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, 2022 ("fourth quarter 2022") and full year ended December 31, 2022 ("full year 2022").

Financial and Operational Highlights for Fourth Quarter 2022

(Note: Unless otherwise noted, percentage and other changes are relative to the three months ended December 31, 2021 ("fourth quarter 2021") and Run Rate percentage changes are relative to December 31, 2021).

Operating revenues of $576.2 million, up 4.8%; Organic operating revenue growth of 6.8%
Recurring subscription revenues up 13.1%; Asset-based fees down 16.2%
Operating margin of 53.6%; Adjusted EBITDA margin of 58.8%
Diluted EPS of $2.67, up 15.1%; Adjusted EPS of $2.84, up 13.1%
New recurring subscription sales down by 2.0%; Organic subscription Run Rate growth of 13.0%; Retention Rate of 93.0%
In full year 2022 and through trade date of January 30, 2023, a total of $1,284.8 million or 2,729,715 shares were repurchased at an average repurchase price of $470.68
Fourth quarter 2022, dividends of $100.0 million were paid to shareholders; Cash dividend of $1.38 per share declared by MSCI Board of Directors for first quarter 2023, an increase of 10.4%

	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,					Dec. 31,			Dec. 31,
In thousands, except per share data	2022			2021			% Change		2022			2021			% Change
Operating revenues	$	576,208		$	549,842		4.8	%	$	2,248,598		$	2,043,544		10.0	%
Operating income	$	308,750		$	280,587		10.0	%	$	1,207,640		$	1,072,725		12.6	%
Operating margin %		53.6	%		51.0	%				53.7	%		52.5	%

Net income	$	214,971		$	193,865		10.9	%	$	870,573		$	725,983		19.9	%

Diluted EPS	$	2.67		$	2.32		15.1	%	$	10.72		$	8.70		23.2	%
Adjusted EPS	$	2.84		$	2.51		13.1	%	$	11.45		$	9.95		15.1	%

Adjusted EBITDA	$	339,022		$	318,660		6.4	%	$	1,329,671		$	1,196,790		11.1	%
Adjusted EBITDA margin %		58.8	%		58.0	%				59.1	%		58.6	%

"Despite a global bear market and historically volatile market conditions, MSCI delivered strong performance for the year with Adjusted EPS growth of 15.1% and a record full year retention rate of 95.2%. Among other highlights, we achieved our ninth consecutive year of double-digit subscription run rate growth in Index. Meanwhile, our full-year Climate results across all product lines included 79.6% run rate growth and 97.8% retention rate. Climate remains a significant opportunity and area of keen focus for MSCI," said Henry A. Fernandez, Chairman and CEO of MSCI.

"While the external environment created headwinds for AUM-linked fees, our all-weather franchise has enabled us to continue making critical investments in our long-term growth areas. These investments are helping MSCI expand and enhance our solutions to meet the needs of an increasingly diverse client base."

Fourth Quarter Consolidated Results

Operating Revenues: Operating revenues were $576.2 million, up 4.8%. The $26.4 million increase was primarily the result of $50.0 million in higher recurring subscription revenues offset by a $24.2 million decrease in asset-based fees. Organic operating revenue growth was 6.8%.

Run Rate and Retention Rate: Total Run Rate at December 31, 2022 was $2,320.3 million, up 5.3%. Recurring subscriptions Run Rate increased by $191.5 million, and asset-based fees Run Rate decreased by $75.1 million. Organic recurring subscriptions Run Rate growth was 13.0%. Retention Rate in fourth quarter 2022 was 93.0%, compared to 94.4% in fourth quarter 2021.

Expenses: Total operating expenses were $267.5 million, down 0.7%. Adjusted EBITDA expenses were $237.2 million, up 2.6%, primarily related to higher non-compensation costs including information technology costs. Compensation costs were up slightly, primarily driven by higher severance and salary costs, partially offset by lower incentive compensation. Total operating expenses excluding the impact of foreign currency exchange rate fluctuations ("ex-FX") and adjusted EBITDA expenses ex-FX increased 3.8% and 7.6%, respectively.

Operating Income: Operating Income was 308.8 million, up 10.0%. Operating Income margin in fourth quarter 2022 was 53.6%, compared to 51.0% in fourth quarter 2021.

Headcount: As of December 31, 2022, headcount was 4,759 employees, with approximately 35% and approximately 65% of employees located in developed market and emerging market locations, respectively.

Other Expense (Income), Net: Other expense (income), net was $43.1 million, up 23.7% primarily driven by the absence of the one-time gain of $7.0 million from changes in ownership interest of The Burgiss Group, LLC, an equity method investment, and higher interest expense associated with higher average outstanding debt balances, partially offset by higher interest income.

Income Taxes: The effective tax rate was 19.1% in fourth quarter 2022, compared to 21.1% in fourth quarter 2021. The higher rate in the prior period reflected higher net unfavorable discrete expenses, primarily driven by accrual adjustments for potential audit settlements based on latest developments with tax authorities.

Net Income: As a result of the factors described above, net income was $215.0 million, up 10.9%.

Adjusted EBITDA: Adjusted EBITDA was $339.0 million, up 6.4%. Adjusted EBITDA margin in fourth quarter 2022 was 58.8%, compared to 58.0% in fourth quarter 2021.

Index Segment:

Table 1A: Results (unaudited)

	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,					Dec. 31,			Dec. 31,
In thousands	2022			2021			% Change		2022			2021			% Change
Operating revenues:
Recurring subscriptions	$	189,970		$	170,141		11.7	%	$	729,710		$	650,629		12.2	%
Asset-based fees		125,238			149,398		(16.2	)%		528,127			553,991		(4.7	)%
Non-recurring		14,053			12,268		14.6	%		45,372			47,144		(3.8	)%
Total operating revenues		329,261			331,807		(0.8	)%		1,303,209			1,251,764		4.1	%
Adjusted EBITDA expenses		80,866			79,429		1.8	%		317,802			300,452		5.8	%
Adjusted EBITDA	$	248,395		$	252,378		(1.6	)%	$	985,407		$	951,312		3.6	%
Adjusted EBITDA margin %		75.4	%		76.1	%				75.6	%		76.0	%

Index operating revenues were $329.3 million, down 0.8%. The $2.5 million decrease was primarily driven by $24.2 million in lower asset-based fees, partially offset by $19.8 million in higher recurring subscription revenues.

Growth in recurring subscription revenues was primarily driven by strong growth from market-cap weighted Index products and growth from factor, ESG and climate Index products.

The decrease in revenues attributable to asset-based fees reflected a decline in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes, driven by a decrease in average AUM and average basis point fees. The decrease in revenues attributable to asset-based fees was partially offset by an increase in revenues from exchange traded futures and options contracts linked to MSCI indexes, driven by volume increases.

Index Run Rate as of December 31, 2022 was $1.3 billion, up 0.6%. The $8.0 million increase was comprised of a $83.0 million increase in recurring subscription Run Rate partially offset by a $75.1 million decrease in asset-based fees Run Rate. The increase in recurring subscription Run Rate was driven by strong growth from market cap-weighted, factor, ESG and climate, and custom Index products and special packages, and reflected growth across all regions and client segments. The decline in asset-based fees Run Rate primarily reflected lower AUM in ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes, partially offset by higher exchange traded futures and options volume.

Analytics Segment:

Table 1B: Results (unaudited)

	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,					Dec. 31,			Dec. 31,
In thousands	2022			2021			% Change		2022			2021			% Change
Operating revenues:
Recurring subscriptions	$	146,957		$	133,818		9.8	%	$	567,004		$	533,178		6.3	%
Non-recurring		2,754			4,264		(35.4	)%		9,103			11,121		(18.1	)%
Total operating revenues		149,711			138,082		8.4	%		576,107			544,299		5.8	%
Adjusted EBITDA expenses		83,300			85,119		(2.1	)%		328,212			345,500		(5.0	)%
Adjusted EBITDA	$	66,411		$	52,963		25.4	%	$	247,895		$	198,799		24.7	%
Adjusted EBITDA margin %		44.4	%		38.4	%				43.0	%		36.5	%

Analytics operating revenues were $149.7 million, up 8.4%. The $11.6 million increase was primarily driven by growth from recurring subscriptions related to both Multi-Asset Class and Equity Analytics products. Excluding the impact of foreign currency exchange rate fluctuations, Analytics operating revenue growth was 9.5%.

Analytics Run Rate as of December 31, 2022, was $616.1 million, up 5.3%. The increase of $30.8 million was driven by strong growth in Equity Analytics products as well as growth in Multi-Asset Class products, and reflected growth across all regions. Excluding the impact of foreign currency exchange rate fluctuations, Analytics Run Rate growth was 6.6%.

ESG and Climate Segment:

Table 1C: Results (unaudited)

	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,					Dec. 31,			Dec. 31,
In thousands	2022			2021			% Change		2022			2021			% Change
Operating revenues:
Recurring subscriptions	$	62,198		$	47,310		31.5	%	$	223,160		$	162,609		37.2	%
Non-recurring		1,361			1,133		20.1	%		5,151			3,583		43.8	%
Total operating revenues		63,559			48,443		31.2	%		228,311			166,192		37.4	%
Adjusted EBITDA expenses		44,799			39,280		14.1	%		167,217			136,444		22.6	%
Adjusted EBITDA	$	18,760		$	9,163		104.7	%	$	61,094		$	29,748		105.4	%
Adjusted EBITDA margin %		29.5	%		18.9	%				26.8	%		17.9	%

ESG and Climate operating revenues were $63.6 million, up 31.2%. The $15.1 million increase was primarily driven by strong growth from recurring subscriptions related to Ratings, Climate and Screening products. Excluding the impact of foreign currency exchange rate fluctuations, ESG and Climate operating revenue growth was 43.0%.

ESG and Climate Run Rate as of December 31, 2022, was $267.0 million, up 33.8%. The $67.4 million increase primarily reflects strong growth from Ratings, Climate and Screening products with contributions across all regions and client segments. Excluding the impact of foreign currency exchange rate fluctuations, ESG and Climate Run Rate growth was 36.8%.

All Other – Private Assets Segment:

Table 1D: Results (unaudited)

	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,					Dec. 31,			Dec. 31,
In thousands	2022			2021			% Change		2022			2021			% Change
Operating revenues:
Recurring subscriptions	$	33,373		$	31,269		6.7	%	$	139,649		$	79,624		75.4	%
Non-recurring		304			241		26.1	%		1,322			1,665		(20.6	)%
Total operating revenues		33,677			31,510		6.9	%		140,971			81,289		73.4	%
Adjusted EBITDA expenses		28,221			27,354		3.2	%		105,696			64,358		64.2	%
Adjusted EBITDA	$	5,456		$	4,156		31.3	%	$	35,275		$	16,931		108.3	%
Adjusted EBITDA margin %		16.2	%		13.2	%				25.0	%		20.8	%

All Other – Private Assets operating revenues, which reflects the Real Assets operating segment, were $33.7 million, up 6.9%, primarily driven by growth from recurring subscriptions related to strong growth from RCA, Global Intel, Enterprise Analytics and Climate Value-at-Risk products, partially offset by unfavorable foreign currency exchange rate fluctuations. Excluding the impact of foreign currency exchange rate fluctuations, All Other – Private Assets operating revenue growth was 13.8%.

All Other – Private Assets Run Rate, which reflects the Real Assets operating segment, was $145.3 million as of December 31, 2022, up 7.5%, driven by growth in RCA, Global Intel, Climate Value-at-Risk and Enterprise Analytics products across all regions, partially offset by unfavorable foreign currency exchange rate fluctuations. Excluding the impact of foreign currency exchange rate fluctuations, All Other – Private Assets Run Rate growth was 11.6%.

Select Balance Sheet Items and Capital Allocation

Cash Balances and Outstanding Debt: Cash and cash equivalents was $1.0 billion as of December 31, 2022. MSCI typically seeks to maintain minimum cash balances globally of approximately $225.0 million to $275.0 million for general operating purposes.

Total principal amount of debt outstanding as of December 31, 2022 was $4.5 billion. The total debt to net income ratio (based on trailing twelve months net income) was 5.2x. The total debt to adjusted EBITDA ratio (based on trailing twelve months adjusted EBITDA) was 3.4x.

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 $20.5 million, and net cash provided by operating activities increased by 12.8% to $315.4 million, primarily reflecting lower tax payments and higher cash collections from customers, partially offset by higher cash expenses paid in the quarter. Free cash flow was up 12.1% to $295.0 million.

Share Count and Share Repurchases: Weighted average diluted shares outstanding were 80.4 million in fourth quarter 2022, down 3.8% year-over-year. Total share repurchases during the quarter were $70.1 million or 163,064 shares at an average repurchase price of $430.07. Total shares outstanding as of December 31, 2022 were 80.0 million. A total of $1.3 billion remains on the outstanding share repurchase authorization as of trade date of January 30, 2023.

Dividends: Approximately $100.0 million in dividends were paid to shareholders in fourth quarter 2022. On January 30, 2023, the MSCI Board of Directors declared a cash dividend of $1.38 per share for first quarter 2023, payable on February 28, 2023 to shareholders of record as of the close of trading on February 17, 2023.

Full-Year 2023 Guidance

MSCI's guidance for the year ending December 31, 2023 ("Full-Year 2023") 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 the impact from changes in interest rates, the economic and market impacts of elevated inflation levels and Russia's invasion of Ukraine, as well as the ongoing uncertainty related to the duration, magnitude and the impact of the ongoing COVID-19 pandemic. See "Forward-Looking Statements" below.

Guidance Item	Current Guidance for Full-Year 2023
Operating Expense	$1,090 to $1,130 million
Adjusted EBITDA Expense	$965 to $995 million
Interest Expense (including amortization of financing fees)	$184 to $187 million
Depreciation & Amortization Expense	$125 to $135 million
Effective Tax Rate	17.0% to 20.0%
Capital Expenditures	$75 to $85 million
Net Cash Provided by Operating Activities	$1,145 to $1,195 million
Free Cash Flow	$1,060 to $1,120 million

The guidance provided above assumes, among other things, that MSCI maintains its current debt levels.

Conference Call Information

MSCI's senior management will review the fourth quarter and full year 2022 results on Tuesday, January 31, 2023 at 11:00 AM Eastern Time. To listen to the live event via webcast, visit the events and presentations section of MSCI's Investor Relations website, https://ir.msci.com/events-and-presentations, or via telephone, dial 1-833-630-1956 within the United States. International callers may dial 1-412-317-1837. Participants should ask the operator to be joined into the MSCI call. The teleconference will also be webcast with an accompanying slide presentation that can be accessed through MSCI's Investor Relations website.

-Ends-

About MSCI Inc.

MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 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 2023 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, 2021 filed with the Securities and Exchange Commission ("SEC") on February 11, 2022 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 Investor Relations homepage, Corporate Responsibility homepage and 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 or discontinue the subscription 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 cancellation. In the Analytics and the ESG and Climate 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 Assets 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-sell 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, or reach the end of the committed subscription period, 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, non-renewal or an indication the client does not intend to continue their subscription 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 14 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, when applicable, impairment related to sublease of leased property and certain non-recurring acquisition related integration and transaction costs.

"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, when applicable, impairment related to sublease of leased property and certain non-recurring acquisition-related integration and transaction costs.

"Adjusted EBITDA margin" is defined as adjusted EBITDA divided by operating revenues.

"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 and, at times, certain other transactions or adjustments, including, when applicable, the impact related to costs associated with debt extinguishment, the impact related to certain non-recurring acquisition-related integration and transaction costs, the impact from the write-off of internally developed capitalized software, the impact from impairment related to sublease of leased property and the impact related to gain from changes in ownership interest of equity method investee.

"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, adjusted EBITDA margin 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 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 EBITDA margin, adjusted net income, adjusted EPS, 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. Approximately 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								Year Ended
	Dec. 31,			Dec. 31,			%		Dec. 31,			Dec. 31,			%
In thousands, except per share data	2022			2021			Change		2022			2021			Change
Operating revenues	$	576,208		$	549,842		4.8	%	$	2,248,598		$	2,043,544		10.0	%
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization)		102,384			95,903		6.8	%		404,341			358,684		12.7	%
Selling and marketing		71,912			68,708		4.7	%		264,583			243,185		8.8	%
Research and development		29,026			30,819		(5.8	)%		107,205			111,564		(3.9	)%
General and administrative		33,864			44,873		(24.5	)%		146,857			147,893		(0.7	)%
Amortization of intangible assets		23,805			21,023		13.2	%		91,079			80,592		13.0	%
Depreciation and amortization of property,
equipment and leasehold improvements		6,467			7,929		(18.4	)%		26,893			28,901		(6.9	)%
Total operating expenses(1)		267,458			269,255		(0.7	)%		1,040,958			970,819		7.2	%

Operating income		308,750			280,587		10.0	%		1,207,640			1,072,725		12.6	%

Interest income		(6,609	)		(368	)	n/m			(11,769	)		(1,497	)	n/m
Interest expense		45,610			40,336		13.1	%		171,571			159,614		7.5	%
Other expense (income)		4,087			(5,144	)	179.5	%		3,997			56,472		(92.9	)%
Other expense (income), net		43,088			34,824		23.7	%		163,799			214,589		(23.7	)%

Income before provision for income taxes		265,662			245,763		8.1	%		1,043,841			858,136		21.6	%

Provision for income taxes		50,691			51,898		(2.3	)%		173,268			132,153		31.1	%
Net income		214,971			193,865		10.9	%		870,573			725,983		19.9	%


Earnings per basic common share	$	2.69		$	2.35		14.5	%	$	10.78		$	8.80		22.5	%


Earnings per diluted common share	$	2.67		$	2.32		15.1	%	$	10.72		$	8.70		23.2	%

Weighted average shares outstanding used
in computing earnings per share:

Basic		79,989			82,473		(3.0	)%		80,746			82,508		(2.1	)%
Diluted		80,424			83,578		(3.8	)%		81,215			83,479		(2.7	)%

n/m: not meaningful.

^{(1) Includes stock-based compensation expense of $12.6 million and $12.2 million for the three months ended Dec. 31, 2022 and Dec. 31, 2021, respectively. Includes stock-based compensation expense of $58.0 million and $58.5 million for the year ended Dec. 31, 2022 and Dec. 31, 2021, respectively.}

Table 3: Selected Balance Sheet Items (unaudited)

	As of
	Dec. 31,	Dec. 31,
In thousands	2022	2021
Cash and cash equivalents	$993,564	$1,421,449
Accounts receivable, net of allowances	$663,236	$664,511

Current deferred revenue	$882,886	$824,912
Current portion of long-term debt (1)	$8,713	$—
Long-term debt(2)	$4,503,233	$4,161,422


^{(1) Consists of gross current portion of long-term debt, net of deferred financing fees. Gross current portion of long-term debt was $8.8 million at Dec. 31, 2022.}
^{(2) Consists of gross long-term debt, net of deferred financing fees. Gross long-term debt was $4,539.1 million at Dec. 31, 2022 and $4,200.0 million at Dec. 31, 2021.}

Table 4: Selected Cash Flow Items (unaudited)

	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,			%		Dec. 31,			Dec. 31,			%
In thousands	2022			2021			Change		2022			2021			Change
Net cash provided by operating activities	$	315,427		$	279,664		12.8	%	$	1,095,369		$	936,069		17.0	%
Net cash used in investing activities		(26,922	)		(49,834	)	46.0	%		(79,335	)		(1,035,713	)	92.3	%
Net cash (used in) provided by financing activities		(172,553	)		(91,744	)	(88.1	)%		(1,425,380	)		229,505		n/m
Effect of exchange rate changes		10,500			(1,301	)	n/m			(18,539	)		(8,933	)	(107.5	)%
Net (decrease) increase in cash and cash equivalents	$	126,452		$	136,785		(7.6	)%	$	(427,885	)	$	120,928		n/m

n/m: not meaningful.

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

*Index*	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,			%		Dec. 31,			Dec. 31,			%
In thousands	2022			2021			Change		2022			2021			Change
Operating revenues:
Recurring subscriptions	$	189,970		$	170,141		11.7	%	$	729,710		$	650,629		12.2	%
Asset-based fees		125,238			149,398		(16.2	)%		528,127			553,991		(4.7	)%
Non-recurring		14,053			12,268		14.6	%		45,372			47,144		(3.8	)%
Total operating revenues		329,261			331,807		(0.8	)%		1,303,209			1,251,764		4.1	%
Adjusted EBITDA expenses		80,866			79,429		1.8	%		317,802			300,452		5.8	%
Adjusted EBITDA	$	248,395		$	252,378		(1.6	)%	$	985,407		$	951,312		3.6	%
Adjusted EBITDA margin %		75.4	%		76.1	%				75.6	%		76.0	%

*Analytics*	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,			%		Dec. 31,			Dec. 31,			%
In thousands	2022			2021			Change		2022			2021			Change
Operating revenues:
Recurring subscriptions	$	146,957		$	133,818		9.8	%	$	567,004		$	533,178		6.3	%
Non-recurring		2,754			4,264		(35.4	)%		9,103			11,121		(18.1	)%
Total operating revenues		149,711			138,082		8.4	%		576,107			544,299		5.8	%
Adjusted EBITDA expenses		83,300			85,119		(2.1	)%		328,212			345,500		(5.0	)%
Adjusted EBITDA	$	66,411		$	52,963		25.4	%	$	247,895		$	198,799		24.7	%
Adjusted EBITDA margin %		44.4	%		38.4	%				43.0	%		36.5	%

*ESG and Climate*	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,			%		Dec. 31,			Dec. 31,			%
In thousands	2022			2021			Change		2022			2021			Change
Operating revenues:
Recurring subscriptions	$	62,198		$	47,310		31.5	%	$	223,160		$	162,609		37.2	%
Non-recurring		1,361			1,133		20.1	%		5,151			3,583		43.8	%
Total operating revenues		63,559			48,443		31.2	%		228,311			166,192		37.4	%
Adjusted EBITDA expenses		44,799			39,280		14.1	%		167,217			136,444		22.6	%
Adjusted EBITDA	$	18,760		$	9,163		104.7	%	$	61,094		$	29,748		105.4	%
Adjusted EBITDA margin %		29.5	%		18.9	%				26.8	%		17.9	%

*All Other - Private Assets*	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,			%		Dec. 31,			Dec. 31,			%
In thousands	2022			2021			Change		2022			2021			Change
Operating revenues:
Recurring subscriptions	$	33,373		$	31,269		6.7	%	$	139,649		$	79,624		75.4	%
Non-recurring		304			241		26.1	%		1,322			1,665		(20.6	)%
Total operating revenues		33,677			31,510		6.9	%		140,971			81,289		73.4	%
Adjusted EBITDA expenses		28,221			27,354		3.2	%		105,696			64,358		64.2	%
Adjusted EBITDA	$	5,456		$	4,156		31.3	%	$	35,275		$	16,931		108.3	%
Adjusted EBITDA margin %		16.2	%		13.2	%				25.0	%		20.8	%

*Consolidated*	Three Months Ended								Year Ended
	Dec. 31,			Dec. 31,			%		Dec. 31,			Dec. 31,			%
In thousands	2022			2021			Change		2022			2021			Change
Operating revenues:
Recurring subscriptions	$	432,498		$	382,538		13.1	%	$	1,659,523		$	1,426,040		16.4	%
Asset-based fees		125,238			149,398		(16.2	)%		528,127			553,991		(4.7	)%
Non-recurring		18,472			17,906		3.2	%		60,948			63,513		(4.0	)%
Operating revenues total		576,208			549,842		4.8	%		2,248,598			2,043,544		10.0	%
Adjusted EBITDA expenses		237,186			231,182		2.6	%		918,927			846,754		8.5	%
Adjusted EBITDA	$	339,022		$	318,660		6.4	%	$	1,329,671		$	1,196,790		11.1	%
Operating margin %		53.6	%		51.0	%				53.7	%		52.5	%
Adjusted EBITDA margin %		58.8	%		58.0	%				59.1	%		58.6	%

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

	Three Months Ended						Year Ended
	Dec. 31,			Dec. 31,			Dec. 31,			Dec. 31,
In thousands	2022			2021			2022			2021
Index
New recurring subscription sales	$	35,206		$	33,649		$	109,699		$	99,686
Subscription cancellations		(8,635	)		(6,207	)		(27,103	)		(24,399	)
Net new recurring subscription sales	$	26,571		$	27,442		$	82,596		$	75,287
Non-recurring sales	$	16,203		$	14,690		$	57,560		$	54,030
Total gross sales	$	51,409		$	48,339		$	167,259		$	153,716
Total Index net sales	$	42,774		$	42,132		$	140,156		$	129,317

Index Retention Rate		95.0	%		96.0	%		96.1	%		96.1	%

Analytics
New recurring subscription sales	$	25,193		$	27,275		$	75,584		$	71,656
Subscription cancellations		(14,648	)		(9,103	)		(37,171	)		(34,291	)
Net new recurring subscription sales	$	10,545		$	18,172		$	38,413		$	37,365
Non-recurring sales	$	2,731		$	4,284		$	11,143		$	12,407
Total gross sales	$	27,924		$	31,559		$	86,727		$	84,063
Total Analytics net sales	$	13,276		$	22,456		$	49,556		$	49,772

Analytics Retention Rate		90.0	%		93.4	%		93.6	%		93.8	%

ESG and Climate
New recurring subscription sales	$	23,363		$	23,258		$	78,980		$	69,964
Subscription cancellations		(2,303	)		(1,175	)		(5,618	)		(4,811	)
Net new recurring subscription sales	$	21,060		$	22,083		$	73,362		$	65,153
Non-recurring sales	$	715		$	1,208		$	4,268		$	4,135
Total gross sales	$	24,078		$	24,466		$	83,248		$	74,099
Total ESG and Climate net sales	$	21,775		$	23,291		$	77,630		$	69,288

ESG and Climate Retention Rate		95.4	%		96.6	%		97.2	%		96.5	%

All Other - Private Assets
New recurring subscription sales	$	6,723		$	8,119		$	23,213		$	14,142
Subscription cancellations		(2,489	)		(3,856	)		(7,569	)		(6,737	)
Net new recurring subscription sales	$	4,234		$	4,263		$	15,644		$	7,405
Non-recurring sales	$	574		$	493		$	1,264		$	1,694
Total gross sales	$	7,297		$	8,612		$	24,477		$	15,836
Total All Other - Private Assets net sales	$	4,808		$	4,756		$	16,908		$	9,099

All Other - Private Assets Retention Rate(2)		92.6	%		88.1	%		94.4	%		90.5	%

Consolidated
New recurring subscription sales	$	90,485		$	92,301		$	287,476		$	255,448
Subscription cancellations		(28,075	)		(20,341	)		(77,461	)		(70,238	)
Net new recurring subscription sales	$	62,410		$	71,960		$	210,015		$	185,210
Non-recurring sales	$	20,223		$	20,675		$	74,235		$	72,266
Total gross sales	$	110,708		$	112,976		$	361,711		$	327,714
Total net sales	$	82,633		$	92,635		$	284,250		$	257,476

Total Retention Rate		93.0	%		94.4	%		95.2	%		94.7	%

^{(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.}
^{(2) Retention rate for All Other – Private Assets excluding the impact of RCA was 92.7% for the year ended Dec. 31, 2022.}

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

	Three Months Ended													Year Ended
	Dec. 31,		Mar. 31,			June 30,			Sep. 30,			Dec. 31,		Dec. 31,		Dec. 31,
In billions	2021		2022			2022			2022			2022		2021		2022
Beginning Period AUM in ETFs linked to	$	1,336.6	$	1,451.6		$	1,389.3		$	1,189.5		$	1,081.2	$	1,103.6	$	1,451.6
MSCI equity indexes
Market Appreciation/(Depreciation)		56.5		(89.7	)		(207.3	)		(105.7	)		118.8		142.7		(283.9	)
Cash Inflows/(Outflows)		58.5		27.4			7.5			(2.6	)		22.9		205.3		55.2
Period-End AUM in ETFs linked to
MSCI equity indexes	$	1,451.6	$	1,389.3		$	1,189.5		$	1,081.2		$	1,222.9	$	1,451.6	$	1,222.9

Period Average AUM in ETFs linked to
MSCI equity indexes	$	1,414.8

MSCI Reports Financial Results for Fourth Quarter and Full Year 2022