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    MSCI   US55354G1004

MSCI INC.

(MSCI)
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MSCI : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

04/28/2021 | 12:40pm EDT
The following discussion and analysis of the financial condition and results
of operations should be read in conjunction with the condensed consolidated
financial statements and related notes included elsewhere in this Form 10-Q and
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020
(the "Form 10-K"). This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those discussed below. Factors that could cause or contribute to such
differences include, but are not limited to, those identified below and those
discussed in "Item 1A.-Risk Factors," in our Form 10-K.

Except as the context otherwise indicates, the terms "MSCI," the "Company," "we," "our" and "us" refer to MSCI Inc., together with its subsidiaries.

Overview




We are a leading provider of critical decision support tools and services for
the global investment community. Leveraging our knowledge of the global
investment process and our expertise in research, data and technology, our
actionable solutions power better investment decisions by enabling our clients
to understand and analyze key drivers of risk and return and confidently and
efficiently build more effective portfolios.



Investors all over the world use our tools and services to gain insight and
improve transparency throughout their investment processes, including to help
define their investment universe, inform and analyze their asset allocation and
portfolio construction decisions, measure and manage portfolio performance and
risk, conduct performance attribution, implement sustainable and other
investment strategies, design and issue ETFs and other indexed financial
products, and facilitate reporting to stakeholders.



Our leading research-enhanced products and services include indexes; portfolio
construction and risk management analytics; ESG and climate solutions; and real
estate benchmarks, return-analytics and market insights. Through our integrated
franchise we provide solutions across our products and services to support our
clients' dynamic and complex needs. Our content and capabilities can be accessed
by our clients through multiple channels and platforms.



We are focused on product innovation to address the evolving needs of our
clients in light of changing investment trends and an increasingly complex
industry. In order to most effectively serve our clients, we are committed to
driving an integrated solutions-based approach, achieving service excellence,
enhancing our differentiated research and content, and delivering flexible,
cutting-edge technology and platforms.



Our clients comprise a wide spectrum of the global investment industry and include the following key client types:

• Asset owners (pension funds, endowments, foundations, central banks,

sovereign wealth funds, family offices and insurance companies)

• Asset managers (institutional funds and accounts, mutual funds, hedge

funds, ETFs, insurance products, private banks and real estate investment

trusts)

• Financial intermediaries (banks, broker-dealers, exchanges, custodians,

trust companies and investment consultants)

• Wealth managers (including robo-advisors and self-directed brokerages)



  • Corporates


As of March 31, 2021, we served over 4,4001 clients in more than 90 countries.
As of March 31, 2021, we had offices in more than 30 cities across more than 20
countries to help serve our diverse client base, with 45.4% of our revenues
coming from clients in the Americas, 38.7% in EMEA and 15.9% in Asia and
Australia.

Our principal business model is generally to license annual, recurring
subscriptions for the majority of our Index, Analytics and ESG and Climate
products and services for a fee due in advance of the service period. We also
license annual recurring subscriptions for the majority of our Real Estate
products for a fee which is primarily paid in arrears after the product is
delivered, with the exception of the Market Information product for which the
fees are generally paid in advance. A portion of our fees comes from clients who
use our indexes as the basis for index-linked investment products. Such fees are
primarily based on a client's assets under management ("AUM"), trading volumes
and fee levels.



1 Represents the aggregate of all related clients under their respective parent

   entity.


                                       20
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In evaluating our financial performance, we focus on revenue and profit growth,
including results accounted for under accounting principles generally accepted
in the United States ("GAAP") as well as non-GAAP measures, for the Company as a
whole and by operating segment. In addition, we focus on operating metrics,
including Run Rate, subscription sales and Retention Rate, to manage the
business. Our business is not highly capital intensive and, as such, we expect
to continue to convert a high percentage of our profits into excess cash in the
future. Our growth strategy includes: (a) extending leadership in
research-enhanced content across asset classes, (b) enhancing distribution and
content-enabling technology, (c) expanding solutions that empower client
customization, (d) strengthening existing and developing new client
relationships and (e) executing strategic relationships and acquisitions with
complementary content and technology companies.

In the discussion that follows, we provide certain variances excluding 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. More than
three-fifths of the AUM is 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.



The discussion of our results of operations for the three months ended March 31,
2021 and 2020 are presented below. The results of operations for interim periods
may not be indicative of future results.





Results of Operations

The following table presents the results of operations for the periods
indicated:



                                                         Three Months Ended
                                                              March 31,
                                                      2021                2020
                                                      (in thousands, except per share data)
Operating revenues                                $     478,423$     416,780         14.8 %
Operating expenses:
Cost of revenues                                         85,780              74,609         15.0 %
Selling and marketing                                    56,467              55,549          1.7 %
Research and development                                 24,862              26,562         (6.4 %)
General and administrative                               34,728              30,833         12.6 %
Amortization of intangible assets                        15,068              13,776          9.4 %
Depreciation and amortization of property,
  equipment and leasehold improvements                    7,143               7,567         (5.6 %)
Total operating expenses                                224,048             208,896          7.3 %
Operating income                                        254,375             207,884         22.4 %
Other expense (income), net                              38,347              45,035        (14.9 %)
Income before provision for income taxes                216,028             162,849         32.7 %
Provision for income taxes                               19,209              14,724         30.5 %
Net income                                        $     196,819$     148,125         32.9 %

Earnings per basic common share                   $        2.38       $     

1.75 36.0 %


Earnings per diluted common share                 $        2.36$        1.73         36.4 %

Operating margin                                           53.2 %              49.9 %




Operating Revenues

Our revenues are grouped by the following types: recurring subscriptions,
asset-based fees and non-recurring. We also group revenues by major product or
reportable segment as follows: Index, Analytics, ESG and Climate and All Other -
Private Assets, which includes the Real Estate product line.

                                       21

--------------------------------------------------------------------------------


The following table presents operating revenues by type for the periods
indicated:



                           Three Months Ended
                                March 31,
                           2021          2020         % Change
                                       (in thousands)
Recurring subscriptions  $ 337,732$ 304,425           10.9 %
Asset-based fees           126,706       100,196           26.5 %
Non-recurring               13,985        12,159           15.0 %

Total operating revenues $ 478,423$ 416,780           14.8 %




Total operating revenues for the three months ended March 31, 2021 increased
14.8% to $478.4 million compared to $416.8 million for the three months ended
March 31, 2020. Adjusting for the impact of foreign currency exchange rate
fluctuations, the increase would have been 14.0% for the three months ended
March 31, 2021 compared to the three months ended March 31, 2020.

Operating revenues from recurring subscriptions for the three months ended
March 31, 2021 increased 10.9% to $337.7 million compared to $304.4 million for
the three months ended March 31, 2020, primarily driven by growth in Index
products, which increased $15.3 million, or 10.9%, strong growth in ESG and
Climate products, which increased $9.2 million, or 37.1%, and growth in
Analytics products, which increased $7.6 million, or 6.1%. Adjusting for the
impact of foreign currency exchange rate fluctuations, the increase would have
been 9.9% for the three months ended March 31, 2021 compared to the three months
ended March 31, 2020.

Operating revenues from asset-based fees for the three months ended March 31,
2021 increased 26.5% to $126.7 million compared to $100.2 million for the three
months ended March 31, 2020. The increase in asset-based fees was driven by
growth in revenues from all of our indexed investment product categories,
including an increase in revenues from ETFs linked to MSCI equity indexes that
was primarily driven by a 33.3% increase in average AUM in ETFs, partially
offset by a change in fee levels of certain products. The increase in revenues
from asset-based fees was also driven by higher revenues from non-ETF indexed
funds linked to MSCI indexes resulting from new funds and increased demand in
ESG products and climate products. Revenues from exchange traded futures and
options contracts linked to MSCI indexes also increased, primarily driven by
price increases, partially offset by lower volume. The impact of foreign
currency exchange rate fluctuations on revenues from asset-based fees was
negligible.

The following table presents the value of AUM in ETFs linked to MSCI equity
indexes and the sequential change of such assets as of the end of each of the
periods indicated:



                                                                Period Ended
                                                             2020                               2021
                                       March         June        September      December        March
(in billions)                           31,          30,            30,            31,           31,
AUM in ETFs linked to MSCI equity
indexes(1), (2)                       $  709.5$  825.4$     908.9

$ 1,103.6$ 1,209.6


Sequential Change in Value
Market Appreciation/(Depreciation)    $ (216.5 )$  117.4$      57.0$   135.7$    43.2
Cash Inflows                              (8.4 )       (1.5 )          26.5          59.0          62.8
Total Change                          $ (224.9 )$  115.9$      83.5$   194.7$   106.0

The following table presents the average value of AUM in ETFs linked to MSCI equity indexes for the periods indicated:



                                                              2020                               2021
(in billions)                          March         June        September       December        March
AUM in ETFs linked to MSCI equity
indexes(1), (2)
Quarterly average                     $  877.1$  776.9$     893.4$    999.2$ 1,169.2
Year-to-date average                  $  877.1$  827.0$     849.1$    886.7$ 1,169.2

(1) The historical values of the AUM in ETFs linked to our equity indexes as of

the last day of the month and the monthly average balance can be found under

the link "AUM in ETFs Linked to MSCI Equity Indexes" on our Investor

Relations homepage at http://ir.msci.com. This information is updated

mid-month each month. Information contained on our website is not

incorporated by reference into this Quarterly Report on Form 10-Q or any

    other report filed with the SEC. The AUM in ETFs also includes AUM in
    Exchange Traded Notes, the value of which is less than 1.0% of the AUM
    amounts presented.

(2) The value of AUM in ETFs linked to MSCI equity indexes is calculated by

    multiplying the equity ETF net asset value by the number of shares
    outstanding.




The average value of AUM in ETFs linked to MSCI equity indexes for the three
months ended March 31, 2021 was $1,169.2 billion, up $292.1 billion, or 33.3%,
from $877.1 billion for the three months ended March 31, 2020.



                                       22

--------------------------------------------------------------------------------




Non-recurring revenues for the three months ended March 31, 2021 increased 15.0%
to $14.0 million compared to $12.2 million for the three months ended March 31,
2020, primarily driven by growth in Index products, which increased $1.4
million, or 15.7%.

The following table presents operating revenues by reportable segment and revenue type for the periods indicated:



                                   Three Months Ended
                                        March 31,
                                   2021          2020         % Change
                                               (in thousands)
Operating revenues:
Index
Recurring subscriptions          $ 155,117$ 139,840           10.9 %
Asset-based fees                   126,706       100,196           26.5 %
Non-recurring                       10,668         9,220           15.7 %
Index total                        292,491       249,256           17.3 %

Analytics
Recurring subscriptions            131,672       124,065            6.1 %
Non-recurring                        2,345         1,443           62.5 %
Analytics total                    134,017       125,508            6.8 %

ESG and Climate
Recurring subscriptions             34,140        24,901           37.1 %
Non-recurring                          610           332           83.7 %
ESG and Climate total               34,750        25,233           37.7 %

All Other - Private Assets
Recurring subscriptions             16,803        15,619            7.6 %
Non-recurring                          362         1,164          (68.9 %)
All Other - Private Assets total    17,165        16,783            2.3 %
Total operating revenues         $ 478,423$ 416,780           14.8 %



Refer to the section titled "Segment Results" that follows for further discussion of segment revenues.





Operating Expenses

We group our operating expenses into the following activity categories:

  • Cost of revenues;


  • Selling and marketing;


  • Research and development ("R&D");


  • General and administrative ("G&A");


  • Amortization of intangible assets; and


    •   Depreciation and amortization of property, equipment and leasehold
        improvements.


                                       23
--------------------------------------------------------------------------------

Costs are assigned to these activity categories based on the nature of the expense or, when not directly attributable, an estimated allocation based on the type of effort involved.


The following table presents operating expenses by activity category for the
periods indicated:



                                             Three Months Ended
                                                  March 31,
                                             2021          2020         % Change
                                                       (in thousands)
Operating expenses:
Cost of revenues                           $  85,780$  74,609           15.0 %
Selling and marketing                         56,467        55,549            1.7 %
Research and development                      24,862        26,562           (6.4 %)
General and administrative                    34,728        30,833           12.6 %
Amortization of intangible assets             15,068        13,776            9.4 %
Depreciation and amortization of property,

equipment and leasehold improvements 7,143 7,567

 (5.6 %)
Total operating expenses                   $ 224,048$ 208,896            7.3 %




Total operating expenses for the three months ended March 31, 2021 increased
7.3% to $224.0 million compared to $208.9 million for the three months ended
March 31, 2020. Adjusting for the impact of foreign currency exchange rate
fluctuations, the increase would have been 5.4% for the three months ended
March 31, 2021 compared to the three months ended March 31, 2020.

Cost of Revenues


Cost of revenues expenses consist of costs related to the production and
servicing of our products and services and primarily includes related
information technology costs, including data center, cloud service, platform and
infrastructure costs; costs to acquire, produce and maintain market data
information; costs of research to support and maintain existing products; costs
of product management teams; costs of client service and consultant teams to
support customer needs; as well as other support costs directly attributable to
the cost of revenues including certain human resources, finance and legal costs.

Cost of revenues for the three months ended March 31, 2021 increased 15.0% to
$85.8 million compared to $74.6 million for the three months ended March 31,
2020, reflecting increases across all four reportable segments. The change was
driven by increases in compensation and benefits costs, primarily relating to
higher incentive compensation, wages and salaries and benefits costs, as well as
higher non-compensation costs, reflecting higher information technology costs,
professional fees and market data costs, partially offset by lower travel and
entertainment costs.

Selling and Marketing

Selling and marketing expenses consist of costs associated with acquiring new
clients or selling new products or product renewals to existing clients and
primarily includes the costs of our sales and marketing teams, as well as costs
incurred in other groups associated with acquiring new business, including
product management, research, technology and sales operations.

Selling and marketing expenses for the three months ended March 31, 2021
increased 1.7% to $56.5 million compared to $55.5 million for the three months
ended March 31, 2020, driven by higher costs in the ESG and Climate reportable
segment, partially offset by lower costs in the Analytics reportable segment.
The change was driven by increases in compensation and benefits costs, including
severance costs, wages and salaries and incentive compensation, partially offset
by decreases in non-compensation costs, primarily relating to lower travel and
entertainment costs, marketing costs and recruiting costs.

Research and Development


R&D expenses consist of the costs to develop new or enhance existing products
and the costs to develop new or improved technology and service platforms for
the delivery of our products and services and primarily include the costs of
development, research, product management, project management and the technology
support associated with these efforts.

R&D expenses for the three months ended March 31, 2021 decreased 6.4% to $24.9
million compared to $26.6 million for the three months ended March 31, 2020,
reflecting higher allocation of resources to projects eligible for
capitalization across all of the segments, leading to a decline in compensation
and benefits costs, primarily wages and salaries, expensed as R&D.

                                       24

--------------------------------------------------------------------------------

General and Administrative


G&A expenses consist of costs primarily related to finance operations, human
resources, office of the CEO, legal, corporate technology, corporate development
and certain other administrative costs that are not directly attributed, but are
instead allocated, to a product or service.

G&A expenses for the three months ended March 31, 2021 increased 12.6% to $34.7
million compared to $30.8 million for the three months ended March 31, 2020,
reflecting increases across all four reportable segments. The change was driven
by increases in compensation and benefits costs, primarily relating to higher
incentive compensation.

The following table presents operating expenses using compensation and
non-compensation categories, rather than using activity categories, for the
periods indicated:



                                             Three Months Ended
                                                  March 31,
                                             2021          2020         % Change
                                                       (in thousands)
Compensation and benefits                  $ 151,517$ 137,262           10.4 %
Non-compensation expenses                     50,320        50,291            0.1 %
Amortization of intangible assets             15,068        13,776            9.4 %
Depreciation and amortization of property,

equipment and leasehold improvements 7,143 7,567

 (5.6 %)
Total operating expenses                   $ 224,048$ 208,896            7.3 %




Compensation and Benefits

Compensation and benefits costs are our most significant expense and typically
represent approximately 65% of operating expenses or more than 70% of Adjusted
EBITDA expenses. We had 3,728 and 3,459 employees as of March 31, 2021 and 2020,
respectively, reflecting a 7.8% growth in the number of employees. Continued
growth of our emerging market centers around the world is an important factor in
our ability to manage and control the growth of our compensation and benefit
expenses. As of March 31, 2021, 64.9% of our employees were located in emerging
market centers compared to 63.3% as of March 31, 2020.

Compensation and benefits costs for the three months ended March 31, 2021 increased 10.4% to $151.5 million compared to $137.3 million for the three months ended March 31, 2020, driven by higher incentive compensation, wages and salaries and benefits costs, partially offset by lower severance costs.

A significant portion of the incentive compensation component of operating expenses is based on the achievement of a number of financial and operating metrics. In a scenario where operating revenue growth and profitability moderate, incentive compensation would be expected to decrease accordingly.

Non-Compensation Expenses

Non-compensation expenses of $50.3 million for the three months ended March 31, 2021 remained consistent compared to the three months ended March 31, 2020.


Fixed costs constitute a significant portion of the non-compensation component
of operating expenses. The discretionary non-compensation component of operating
expenses could, however, be reduced in the near-term in a scenario where
operating revenue growth moderates.

Amortization of Intangible Assets


Amortization of intangible assets expense relates to definite-lived intangible
assets arising from past acquisitions and internal capitalized software projects
recognized over their estimated useful lives. Amortization of intangible assets
expense for the three months ended March 31, 2021 increased 9.4% to $15.1
million compared to $13.8 million for the three months ended March 31, 2020,
primarily driven by higher amortization of internally developed capitalized
software.

                                       25

--------------------------------------------------------------------------------

Depreciation and Amortization of Property, Equipment and Leasehold Improvements


Depreciation and amortization of property, equipment and leasehold improvements
consists of expenses related to depreciating or amortizing the cost of furniture
and fixtures, computer and related equipment and leasehold improvements over the
estimated useful life of the assets. Depreciation and amortization of property,
equipment and leasehold improvements for the three months ended March 31, 2021
decreased 5.6% to $7.1 million compared to $7.6 million for the three months
ended March 31, 2020. The decrease was primarily the result of lower
depreciation on computer and related equipment, software and leasehold
improvements, partially offset by higher depreciation on furniture.

Other Expense (Income), Net


Other expense (income), net for the three months ended March 31, 2021 decreased
14.9% to $38.3 million compared to $45.0 million for the three months ended
March 31, 2020. The decrease in net expenses was primarily driven by the absence
of the $10.0 million loss on debt extinguishment associated with the redemption
of all of the $300.0 million aggregate principal amount of 5.250% senior
unsecured notes due 2024 that remained outstanding (the "2024 Senior Notes
Redemption") during the three months ended March 31, 2020.

Income Taxes


The Company's provision for income taxes for the three months ended March 31,
2021 and 2020 was $19.2 million and $14.7 million, respectively. These amounts
reflect effective tax rates of 8.9% and 9.0% for the three months ended
March 31, 2021 and 2020, respectively.

The effective tax rate of 8.9% for the three months ended March 31, 2021
reflects the Company's estimate of the effective tax rate for the period which
was impacted by certain favorable discrete items totaling $22.3 million. For the
three months ended March 31, 2021, these discrete items primarily related to
$20.4 million of excess tax benefits recognized on share-based compensation
vested during the period.

The effective tax rate of 9.0% for the three months ended March 31, 2020
reflects the Company's estimate of the effective tax rate for the period which
was impacted by certain favorable discrete items totaling $22.4 million. For the
three months ended March 31, 2020, these discrete items primarily related to
$18.9 million of excess tax benefits recognized on share-based compensation
vested during the period and $2.6 million related to the tax impact of loss on
debt extinguishment recognized during the period. The discrete items also
included a $0.8 million benefit related to the revaluation of the cost of deemed
repatriation of foreign earnings.

Net Income

As a result of the factors described above, net income for the three months ended March 31, 2021 increased 32.9% to $196.8 million compared to $148.1 million for the three months ended March 31, 2020.

Weighted Average Shares


The weighted average shares outstanding used to calculate basic and diluted
earnings per share for the three months ended March 31, 2021 compared to the
three months ended March 31, 2020 decreased by 2.6% and 2.4%, respectively. The
decreases primarily reflect the impact of share repurchases made pursuant to the
stock repurchase program.





Adjusted EBITDA

"Adjusted EBITDA," a non-GAAP measure used by management to assess operating
performance, 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.

"Adjusted EBITDA expenses," a non-GAAP measure used by management to assess
operating performance, 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.

Adjusted EBITDA and Adjusted EBITDA expenses are believed to be meaningful
measures of the operating performance of the Company 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 the Company's ongoing operating
performance in the period. All companies do not calculate adjusted EBITDA and
adjusted EBITDA expenses in the same way. 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 the Adjusted EBITDA and Adjusted EBITDA expenses measures may not
be comparable to similarly titled measures computed by other companies.

                                       26

--------------------------------------------------------------------------------


The following table presents the calculation of Adjusted EBITDA for the periods
indicated:



                           Three Months Ended
                                March 31,
                           2021          2020         % Change
                                     (in thousands)
Operating revenues       $ 478,423$ 416,780           14.8 %
Adjusted EBITDA expenses   201,837       187,553            7.6 %
Adjusted EBITDA          $ 276,586$ 229,227           20.7 %
Adjusted EBITDA margin %      57.8 %        55.0 %
Operating margin %            53.2 %        49.9 %




Adjusted EBITDA for the three months ended March 31, 2021 increased 20.7% to
$276.6 million compared to $229.2 million for the three months ended March 31,
2020. Adjusted EBITDA margin for the three months ended March 31, 2021 increased
to 57.8% compared to 55.0% for the three months ended March 31, 2020. The
increase in Adjusted EBITDA margin reflects a higher rate of growth in operating
revenues as compared to the rate of growth of Adjusted EBITDA expenses.

Reconciliation of Adjusted EBITDA to Net Income and Adjusted EBITDA Expenses to Operating Expenses


The following table presents the reconciliation of Adjusted EBITDA to net income
for the periods indicated:



                                               Three Months Ended
                                                    March 31,
                                               2021          2020
                                                 (in thousands)
Index Adjusted EBITDA                        $ 219,879$ 183,587
Analytics Adjusted EBITDA                       45,731        36,317
ESG and Climate Adjusted EBITDA                  5,045         3,626

All Other - Private Assets Adjusted EBITDA 5,931 5,697 Consolidated Adjusted EBITDA

                   276,586       229,227
Amortization of intangible assets               15,068        13,776

Depreciation and amortization of property,

  equipment and leasehold improvements           7,143         7,567
Operating income                               254,375       207,884
Other expense (income), net                     38,347        45,035
Provision for income taxes                      19,209        14,724
Net income                                   $ 196,819$ 148,125

The following table presents the reconciliation of Adjusted EBITDA expenses to operating expenses for the periods indicated:



                                                        Three Months Ended
                                                             March 31,
                                                        2021          2020
                                                          (in thousands)
Index Adjusted EBITDA expenses                        $  72,612     $  

65,669

Analytics Adjusted EBITDA expenses                       88,286        

89,191

ESG and Climate Adjusted EBITDA expenses                 29,705        

21,607

All Other - Private Assets Adjusted EBITDA expenses 11,234 11,086 Consolidated Adjusted EBITDA expenses

                   201,837       

187,553

Amortization of intangible assets                        15,068        

13,776

Depreciation and amortization of property,

  equipment and leasehold improvements                    7,143         7,567
Total operating expenses                              $ 224,048$ 208,896

The discussion of the segment results is presented below.





                                       27
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Segment Results

Index Segment

The following table presents the results for the Index segment for the periods
indicated:



                           Three Months Ended
                                March 31,
                           2021          2020         % Change
                                     (in thousands)
Operating revenues:
Recurring subscriptions  $ 155,117$ 139,840           10.9 %
Asset-based fees           126,706       100,196           26.5 %
Non-recurring               10,668         9,220           15.7 %
Operating revenues total   292,491       249,256           17.3 %
Adjusted EBITDA expenses    72,612        65,669           10.6 %
Adjusted EBITDA          $ 219,879$ 183,587           19.8 %
Adjusted EBITDA margin %      75.2 %        73.7 %



Revenues related to Index products for the three months ended March 31, 2021 increased 17.3% to $292.5 million compared to $249.3 million for the three months ended March 31, 2020.


Recurring subscriptions for the three months ended March 31, 2021 increased
10.9% to $155.1 million compared to $139.8 million for the three months ended
March 31, 2020. The increase was primarily driven by strong growth in market
cap-weighted index products. The impact of foreign currency exchange rate
fluctuations on revenues from recurring subscriptions was negligible.

Revenues from asset-based fees for the three months ended March 31, 2021
increased 26.5% to $126.7 million compared to $100.2 million for the three
months ended March 31, 2020. The increase in asset-based fees was driven by
growth in revenues from all of our indexed investment product categories,
including an increase in revenues from ETFs linked to MSCI equity indexes that
was primarily driven by a 33.3% increase in average AUM in ETFs, partially
offset by a change in fee levels of certain products. The increase in revenues
from asset-based fees was also driven by higher revenues from non-ETF indexed
funds linked to MSCI indexes resulting from new funds and increased demand in
ESG products and climate products. Revenues from exchange traded futures and
options contracts linked to MSCI indexes also increased, primarily driven by
price increases, partially offset by lower volume. The impact of foreign
currency exchange rate fluctuations on revenues from asset-based fees was
negligible.

Index segment Adjusted EBITDA expenses for the three months ended March 31, 2021
increased 10.6% to $72.6 million compared to $65.7 million for the three months
ended March 31, 2020, reflecting higher expenses across the cost of revenues and
G&A expense activity categories. Adjusting for the impact of foreign currency
exchange rate fluctuations, the increase would have been 8.4% for the three
months ended March 31, 2021 compared to the three months ended March 31, 2020.

Analytics Segment


The following table presents the results for the Analytics segment for the
periods indicated:



                           Three Months Ended
                                March 31,
                           2021          2020         % Change
                                     (in thousands)
Operating revenues:
Recurring subscriptions  $ 131,672$ 124,065            6.1 %
Non-recurring                2,345         1,443           62.5 %
Operating revenues total   134,017       125,508            6.8 %
Adjusted EBITDA expenses    88,286        89,191           (1.0 %)
Adjusted EBITDA          $  45,731$  36,317           25.9 %
Adjusted EBITDA margin %      34.1 %        28.9 %




Analytics segment revenues for the three months ended March 31, 2021 increased
6.8% to $134.0 million compared to $125.5 million for the three months ended
March 31, 2020, primarily driven by growth in Multi-Asset Class and Equity
Analytics products. Adjusting for the impact of foreign currency exchange rate
fluctuations, the increase would have been 6.6% for the three months ended
March 31, 2021 compared to the three months ended March 31, 2020.

                                       28

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Analytics segment Adjusted EBITDA expenses for the three months ended March 31,
2021 decreased 1.0% to $88.3 million compared to $89.2 million for the three
months ended March 31, 2020, primarily driven by lower expenses across the R&D
and selling and marketing expense activity categories, partially offset by
higher expenses across the G&A and cost of revenues expense activity categories.
Adjusting for the impact of foreign currency exchange rate fluctuations, the
decrease would have been 2.4% for the three months ended March 31, 2021 compared
to the three months ended March 31, 2020.

ESG and Climate Segment


The following table presents the results for the ESG and Climate segment for the
periods indicated:



                           Three Months Ended
                                March 31,
                            2021          2020        % Change
                                     (in thousands)
Operating revenues:
Recurring subscriptions  $   34,140$ 24,901           37.1 %
Non-recurring                   610          332           83.7 %
Operating revenues total     34,750       25,233           37.7 %
Adjusted EBITDA expenses     29,705       21,607           37.5 %
Adjusted EBITDA          $    5,045$  3,626           39.1 %

Adjusted EBITDA margin % 14.5 % 14.4 %





ESG and Climate segment revenues for the three months ended March 31, 2021
increased 37.7% to $34.8 million compared to $25.2 million for the three months
ended March 31, 2020. The increase in ESG and Climate revenues was primarily
driven by strong growth from Ratings and Climate products. Adjusting for the
impact of foreign currency exchange rate fluctuations, ESG and Climate operating
revenues would have increased 31.8%, for the three months ended March 31, 2021
compared to the three months ended March 31, 2020.

ESG and Climate segment Adjusted EBITDA expenses for the three months ended
March 31, 2021 increased 37.5% to $29.7 million compared to $21.6 million for
the three months ended March 31, 2020, reflecting higher expenses across all
expense activity categories. Adjusting for the impact of foreign currency
exchange rate fluctuations, the increase would have been 34.0% for the three
months ended March 31, 2021 compared to the three months ended March 31, 2020.

All Other - Private Assets Segment

The following table presents the results for the All Other - Private Assets segment for the periods indicated:



                           Three Months Ended
                                March 31,
                            2021          2020        % Change
                                     (in thousands)
Operating revenues:
Recurring subscriptions  $   16,803$ 15,619            7.6 %
Non-recurring                   362        1,164          (68.9 %)
Operating revenues total     17,165       16,783            2.3 %
Adjusted EBITDA expenses     11,234       11,086            1.3 %
Adjusted EBITDA          $    5,931$  5,697            4.1 %

Adjusted EBITDA margin % 34.6 % 33.9 %





All Other - Private Assets segment revenues for the three months ended March 31,
2021 increased 2.3% to $17.2 million compared to $16.8 million for the three
months ended March 31, 2020. The increase in All Other - Private Assets revenues
was primarily driven by favorable foreign currency exchange rate fluctuations,
partially offset by the absence of a previously disclosed one-time data license
fee recognized during the three months ended March 31, 2020. Adjusting for the
impact of foreign currency exchange rate fluctuations, All Other - Private
Assets operating revenues would have decreased 5.6% for the three months ended
March 31, 2021 compared to the three months ended March 31, 2020.

All Other - Private Assets segment Adjusted EBITDA expenses for the three months
ended March 31, 2021 increased 1.3% to $11.2 million compared to $11.1 million
for the three months ended March 31, 2020, primarily driven by higher expenses
across the cost of revenues and G&A expense activity categories, partially
offset by lower expenses across the R&D and selling and marketing expense
activity categories. Adjusting for the impact of foreign currency exchange rate
fluctuations, All Other - Private Assets segment Adjusted EBITDA expenses would
have decreased 2.2% for the three months ended March 31, 2021 compared to the
three months ended March 31, 2020.

                                       29

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Run Rate

"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 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 or non-renewal 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.

Changes in our recurring revenues typically lag changes in Run Rate. The actual
amount of recurring revenues we will realize over the following 12 months will
differ from Run Rate for numerous reasons, including:

  • fluctuations in revenues associated with new recurring sales;


    •   modifications, cancellations and non-renewals of existing Client
        Contracts, subject to specified notice requirements;

• differences between the recurring license start date and the date the

Client Contract is executed due to, for example, contracts with onboarding

periods or fee waiver periods;

• fluctuations in asset-based fees, which may result from changes in certain

investment products' total expense ratios, market movements, including

        foreign currency exchange rates, or from investment inflows into and
        outflows from investment products linked to our indexes;

• fluctuations in fees based on trading volumes of futures and options

contracts linked to our indexes;

• fluctuations in the number of hedge funds for which we provide investment

        information and risk analysis to hedge fund investors;


  • price changes or discounts;

• revenue recognition differences under U.S. GAAP, including those related

to the timing of implementation and report deliveries for certain of our

        products and services;


  • fluctuations in foreign currency exchange rates; and


  • the impact of acquisitions and divestitures.


                                       30
--------------------------------------------------------------------------------

The following table presents the Run Rates as of the dates indicated and the growth percentages over the periods indicated:



                                         As of
                               March 31,       March 31,         %
                                  2021            2020        Change
                                      (in thousands)
Index:
Recurring subscriptions       $   634,565$   574,132        10.5 %
Asset-based fees                  503,207         348,218        44.5 %
Index total                     1,137,772         922,350        23.4 %

Analytics                         556,997         528,378         5.4 %

ESG and Climate                   147,334         103,781        42.0 %

All Other - Private Assets 56,900 49,671 14.6 %


Total Run Rate                $ 1,899,003$ 1,604,180        18.4 %

Recurring subscriptions total $ 1,395,796$ 1,255,962        11.1 %
Asset-based fees                  503,207         348,218        44.5 %
Total Run Rate                $ 1,899,003$ 1,604,180        18.4 %




Total Run Rate grew 18.4% to $1,899.0 million as of March 31, 2021 compared to
$1,604.2 million as of March 31, 2020. Recurring subscriptions Run Rate grew
11.1% to $1,395.8 million as of March 31, 2021 compared to $1,256.0 million as
of March 31, 2020. Adjusting for the impact of foreign currency exchange rate
fluctuations, recurring subscriptions Run Rate would have increased 10.3% as of
March 31, 2021 compared to March 31, 2020.

Run Rate from asset-based fees increased 44.5% to $503.2 million as of March 31,
2021 from $348.2 million as of March 31, 2020, primarily driven by higher AUM in
ETFs linked to MSCI equity indexes, higher prices in non-ETF indexed funds
linked to MSCI indexes and higher prices in futures and options. Partially
offsetting the impact of the increase in AUM in ETFs linked to MSCI equity
indexes was a change in fee levels of certain products, which was the primary
driver of a decline in average basis point fees to 2.61 as of March 31, 2021
from 2.71 as of March 31, 2020. As of March 31, 2021, the value of AUM in ETFs
linked to MSCI equity indexes was $1,209.6 billion, up $500.1 billion, or 70.5%,
from $709.5 billion as of March 31, 2020. The increase of $500.1 billion
consisted of market appreciation of $353.3 billion and net inflows of $146.8
billion.

Index recurring subscriptions Run Rate grew 10.5% to $634.6 million as of
March 31, 2021 compared to $574.1 million as of March 31, 2020, primarily driven
by growth in market cap-weighted index products and reflected growth across all
regions and all client segments.

Run Rate from Analytics products increased 5.4% to $557.0 million as of
March 31, 2021 compared to $528.4 million as of March 31, 2020, primarily driven
by growth in both Multi-Asset Class and Equity Analytics products. Adjusting for
the impact of foreign currency exchange rate fluctuations, Analytics Run Rate
would have increased 4.7% as of March 31, 2021.

Run Rate from ESG and Climate products increased 42.0% to $147.3 million as of
March 31, 2021 compared to $103.8 million as of March 31, 2020, primarily driven
by strong growth in both Ratings and Climate products. Adjusting for the impact
of foreign currency exchange rate fluctuations, ESG and Climate Run Rate would
have increased 38.8% as of March 31, 2021 compared to March 31, 2020.

Run Rate from All Other - Private Assets products increased 14.6% to $56.9
million as of March 31, 2021 compared to $49.7 million as of March 31, 2020,
primarily driven by strong growth in both Enterprise Analytics and Global Intel
products and growth from new sales of Real Estate Climate Value-at-Risk
products. Adjusting for the impact of foreign currency exchange rate
fluctuations, All Other - Private Assets Run Rate would have increased 7.4% as
of March 31, 2021 compared to March 31, 2020.

Sales


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.

                                       31

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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.

The following table presents our recurring subscription sales, cancellations and non-recurring sales by reportable segment for the periods indicated:



                                              Three Months Ended
                                           March 31,      March 31,         %
                                              2021           2020        Change
                                                      (in thousands)
New recurring subscription sales
Index                                      $   20,856$   19,054         9.5 %
Analytics                                      12,210         11,218         8.8 %
ESG and Climate                                11,640          6,994        66.4 %
All Other - Private Assets                      1,684          1,175        43.3 %
New recurring subscription sales total         46,390         38,441        20.7 %

Subscription cancellations
Index                                          (5,198 )       (5,116 )       1.6 %
Analytics                                      (5,879 )       (8,244 )     (28.7 %)
ESG and Climate                                (1,052 )       (1,503 )     (30.0 %)
All Other - Private Assets                       (698 )         (550 )      26.9 %
Subscription cancellations total              (12,827 )      (15,413 )     

(16.8 %)


Net new recurring subscription sales
Index                                          15,658         13,938        12.3 %
Analytics                                       6,331          2,974       112.9 %
ESG and Climate                                10,588          5,491        92.8 %
All Other - Private Assets                        986            625        57.8 %
Net new recurring subscription sales total     33,563         23,028        45.7 %

Non-recurring sales
Index                                          11,205         10,283         9.0 %
Analytics                                       2,973          3,265        (8.9 %)
ESG and Climate                                   697            151       361.6 %
All Other - Private Assets                        886            880         0.7 %
Non-recurring sales total                      15,761         14,579         8.1 %

Gross sales
Index                                      $   32,061$   29,337         9.3 %
Analytics                                      15,183         14,483         4.8 %
ESG and Climate                                12,337          7,145        72.7 %
All Other - Private Assets                      2,570          2,055        25.1 %
Total gross sales                          $   62,151$   53,020        17.2 %

Net sales
Index                                      $   26,863$   24,221        10.9 %
Analytics                                       9,304          6,239        49.1 %
ESG and Climate                                11,285          5,642       100.0 %
All Other - Private Assets                      1,872          1,505        24.4 %
Total net sales                            $   49,324$   37,607        31.2 %




                                       32
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A significant portion of MSCI's operating revenues are derived from subscriptions or licenses of products and services, which are provided over contractually-agreed periods of time that are subject to renewal or cancellation at the end of current contract terms.

Retention Rate


The following table presents our Retention Rate by reportable segment for the
periods indicated:



                             Three Months Ended
                                  March 31,
                               2021           2020
Index                        96.6%          96.3%
Analytics                    95.8%          93.7%
ESG and Climate              97.0%          94.1%
All Other - Private Assets   95.1%          95.7%

Total                        96.3%          95.0%


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. Retention Rate is an important metric because subscription
cancellations decrease our Run Rate and ultimately our future operating revenues
over time.

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 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 cancel. 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 Estate 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.

Retention Rate is generally higher during the first three quarters and lower in
the fourth quarter, as the fourth quarter is traditionally the largest renewal
period in the year.


Critical Accounting Policies and Estimates


We describe our significant accounting policies in Note 1, "Introduction and
Basis of Presentation," of the Notes to Consolidated Financial Statements
included in our Form 10-K. There have been no significant changes in our
accounting policies or critical accounting estimates since the end of the fiscal
year ended December 31, 2020.

Liquidity and Capital Resources


We require capital to fund ongoing operations, internal growth initiatives and
acquisitions. Our primary sources of liquidity are cash flows generated from our
operations, existing cash and cash equivalents and credit capacity under our
existing credit facility. In addition, we believe we have access to additional
funding in the public and private markets. We intend to use these sources of
liquidity to, among other things, service our existing and future debt
obligations, fund our working capital requirements for capital expenditures,
investments, acquisitions and dividend payments, and repurchases of our common
stock. In connection with our business strategy, we regularly evaluate
acquisition and strategic partnership opportunities. We believe our liquidity,
along with other financing alternatives, will provide the necessary capital to
fund these transactions and achieve our planned growth.

                                       33

--------------------------------------------------------------------------------

Senior Notes and Credit Agreement


We have an aggregate of $3,900.0 million in Senior Notes outstanding and a
$500.0 million undrawn Revolving Credit Agreement with a syndicate of banks. On
April 12, 2021, we paid $518.2 million, which included a premium of $18.2
million, for the pre-maturity redemption all of the outstanding 2026 Senior
Notes. See Note 7, "Commitments and Contingencies," of the Notes to Condensed
Consolidated Financial Statements (Unaudited) included herein for additional
information on our Senior Notes and Revolving Credit Agreement.

The Senior Notes and the Revolving Credit Agreement are fully and
unconditionally, and jointly and severally, guaranteed by our direct or indirect
wholly owned domestic subsidiaries that account for more than 5% of our and our
subsidiaries' consolidated assets, other than certain excluded subsidiaries (the
"subsidiary guarantors"). Amounts due under the Revolving Credit Agreement are
our and the subsidiary guarantors' senior unsecured obligations and rank equally
with the Senior Notes and any of our other unsecured, unsubordinated debt,
senior to any of our subordinated debt and effectively subordinated to our
secured debt to the extent of the assets securing such debt.

The indentures governing our Senior Notes (the "Indentures") among us, each of
the subsidiary guarantors, and Wells Fargo Bank, National Association, as
trustee, contain covenants that limit our and certain of our subsidiaries'
ability to, among other things, incur liens, enter into sale/leaseback
transactions and consolidate, merge or sell all or substantially all of our
assets. In addition, the Indentures restrict our non-guarantor subsidiaries'
ability to create, assume, incur or guarantee additional indebtedness without
such non-guarantor subsidiaries guaranteeing the Senior Notes on a pari passu
basis.

The Revolving Credit Agreement contains affirmative and restrictive covenants
that, among other things, limit our ability and the ability of our existing or
future subsidiaries to:

  • incur liens;


    •   in the case of our subsidiaries that are not guarantors under the
        Revolving Credit Agreement, incur additional indebtedness;

• merge, dissolve, liquidate, consolidate with or into another person or

sell all or substantially all assets of the Company and its subsidiaries

        on a consolidated basis;


  • enter into sale/leaseback transactions;

• pay dividends or make other distributions in respect of our capital stock

or engage in stock repurchases, redemptions and other restricted payments;

        or


  • change the nature of our business.


The Revolving Credit Agreement and the Indentures also contain customary events
of default, including those relating to non-payment, breach of representations,
warranties or covenants, cross-default and cross-acceleration, and bankruptcy
and insolvency events, and, in the case of the Revolving Credit Agreement,
invalidity or impairment of loan documentation, change of control and customary
ERISA defaults in addition to the foregoing. None of the restrictions above are
expected to impact our ability to effectively operate the business.

The Revolving Credit Agreement also requires us and our subsidiaries to achieve
financial and operating results sufficient to maintain compliance with the
following financial ratios on a consolidated basis through the termination of
the Revolving Credit Agreement: (1) the maximum Consolidated Leverage Ratio (as
defined in the Revolving Credit Agreement) measured quarterly on a rolling
four-quarter basis shall not exceed 4.25:1.00 (or 4.50:1.00 for two fiscal
quarters following a material acquisition) and (2) the minimum Consolidated
Interest Coverage Ratio (as defined in the Revolving Credit Agreement) measured
quarterly on a rolling four-quarter basis shall be at least 4.00:1.00. As of
March 31, 2021, our Consolidated Leverage Ratio was 3.53:1.00 and our
Consolidated Interest Coverage Ratio was 7.57:1.00. As of March 31, 2021, there
were no amounts drawn and outstanding under the Revolving Credit Agreement.

                                       34

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Our non-guarantor subsidiaries under the Senior Notes consist of: (i) domestic
subsidiaries of the Company that account for 5% or less of consolidated assets
of the Company and its subsidiaries and (ii) any foreign or domestic subsidiary
of the Company that is deemed to be a controlled foreign corporation within the
meaning of Section 957 of the Internal Revenue Code of 1986, as amended. Our
non-guarantor subsidiaries accounted for approximately $1,035.4 million, or
58.9%, of our total revenue for the trailing 12 months ended March 31, 2021,
approximately $375.2 million, or 40.3%, of our consolidated operating income for
the trailing 12 months ended March 31, 2021, and approximately $1,058.0 million,
or 23.2%, of our consolidated total assets (excluding intercompany assets) and
$688.3 million, or 13.6%, of our consolidated total liabilities, in each case as
of March 31, 2021.

Share Repurchases

The following table provides information with respect to repurchases of the Company's common stock pursuant to open market repurchases:



                      Average          Total            Dollar
                       Price         Number of         Value of
                     Paid Per         Shares            Shares
Three Months Ended     Share        Repurchased       Repurchased
                                           (in thousands)
March 31, 2021       $  407.70               330     $     134,340
March 31, 2020       $  248.65             1,310     $     325,699

As of March 31, 2021, there was $1,594.4 million of available authorization remaining under the 2020 Repurchase Program.

Cash Dividend


On April 26, 2021, the Board of Directors declared a quarterly cash dividend of
$0.78 per share for the three months ending June 30, 2021. The second quarter
2021 dividend is payable on May 28, 2021 to shareholders of record as of the
close of trading on May 14, 2021.



Cash Flows



                                        As of
                             March 31,       December 31,
                                2021              2020
                                    (in thousands)

Cash and cash equivalents $ 1,747,147$ 1,300,521





Cash and cash equivalents were $1,747.1 million and $1,300.5 million as of
March 31, 2021 and December 31, 2020, respectively. We typically seek to
maintain minimum cash balances globally of approximately $200.0 million to
$250.0 million for general operating purposes. As of March 31, 2021 and
December 31, 2020, $473.7 million and $423.3 million, respectively, of the cash
and cash equivalents were held by foreign subsidiaries. Repatriation of some
foreign cash may be subject to certain withholding taxes in local jurisdictions
and other distribution restrictions. The global cash and cash equivalent
balances that are maintained will be available to meet our global needs whether
for general corporate purposes or other needs, including acquisitions or
expansion of our products.

We believe that global cash flows from operations, together with existing cash
and cash equivalents and funds available under our existing credit facility and
our ability to access the debt and capital markets for additional funds, will
continue to be sufficient to fund our global operating activities and cash
commitments for investing and financing activities, such as material capital
expenditures and share repurchases, for at least the next 12 months and for the
foreseeable future thereafter. In addition, we expect that foreign cash flows
from operations, together with existing cash and cash equivalents will continue
to be sufficient to fund our foreign operating activities and cash commitments
for investing activities, such as material capital expenditures, for at least
the next 12 months and for the foreseeable future thereafter.



                                       35

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Net Cash Provided by (Used In) Operating, Investing and Financing Activities



                                                         Three Months Ended
                                                             March 31,
                                                         2021          2020
                                                           (in thousands)
Net cash provided by operating activities             $ 215,457     $  

112,770

Net cash used in investing activities                   (10,360 )     (201,638 )
Net cash provided by (used in) financing activities     245,542       (340,081 )
Effect of exchange rate changes                          (4,013 )      (10,762 )
Net increase (decrease) in cash                       $ 446,626$ (439,711 )

Cash Flows From Operating Activities


Cash flows from operating activities consist of net income adjusted for certain
non-cash items and changes in assets and liabilities. Cash provided by operating
activities was $215.5 million and $112.8 million for the three months ended
March 31, 2021 and 2020, respectively. The year-over-year increase was primarily
driven by higher cash collections from customers.

Our primary uses of cash from operating activities are for the payment of cash
compensation expenses, office rent, technology costs, market data costs,
interest expenses and income taxes. Historically, the payment of cash for
compensation and benefits is at its highest level in the first quarter when we
pay discretionary employee compensation related to the previous fiscal year.

Cash Flows From Investing Activities


Cash used in investing activities was $10.4 million for the three months ended
March 31, 2021 compared to $201.6 million for the three months ended March 31,
2020. The year-over-year change was primarily driven by the absence of the
$190.8 million equity method investment in Burgiss.

Cash Flows From Financing Activities


Cash provided by financing activities was $245.5 million for the three months
ended March 31, 2021 compared to cash used in financing activities of $340.1
million for the three months ended March 31, 2020. The year-over-year change was
primarily driven by the absence of the 2024 Senior Notes Redemption, lower share
repurchases and the impact of higher proceeds from the new senior notes
offerings made during the three months ended March 31, 2021.

Off-Balance Sheet Arrangements


We do not have any relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or
special purpose entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes.

© Edgar Online, source Glimpses

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