MSCI Inc. (MSCI): Business Model Canvas [10-2024 Updated]

In the ever-evolving world of finance, MSCI Inc. stands out as a leader in providing critical insights and analytics to investors. This blog post delves into the Business Model Canvas of MSCI, outlining key components such as their partnerships, activities, and unique value propositions. Discover how MSCI's innovative approach shapes their offerings and drives value for a diverse range of customers, from institutional investors to corporations seeking ESG insights.

MSCI Inc. (MSCI) - Business Model: Key Partnerships

Collaborations with financial institutions

MSCI collaborates with numerous financial institutions, including investment banks, asset managers, and pension funds, to provide data and analytics for investment decision-making. In the nine months ended September 30, 2024, MSCI reported operating revenues from asset-based fees increased by 16.9%, primarily driven by strong growth in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes, which increased by 17.9% and 19.4%, respectively.

Partnerships with technology firms for data integration

MSCI has established partnerships with various technology firms to enhance its data integration capabilities. The acquisition of Fabric RQ, Inc., a wealth technology platform, on January 2, 2024, showcases MSCI's strategic focus on integrating advanced analytics and portfolio design tools. This acquisition allows MSCI to offer more sophisticated analytics to wealth managers and advisors.

Strategic alliances with ESG and climate data providers

MSCI has formed strategic alliances with ESG and climate data providers to bolster its ESG offerings. The acquisition of Trove Research Ltd on November 1, 2023, for approximately $37.5 million further strengthens MSCI's capabilities in carbon markets intelligence. This acquisition is expected to enhance MSCI's ESG product suite, reflecting a growing demand for sustainable investment solutions.

Relationships with index-linked investment product issuers

MSCI maintains strong relationships with issuers of index-linked investment products, including ETFs and mutual funds. As of September 30, 2024, the average value of assets under management (AUM) in ETFs linked to MSCI equity indexes was approximately $1,761.8 billion, reflecting a sequential increase of $129.9 billion. These relationships are crucial as they drive MSCI's revenue through asset-based fees, which accounted for 22.8% of total operating revenues.

Partnership Type	Key Collaborations	Impact on Revenue
Financial Institutions	Investment banks, asset managers	Asset-based fees increased by 16.9% for nine months ended September 30, 2024
Technology Firms	Fabric RQ, Inc. (acquisition)	Enhanced analytics for wealth managers
ESG Providers	Trove Research Ltd (acquisition)	Strengthened ESG product offerings
Index Product Issuers	ETFs and mutual funds	AUM in ETFs linked to MSCI equity indexes at $1,761.8 billion as of September 30, 2024

MSCI Inc. (MSCI) - Business Model: Key Activities

Development of index products and analytics tools

MSCI Inc. is a leading provider of investment decision support tools, primarily focused on developing index products and analytics tools. In 2024, the company reported operating revenues from its index segment totaling $1,175,946 thousand for the nine months ending September 30, reflecting a growth of 10.5% compared to the previous year. Recurring subscriptions within this segment increased by 8.3%, contributing $653,929 thousand to the overall revenue.

Continuous research and innovation in financial data

MSCI invests significantly in research and development (R&D) to enhance its financial data offerings. For the nine months ended September 30, 2024, R&D expenses were reported at $120,182 thousand, up from $92,901 thousand in the previous year, marking a substantial increase of 29.3%. This investment supports the development of innovative products and services, particularly in the areas of ESG (Environmental, Social, and Governance) and climate risk analytics, which saw a 13.7% increase in recurring subscriptions, generating $235,954 thousand.

Marketing and sales of subscription services

MSCI's marketing and sales strategies are pivotal in driving subscription revenue growth. In the first three quarters of 2024, the company's total operating revenues reached $2,112,619 thousand, a 14.9% increase from the prior year. The marketing efforts have particularly bolstered the growth of asset-based fees, which rose by 16.9%, amounting to $482,162 thousand.

Revenue Type	Q3 2024 Revenue (in thousands)	Q3 2023 Revenue (in thousands)	% Change
Recurring Subscriptions	$724,705	$625,439	15.9%
Asset-Based Fees	$482,162	$412,354	16.9%
Non-Recurring Revenue	$39,855	$47,621	(16.3%)

Client support and relationship management

MSCI emphasizes strong client support and relationship management as part of its key activities. The company’s approach includes dedicated client service teams and ongoing support, which are critical for maintaining high client retention rates. As of September 30, 2024, MSCI reported a net income of $803,613 thousand, up from $745,212 thousand in the previous year, indicating the effectiveness of its client management strategies.

Overall, MSCI’s focus on these key activities has played a crucial role in its growth trajectory, enabling the company to maintain its leadership position in the financial services industry as of 2024.

MSCI Inc. (MSCI) - Business Model: Key Resources

Proprietary financial data and analytics

MSCI Inc. leverages its proprietary financial data and analytics to deliver value to its clients. As of September 30, 2024, the company's operating revenues from its Index segment totaled $404.9 million, reflecting an 11.8% increase from the previous year. This growth is primarily attributed to strong performance in asset-based fees, which increased by 19.5% to $168.6 million, and recurring subscription revenues, which rose 8.5% to $223.9 million.

Advanced technology and software solutions

MSCI invests significantly in advanced technology and software solutions to enhance its offerings. The company's research and development expenses for the nine months ended September 30, 2024, were $120.2 million, up from $92.9 million in the same period of the previous year, indicating a focus on technological advancements.

Additionally, MSCI's acquisition of Foxberry Ltd. in April 2024 for approximately $42.6 million enhances its front-office index technology capabilities.

Skilled workforce with financial expertise

MSCI's workforce is a critical resource, comprising skilled professionals with extensive financial expertise. As of September 30, 2024, the company had accrued compensation and related benefits amounting to $219.5 million, reflecting the value placed on talent acquisition and retention. This investment in human capital supports the company's ability to provide high-quality analytics and advisory services to its clients.

Strong brand reputation in the investment community

MSCI enjoys a strong brand reputation within the investment community, which is reflected in its financial performance. The company reported net income of $803.6 million for the nine months ended September 30, 2024, marking an increase from $745.2 million in the prior year. This strong financial performance is indicative of the trust and credibility MSCI has built over the years among investors and asset managers.

Key Resource	Details	Financial Metrics
Proprietary Financial Data	Operating revenues from Index segment	$404.9 million (Q3 2024)
Technology Solutions	R&D expenses	$120.2 million (9M 2024)
Skilled Workforce	Accrued compensation	$219.5 million (Q3 2024)
Brand Reputation	Net income	$803.6 million (9M 2024)

MSCI Inc. (MSCI) - Business Model: Value Propositions

Comprehensive and reliable financial data solutions

MSCI Inc. provides a wide range of financial data solutions, primarily through its subscription-based model. As of September 30, 2024, operating revenues from recurring subscriptions reached $1.57 billion, reflecting a 15.0% increase compared to the previous year. The company's data solutions include indices, analytics, and risk assessment tools that cater to diverse investment strategies.

Innovative analytics for better investment decisions

In the third quarter of 2024, the Analytics segment reported operating revenues of $172.4 million, an increase of 11.7% year-over-year. The growth is driven by enhanced analytics that support investment decision-making, offering clients insights into market trends and performance metrics. The Adjusted EBITDA for the Analytics segment rose to $90.3 million, representing a margin of 52.4%.

ESG and climate risk assessment tools

MSCI's ESG and Climate segment recorded operating revenues of $83.6 million for Q3 2024, up 14.5% from the previous year. This segment’s growth is indicative of the increasing demand for sustainable investment solutions. The company continues to expand its ESG offerings, with recurring subscription revenues in this category reaching $236.0 million for the nine months ended September 30, 2024, a growth of 13.7%.

Customizable index solutions for diverse investment needs

MSCI offers customizable index solutions, which cater to a variety of investment strategies. As of September 30, 2024, operating revenues from asset-based fees totaled $482.2 million, reflecting a 19.5% increase. The company's indices are widely used in exchange-traded funds (ETFs), with assets under management (AUM) in ETFs linked to MSCI equity indexes reaching $1.76 trillion. This growth is supported by substantial inflows and market appreciation, indicating a strong reliance on MSCI’s index solutions for investment performance.

Segment	Operating Revenues (Q3 2024)	Year-over-Year Growth	Adjusted EBITDA (Q3 2024)	EBITDA Margin
Analytics	$172.4 million	11.7%	$90.3 million	52.4%
ESG and Climate	$83.6 million	14.5%	N/A	N/A
Index	$404.9 million	11.8%	$314.1 million	77.6%

In summary, MSCI's value propositions are anchored in its comprehensive suite of financial data solutions, innovative analytics, robust ESG tools, and customizable index offerings, all of which are designed to meet the diverse needs of its clients and drive investment performance.

MSCI Inc. (MSCI) - Business Model: Customer Relationships

Subscription-based service model ensuring ongoing engagement

MSCI operates primarily on a subscription-based service model, which is crucial for ensuring ongoing engagement with its clients. As of September 30, 2024, the total recurring subscriptions revenue reached $2,210,728,000, reflecting a 15.0% increase from the previous year. The recurring subscriptions from the Index segment alone accounted for $653,929,000, an 8.3% increase year-over-year.

Dedicated customer support teams

MSCI has established dedicated customer support teams to enhance client satisfaction and retention. The company reported a total retention rate of 94.2% for the three months ended September 30, 2024. This is indicative of the effectiveness of their support teams in maintaining strong relationships with clients, despite a significant increase in subscription cancellations, which rose by 46.4% compared to the previous year.

Regular updates and enhancements to services

Regular updates and enhancements to MSCI's services are integral to its customer relationship strategy. In the nine months ended September 30, 2024, operating revenues from recurring subscriptions increased by 15.0%, driven by enhancements in Index products, which grew by $50.1 million, or 8.3%. Additionally, the ESG and Climate products saw a revenue increase of $28.4 million, or 13.7%.

Client education and training on product usage

MSCI invests in client education and training to ensure effective product usage. The company emphasizes the importance of educating clients on new features and services, which is reflected in the growth of their Analytics segment, which reported an 11.3% increase in operating revenues for the nine months ended September 30, 2024. This growth can be attributed to enhanced training programs and resources provided to clients, fostering greater engagement and utilization of MSCI's offerings.

Metrics	2024 (Q3)	2023 (Q3)	% Change
Total Recurring Subscriptions Revenue	$2,210,728,000	$1,922,842,000	15.0%
Index Segment Recurring Subscriptions	$653,929,000	$603,845,000	8.3%
Retention Rate	94.2%	95.4%	-1.2%
Subscription Cancellations	30,354	20,737	46.4%
Analytics Operating Revenues	$502,337,000	$451,219,000	11.3%
ESG and Climate Revenue Growth	$235,954,000	$207,523,000	13.7%

MSCI Inc. (MSCI) - Business Model: Channels

Direct sales through the company website

MSCI Inc. leverages its website as a primary channel for direct sales, facilitating access to its suite of products and services. As of September 30, 2024, MSCI reported total operating revenues of $724.7 million, representing a 15.9% increase compared to $625.4 million in the same period of the previous year. This growth reflects enhanced digital engagement and improved user experience on their web platform, which supports recurring subscriptions and asset-based fees.

Partnerships with financial advisors and institutions

MSCI has established partnerships with numerous financial advisors and institutions, enhancing its market reach. The company reported operating revenues from asset-based fees increased by 19.5% to $168.6 million for the three months ended September 30, 2024. These partnerships are pivotal in driving sales, as they enable advisors to integrate MSCI's indexing and analytical products into their offerings.

Online platforms for product access and information

In addition to direct sales, MSCI utilizes various online platforms to provide product access and information to clients. The average value of assets under management (AUM) in ETFs linked to MSCI equity indexes reached $1,761.8 billion as of September 30, 2024, marking a substantial increase driven by these online channels. This accessibility facilitates better client engagement and enhances the visibility of MSCI's offerings.

Industry conferences and events for networking

MSCI actively participates in industry conferences and events, which serve as critical networking channels. These events enable MSCI to showcase its products and connect with potential clients. The company’s total operating revenues from recurring subscriptions increased by 15.4% for the three months ended September 30, 2024, highlighting the effectiveness of such networking efforts in driving revenue growth.

Channel	Revenue Growth (% Change)	Operating Revenues (in millions)
Direct Sales via Website	15.9%	$724.7
Partnerships with Advisors	19.5%	$168.6 (Asset-based fees)
Online Platforms	21.8% (Average AUM increase)	$1,761.8 (AUM in ETFs)
Industry Conferences	15.4%	$536.6 (Recurring subscriptions)

MSCI Inc. (MSCI) - Business Model: Customer Segments

Institutional investors and asset managers

MSCI serves a significant portion of institutional investors, including pension funds, endowments, and other asset managers. As of September 30, 2024, the operating revenues from recurring subscriptions to institutional clients amounted to approximately $653.9 million, reflecting an increase of 8.3% year-over-year. The total assets under management (AUM) in ETFs linked to MSCI equity indexes reached $1.761 trillion, marking a sequential increase of $111.3 billion. This growth is largely driven by the increasing demand for index-based investment strategies among institutional investors.

Hedge funds and private equity firms

Hedge funds and private equity firms are critical customer segments for MSCI, particularly for its analytics and index products. The recurring subscription revenues from these segments increased by approximately 11.2% in 2024, with total operating revenues reaching $502.3 million during the nine months ended September 30, 2024. The increase is attributed to the growing reliance of hedge funds on MSCI's risk management and performance measurement tools. The analytics segment, which includes multi-asset class analytics, contributed significantly to this revenue growth.

Wealth management firms

Wealth management firms utilize MSCI’s tools for portfolio management and investment analysis. As of September 30, 2024, operating revenues from the wealth management segment showed a 15.4% increase, totaling $1.571 billion. The wealth management segment's growth is driven by the demand for ESG (Environmental, Social, and Governance) investment solutions, with MSCI's ESG and climate products contributing $235.9 million in recurring subscriptions, up 13.7% year-over-year.

Corporations seeking ESG insights

Corporations increasingly rely on MSCI for ESG insights to enhance their sustainability efforts and meet regulatory requirements. The ESG and Climate segment reported revenues of $241.4 million for the nine months ended September 30, 2024, which reflects a growth of 14.2% compared to the previous year. The demand for MSCI's ESG ratings and climate risk assessments has surged, highlighting the growing importance of sustainable investment strategies among corporate clients.

Customer Segment	Operating Revenues (2024)	Growth Rate	AUM in ETFs (as of Sept 2024)
Institutional Investors	$653.9 million	+8.3%	$1.761 trillion
Hedge Funds & Private Equity	$502.3 million	+11.2%	N/A
Wealth Management Firms	$1.571 billion	+15.4%	N/A
Corporations (ESG Insights)	$241.4 million	+14.2%	N/A

MSCI Inc. (MSCI) - Business Model: Cost Structure

Research and Development Expenses

For the nine months ended September 30, 2024, MSCI reported research and development (R&D) expenses of $98.5 million, reflecting a 14.6% increase compared to $86.1 million in the same period of 2023. The increase was primarily driven by higher compensation costs and professional fees associated with ongoing projects.

Marketing and Sales Costs

In the nine months ended September 30, 2024, MSCI's marketing and sales expenses amounted to $158.2 million, an increase of 19.9% from $131.9 million in the corresponding period of 2023. This rise is attributed to increased promotional activities and the expansion of the sales team to enhance client acquisition.

Technology Infrastructure and Maintenance

MSCI incurred technology infrastructure and maintenance costs of $45.7 million for the nine months ended September 30, 2024, which is a 10.3% increase from $41.5 million in the prior year. This expenditure supports the development and upkeep of their analytics and data management platforms.

Personnel Costs Related to Skilled Workforce

Personnel costs, including salaries and benefits for the skilled workforce, totaled $423.1 million for the nine months ended September 30, 2024, reflecting a 15.8% increase from $365.1 million in the same period of 2023. This increase is primarily due to higher wages, bonuses, and the expansion of workforce capabilities across various departments.

Cost Category	2024 (in millions)	2023 (in millions)	Percentage Change
Research and Development	$98.5	$86.1	14.6%
Marketing and Sales	$158.2	$131.9	19.9%
Technology Infrastructure	$45.7	$41.5	10.3%
Personnel Costs	$423.1	$365.1	15.8%

MSCI Inc. (MSCI) - Business Model: Revenue Streams

Recurring subscription fees for data services

MSCI generates significant revenue through recurring subscription fees. For the three months ended September 30, 2024, operating revenues from recurring subscriptions were $536,622,000, representing a 15.4% increase compared to $464,997,000 for the same period in 2023. For the nine months ended September 30, 2024, recurring subscription revenues reached $1,571,146,000, up from $1,365,936,000, reflecting a 15.0% growth.

Asset-based fees from index-linked products

Asset-based fees are another crucial revenue stream for MSCI. In Q3 2024, MSCI reported asset-based fees of $168,622,000, marking a 19.5% increase from $141,066,000 in Q3 2023. For the nine months of 2024, asset-based fees totaled $482,162,000, up from $412,354,000 in the same period the previous year, representing a 16.9% growth.

Period	Asset-Based Fees (in thousands)	Growth Rate
Q3 2024	$168,622	19.5%
Q3 2023	$141,066
9M 2024	$482,162	16.9%
9M 2023	$412,354

Non-recurring project-based revenues

Non-recurring revenues from project-based activities were $19,461,000 for Q3 2024, a slight increase of 0.4% from $19,376,000 in Q3 2023. For the nine months ended September 30, 2024, non-recurring revenues amounted to $59,311,000, down from $60,524,000 in the prior year, reflecting a decrease of 2.0%.

Period	Non-Recurring Revenues (in thousands)	Growth Rate
Q3 2024	$19,461	0.4%
Q3 2023	$19,376
9M 2024	$59,311	-2.0%
9M 2023	$60,524

Licensing fees for proprietary analytics solutions

MSCI also earns revenue through licensing fees for its proprietary analytics solutions. In Q3 2024, revenues from the Analytics segment, which includes licensing, were reported at $172,376,000, an increase of 11.7% from $154,268,000 in Q3 2023. For the nine months ended September 30, 2024, analytics revenues totaled $502,337,000, up from $451,219,000, representing an 11.3% increase.

Period	Analytics Revenues (in thousands)	Growth Rate
Q3 2024	$172,376	11.7%
Q3 2023	$154,268
9M 2024	$502,337	11.3%
9M 2023	$451,219

Article updated on 8 Nov 2024

Resources:

1. MSCI Inc. (MSCI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of MSCI Inc. (MSCI)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View MSCI Inc. (MSCI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.