AI Takeaway
MSCI delivered strong Q2 FY2026 results with revenue up 12.2% to $867.0M and net income up 12.6% to $342.0M, driven by broad-based growth across Index asset-based fees (+26.6%) and recurring subscriptions (+9.0%), though stockholders' equity remained deeply negative at -$2,689.5M due to substantial leverage used for share buybacks and long-term debt now at $6,380.4M.
Revenue
$867M
++12.20% YoY
EPS (Basic)
$4.70
++19.90% YoY
Operating Income
$487.5M
++14.62% YoY
Filed · Source: SEC EDGAR 10-Q filing
Msci (MSCI) reported Q2 FY2026 revenue of $867M, up 12.2% year over year. The company posted net income of $342M, up 12.6% from a year earlier, with diluted EPS of $4.69.
Index segment operating revenues increased 17.5% to $511.0M for the quarter, driven primarily by a 26.6% increase in asset-based fees to $233.1M. This was fueled by a 36.1% increase in revenues from ETFs linked to MSCI equity indexes, as average AUM in these ETFs rose 44.8% year-over-year to $2,706B, partially offset by lower average basis point fees.
Source: 10-Q Item 2 MD&A, Segment Results, p.31-32
For the six months ended June 30, 2026, BlackRock accounted for 11.8% of MSCI's consolidated operating revenues, with 96.6% of that revenue coming from fees based on assets in BlackRock's ETFs and non-ETF products linked to MSCI indexes, underscoring significant client concentration tied to asset-based fee dynamics.
Source: 10-Q Item 2 MD&A, Overview, p.23
The effective tax rate for the six months ended June 30, 2026 was 7.3%, down sharply from 16.5% in the prior year period, primarily due to an $88.0 million discrete tax benefit recognized upon completion of a multi-phased internal legal entity restructuring completed in Q1 FY2026.
Source: 10-Q Item 2 MD&A, Income Taxes, p.28
Total other expense, net increased 47.8% to $70.2M for the quarter, primarily driven by higher interest expense ($71.0M vs $46.2M prior year, +53.7%) as a result of higher debt levels, reflecting the company's increased leverage used to fund share repurchases.
Source: 10-Q Item 2 MD&A, Total Other Expense, p.27-28
Weighted average diluted shares outstanding declined 5.9% to 72.9M shares, driven by ongoing share repurchases pursuant to the company's stock repurchase program; year-to-date share buybacks reached $583.2M, up 65.9% from $351.6M in the prior year period.
Source: 10-Q Item 2 MD&A, Weighted Average Shares, p.28
BlackRock accounted for 11.8% of MSCI's consolidated operating revenues for the six months ended June 30, 2026, with 96.6% of that revenue tied to fees based on assets in BlackRock's ETFs and non-ETF products linked to MSCI indexes. This concentration creates exposure to a single client relationship and to fluctuations in that client's AUM.
Source: 10-Q Item 2 MD&A, Overview, p.23
Stockholders' equity stood at -$2,689.5M as of the reporting period, a sharp decline from -$886.2M in the prior year, driven by aggressive share buybacks ($583.2M YTD) funded partly through increased long-term debt, which rose 41.4% YoY to $6,380.4M. This capital structure results in a negative debt-to-equity ratio of -3.08, reflecting an unusual and leveraged balance sheet position.
Source: 10-Q Balance Sheet (XBRL)
Interest expense increased 53.7% to $71.0M for the quarter and 51.1% to $140.1M year-to-date, driven by higher debt levels used to fund share repurchases and other capital activities. Continued reliance on debt financing could further pressure net income if interest rates or debt levels rise.
Source: 10-Q Item 2 MD&A, Total Other Expense, p.27-28
A significant portion of Index segment revenue growth (26.6% increase in asset-based fees) is tied to AUM levels in ETFs and non-ETF products linked to MSCI indexes, which are subject to market appreciation/depreciation. The filing notes that average basis point fees have been decreasing even as AUM grows, indicating fee compression risk alongside market-dependent revenue volatility.
Source: 10-Q Item 2 MD&A, Segment Results - Index, p.31-32
The current ratio of 0.89 indicates current liabilities ($1,605.7M) exceed current assets ($1,436.2M), which combined with the negative equity position, suggests a balance sheet structure reliant on continued cash flow generation and debt refinancing capacity rather than liquid asset coverage.
Source: 10-Q Balance Sheet (XBRL)
Reported EPS of $4.94 versus the $5.03 analyst consensus — a -1.9% miss for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $867M | $772.7M | +12.20% |
Operating Income | $487.5M | $425.3M | +14.62% |
Net Income | $342M | $303.7M | +12.61% |
EPS (Basic) | $4.70 | $3.92 | +19.90% |
EPS (Diluted) | $4.69 | $3.92 | +19.64% |
R&D Expense | $46M | $44.1M | +4.31% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $5.6B | $5.37B | +4.26% |
Current Assets | $1.44B | $1.27B | +12.98% |
Total Liabilities | $8.29B | $6.26B | +32.46% |
Current Liabilities | $1.61B | $1.47B | +9.22% |
Stockholders' Equity | $-2.69B | $-886.2M | -203.49% |
Cash & Equivalents | $356.4M | $347.32M | +2.61% |
Long-Term Debt | $6.38B | $4.51B | +41.38% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $677.6M | $637.9M | +6.22% |
Investing Cash FlowYTD | $-132M | $-67.5M | -95.56% |
Financing Cash FlowYTD | $-703.9M | $-642.8M | -9.51% |
Share BuybacksYTD | $583.2M | $351.6M | +65.87% |
D&AYTD | $12.1M | $10.1M | +19.80% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 56.2% | 55.0% | +1.19% |
Net Margin | 39.4% | — | — |
ROE | -12.7% | — | — |
ROA | 6.1% | — | — |
Current Ratio | $0.894 | — | — |
Debt to Equity | $-3.083 | — | — |
Expected release date, analyst estimates & what to watch
MSCI delivered strong Q1 2026 results with revenue up 14.1% YoY to $850.8M and net income surging 40.7% to $406.0M, though total liabilities jumped 32% to $8.32B driven by a significant increase in long-term debt and aggressive share buybacks that deepened stockholders' equity deficit to -$2.77B.
MSCI delivered strong FY2025 results with revenue growing 9.7% to $3.13B and operating margin expanding to 54.7%, while aggressively returning capital to shareholders through $2.48B in share buybacks that drove a deeply negative stockholders' equity position.
Other companies in Financial Exchanges & Data
The filing does not disclose analyst consensus estimates, but MSCI reported strong YoY growth with revenue up 12.2% to $867.0M and diluted EPS up 19.6% to $4.69 for Q2 FY2026. Net income rose 12.6% to $342.0M, indicating solid operating momentum.
Revenue growth of 12.2% to $867.0M was driven by a $50.6M increase in recurring subscription revenues and a $49.0M increase in asset-based fees, per the MD&A. The Index segment was the largest contributor, with asset-based fees up 26.6% due to a 44.8% increase in average AUM in ETFs linked to MSCI equity indexes.
MSCI's stockholders' equity was -$2,689.5M as of Q2 FY2026, worsening from -$886.2M a year earlier, primarily due to aggressive share repurchases ($583.2M year-to-date) funded through increased long-term debt, which rose 41.4% YoY to $6,380.4M. This reflects a deliberate capital return strategy rather than operating losses, as net income remained solidly positive.
According to the MD&A, BlackRock accounted for 11.8% of MSCI's consolidated operating revenues for the six months ended June 30, 2026, with 96.6% of that revenue tied to fees based on BlackRock's ETF and non-ETF assets linked to MSCI indexes. This represents notable client concentration risk within the Index segment.
MSCI's operating margin improved to 56.2% from 55.0% a year ago, and net margin was 39.4%, reflecting strong operating leverage. However, ROE was -12.7% due to negative stockholders' equity from leverage-funded buybacks, not due to unprofitability, while ROA stood at a healthy 6.1%.