Segment Information | 11. SEGMENT INFORMATION The Company has five operating segments: Index, Analytics, ESG and Climate, Real Estate and Burgiss, which are presented as the following four reportable segments: Index, Analytics, ESG and Climate and All Other – Private Assets. Effective January 1, 2021, the Company began presenting four reportable segments with the ESG and Climate operating segment being presented as a separate reportable segment. The operating segments of Real Estate and Burgiss do not individually meet the segment reporting thresholds and have been combined and presented as part of All Other – Private Assets reportable segment. The Company’s ownership interest in Burgiss is classified as an equity-method investment . T herefore, the All Other – Private Assets segment does not include the Company’s proportionate share of operating revenues and Adjusted EBITDA related to Burgiss . The Company’s proportionate share of the income or loss from its equity-method investment in Burgiss is not a component of Adjusted EBITDA as it is reported as a component of other (expense) income, net. Prior period amounts have been recast to reflect the current presentation. The Index operating segment offers equity and fixed income indexes. The indexes are used in many areas of the investment process, including index-linked product creation (e.g., Exchange Traded Funds (“ETFs”) and futures and options), performance benchmarking, portfolio construction and rebalancing, broker-dealer structured products and asset allocation. The Analytics operating segment offers risk management, performance attribution and portfolio management content, applications and services that provide clients with an integrated view of risk and return and an analysis of market, credit, liquidity and counterparty risk across all major asset classes, spanning short-, medium- and long-term time horizons. Clients access Analytics content through MSCI’s own proprietary applications and application programming interfaces, third-party applications or directly through their own platforms. Additionally, the Analytics operating segment also provides various managed services to help clients operate more efficiently, including consolidation of client portfolio data from various sources, review and reconciliation of input data and results, and customized reporting. The ESG and Climate operating segment offers products and services that help institutional investors understand how ESG and climate considerations can impact the long-term risk and return of their portfolio and individual security-level investments. In addition, MSCI ESG Research data and ratings, as well as climate solutions, are used in the construction of equity and fixed income indexes to help institutional investors more effectively benchmark ESG and climate investment performance, issue index-based investment products, as well as manage, measure and report on ESG and climate mandates. The Real Estate operating segment offers research, reporting, market data and benchmarking offerings that provide real estate performance analysis for funds, investors and managers. Real Estate performance and risk analytics range from enterprise-wide to property-specific analysis. The Real Estate operating segment also provides business intelligence to real estate owners, managers, developers and brokers worldwide. The Burgiss operating segment represents the Company’s equity method investment in Burgiss, a global provider of investment decision support tools for private capital. The change in reportable segments has not resulted in any changes to MSCI’s Chief Operating Decision Maker (“CODM”) or the basis for segment profitability from the information disclosed in our 2020 Annual Report on Form 10-K. The CODM continues to measure and evaluate reportable segments based on segment operating revenues as well as Adjusted EBITDA and other measures. The Company excludes the following items from segment Adjusted EBITDA: provision for income taxes, other expense (income), net, depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and, at times, certain other transactions or adjustments, that the CODM does not consider for the purposes of making decisions to allocate resources among segments or to assess segment performance. Although these amounts are excluded from segment Adjusted EBITDA, they are included in reported consolidated net income and are included in the reconciliation that follows. The following table presents operating revenues by reportable segment for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (in thousands) Operating revenues Index $ 305,963 $ 242,908 $ 598,454 $ 492,164 Analytics 135,902 127,563 269,919 253,071 ESG and Climate 39,308 26,302 74,058 51,535 All Other - Private Assets 17,007 12,843 34,172 29,626 Total $ 498,180 $ 409,616 $ 976,603 $ 826,396 The following table presents segment profitability and a reconciliation to net income for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (in thousands) Index Adjusted EBITDA $ 233,468 $ 183,256 $ 453,347 $ 366,843 Analytics Adjusted EBITDA 49,814 46,167 95,545 82,484 ESG and Climate Adjusted EBITDA 5,720 5,499 10,765 9,125 All Other - Private Assets Adjusted EBITDA 5,947 1,778 11,878 7,475 Total operating segment profitability 294,949 236,700 571,535 465,927 Amortization of intangible assets 30,396 14,062 45,464 27,838 Depreciation and amortization of property, equipment and leasehold improvements 7,020 7,463 14,163 15,030 Operating income 257,533 215,175 511,908 423,059 Other expense (income), net 61,838 76,008 100,185 121,043 Provision for income taxes 30,272 24,044 49,481 38,768 Net income $ 165,423 $ 115,123 $ 362,242 $ 263,248 Operating revenues by geography are based on the shipping address of the ultimate customer utilizing the product. The following table presents revenue by geographic area for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (in thousands) Operating revenues Americas: United States $ 200,781 $ 175,819 $ 397,470 $ 356,865 Other 21,026 16,891 41,199 34,647 Total Americas 221,807 192,710 438,669 391,512 Europe, the Middle East and Africa ("EMEA"): United Kingdom 84,802 62,826 163,883 127,887 Other 113,258 90,209 219,452 178,138 Total EMEA 198,060 153,035 383,335 306,025 Asia & Australia: Japan 22,993 19,725 44,635 39,117 Other 55,320 44,146 109,964 89,742 Total Asia & Australia 78,313 63,871 154,599 128,859 Total $ 498,180 $ 409,616 $ 976,603 $ 826,396 Long-lived assets consist of property, equipment and leasehold improvements, right of use assets and internally developed capitalized software, net of accumulated depreciation and amortization. The following table presents long-lived assets by geographic area on the dates indicated: As of June 30, December 31, 2021 2020 (in thousands) Long-lived assets Americas: United States $ 161,363 $ 182,776 Other 14,739 13,949 Total Americas 176,102 196,725 EMEA: United Kingdom 19,596 19,678 Other 32,720 33,561 Total EMEA 52,316 53,239 Asia & Australia: Japan 1,471 1,896 Other 33,934 37,946 Total Asia & Australia 35,405 39,842 Total $ 263,823 $ 289,806 |