Revenue rose 12.4% against Q3 2025, but half the increase came from asset-based fees 8-K. Operating margin was flat, and EPS (up 14.4%) outran net income (up 7.9%) because of a smaller share count 8-K.
MSCI Inc. · Q3 2026 · Reported 20 Oct 2026 · US
Key figures
Million USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Net revenues | 892.00 | 793.40 | +12.4 % |
Operating income | 502.10 | 447.60 | +12.2 % |
Net income | 351.00 | 325.30 | +7.9 % |
Diluted EPS | 4.86 USD/share | 4.25 USD/share | +14.4 % |
Retention Rate | 95.0 % | 94.7 % | +0.3 pp |
Adjusted EBITDA | 554.80 | 494.40 | +12.2 % |
Adjusted EBITDA margin | 62.2 % | 62.3 % | -0.1 pp |
Adjusted EPS | 5.11 USD/share | 4.47 USD/share | +14.3 % |
Operating margin | 56.3 % | 56.4 % | -0.1 pp |
Net margin | 39.3 % | 41.0 % | -1.7 pp |
Figures in USD, as reported. Margins are computed from the reported lines. Changes in ratios are in percentage points.
Asset-based fees supplied half of the revenue increase
Revenue was $892.0 million, up 12.4%, with organic growth of 12.3% 8-K. Of the $98.6 million increase, $49.1 million came from asset-based fees and $44.5 million from recurring subscriptions 8-K. Subscriptions alone grew 7.7%, while asset-based fees grew 24.9% 8-K. The release ties the fee increase to record ETF assets linked to MSCI indexes 8-K. Because these fees follow assets under management, I read this part of growth as market-dependent.
The growth in ETF-linked assets was not solely driven by market appreciation. During Q3, ETFs linked to MSCI indexes attracted approximately $76 billion in net inflows, while market appreciation contributed around $11 billion. This suggests underlying investor demand supported fee growth alongside market performance.
Subscription momentum was also stronger than reported revenue growth suggests. Net new recurring subscription sales rose 41.2% to $54.8 million. However, retention trends were mixed: Index improved to 97.1%, while Sustainability and Climate declined to 91.0% from 93.6%.
Beneath the total, Analytics revenue grew 4.8% and its adjusted EBITDA margin (company-defined) fell to 44.9% from 49.4% a year earlier 8-K. Sustainability and Climate organic growth was 2.2%, below its reported 4.0% because acquisitions (including First Street) added 2.0 points 8-K.
Higher interest costs held net income growth to 7.9%
Operating income rose 12.2% to $502.1 million and operating margin was 56.3%, against 56.4% a year earlier, so growth did not widen margins 8-K. Operating expenses rose 12.8%, led by technology, professional fees and market data costs 8-K. Other expense, net rose 45.2% to $74.2 million, mainly from higher interest expense on higher debt 8-K.
Net income rose 7.9% to $351.0 million, while diluted EPS rose 14.4% to $4.86 8-K. The gap reflects diluted shares of 72.3 million, down 5.6% 8-K. Company-defined adjusted EPS was $5.11, up 14.3% from $4.47 8-K.
Free cash flow declined as investment spending rose, while buybacks exceeded quarterly FCF
Operating cash flow declined 3.0% to $436.1 million, partly reflecting higher cash interest payments. Free cash flow, a company-defined non-GAAP measure, fell 8.9% to $385.4 million, also affected by higher capital expenditures and capitalized software costs, which rose to $50.7 million from $26.2 million 8-K. Share repurchases totaled $552.3 million, exceeding quarterly free cash flow by approximately $167 million. However, repurchases were substantially lower than a year earlier. Cash declined to $261.0 million from $515.3 million at year-end 2025, remaining within management's targeted minimum operating cash range of approximately $225 million to $275 million8-K. Cash fell to $261.0 million from $515.3 million at December 31, 2025 8-K.
Debt principal was $6.8 billion, or 3.2x trailing adjusted EBITDA, inside the 3.0x to 3.5x target range 8-K. Full-year interest expense guidance rose to $288 to $291 million from $282 to $286 million, while cash flow guidance was unchanged 8-K.
What to watch next
Market-linked growth: Whether ETF inflows and asset-based fee growth remain strong if market appreciation slows.
Subscription momentum: Whether stronger net new recurring subscription sales translate into revenue growth, particularly as Sustainability and Climate retention weakened to 91.0%.
Profitability: Whether Analytics recovers its declining adjusted EBITDA margin and higher interest expenses continue to weigh on earnings.
Cash generation: Whether increased investment spending and continued share repurchases limit financial flexibility despite MSCI's strong profitability.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.