MSCI Inc. (MSCI) shares jumped Wednesday after the index and analytics provider posted quarterly results that demonstrate just how sticky its business model really is. When 93% of your clients keep coming back, you're clearly doing something right.

The Numbers Tell a Growth Story

MSCI delivered fourth-quarter adjusted earnings of $4.66 per share, beating the analyst consensus of $4.57. Revenue came in at $822.5 million, nudging past Wall Street's expectation of $819.4 million. Operating revenues climbed 10.6%, with organic growth hitting 10.2%.

But here's where it gets interesting: recurring subscription revenues increased 7.8%, which is solid and predictable. Asset-based fees, however, absolutely rocketed up 20.7%. That's the market-driven side of the business working in MSCI's favor, reflecting stronger inflows and valuations in ETF products tied to the company's indexes.

Operating income reached $463.6 million, up 14.4% from a year ago. Operating margin expanded nicely to 56.4% from 54.5%, showing the company is getting more efficient as it scales.

Adjusted EBITDA totaled $512 million in the quarter, compared to $452.3 million the prior year. The EBITDA margin widened to 62.2% from 60.8%, which is the kind of operating leverage investors love to see.

Retention Remains the Secret Sauce

The company's Total Run Rate as of December 31, 2025, hit $3.3 billion, up 13%. More impressively, the retention rate for Q4 came in at 93.4%, slightly ahead of the 93.1% posted in the same quarter last year. When clients stick around at that rate, you've got a business with serious moat.

MSCI's headcount stood at 6,268 employees at year-end, reflecting modest 2.2% growth. Capital expenditures totaled $36.3 million for the quarter.

Cash flow showed real strength: net cash from operating activities jumped 16.4% to $501.1 million, driven by higher customer collections that more than offset increased expenses and tax payments. Free cash flow surged 17.8% to $464.8 million. The company closed the quarter with $515.3 million in cash and equivalents.

Management Perspective

Chairman and CEO Henry A. Fernandez highlighted the milestone achievements: "In the fourth quarter, MSCI delivered strong results while achieving a number of key milestones, including our 11th straight year of double-digit adjusted EPS growth, a record asset-based-fee run rate driven by record inflows into ETF products linked to our indexes, and our best-ever quarter for recurring sales in Index."

Fernandez emphasized the company's positioning for the future: "MSCI's deep-rooted competitive advantages have helped us build momentum across product lines and client segments. With emerging client segments, in particular, we are doubling down on key opportunities while reinforcing our role as the essential intelligence layer of global investing. As a result, MSCI is well positioned to benefit from AI and use it to increase the value of our solutions."

Dividend and 2026 Outlook

On January 27, 2026, the board declared a quarterly dividend of $2.05 per share for Q1 2026, payable February 27.

Looking ahead to the full year, MSCI guided for operating expenses of $1.49-$1.53 billion, with adjusted EBITDA expenses projected at $1.305-$1.335 billion. Interest expense is expected between $274-$280 million, while depreciation and amortization should land at $185-$195 million.

The company anticipates an effective tax rate of 18%-20% and plans to spend $160-$170 million on capital expenditures.

For the bottom line, MSCI projects net cash from operations of $1.64-$1.69 billion, translating to free cash flow of $1.47-$1.53 billion for 2026.

MSCI shares traded up 3.48% at $601.98 Wednesday following the results.