusted EBITDA $194,720 $177,680 9.6% $561,563 $493,806 13.7%

Adjusted EBITDA 76.2% 74.8% 75.1% 72.9% margin %

Index operating revenues for third quarter 2020 were $255.7 million, up 7.7%. The $18.3 million increase was driven by $13.0 million in higher recurring subscription revenues, $4.4 million in higher asset-based fees and $0.9 million in higher non-recurring revenues.

The increase in recurring subscription revenues was primarily driven by growth in core products, strong growth in factor and ESG/Climate index products and growth in custom index products. The increase in non-recurring revenues reflected higher contributions from licenses of historical data.

Growth in asset-based fees primarily consisted of increases from exchange traded funds ("ETFs") linked to MSCI indexes and from non-ETF funds linked to MSCI indexes. The increase in revenues from ETFs linked to MSCI indexes was driven by a 10.2% increase in average AUM in equity ETFs linked to MSCI indexes, partially offset by the impact of a change in product mix.

Index Run Rate as of September 30, 2020 was $1.0 billion, up 11.1%. The $99.9 million increase was driven by a $54.7 million increase in recurring subscription Run Rate and a $45.2 million increase in asset-based fees Run Rate. The increase in recurring subscription Run Rate was primarily driven by strong growth in core products, custom and specialized index products and factor and ESG/Climate index products, with growth across all regions and all client segments. The increase in asset-based fees Run Rate was primarily driven by higher volume in futures and options, higher AUM in equity ETFs linked to MSCI indexes and higher AUM in non-ETF indexed funds linked to MSCI indexes.

Analytics Segment:

Table 1B: Results (unaudited)

Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY %

In thousands 2020 2019 Change 2020 2019 Change

Operating revenues:

Recurring $126,251 $122,120 3.4% $376,505 $363,929 3.5%subscriptions

Non-recurring 2,086 1,483 40.7% 4,903 4,790 2.4%

Total operating 128,337 123,603 3.8% 381,408 368,719 3.4%revenues

Adjusted EBITDA 83,281 85,806 (2.9%) 253,868 255,453 (0.6%)expenses

Adjusted EBITDA $45,056 $37,797 19.2% $127,540 $113,266 12.6%

Adjusted EBITDA 35.1% 30.6% 33.4% 30.7% margin %

Analytics operating revenues for third quarter 2020 were $128.3 million, up 3.8%. The $4.7 million increase was driven by higher recurring subscription revenues, predominantly from Multi-Asset Class Analytics products.

Analytics Run Rate as of September 30, 2020 was $544.3 million, up 6.9%. The increase of $35.1 million was primarily driven by growth in Multi-Asset Class Analytics products, with increases across all regions. Analytics organic subscription Run Rate growth was 5.9%.

All Other Segment:

Table 1C: Results (unaudited)

Three Months Ended Nine Months Ended

Sep. Sep. YoY % Sep. 30, Sep. 30, YoY % 30, 30,

In thousands 2020 2019 Change 2020 2019 Change

Operating revenues:

Recurring $40,552 $32,585 24.4% $119,363 $102,470 16.5%subscriptions

Non-recurring 753 636 18.4% 3,103 2,251 37.8%

Total operating 41,305 33,221 24.3% 122,466 104,721 16.9%revenues

Adjusted EBITDA 31,634 27,909 13.3% 96,195 81,501 18.0%expenses

Adjusted EBITDA $9,671 $5,312 82.1% $26,271 $23,220 13.1%

Adjusted EBITDA 23.4% 16.0% 21.5% 22.2% margin %

All Other operating revenues for third quarter 2020 were $41.3 million, up 24.3%. The $8.1 million increase was driven by $5.8 million of higher ESG operating revenues, primarily driven by strong growth from Ratings, Climate and Screening products, and $2.3 million of higher Real Estate operating revenues, primarily driven by strong growth in Enterprise Analytics and Global Intel products. Total ESG operating revenues were $28.5 million and total Real Estate operating revenues were $12.8 million. All Other organic operating revenue growth was 18.6%, including ESG organic operating revenue growth of 19.4% and Real Estate organic operating revenue growth of 16.7%.

All Other Run Rate as of September 30, 2020 was $175.2 million, up 24.0%. The $34.0 million increase was driven by a $29.1 million increase in ESG Run Rate, reflecting strong growth in Ratings and Climate products. Real Estate Run Rate increased $4.9 million, reflecting growth in Global Intel and Enterprise Analytics products. All Other organic subscription Run Rate growth was 19.5%, with ESG organic subscription Run Rate growth of 26.3% and Real Estate organic subscription Run Rate growth of 6.5%.

Select Balance Sheet Items and Capital Allocation

Cash Balances and Outstanding Debt: Cash and cash equivalents was $1.3 billion as of September 30, 2020. MSCI typically seeks to maintain minimum cash balances globally of approximately $200.0 million to $250.0 million for general operating purposes but may maintain higher minimum cash balances while the COVID-19 pandemic continues to impact global economic markets.

Total outstanding debt as of September 30, 2020 was $3.4 billion. The total debt to net income ratio (based on trailing twelve months net income) was 5.9x. The total debt to adjusted EBITDA ratio (based on trailing twelve months adjusted EBITDA) was 3.6x.

MSCI seeks to maintain gross leverage to adjusted EBITDA in a target range of 3.0x to 3.5x.

Capex and Cash Flow: For third quarter 2020, Capex was $11.7 million, cash provided by operating activities was $199.8 million, up 6.0%, and free cash flow was $188.1 million, up 8.2%.

Share Count and Share Repurchases: Weighted average diluted shares outstanding were 84.5 million in third quarter 2020, down 1.3% year-over-year. In third quarter 2020, a total of 598,031 shares were repurchased at an average price of $345.41 per share for a total value of $206.6 million. From October 1st through 23rd, an incremental 147,001 shares were repurchased at an average price of $347.26 per share for a total value of $51.0 million. A total of $0.8 billion of outstanding share repurchase authorization remains as of October 23, 2020. Total shares outstanding as of September 30, 2020 were 83.0 million.

Dividends: Approximately $65.3 million in dividends was paid to shareholders in third quarter 2020. On October 26, 2020, the MSCI Board of Directors declared a cash dividend of $0.78 per share for fourth quarter 2020, payable on November 30, 2020 to shareholders of record as of the close of trading on November 13, 2020.

Full-Year 2020 Guidance

MSCI's guidance for 2020 is based on assumptions about a number of macroeconomic and capital market factors, in particular related to equity markets. These assumptions are subject to uncertainty, and actual results for the year could differ materially from our current guidance, including as a result of ongoing uncertainty related to the duration, magnitude and impact of the COVID-19 pandemic.

Guidance Item Current Guidance Prior Guidance for Full-Year for Full-Year 2020 2020

Operating Expense $800 to $820 $790 to $840 million million

Adjusted EBITDA Expense $710 to $730 $700 to $750 million million

Interest Expense (includingamortization of financing fees) ~$158 million ~$158 million(1)

Depreciation & Amortization ~$90 million ~$90 millionExpense

Effective Tax Rate 11.5% to 13.5% 16% to 19%

Capital Expenditures $50 to $55 million $50 to $60 million

Net Cash Provided by Operating $705 to $750 $600 to $650 million (towardActivities million the upper end of the range)

Free Cash Flow $650 to $700 $540 to $600 million (toward million the upper end of the range)

(1) Interest income will continue to be impacted by the lower rates available on cash balances.

Conference Call Information

MSCI's senior management will review the third quarter 2020 results on Tuesday, October 27, 2020 at 11:00 AM Eastern Time. To listen to the live event, visit the events and presentations section of MSCI's Investor Relations homepage, https://ir.msci.com/events-and-presentations, or dial 1-877-376-9931 conference ID: 9725609 within the United States. International callers may dial 1-720-405-2251 conference ID: 9725609. The teleconference will also be webcast with an accompanying slide presentation which can be accessed through MSCI's Investor Relations website. An archived replay of the webcast also will be available shortly after the live event on MSCI's Investor Relations website, https://ir.msci.com/events-and-presentations.

About MSCI Inc.

MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 45 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading, research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process.

To learn more, please visit 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, MSCI's full-year 2020 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 MSCI's control and that could materially affect 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 December 31, 2019 filed with the Securities and Exchange Commission ("SEC") on February 18, 2020 and in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC. If any of these risks or uncertainties materialize, or if MSCI's underlying assumptions prove to be incorrect, actual results may vary significantly from what MSCI projected. Any forward-looking statement in this earnings release reflects MSCI's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to MSCI's operations, results of operations, growth strategy and liquidity. MSCI assumes no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law.

Website and Social Media Disclosure

MSCI uses its website, including its quarterly updates, blog, podcasts and social media channels, including its corporate Twitter account (@MSCI_Inc), as channels of distribution of company information. The information MSCI posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following MSCI's press releases, quarterly SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about MSCI when you enroll your email address by visiting the "Email Alerts Subscription" section of MSCI's Investor Relations homepage at http://ir.msci.com/email-alerts. The contents of MSCI's website, including its quarterly updates, blog, podcasts and social media channels are not, however, incorporated by reference into this earnings release.

Notes Regarding the Use of Operating Metrics

MSCI has presented supplemental key operating metrics as part of this earnings release, including Retention Rate, Run Rate, subscription sales, subscription cancellations and non-recurring sales.

Retention Rate is an important metric because subscription cancellations decrease our Run Rate and ultimately our operating revenues over time. The annual Retention Rate represents the retained subscription Run Rate (subscription Run Rate at the beginning of the fiscal year less actual cancels during the year) as a percentage of the subscription Run Rate at the beginning of the fiscal year.

The Retention Rate for a non-annual 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 non-annual 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 Run Rate at the beginning of the fiscal year to calculate a cancellation rate. This cancellation rate is then subtracted from 100% to derive the annualized Retention Rate for the period.

Retention Rate is computed by operating segment on a product/service-by-product/service basis. In general, if a client reduces the number of products or services to which it subscribes within a segment, or switches between products or services within a segment, we treat it as a cancellation for purposes of calculating our Retention Rate except in the case of a product or service switch that management considers to be a replacement product or service. In those replacement cases, only the net change to the client subscription, if a decrease, is reported as a cancel. In the Analytics and the ESG operating segments, substantially all product or service switches are treated as replacement products or services and netted in this manner, while in our Index and Real Estate operating segments, product or service switches that are treated as replacement products or services and receive netting treatment occur only in certain limited instances. In addition, we treat any reduction in fees resulting from a down-sale of the same product or service as a cancellation to the extent of the reduction. We do not calculate Retention Rate for that portion of our Run Rate attributable to assets in index-linked investment products or futures and options contracts, in each case, linked to our indexes.

Run Rate estimates at a particular point in time the annualized value of the recurring revenues under our client license agreements ("Client Contracts") for the next 12 months, assuming all Client Contracts that come up for renewal are renewed and assuming then-current currency exchange rates, subject to the adjustments and exclusions described below. For any Client Contract where fees are linked to an investment product's assets or trading volume/fees, 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/or reported exchange fees, and for other non-ETF products, the most recent client-reported assets. Run Rate does not include fees associated with "one-time" and other non-recurring transactions. In addition, we add to Run Rate the annualized fee value of recurring new sales, whether to existing or new clients, when we execute Client Contracts, even though the license start date, and associated revenue recognition, may not be effective until a later date. We remove from Run Rate the annualized fee value associated with products or services under any Client Contract with respect to which we have received a notice of termination or non-renewal during the period and have determined that such notice evidences the client's final decision to terminate or not renew the applicable products or services, even though such notice is not effective until a later date.

"Organic subscription Run Rate growth" is defined as the period over period Run Rate growth, excluding the impact of changes in foreign currency and the first year impact of any acquisitions. It is also adjusted for divestitures. Changes in foreign currency are calculated by applying the currency exchange rate from the comparable prior period to current period foreign currency denominated Run Rate.

Sales represents the annualized value of products and services clients commit to purchase from MSCI and will result in additional operating revenues. Non-recurring sales represent the actual value of the customer agreements entered into during the period and are not a component of Run Rate. New recurring subscription sales represent additional selling activities, such as new customer agreements, additions to existing agreements or increases in price that occurred during the period and are additions to Run Rate. Subscription cancellations reflect client activities during the period, such as discontinuing products and services and/or reductions in price, resulting in reductions to Run Rate. Net new recurring subscription sales represent the amount of new recurring subscription sales net of subscription cancellations during the period, which reflects the net impact to Run Rate during the period.

Total gross sales represent the sum of new recurring subscription sales and non-recurring sales. Total net sales represent the total gross sales net of the impact from subscription cancellations.

Notes Regarding the Use of Non-GAAP Financial Measures

MSCI has presented supplemental non-GAAP financial measures as part of this earnings release. Reconciliations are provided in Tables 9 through 15 below that reconcile each non-GAAP financial measure with the most comparable GAAP measure. The non-GAAP financial measures presented in this earnings release should not be considered as alternative measures for the most directly comparable GAAP financial measures. The non-GAAP financial measures presented in this earnings release are used by management to monitor the financial performance of the business, inform business decision-making and forecast future results.

"Adjusted EBITDA" is defined as net income before (1) provision for income taxes, (2) other expense (income), net, (3) depreciation and amortization of property, equipment and leasehold improvements, (4) amortization of intangible assets and, at times, (5) certain other transactions or adjustments, including the impact related to the vesting of the multi-year restricted stock units subject to performance payout adjustments granted in 2016 (the "Multi-Year PSUs").

"Adjusted EBITDA expenses" is defined as operating expenses less depreciation and amortization of property, equipment and leasehold improvements and amortization of intangible assets and, at times, certain other transactions or adjustments, including the impact related to the vesting of the Multi-Year PSUs.

"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, including the amortization of the basis difference between the cost of the equity method investment and MSCI's share of the net assets of the investee at historical carrying value, the impact of divestitures, the impact of adjustments for the Tax Cuts and Jobs Act that was enacted on December 22, 2017 ("Tax Reform"), except for amounts associated with active tax planning implemented as a result of Tax Reform, and, at times, certain other transactions or adjustments, including the impact related to the vesting of the Multi-Year PSUs and costs associated with debt extinguishment.

"Adjusted tax rate" is defined as the effective tax rate excluding the impact of Tax Reform adjustments (except for amounts associated with active tax planning implemented as a result of Tax Reform) and the impact related to the vesting of the Multi-Year PSUs.

"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.

"Organic operating revenue growth" is defined as operating revenue growth compared to the prior year period excluding the impact of acquired businesses, divested businesses and foreign currency exchange rate fluctuations.

Asset-based fees ex-FX does not adjust for the impact from foreign currency exchange rate fluctuations on the underlying assets under management ("AUM").

We believe adjusted EBITDA and adjusted EBITDA expenses are meaningful measures of the operating performance of MSCI because they adjust for significant one-time, unusual or non-recurring items as well as eliminate the accounting effects of certain capital spending and acquisitions that do not directly affect what management considers to be our ongoing operating performance in the period.

We believe adjusted net income and adjusted EPS are meaningful measures of the performance of MSCI because they adjust for the after-tax impact of significant one-time, unusual or non-recurring items as well as eliminate the impact of any transactions that do not directly affect what management considers to be our ongoing operating performance in the period. We also exclude the after-tax impact of the amortization of acquired intangible assets and amortization of the basis difference between the cost of the equity method investment and MSCI's share of the net assets of the investee at historical carrying value, as these non-cash amounts are significantly impacted by the timing and size of each acquisition and therefore not meaningful to the ongoing operating performance in the period.

We believe that adjusted tax rate is useful to investors because it increases the comparability of period-to-period results by adjusting for the estimated net impact of Tax Reform and the impact related to the vesting of the Multi-Year PSUs.

We believe that free cash flow is useful to investors because it relates the operating cash flow of MSCI to the capital that is spent to continue and improve business operations, such as investment in MSCI's existing products. Further, free cash flow indicates our ability to strengthen MSCI's balance sheet, repay our debt obligations, pay cash dividends and repurchase shares of our common stock.

We believe organic operating revenue growth is a meaningful measure of the operating performance of MSCI because it adjusts for the impact of foreign currency exchange rate fluctuations and excludes the impact of operating revenues attributable to acquired and divested businesses for the comparable prior year period, providing insight into our ongoing operating performance for the period(s) presented.

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, adjusted tax rate, Capex, free cash flow and organic operating revenue growth 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. These measures can differ significantly from company to company depending on, among other things, long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Accordingly, the Company's computation of these measures may not be comparable to similarly titled measures computed by other companies.

Notes Regarding Adjusting for the Impact of Foreign Currency Exchange Rate Fluctuations

Foreign currency exchange rate fluctuations reflect 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. While operating revenues adjusted for the impact of foreign currency fluctuations includes asset-based fees that have been adjusted for the impact of foreign currency fluctuations, the underlying AUM, which is the primary component of asset-based fees, is not adjusted for foreign currency fluctuations. More than three-fifths of the AUM are invested in securities denominated in currencies other than the U.S. dollar, and accordingly, any such impact is excluded from the disclosed foreign currency-adjusted variances.

Table 2: Condensed Consolidated Statements of Income (unaudited)

^(1) Interest income will continue to be impacted by the lower rates availableon cash balances.

Conference Call Information

MSCI's senior management will review the third quarter 2020 results on Tuesday, October 27, 2020 at 11:00 AM Eastern Time. To listen to the live event, visit the events and presentations section of MSCI's Investor Relations homepage, https://ir.msci.com/events-and-presentations, or dial 1-877-376-9931 conference ID: 9725609 within the United States. International callers may dial 1-720-405-2251 conference ID: 9725609. The teleconference will also be webcast with an accompanying slide presentation which can be accessed through MSCI's Investor Relations website. An archived replay of the webcast also will be available shortly after the live event on MSCI's Investor Relations website, https://ir.msci.com/events-and-presentations.

About MSCI Inc.

MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 45 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading, research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process.

To learn more, please visit 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, MSCI's full-year 2020 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 MSCI's control and that could materially affect 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 December 31, 2019 filed with the Securities and Exchange Commission ("SEC") on February 18, 2020 and in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC. If any of these risks or uncertainties materialize, or if MSCI's underlying assumptions prove to be incorrect, actual results may vary significantly from what MSCI projected. Any forward-looking statement in this earnings release reflects MSCI's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to MSCI's operations, results of operations, growth strategy and liquidity. MSCI assumes no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law.

Website and Social Media Disclosure

MSCI uses its website, including its quarterly updates, blog, podcasts and social media channels, including its corporate Twitter account (@MSCI_Inc), as channels of distribution of company information. The information MSCI posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following MSCI's press releases, quarterly SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about MSCI when you enroll your email address by visiting the "Email Alerts Subscription" section of MSCI's Investor Relations homepage at http://ir.msci.com/email-alerts. The contents of MSCI's website, including its quarterly updates, blog, podcasts and social media channels are not, however, incorporated by reference into this earnings release.

Notes Regarding the Use of Operating Metrics

MSCI has presented supplemental key operating metrics as part of this earnings release, including Retention Rate, Run Rate, subscription sales, subscription cancellations and non-recurring sales.

Retention Rate is an important metric because subscription cancellations decrease our Run Rate and ultimately our operating revenues over time. The annual Retention Rate represents the retained subscription Run Rate (subscription Run Rate at the beginning of the fiscal year less actual cancels during the year) as a percentage of the subscription Run Rate at the beginning of the fiscal year.

The Retention Rate for a non-annual 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 non-annual 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 Run Rate at the beginning of the fiscal year to calculate a cancellation rate. This cancellation rate is then subtracted from 100% to derive the annualized Retention Rate for the period.

Retention Rate is computed by operating segment on a product/service-by-product/service basis. In general, if a client reduces the number of products or services to which it subscribes within a segment, or switches between products or services within a segment, we treat it as a cancellation for purposes of calculating our Retention Rate except in the case of a product or service switch that management considers to be a replacement product or service. In those replacement cases, only the net change to the client subscription, if a decrease, is reported as a cancel. In the Analytics and the ESG operating segments, substantially all product or service switches are treated as replacement products or services and netted in this manner, while in our Index and Real Estate operating segments, product or service switches that are treated as replacement products or services and receive netting treatment occur only in certain limited instances. In addition, we treat any reduction in fees resulting from a down-sale of the same product or service as a cancellation to the extent of the reduction. We do not calculate Retention Rate for that portion of our Run Rate attributable to assets in index-linked investment products or futures and options contracts, in each case, linked to our indexes.

Run Rate estimates at a particular point in time the annualized value of the recurring revenues under our client license agreements ("Client Contracts") for the next 12 months, assuming all Client Contracts that come up for renewal are renewed and assuming then-current currency exchange rates, subject to the adjustments and exclusions described below. For any Client Contract where fees are linked to an investment product's assets or trading volume/fees, 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/or reported exchange fees, and for other non-ETF products, the most recent client-reported assets. Run Rate does not include fees associated with "one-time" and other non-recurring transactions. In addition, we add to Run Rate the annualized fee value of recurring new sales, whether to existing or new clients, when we execute Client Contracts, even though the license start date, and associated revenue recognition, may not be effective until a later date. We remove from Run Rate the annualized fee value associated with products or services under any Client Contract with respect to which we have received a notice of termination or non-renewal during the period and have determined that such notice evidences the client's final decision to terminate or not renew the applicable products or services, even though such notice is not effective until a later date.

"Organic subscription Run Rate growth" is defined as the period over period Run Rate growth, excluding the impact of changes in foreign currency and the first year impact of any acquisitions. It is also adjusted for divestitures. Changes in foreign currency are calculated by applying the currency exchange rate from the comparable prior period to current period foreign currency denominated Run Rate.

Sales represents the annualized value of products and services clients commit to purchase from MSCI and will result in additional operating revenues. Non-recurring sales represent the actual value of the customer agreements entered into during the period and are not a component of Run Rate. New recurring subscription sales represent additional selling activities, such as new customer agreements, additions to existing agreements or increases in price that occurred during the period and are additions to Run Rate. Subscription cancellations reflect client activities during the period, such as discontinuing products and services and/or reductions in price, resulting in reductions to Run Rate. Net new recurring subscription sales represent the amount of new recurring subscription sales net of subscription cancellations during the period, which reflects the net impact to Run Rate during the period.

Total gross sales represent the sum of new recurring subscription sales and non-recurring sales. Total net sales represent the total gross sales net of the impact from subscription cancellations.

Notes Regarding the Use of Non-GAAP Financial Measures

MSCI has presented supplemental non-GAAP financial measures as part of this earnings release. Reconciliations are provided in Tables 9 through 15 below that reconcile each non-GAAP financial measure with the most comparable GAAP measure. The non-GAAP financial measures presented in this earnings release should not be considered as alternative measures for the most directly comparable GAAP financial measures. The non-GAAP financial measures presented in this earnings release are used by management to monitor the financial performance of the business, inform business decision-making and forecast future results.

"Adjusted EBITDA" is defined as net income before (1) provision for income taxes, (2) other expense (income), net, (3) depreciation and amortization of property, equipment and leasehold improvements, (4) amortization of intangible assets and, at times, (5) certain other transactions or adjustments, including the impact related to the vesting of the multi-year restricted stock units subject to performance payout adjustments granted in 2016 (the "Multi-Year PSUs").

"Adjusted EBITDA expenses" is defined as operating expenses less depreciation and amortization of property, equipment and leasehold improvements and amortization of intangible assets and, at times, certain other transactions or adjustments, including the impact related to the vesting of the Multi-Year PSUs.

"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, including the amortization of the basis difference between the cost of the equity method investment and MSCI's share of the net assets of the investee at historical carrying value, the impact of divestitures, the impact of adjustments for the Tax Cuts and Jobs Act that was enacted on December 22, 2017 ("Tax Reform"), except for amounts associated with active tax planning implemented as a result of Tax Reform, and, at times, certain other transactions or adjustments, including the impact related to the vesting of the Multi-Year PSUs and costs associated with debt extinguishment.

"Adjusted tax rate" is defined as the effective tax rate excluding the impact of Tax Reform adjustments (except for amounts associated with active tax planning implemented as a result of Tax Reform) and the impact related to the vesting of the Multi-Year PSUs.

"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.

"Organic operating revenue growth" is defined as operating revenue growth compared to the prior year period excluding the impact of acquired businesses, divested businesses and foreign currency exchange rate fluctuations.

Asset-based fees ex-FX does not adjust for the impact from foreign currency exchange rate fluctuations on the underlying assets under management ("AUM").

We believe adjusted EBITDA and adjusted EBITDA expenses are meaningful measures of the operating performance of MSCI because they adjust for significant one-time, unusual or non-recurring items as well as eliminate the accounting effects of certain capital spending and acquisitions that do not directly affect what management considers to be our ongoing operating performance in the period.

We believe adjusted net income and adjusted EPS are meaningful measures of the performance of MSCI because they adjust for the after-tax impact of significant one-time, unusual or non-recurring items as well as eliminate the impact of any transactions that do not directly affect what management considers to be our ongoing operating performance in the period. We also exclude the after-tax impact of the amortization of acquired intangible assets and amortization of the basis difference between the cost of the equity method investment and MSCI's share of the net assets of the investee at historical carrying value, as these non-cash amounts are significantly impacted by the timing and size of each acquisition and therefore not meaningful to the ongoing operating performance in the period.

We believe that adjusted tax rate is useful to investors because it increases the comparability of period-to-period results by adjusting for the estimated net impact of Tax Reform and the impact related to the vesting of the Multi-Year PSUs.

We believe that free cash flow is useful to investors because it relates the operating cash flow of MSCI to the capital that is spent to continue and improve business operations, such as investment in MSCI's existing products. Further, free cash flow indicates our ability to strengthen MSCI's balance sheet, repay our debt obligations, pay cash dividends and repurchase shares of our common stock.

We believe organic operating revenue growth is a meaningful measure of the operating performance of MSCI because it adjusts for the impact of foreign currency exchange rate fluctuations and excludes the impact of operating revenues attributable to acquired and divested businesses for the comparable prior year period, providing insight into our ongoing operating performance for the period(s) presented.

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, adjusted tax rate, Capex, free cash flow and organic operating revenue growth 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. These measures can differ significantly from company to company depending on, among other things, long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Accordingly, the Company's computation of these measures may not be comparable to similarly titled measures computed by other companies.

Notes Regarding Adjusting for the Impact of Foreign Currency Exchange Rate Fluctuations

Foreign currency exchange rate fluctuations reflect 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. While operating revenues adjusted for the impact of foreign currency fluctuations includes asset-based fees that have been adjusted for the impact of foreign currency fluctuations, the underlying AUM, which is the primary component of asset-based fees, is not adjusted for foreign currency fluctuations. More than three-fifths of the AUM are invested in securities denominated in currencies other than the U.S. dollar, and accordingly, any such impact is excluded from the disclosed foreign currency-adjusted variances.

Table 2: Condensed Consolidated Statements of Income (unaudited)

Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY %

In thousands,except per 2020 2019 Change 2020 2019 Change share data

Operating $ 425,333 $ 394,251 7.9 % $ 1,251,729 $ 1,151,190 8.7 %revenues

Operating expenses:

Cost of 70,704 70,486 0.3 % 215,769 224,807 (4.0 %)revenues

Selling and 52,668 52,107 1.1 % 159,834 159,812 - %marketing

Research and 24,901 24,310 2.4 % 73,997 71,234 3.9 %development

General and 27,613 26,559 4.0 % 86,755 80,434 7.9 %administrative

Amortizationof intangible 14,333 12,361 16.0 % 42,171 36,167 16.6 %assets

Depreciationand amortizationof property,

equipment andleasehold 7,494 7,209 4.0 % 22,524 22,464 0.3 %improvements

Totaloperating 197,713 193,032 2.4 % 601,050 594,918 1.0 %expenses(1)



Operating 227,620 201,219 13.1 % 650,679 556,272 17.0 %income



Interest (475 ) (3,673 ) (87.1 %) (4,729 ) (11,104 ) (57.4 %)income

Interest 37,536 35,922 4.5 % 118,994 107,752 10.4 %expense

Other expense 1,516 222 n/m 45,355 2,839 n/m (income)

Other expense 38,577 32,471 18.8 % 159,620 99,487 60.4 %(income), net



Income beforeprovision for 189,043 168,748 12.0 % 491,059 456,785 7.5 %income taxes



Provision for 6,685 31,765 (79.0 %) 45,453 15,920 185.5 %income taxes

Net income $ 182,358 $ 136,983 33.1 % $ 445,606 $ 440,865 1.1 %





Earnings perbasic common $ 2.18 $ 1.62 34.6 % $ 5.30 $ 5.21 1.7 %share





Earnings perdiluted common $ 2.16 $ 1.60 35.0 % $ 5.26 $ 5.15 2.1 %share



Weightedaverage shares outstandingused

in computingearnings per share:



Basic 83,602 84,765 (1.4 %) 84,044 84,591 (0.6 %)

Diluted 84,479 85,550 (1.3 %) 84,789 85,533 (0.9 %)



n/m: not meaningful.

(1) Includes stock-based compensation expense of $12.0 million and $10.6 million for the three months ended Sep. 30, 2020 and Sep. 30, 2019, respectively. Includes stock-based compensation expense of $43.3 million and $32.6 million for the nine months ended Sep. 30, 2020 and Sep. 30, 2019, respectively.

Table 3: Selected Balance Sheet Items (unaudited)

^(1) Includes stock-based compensation expense of $12.0 million and $10.6million for the three months ended Sep. 30, 2020 and Sep. 30, 2019,respectively. Includes stock-based compensation expense of $43.3 million and$32.6 million for the nine months ended Sep. 30, 2020 and Sep. 30, 2019,respectively.

Table 3: Selected Balance Sheet Items (unaudited)

As of

Sep. 30, Dec. 31,

In thousands 2020 2019

Cash and cash equivalents $1,302,858 $1,506,567

Accounts receivable, net of allowances $429,804 $499,268



Deferred revenue $531,487 $574,656

Long-term debt(1) $3,365,783 $3,071,926

(1) Consists of gross long-term debt, net of deferred financing fees. Gross long-term debt was $3,400.0 million at Sep. 30, 2020 and $3,100.0 million at Dec. 31, 2019.

Table 4: Selected Cash Flow Items (unaudited)

^(1) Consists of gross long-term debt, net of deferred financing fees. Grosslong-term debt was $3,400.0 million at Sep. 30, 2020 and $3,100.0 million atDec. 31, 2019.

Table 4: Selected Cash Flow Items (unaudited)

Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY %

In 2020 2019 Change 2020 2019 Change thousands

Net cashprovided by $ 199,795 $ 188,535 6.0 % $ 575,181 $ 465,880 23.5 %operatingactivities

Net cashused in (11,725 ) (14,765 ) (20.6 %) (224,899 ) (35,292 ) n/m investingactivities

Net cashused in (274,433 ) (58,766 ) n/m (549,484 ) (450,315 ) 22.0 %financingactivities

Effect ofexchange 4,244 (4,971 ) 185.4 % (4,507 ) (3,299 ) (36.6 %)ratechanges

Netincrease(decrease) $ (82,119 ) $ 110,033 (174.6 %) $ (203,709 ) $ (23,026 ) n/m in cash andcashequivalents



n/m: not meaningful.

Table 5: Operating Results by Segment and Revenue Type (unaudited)

Index Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY %

In thousands 2020 2019 Change 2020 2019 Change

Operating revenues:

Recurring $ 146,387 $ 133,403 9.7 % $ 431,631 $ 393,222 9.8 %subscriptions

Asset-based fees 100,371 96,013 4.5 % 288,642 265,554 8.7 %

Non-recurring 8,933 8,011 11.5 % 27,582 18,974 45.4 %

Total operating 255,691 237,427 7.7 % 747,855 677,750 10.3 %revenues

Adjusted EBITDA 60,971 59,747 2.0 % 186,292 183,944 1.3 %expenses

Adjusted EBITDA $ 194,720 $ 177,680 9.6 % $ 561,563 $ 493,806 13.7 %

Adjusted EBITDA 76.2 % 74.8 % 75.1 % 72.9 % margin %



Analytics Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY %

In thousands 2020 2019 Change 2020 2019 Change

Operating revenues:

Recurring $ 126,251 $ 122,120 3.4 % $ 376,505 $ 363,929 3.5 %subscriptions

Non-recurring 2,086 1,483 40.7 % 4,903 4,790 2.4 %

Total operating 128,337 123,603 3.8 % 381,408 368,719 3.4 %revenues

Adjusted EBITDA 83,281 85,806 (2.9 %) 253,868 255,453 (0.6 %)expenses

Adjusted EBITDA $ 45,056 $ 37,797 19.2 % $ 127,540 $ 113,266 12.6 %

Adjusted EBITDA 35.1 % 30.6 % 33.4 % 30.7 % margin %



All Other Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY %

In thousands 2020 2019 Change 2020 2019 Change

Operating revenues:

Recurring $ 40,552 $ 32,585 24.4 % $ 119,363 $ 102,470 16.5 %subscriptions

Non-recurring 753 636 18.4 % 3,103 2,251 37.8 %

Total operating 41,305 33,221 24.3 % 122,466 104,721 16.9 %revenues

Adjusted EBITDA 31,634 27,909 13.3 % 96,195 81,501 18.0 %expenses

Adjusted EBITDA $ 9,671 $ 5,312 82.1 % $ 26,271 $ 23,220 13.1 %

Adjusted EBITDA 23.4 % 16.0 % 21.5 % 22.2 % margin %



Consolidated Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, YoY % Sep. 30, Sep. 30, YoY %

In thousands 2020 2019 Change 2020 2019 Change

Operating revenues:

Recurring $ 313,190 $ 288,108 8.7 % $ 927,499 $ 859,621 7.9 %subscriptions

Asset-based fees 100,371 96,013 4.5 % 288,642 265,554 8.7 %

Non-recurring 11,772 10,130 16.2 % 35,588 26,015 36.8 %

Operating revenues 425,333 394,251 7.9 % 1,251,729 1,151,190 8.7 %total

Adjusted EBITDA 175,886 173,462 1.4 % 536,355 520,898 3.0 %expenses

Adjusted EBITDA $ 249,447 $ 220,789 13.0 % $ 715,374 $ 630,292 13.5 %

Adjusted EBITDA 58.6 % 56.0 % 57.2 % 54.8 % margin %

Operating margin % 53.5 % 51.0 % 52.0 % 48.3 %



Table 6: Sales and Retention Rate by Segment (unaudited)(1)

Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, Sep. 30, Sep. 30,

In thousands 2020 2019 2020 2019

Index

New recurring subscription $ 18,743 $ 17,553 $ 58,073 $ 54,408 sales

Subscription cancellations (7,050 ) (5,066 ) $ (19,589 ) (13,033 )

Net new recurring $ 11,693 $ 12,487 $ 38,484 $ 41,375 subscription sales

Non-recurring sales $ 10,001 $ 9,029 $ 30,734 $ 20,092

Total gross sales $ 28,744 $ 26,582 $ 88,807 $ 74,500

Total Index net sales $ 21,694 $ 21,516 $ 69,218 $ 61,467



Index Retention Rate 95.0 % 96.0 % 95.3 % 96.5 %



Analytics

New recurring subscription $ 15,229 $ 15,285 $ 41,426 $ 41,705 sales

Subscription cancellations (8,211 ) (7,854 ) $ (27,008 ) (22,720 )

Net new recurring $ 7,018 $ 7,431 $ 14,418 $ 18,985 subscription sales

Non-recurring sales $ 2,562 $ 4,876 $ 7,486 $ 10,084

Total gross sales $ 17,791 $ 20,161 $ 48,912 $ 51,789

Total Analytics net sales $ 9,580 $ 12,307 $ 21,904 $ 29,069



Analytics Retention Rate 93.8 % 93.6 % 93.2 % 93.8 %



All Other

New recurring subscription $ 9,344 $ 7,495 $ 29,861 $ 22,724 sales

Subscription cancellations (1,871 ) (1,002 ) $ (6,167 ) (4,179 )

Net new recurring $ 7,473 $ 6,493 $ 23,694 $ 18,545 subscription sales

Non-recurring sales $ 247 $ 487 $ 1,852 $ 1,571

Total gross sales $ 9,591 $ 7,982 $ 31,713 $ 24,295

Total All Other net sales $ 7,720 $ 6,980 $ 25,546 $ 20,116



All Other Retention Rate 95.1 % 96.8 % 94.6 % 95.5 %



Consolidated

New recurring subscription $ 43,316 $ 40,333 $ 129,360 $ 118,837 sales

Subscription cancellations (17,132 ) (13,922 ) (52,764 ) (39,932 )

Net new recurring $ 26,184 $ 26,411 $ 76,596 $ 78,905 subscription sales

Non-recurring sales $ 12,810 $ 14,392 $ 40,072 $ 31,747

Total gross sales $ 56,126 $ 54,725 $ 169,432 $ 150,584

Total net sales $ 38,994 $ 40,803 $ 116,668 $ 110,652



Total Retention Rate 94.5 % 95.0 % 94.3 % 95.2 %

(1) See "Notes Regarding the Use of Operating Metrics" for details regarding the definition of new recurring subscription sales, subscription cancellations, net new recurring subscription sales, non-recurring sales, total gross sales, total net sales and Retention Rate.

Table 7: AUM in Equity ETFs Linked to MSCI Indexes (unaudited)(1)(2)(3)

^(1) See "Notes Regarding the Use of Operating Metrics" for details regardingthe definition of new recurring subscription sales, subscription cancellations,net new recurring subscription sales, non-recurring sales, total gross sales,total net sales and Retention Rate.

Table 7: AUM in Equity ETFs Linked to MSCI Indexes (unaudited)(1)(2)(3)

Three Months Ended Nine Months Ended

Sep. June Mar. 31, Dec. Sep. Sep. Sep. 30, 30, 31, 30, 30, 30,

In billions 2020 2020 2020 2019 2019 2020 2019

BeginningPeriod AUM in equity ETFslinked to

MSCI indexes $ 825.4 $ 709.5 $ 934.4 $ 815.0 $ 819.3 $ 934.4 $ 695.6

MarketAppreciation/ 57.0 117.4 (216.5 ) 63.5 (9.2 ) (42.1 ) 84.0 (Depreciation)

Cash Inflows 26.5 (1.5 ) (8.4 ) 55.9 4.9 16.6 35.4

Period-End AUMin equity ETFs linked to

MSCI indexes $ 908.9 $ 825.4 $ 709.5 $ 934.4 $ 815.0 $ 908.9 $ 815.0



Period AverageAUM in equity ETFs linked to

MSCI indexes $ 893.4 $ 776.9 $ 877.1 $ 869.1 $ 810.9 $ 849.1 $ 796.1



Period-EndBasis Point 2.67 2.67 2.71 2.82 2.81 2.67 2.81 Fee(4)

(1) The historical values of the AUM in equity ETFs linked to our indexes as of the last day of the month and the monthly average balance can be found under the link "AUM in equity ETFs Linked to MSCI Indexes" on our Investor Relations homepage at http://ir.msci.com. Information contained on our website is not incorporated by reference into this Press Release or any other report filed with the SEC. The AUM in equity ETFs also includes AUM in Exchange Traded Notes, the value of which is less than 1.0% of the AUM amounts presented.

(2) The values for periods prior to April 26, 2019 were based on data from Bloomberg and MSCI, while the values for periods on or after April 26, 2019 were based on data from Refinitiv and MSCI. De minimis amounts of data are reported on a delayed basis.

(3) The value of AUM in equity ETFs linked to MSCI indexes is calculated by multiplying the equity ETFs net asset value by the number of shares outstanding.

(4) Based on period-end Run Rate for equity ETFs linked to MSCI indexes using period-end AUM.

Table 8: Run Rate by Segment and Type (unaudited)(1)

^(1) The historical values of the AUM in equity ETFs linked to our indexes asof the last day of the month and the monthly average balance can be found underthe link "AUM in equity ETFs Linked to MSCI Indexes" on our Investor Relationshomepage at http://ir.msci.com. Information contained on our website is notincorporated by reference into this Press Release or any other report filedwith the SEC. The AUM in equity ETFs also includes AUM in Exchange TradedNotes, the value of which is less than 1.0% of the AUM amounts presented.

^(2) The values for periods prior to April 26, 2019 were based on data fromBloomberg and MSCI, while the values for periods on or after April 26, 2019were based on data from Refinitiv and MSCI. De minimis amounts of data arereported on a delayed basis.

^(3) The value of AUM in equity ETFs linked to MSCI indexes is calculated bymultiplying the equity ETFs net asset value by the number of sharesoutstanding.

^(4) Based on period-end Run Rate for equity ETFs linked to MSCI indexes usingperiod-end AUM.

Table 8: Run Rate by Segment and Type (unaudited)(1)

As of

Sep. 30, Sep. 30, YoY %

In thousands 2020 2019 Change

Index

Recurring subscriptions $ 598,799 $ 544,059 10.1 %

Asset-based fees 401,196 356,013 12.7 %

Index Run Rate 999,995 900,072 11.1 %



Analytics Run Rate 544,315 509,261 6.9 %



All Other Run Rate 175,243 141,283 24.0 %



Total Run Rate $ 1,719,553 $ 1,550,616 10.9 %



Total recurring subscriptions $ 1,318,357 $ 1,194,603 10.4 %

Total asset-based fees 401,196 356,013 12.7 %

Total Run Rate $ 1,719,553 $ 1,550,616 10.9 %

(1) See "Notes Regarding the Use of Operating Metrics" for details regarding the definition of Run Rate.

Table 9: Reconciliation of Adjusted EBITDA to Net Income (unaudited)

^(1) See "Notes Regarding the Use of Operating Metrics" for details regardingthe definition of Run Rate.

Table 9: Reconciliation of Adjusted EBITDA to Net Income (unaudited)

Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, Sep. 30, Sep. 30,

In thousands 2020 2019 2020 2019

Index adjusted EBITDA $ 194,720 $ 177,680 $ 561,563 $ 493,806

Analytics adjusted 45,056 37,797 127,540 113,266 EBITDA

All Other adjusted 9,671 5,312 26,271 23,220 EBITDA

Consolidated adjusted 249,447 220,789 715,374 630,292 EBITDA

Multi-Year PSU payroll - - - 15,389 tax expense

Amortization of 14,333 12,361 42,171 36,167 intangible assets

Depreciation andamortization of property,

equipment and leasehold 7,494 7,209 22,524 22,464 improvements

Operating income 227,620 201,219 650,679 556,272

Other expense (income), 38,577 32,471 159,620 99,487 net

Provision for income 6,685 31,765 45,453 15,920 taxes

Net income $ 182,358 $ 136,983 $ 445,606 $ 440,865

Table 10: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS (unaudited)

Three Months Ended Nine Months Ended

Sep. 30, Sep. 30, Sep. 30, Sep. 30,

In thousands, except 2020 2019 2020 2019 per share data

Net income $ 182,358 $ 136,983 $ 445,606 $ 440,865

Plus: Amortization ofacquired intangible assets and

equity methodinvestment basis 9,515 8,616 27,885 25,995 difference

Plus: Multi-Year PSU - - - 15,389 payroll tax expense

Less: Discrete excess tax benefit related to

Multi-Year PSU vesting - - - (66,581 )

Plus: Debtextinguishment costs associated with the

2024 and 2025 Senior - - 44,930 - Notes Redemptions

Less: Tax Reform (5,497 ) - (6,256 ) - adjustments

Less: Income tax effect (532 ) (1,702 ) (14,483 ) (7,474 )

Adjusted net income $ 185,844 $ 143,897 $ 497,682 $ 408,194



Diluted EPS $ 2.16 $ 1.60 $ 5.26 $ 5.15

Plus: Amortization ofacquired intangible assets and

equity methodinvestment basis 0.11 0.10 0.33 0.30 difference

Plus: Multi-Year PSU - - - 0.18 payroll tax expense

Less: Discrete excess tax benefit related to

Multi-Year PSU vesting - - - (0.78 )

Plus: Debtextinguishment costs associated with the

2024 and 2025 Senior - - 0.53 - Notes Redemptions

Less: Tax Reform (0.07 ) - (0.07 ) - adjustments

Less: Income tax effect - (0.02 ) (0.18 ) (0.08 )

Adjusted EPS $ 2.20 $ 1.68 $ 5.87 $ 4.77

Table 11: Reconciliation of Adjusted EBITDA Expenses to Operating Expenses (unaudited)

Three Months Ended Nine Months Ended Full-Year

Sep. 30, Sep. 30, Sep. 30, Sep. 30, 2020

In thousands 2020 2019 2020 2019 Outlook (1)

Indexadjusted $ 60,971 $ 59,747 $ 186,292 $ 183,944 EBITDAexpenses

Analyticsadjusted 83,281 85,806 253,868 255,453 EBITDAexpenses

All Otheradjusted 31,634 27,909 96,195 81,501 EBITDAexpenses

Consolidated $710,000adjusted 175,886 173,462 536,355 520,898 -EBITDA $730,000expenses

Multi-YearPSU payroll - - - 15,389 tax expense

Amortizationof 14,333 12,361 42,171 36,167 intangibleassets

Depreciationand ~$90,000amortizationof property,

equipmentand 7,494 7,209 22,524 22,464 leaseholdimprovements

Total $800,000operating $ 197,713 $ 193,032 $ 601,050 $ 594,918 -expenses $820,000

(1) We have not provided a full 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 Net Cash Provided by Operating Activities to Free Cash Flow (unaudited)

^(1) We have not provided a full line-item reconciliation for adjusted EBITDAexpenses to total operating expenses for this future period because we do notprovide guidance on the individual reconciling items between total operatingexpenses and adjusted EBITDA expenses.

Table 12: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (unaudited)

Three Months Ended Nine Months Ended Full-Year

Sep. 30, Sep. 30, Sep. 30, Sep. 30, 2020

In thousands 2020 2019 2020 2019 Outlook (1)

Net cash $705,000provided by $ 199,795 $ 188,535 $ 575,181 $ 465,880 -operating $750,000activities

Capital (4,555 ) (7,782 ) (12,152 ) (17,216 ) expenditures

Capitalizedsoftware (7,170 ) (6,983 ) (21,931 ) (18,086 ) developmentcosts

($55,000Capex (11,725 ) (14,765 ) (34,083 ) (35,302 ) - $50,000)

Free cash $650,000flow $ 188,070 $ 173,770 $ 541,098 $ 430,578 - $700,000

(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.

Table 13: Reconciliation of Effective Tax Rate to Adjusted Tax Rate (unaudited)

^(1) We have not provided a line-item reconciliation for free cash flow to netcash from operating activities for this future period because we do not provideguidance on the individual reconciling items between net cash from operatingactivities and free cash flow.

Table 13: Reconciliation of Effective Tax Rate to Adjusted Tax Rate (unaudited)

Three Months Nine Months Ended Ended

Sep. Sep. Sep. Sep. 30, 30, 30, 30,

2020 2019 2020 2019

Effective tax rate 3.5% 18.8% 9.3% 3.5%

Tax Reform impact on effective tax rate 2.9% -% 1.2% -%

Multi-Year PSU impact on effective tax -% -% -% 14.6%rate

Adjusted tax rate 6.4% 18.8% 10.5% 18.1%

Table 14: Third Quarter 2020 Reconciliation of Operating Revenue Growth to Organic Operating Revenue Growth (unaudited)

Comparison of the Three Months Ended September 30, 2020 and 2019

Recurring Asset-Based Non-Recurring Total Fees Subscription Revenues

Change Change Change ChangeIndex Percentage Percentage Percentage Percentage

Operating revenue 7.7% 9.7% 4.5% 11.5%growth

Impact of acquisitions -% -% -% -%and divestitures

Impact of foreign currency exchange rate

fluctuations (0.1%) -% -% -%

Organic operating 7.6% 9.7% 4.5% 11.5%revenue growth



Recurring Asset-Based Non-Recurring Total Fees Subscription Revenues

Change Change Change ChangeAnalytics Percentage Percentage Percentage Percentage

Operating revenue 3.8% 3.4% -% 40.7%growth

Impact of acquisitions -% -% -% -%and divestitures

Impact of foreign currency exchange rate

fluctuations -% (0.1%) -% (0.2%)

Organic operating 3.8% 3.3% -% 40.5%revenue growth



Recurring Asset-Based Non-Recurring Total Fees Subscription Revenues

Change Change Change ChangeAll Other Percentage Percentage Percentage Percentage

Operating revenue 24.3% 24.4% -% 18.4%growth

Impact of acquisitions (2.1%) (1.4%) -% (35.2%)and divestitures

Impact of foreign currency exchange rate

fluctuations (3.6%) (3.7%) -% (0.7%)

Organic operating 18.6% 19.3% -% (17.5%)revenue growth



Recurring Asset-Based Non-Recurring Total Fees Subscription Revenues

Change Change Change ChangeConsolidated Percentage Percentage Percentage Percentage

Operating revenue 7.9% 8.7% 4.5% 16.2%growth

Impact of acquisitions (0.2%) (0.2%) -% (2.2%)and divestitures

Impact of foreign currency exchange rate

fluctuations (0.4%) (0.4%) -% (0.1%)

Organic operating 7.3% 8.1% 4.5% 13.9%revenue growth

Table 15: Nine Months 2020 Reconciliation of Operating Revenue Growth to Organic Operating Revenue Growth (unaudited)

Comparison of the Nine Months Ended September 30, 2020 and 2019

Recurring Asset-Based Non-Recurring Total Fees Subscription Revenues

Change Change Change ChangeIndex Percentage Percentage Percentage Percentage

Operating revenue 10.3% 9.8% 8.7% 45.4%growth

Impact of acquisitions -% -% -% -%and divestitures

Impact of foreign currency exchange rate

fluctuations -% (0.1%) -% -%

Organic operating 10.3% 9.7% 8.7% 45.4%revenue growth



Recurring Asset-Based Non-Recurring Total Fees Subscription Revenues

Change Change Change ChangeAnalytics Percentage Percentage Percentage Percentage

Operating revenue 3.4% 3.5% -% 2.4%growth

Impact of acquisitions -% -% -% -%and divestitures

Impact of foreign currency exchange rate

fluctuations -% (0.1%) -% (0.3%)

Organic operating 3.4% 3.4% -% 2.1%revenue growth

Total Recurring Asset-Based Non-Recurring Subscription Fees Revenues

Change Change Change ChangeAll Other Percentage Percentage Percentage Percentage

Operating revenue 16.9% 16.5% -% 37.8%growth

Impact of acquisitions (1.2%) (0.9%) -% (16.6%)and divestitures

Impact of foreign currency exchange rate

fluctuations 0.3% 0.3% -% 0.6%

Organic operating 16.0% 15.9% -% 21.8%revenue growth



Recurring Asset-Based Non-Recurring Total Fees Subscription Revenues

Change Change Change ChangeConsolidated Percentage Percentage Percentage Percentage

Operating revenue 8.7% 7.9% 8.7% 36.8%growth

Impact of acquisitions (0.1%) (0.1%) -% (1.4%)and divestitures

Impact of foreign currency exchange rate

fluctuations -% -% -% (0.1%)

Organic operating 8.6% 7.8% 8.7% 35.3%revenue growth

View source version on businesswire.com: https://www.businesswire.com/news/home/20201027005333/en/

CONTACT: MSCI Inc. Contacts Investor Inquiries sallilyn.schwartz@msci.com Salli Schwartz + 1 212 804 5306 Media Inquiries PR@msci.com Sam Wang +1 212 804 5244 Melanie Blanco +1 212 981 1049 Rachel Lai +852 2844 9315