- Strong Financial Growth Organic revenue grew 9%, adjusted EBITDA rose 10%, and adjusted EPS increased over 15% in Q3 2025.
- Aggressive Share Repurchases $1.25B repurchased in Q3, totaling $1.5B YTD, with an additional $3B authorization for future buybacks.
- Index Sales Surge Recurring net new subscription sales grew 27% in Index (43% in Americas), driven by asset-based fee run rate growth of 17%.
- Analytics Expansion Analytics saw 16% recurring net new sales growth, fueled by hedge fund adoption of risk tools and equity models.
- AI-Driven Efficiency AI integration saved $15-20M in 2025 revenue and reduced costs, with 15-20 AI projects enhancing data capture and product development.
Financial Performance
The company's financial performance was characterized by strong revenue growth, driven by its mission-critical, durable solutions and accelerating pace of innovation. MSCI's total run rate growth was over 10%, with asset-based fee run rate growth of 17%. The company's adjusted EBITDA margin was also robust, driven by operating leverage. MSCI's free cash flow guidance was increased, reflecting the company's strong growth momentum.
Segment Performance
MSCI's client segments, including hedge funds, wealth managers, asset owners, banks, and broker-dealers, and asset managers, all saw strong growth. The company's hedge fund segment was particularly strong, with 21% recurring net new subscription sales growth. MSCI's Analytics segment saw strong adoption of risk tools and equity models by multi-strategy hedge funds, driving 16% recurring net new sales growth.
Innovation and AI Integration
MSCI has been focused on developing solutions for private credit, including terms and conditions on loans, credit assessments, and market risk measurements. The company has also launched a number of private credit indices to provide benchmarks for the industry. MSCI has made significant investments in AI, which is becoming a key component of its business. According to Henry Fernandez, "AI will dramatically increase MSCI's margins by reducing costs and enabling the creation of new products."
Valuation
MSCI's valuation metrics suggest that the company's strong growth momentum is partially priced in. The stock trades at a P/E Ratio of 37.46, EV/EBITDA of 29.86, and P/S Ratio of 15.03. While the valuation is rich, MSCI's high ROIC (35.3%) and ROE (albeit negative due to accounting treatments) suggest that the company's profitability is strong. The Dividend Yield is 1.18%, and the Free Cash Flow Yield is 3.21%, indicating a reasonable return for shareholders.
Outlook
MSCI's full-year guidance reflects the company's strong growth, with an increase in the low end of the expense guidance range and an increase in free cash flow guidance. Analysts estimate next year's revenue growth at 8.8%, indicating a continued strong momentum. The company's focus on innovation, AI integration, and expansion into new client segments positions it well for long-term growth.