MSCI : Earnings Release

PRESS RELEASE

MSCI Reports Financial Results for

Fourth Quarter and Full Year 2021

New York - January 27, 2022 - 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 December 31, 2021 ("fourth quarter 2021") and full year ended December 31, 2021 ("full year 2021").

Financial and Operational Highlights for Fourth Quarter 2021

(Note: Unless otherwise noted, percentage and other changes are relative to the three months ended December 31, 2020 ("fourth quarter 2020") and Run Rate percentage changes are relative to December 31, 2020).

• Operating revenues of $549.8 million, up 23.9%; Organic operating revenue growth of 19.8%
• Recurring subscription revenues up 19.3%; Asset-based fees up 34.4%
• Operating margin of 51.0%; Adjusted EBITDA margin of 58.0%
• Diluted EPS of $2.32, up 24.1%; Adjusted EPS of $2.51, up 28.1%
• New recurring subscription sales growth of 43.1%; Organic subscription Run Rate growth of 13.4%; Retention Rate of 94.4%
• In first quarter 2022 and through trade date of January 25, 2022, a total of $474.3 million or 915,866 shares were repurchased at an average repurchase price of $517.83
• Approximately $85.8 million in dividends were paid to shareholders in fourth quarter 2021; Cash dividend of $1.04 per share declared by MSCI Board of Directors for first quarter 2022

		Three Months Ended			Year Ended
		Dec. 31,		Dec. 31,	%		Dec. 31,		Dec. 31,	%
In thousands, except per share data		2021		2020	Change		2021		2020	Change
Operating revenues	$	549,842	$	443,661	23.9%	$	2,043,544	$	1,695,390	20.5%
Operating income	$	280,587	$	234,085	19.9%	$	1,072,725	$	884,764	21.2%
Operating margin %		51.0%		52.8%			52.5%		52.2%
Net income	$	193,865	$	156,216	24.1%	$	725,983	$	601,822	20.6%

Diluted EPS	$	2.32	$	1.87	24.1%	$	8.70	$	7.12	22.2%
Adjusted EPS	$	2.51	$	1.96	28.1%	$	9.95	$	7.83	27.1%
Adjusted EBITDA	$	318,660	$	256,136	24.4%	$	1,196,790	$	971,510	23.2%
Adjusted EBITDA margin %		58.0%		57.7%			58.6%		57.3%

"MSCI's ground-breaking performance in the fourth quarter and full year of 2021 reflected strong success on key strategic investments, a laser focus on the needs of our clients, and unprecedented demand for our solutions. Among other milestones, we achieved record full-year and quarterly recurring sales and recurring net new sales, along with the 32nd consecutive quarter of double-digit subscription growth in our Index business," said Henry A. Fernandez, Chairman and CEO of MSCI.

"Over the course of 2022, we will continue investing and executing aggressively to meet growing client demand and secure leadership positions across the enormous growth opportunities in front of us, including ESG and Climate. The global race to net-zero keeps accelerating, and we have positioned MSCI as a leading provider of climate-related tools for the capital markets industry," added Mr. Fernandez.

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PRESS RELEASE

Fourth Quarter Consolidated Results

Operating Revenues: Operating revenues were $549.8 million, up 23.9%. Organic operating revenue growth was 19.8%. The $106.2 million increase was comprised of $61.9 million in higher recurring subscription revenues and $38.3 million in higher asset-based fees, as well as $6.0 million in higher non-recurring revenues.

Run Rate and Retention Rate: Total Run Rate at December 31, 2021 was $2,203.9 million, up 20.3%. Recurring subscriptions Run Rate increased by $246.2 million and asset-based fees Run Rate increased by $125.2 million. Organic recurring subscriptions Run Rate growth was 13.4%. Retention Rate in fourth quarter 2021 was 94.4%, compared to 92.6% in fourth quarter 2020.

Expenses: Total operating expenses were $269.3 million, up 28.5%. Adjusted EBITDA expenses were $231.2 million, up 23.3%, primarily reflecting higher compensation and benefits costs, related to continued investments to support growth, including increased headcount in product development and research and technology and increased non-compensation costs in the areas of information technology costs, professional fees, market data costs and marketing costs. Approximately $8.7 million in impairment charges related to the sublease of leased property were excluded from Adjusted EBITDA expenses. Total operating expenses excluding the impact of foreign currency exchange rate fluctuations ("ex-FX") and adjusted EBITDA expenses ex-FX increased 29.0% and 23.9%, respectively.

Headcount: As of December 31, 2021, headcount was 4,303 employees, with approximately 37% and approximately 63% of employees located in developed market and emerging market locations, respectively.

Other Expense (Income), Net: Other expense (income), net was $34.8 million, down 10.5% primarily reflecting a one-time gain of $7.0 million related to the gain resulting from changes in ownership interest of The Burgiss Group, LLC, an equity method investee, partially offset by higher interest expense due to higher debt balances versus the prior period.

Income Taxes:The effective tax rate was 21.1% in fourth quarter 2021, compared to 20.0% in fourth quarter 2020, primarily driven by higher net unfavorable discrete expenses, including accruals for potential audit settlements and other prior year items.

Net Income: As a result of the factors described above, net income was $193.9 million, up 24.1%.

Adjusted EBITDA: Adjusted EBITDA was $318.7 million, up 24.4%. Adjusted EBITDA margin in fourth quarter 2021 was 58.0%, compared to 57.7% in fourth quarter 2020.

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PRESS RELEASE

Index Segment:

Table 1A: Results (unaudited)

	Three Months Ended		Year Ended
	Dec. 31,		Dec. 31,	%	Dec. 31,		Dec. 31,	%
In thousands	2021	2020	Change	2021	2020	Change
Operating revenues:
Recurring subscriptions	$170,141	$148,762	14.4%	$650,629	$580,393	12.1%
Asset-based fees	149,398	111,129	34.4%	553,991	399,771	38.6%
Non-recurring	12,268	8,749	40.2%	47,144	36,331	29.8%
Total operating revenues	331,807	268,640	23.5%	1,251,764	1,016,495	23.1%
Adjusted EBITDA expenses	79,429	63,710	24.7%	300,452	250,002	20.2%
Adjusted EBITDA	$252,378	$204,930	23.2%	$951,312	$766,493	24.1%
Adjusted EBITDA margin %	76.1%				76.0%
76.3%		75.4%

Index operating revenues were $331.8 million, up 23.5%. The $63.2 million increase was primarily driven by $38.3 million in higher asset-based fees mainly reflecting an increase in revenues from exchange traded funds ("ETFs") linked to MSCI equity indexes. This increase reflected higher average AUM in ETFs linked to MSCI equity indexes, partially offset by a decline in average basis point fees on those AUM.

Recurring subscription revenues increased by $21.4 million, primarily reflecting strong contributions from market cap-weighted index products and from factor, ESG and climate index products. The $3.5 million increase in non-recurring revenues reflected higher licenses of derivative and factor and ESG index products, including client license and usage fees related to prior periods.

Index Run Rate as of December 31, 2021 was $1.3 billion, up 18.6%. The $201.4 million increase was comprised of a $125.2 million increase in asset-based fees Run Rate and a $76.2 million increase in recurring subscription Run Rate. The increase in asset-based fees Run Rate was primarily driven by higher AUM in ETFs linked to MSCI equity indexes and higher AUM in non-ETF indexed funds linked to MSCI indexes. The increase in recurring subscription Run Rate was primarily driven by growth across products, including market cap-weighted index products and strong growth in factor, ESG and climate index products and reflected growth across all regions and all client segments.

Analytics Segment:

Table 1B: Results (unaudited)

	Three Months Ended		Year Ended
	Dec. 31,		Dec. 31,	%	Dec. 31,		Dec. 31,	%
In thousands	2021	2020	Change	2021	2020	Change
Operating revenues:
Recurring subscriptions	$133,818	$129,796	3.1%	$533,178	$506,301	5.3%
Non-recurring	4,264	2,604	63.7%	11,121	7,507	48.1%
Total operating revenues	138,082	132,400	4.3%	544,299	513,808	5.9%
Adjusted EBITDA expenses	85,119	87,016	(2.2%)	345,500	340,884	1.4%
Adjusted EBITDA	$52,963	$45,384	16.7%	$198,799	$172,924	15.0%
Adjusted EBITDA margin %	38.4%				36.5%
34.3%		33.7%

Analytics operating revenues were $138.1 million, up 4.3%. The $5.7 million increase was driven primarily by higher recurring subscription revenues from Equity Analytics products.

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PRESS RELEASE

Analytics Run Rate as of December 31, 2021 was $585.2 million, up 5.4%. The increase of $30.1 million was also driven by growth in both Multi-Asset Class and Equity Analytics products. Analytics organic Run Rate growth was 6.8%.

ESG and Climate Segment:

Table 1C: Results (unaudited)

	Three Months Ended		Year Ended
	Dec. 31,		Dec. 31,	%	Dec. 31,		Dec. 31,	%
In thousands	2021	2020	Change	2021	2020	Change
Operating revenues:
Recurring subscriptions	$47,310	$30,984	52.7%	$162,609	$109,945	47.9%
Non-recurring	1,133	294	285.4%	3,583	1,419	152.5%
Total operating revenues	48,443	31,278	54.9%	166,192	111,364	49.2%
Adjusted EBITDA expenses	39,280	25,210	55.8%	136,444	88,513	54.2%
Adjusted EBITDA	$9,163	$6,068	51.0%	$29,748	$22,851	30.2%
Adjusted EBITDA margin %	18.9%				17.9%
19.4%		20.5%

ESG and Climate operating revenues were $48.4 million, up 54.9%. The $17.2 million increase was primarily driven by strong growth from Ratings, Climate and Screening products. Excluding foreign currency exchange rate fluctuations, ESG and Climate revenue growth was 53.0%.

ESG and Climate Run Rate as of December 31, 2021 was $199.6 million, up 44.3%. The $61.3 million increase primarily reflects strong growth from Ratings, Climate and Screening products with contributions across all regions and client segments. ESG and Climate organic Run Rate growth was 47.1%.

All Other - Private Assets Segment:

Table 1D: Results (unaudited)

	Three Months Ended		Year Ended
	Dec. 31,		Dec. 31,	%	Dec. 31,		Dec. 31,	%
In thousands	2021	2020	Change	2021	2020	Change
Operating revenues:
Recurring subscriptions	$31,269	$11,134	180.8%	$79,624	$51,536	54.5%
Non-recurring	241	209	15.3%	1,665	2,187	(23.9%)
Total operating revenues	31,510	11,343	177.8%	81,289	53,723	51.3%
Adjusted EBITDA expenses	27,354	11,589	136.0%	64,358	44,481	44.7%
Adjusted EBITDA	$4,156	$(246)	nm	$16,931	$9,242	83.2%
Adjusted EBITDA margin %	13.2%				20.8%
(2.2%)		17.2%

All Other - Private Assets operating revenues, which reflects the Real Estate operating segment, were $31.5 million, up 177.8%, and included $18.7 million from the acquisition of RCA which closed on September 13, 2021. Excluding the acquisition of RCA, All Other - Private Assets segment revenues increased 13.0% reflecting strong growth in Global Intel and Real Estate Climate Value-at-Risk products. Excluding foreign currency exchange rate fluctuations and contributions from RCA, All Other

- Private Assets revenue growth was 12.9%.

All Other - Private Assets Run Rate, which reflects the Real Estate operating segment, was $135.1 million as of December 31, 2021, up 139.2%, and included $76.0 million associated with the RCA business. Excluding the acquisition, the increase reflected contributions from Global Intel products, as well as strong growth in new sales of Real Estate Climate Value-at-Risk products. All Other - Private Assets organic subscription Run Rate growth was 7.6%.

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PRESS RELEASE

Select Balance Sheet Items and Capital Allocation

Cash Balances and Outstanding Debt: Cash and cash equivalents was $1.4 billion as of December 31, 2021. MSCI typically seeks to maintain minimum cash balances globally of approximately $200.0 million to $250.0 million for general operating purposes.

Total principal amounts of debt outstanding as of December 31, 2021 was $4.2 billion. The total debt to net income ratio (based on trailing twelve months net income) was 5.7x. The total debt to adjusted EBITDA ratio (based on trailing twelve months adjusted EBITDA) was 3.5x.

MSCI seeks to maintain total debt to adjusted EBITDA in a target range of 3.0x to 3.5x.

Capex and Cash Flow: Capex was $16.6 million, cash provided by operating activities increased by 18.5% to $279.7 million due to higher cash collections and free cash flow was $263.1 million, up 20.1%.

Share Count and Share Repurchases: Weighted average diluted shares outstanding were 83.6 million in fourth quarter 2021, down 0.2% year-over-year. Total share repurchases during the quarter were $5.2 million or 9,069 shares at an average repurchase price of $577.76. In first quarter 2022 and through trade date of January 25, 2022, a total of $474.3 million or 915,866 shares were repurchased at an average repurchase price of $517.83. Total shares outstanding as of December 31, 2021 were

82.4 million. A total of $1.1 billion remains on the outstanding share repurchase authorization as of trade date of January 25, 2021.

Dividends: Approximately $85.8 million in dividends were paid to shareholders in fourth quarter 2021. On January 24, 2022, the MSCI Board of Directors declared a cash dividend of $1.04 per share for first quarter 2022, payable on February 28, 2022 to shareholders of record as of the close of trading on February 18, 2022.

Full-Year 2022 Guidance

MSCI's guidance for the year ending December 31, 2022 ("Full-Year 2022") 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 ongoing COVID-19 pandemic.

	Guidance Item	Current Guidance for Full-Year 2022
	Operating Expense	$1,075 to $1,115 million
	Adjusted EBITDA Expense	$975 to $1,005 million
	Interest Expense (including	~$162 million
	amortization of financing fees)(1)
	Depreciation & Amortization Expense	$100 to $110 million
	Effective Tax Rate	15.5% to 18.5%
	Capital Expenditures	$60 to $70 million
	Net Cash Provided by Operating	$1,120 to $1,160 million
	Activities
	Free Cash Flow	$1,050 to $1,100 million

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

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