MOODYS CORP DE

RESULTS OF OPERATIONS

The following footnotes are applicable throughout the discussion of the Company's results of operations:

(1)Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.

(2) Refer to the section entitled "Key Performance Metrics" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.

Three months ended June 30, 2024 compared with three months ended June 30, 2023

Executive Summary

The following table provides an executive summary of key operating results for the quarter ended June 30, 2024. Following this executive summary is a more detailed discussion of the Company’s operating results as well as a discussion of the operating results of the Company’s reportable segments.

Moody's Corporation

The table below shows Moody’s global staffing by geographic area:

(a) Certain reclassifications have been made to 2023 amounts to reflect certain departmental reorganizations and M&A integrations

GLOBAL REVENUE

Three months ended June 30,

The increase in global revenue reflects growth in both MA and MIS, both in the U.S. and internationally. Refer to the section entitled “Segment Results” of this MD&A for a more comprehensive discussion of the Company’s segment revenue.

Second Quarter Operating Expense ⇑ $43 million

Second Quarter SG&A Expense ⇑ $31 million

Depreciation and amortization

The increase is driven by amortization of internally developed software, which is primarily related to the development of MA SaaS solutions.

Restructuring

The amounts in both periods reflect charges/adjustments related to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 9 to the consolidated financial statements.

Charges related to asset abandonment

Reflects costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, which is more fully discussed in Note 11 to the consolidated financial statements.

Operating margin and Adjusted Operating Margin(1) expansion reflects strong revenue growth, particularly in MIS, outpacing an increase in operating and SG&A expenses.

ETR ⇓ 30 BPS

The ETR was generally in line with the prior year.

Both diluted EPS and Adjusted Diluted EPS(1)growth is mostly attributable to higher operating income and Adjusted Operating Income(1), the components of which are more fully described above.

Segment Results

Moody’s Analytics

MOODY'S ANALYTICS REVENUE

Three months ended June 30,

The 7% increase in global MA revenue reflects growth both in the U.S. (6%) and internationally (9%).

–ARR(2)increased 10% reflecting growth across all LOBs.

DECISION SOLUTIONS REVENUE

Three months ended June 30,

Global DS revenue for the three months ended June 30, 2024 and 2023 was comprised as follows:

Global DS revenue grew 10% compared to the second quarter of 2023 and reflects increases in the U.S. (4%) and internationally (13%).

The most notable drivers of the growth are as follows:

–strong demand resulted in new sales and higher price realization for subscription-based catastrophe and actuarial models, driving the increase in insurance revenue and ARR(2)of 11% and 14%, respectively;

–sustained demand for KYC solutions reflecting increased customer and supplier risk data usage, which drove revenue and ARR(2) growth of 13% and 18%, respectively, for these solutions; and

–growth in SaaS-based banking solutions which enable customers' lending, risk management and finance workflows, resulting in revenue and ARR(2) growth of 7% and 9%, respectively.

The aforementioned factors contributed to overall ARR(2)growth for DS of 13%.

RESEARCH AND INSIGHTS REVENUE

Three months ended June 30,

Global R&I revenue increased 4% compared to the second quarter of 2023 and reflects growth in both the U.S. (4%) and internationally (4%). This increase was driven by sales growth from credit and economic research product offerings, which contributed to R&I ARR(2) growth of 6%.

DATA AND INFORMATION REVENUE

Three months ended June 30,

Global D&I revenue increased 7% compared to the second quarter of 2023 and reflects growth in both the U.S. (12%) and internationally (5%), mainly driven by:

•improved customer retention;

•continued growth in new sales and higher price realization for company data applications; and

•continued strong demand for ratings data feeds.

The aforementioned revenue growth factors also contributed to ARR(2)growth of 10% for D&I.

MA: Second Quarter Operating and SG&A Expense ⇑ $32 million

MA: Adjusted Operating Margin 28.5% ⇑ 50 BPS

Adjusted Operating Margin expansion for MA is due to the 7% increase in global MA revenue outpacing increases in operating and SG&A expenses of 6%.

Depreciation and amortization

The increase in depreciation and amortization expense primarily reflects higher amortization of internally developed software relating to the development of SaaS-based solutions.

Restructuring

The amounts in both periods reflect charges/adjustments related to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 9 to the consolidated financial statements.

Charges related to asset abandonment

Reflects costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, which is more fully discussed in Note 11 to the consolidated financial statements.

Moody’s Investors Service

The following chart presents changes in rated issuance volumes compared to the second quarter of 2023. To the extent that changes in rated issuance volumes had a material impact to MIS's revenue compared to the prior year, those impacts are discussed below.

MOODY'S INVESTORS SERVICE REVENUE

Three months ended June 30,

The increase in global MIS revenue reflects strong growth across all ratings LOBs.

CFG REVENUE

Three months ended June 30,

Global CFG revenue for the three months ended June 30, 2024 and 2023 was comprised as follows:

• Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.

The increase in CFG revenue of 44% reflects growth in both the U.S. (43%) and internationally (45%).

Transaction revenue increased $152 million compared to the same period in the prior year, with the most notable drivers of the growth reflecting:

–higher rated issuance volumes in leveraged finance (which includes bank loans and speculative-grade bonds), primarily due to refinancing activity, which was supported by tightening credit spreads and opportunistic issuance ahead of potential market volatility later in the year; and

–higher investment grade rated issuance activity supported by several large M&A-related deals.

SFG REVENUE

Three months ended June 30,

2024---------------------------------------------------------------------------2023

Global SFG revenue for the three months ended June 30, 2024 and 2023 was comprised as follows:

The increase in SFG revenue of 28% reflects growth in the U.S. (53%), slightly offset by a decline in international revenue (7%).

Transaction revenue increased $28 million compared to the second quarter of 2023, mainly attributable to:

–new deal formation, supported by strong bank loan issuance, coupled with refinancing activity from CLOs; and

–strong issuance activity in CMBS, supported by tighter spreads and strong investor demand.

FIG REVENUE

Three months ended June 30,

Global FIG revenue for the three months ended June 30, 2024 and 2023 was comprised as follows:

The increase in FIG revenue of 34% reflects growth in both the U.S. (42%) and internationally (26%).

Transaction revenue increased $42 million compared to the second quarter of 2023, mainly due to growth in the insurance and banking sectors, which was primarily attributable to a favorable issuance mix from infrequent issuer activity.

PPIF REVENUE

Three months ended June 30,

Global PPIF revenue for the three months ended June 30, 2024 and 2023 was comprised as follows:

The increase in PPIF revenue of 21% reflects growth in both the U.S. (18%) and internationally (27%).

Transaction revenue increased $26 million compared to the second quarter of 2023 primarily due to:

–increased issuance from U.S. Public Finance issuers, reflecting refunding activity in the state and local government and healthcare and higher education sectors; and

–higher Project Finance issuance in the U.S. and Canada supported by continued market improvement, tightening spreads and opportunistic issuance.

MIS: Second Quarter Operating and SG&A Expense ⇑ $42 million

MIS: Adjusted Operating Margin 63.2% ⇑ 730 BPS

The MIS Adjusted Operating Margin expansion primarily reflects the aforementioned 36% increase in revenue.

Restructuring

The amounts in both periods reflect charges/adjustments related to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 9 to the consolidated financial statements.

Six months ended June 30, 2024 compared with six months ended June 30, 2023

Executive Summary

The following table provides an executive summary of key operating results for the six months ended June 30, 2024. Following this executive summary is a more detailed discussion of the Company’s operating results as well as a discussion of the operating results of the Company’s reportable segments.

Moody’s Corporation

GLOBAL REVENUE

Six months ended June 30,

Growth in global revenue reflected increases in both MA and MIS, both in the U.S. and internationally. Refer to the section entitled “Segment Results” of this MD&A for a more comprehensive discussion of the Company’s segment revenue.

YTD Operating Expense ⇑ $82 million

YTD SG&A Expense ⇑ $58 million

Depreciation and amortization

The increase in depreciation and amortization expense is driven by amortization of internally developed software, which is primarily related to the development of MA SaaS solutions.

Restructuring

The restructuring charge in both periods relates to the Company's 2022 - 2023 Geolocation Restructuring Program, as more fully discussed in Note 9 to the consolidated financial statements.

Charges related to asset abandonment

Reflects costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, which is more fully discussed in Note 11 to the consolidated financial statements.

Increases in both Operating margin and Adjusted Operating Margin(1)is due to strong revenue growth, particularly within MIS, partially offset by an increase in operating and SG&A expenses.

ETR ⇑ 1,120 BPS

The increase in the ETR primarily reflects $113 million in tax benefits recognized in the first quarter of 2023, which resulted from the resolutions of UTPs in various U.S. and non-U.S. tax jurisdictions.

Both diluted EPS and Adjusted Diluted EPS(1) growth is mostly attributable to higher operating income and Adjusted Operating Income(1), the components of which are more fully described above. This was partially offset by a $0.75 per share benefit in the prior year related to the resolution of tax matters in the first quarter of 2023.

Moody’s Analytics

MOODY'S ANALYTICS REVENUE

Six months ended June 30,

The 8% increase in global MA revenue reflects growth both in the U.S. (6%) and internationally (9%) across all LOBs.

–ARR(2) grew 10% reflecting increases across all LOBs.

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DECISION SOLUTIONS REVENUE

Six months ended June 30,

Global DS revenue for the six months ended June 30, 2024 and 2023 was comprised as follows:

Global DS revenue grew 9% compared to the first half of 2023 and reflects increases in both the U.S. (4%) and internationally (13%).

The most notable drivers of the growth are as follows:

–sustained demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage, which drove both revenue and ARR(2) growth of 18%;

–higher demand for subscription-based revenue for catastrophe and actuarial modeling tools supported insurance growth resulting in insurance revenue and ARR(2) growth of 9% and 14%, respectively; and

–growth across SaaS-based banking offerings which enable customers' lending, risk management, and finance workflows, resulting in revenue and ARR(2) growth of 4% and 9%, respectively.

The aforementioned factors also contributed to overall ARR(2) growth for DS of 13%.

RESEARCH AND INSIGHTS REVENUE

Six months ended June 30,

Global R&I revenue increased 4% compared to the first half of 2023 and reflects growth in both the U.S. (4%) and internationally (4%). This increase was attributable to sales growth for credit and economic research product offerings, which contributed to ARR(2)growth of 6%.

DATA AND INFORMATION REVENUE

Six months ended June 30,

Global D&I revenue increased 10% compared to the first half of 2023 and reflects growth in both the U.S. (13%) and internationally (8%), mainly driven by:

•improved customer retention;

•continued growth in new sales and higher price realization for company data applications; and

•continued strong demand for ratings data feeds.

The aforementioned factors also contributed to ARR(2)growth of 10% for D&I.

MA: YTD Operating and SG&A Expense ⇑ $68 million

MA: Adjusted Operating Margin 29.1% ⇑ 70 BPS

The Adjusted Operating Margin expansion for MA is primarily due to the 8% increase in global MA revenue outpacing operating and SG&A expense growth of 7%.

Depreciation and amortization

The increase in depreciation and amortization expense primarily reflects higher amortization of internally developed software relating to the development of SaaS-based solutions.

Restructuring

The restructuring charges in both periods relate to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 9 to the consolidated financial statements.

Charges related to asset abandonment

Reflects costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, which is more fully discussed in Note 11 to the consolidated financial statements.

Moody’s Investors Service

The following chart presents changes in rated issuance volumes compared to the first half of 2023. To the extent that changes in rated issuance volumes had a material impact to MIS's revenue compared to the prior year, those impacts are discussed below.

MOODY'S INVESTORS SERVICE REVENUE

Six months ended June 30,

The increase in global MIS revenue reflects strong growth across all LOBs.

CFG REVENUE

Six months ended June 30,

Global CFG revenue for the six months ended June 30, 2024 and 2023 was comprised as follows:

• Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.

The increase in CFG revenue of 46% reflects growth in both the U.S (47%) and internationally (44%).

Transaction revenue increased $321 million compared to the same period in the prior year, with the most notable drivers of the growth reflecting:

–higher rated issuance volumes in leveraged finance (which includes bank loans and speculative-grade bonds), primarily due to refinancing activity, which was supported by tightening credit spreads and opportunistic issuance ahead of potential market volatility later in the year; and

–higher investment grade rated issuance activity supported by several large M&A-related deals.

SFG REVENUE

Six months ended June 30,

Global SFG revenue for the six months ended June 30, 2024 and 2023 was comprised as follows:

The increase in SFG revenue of 22% reflects growth in the U.S. (39%), partially offset by modest declines in international revenue (4%).

Transaction revenue increased $41 million compared to the first half of 2023, mainly attributable to:

–higher CLO issuance, with new deals supported by increased bank loan activity, coupled with refinancing activity; and

–increased issuance activity from the CMBS and ABS asset classes, reflecting tightening credit spreads and strong investor demand, including from first time issuers.

FIG REVENUE

Six months ended June 30,

Global FIG revenue for the six months ended June 30, 2024 and 2023 was comprised as follows:

The increase in FIG revenue of 36% reflects growth in both the U.S. (49%) and internationally (25%).

Transaction revenue increased $94 million compared to the same period in the prior year, primarily driven by growth in the insurance and banking sectors, which was mainly attributable to a favorable issuance mix from infrequent issuer activity.

PPIF REVENUE

Six months ended June 30,

Global PPIF revenue for the six months ended June 30, 2024 and 2023 was comprised as follows:

The 15% increase in PPIF revenue reflected increases in both the U.S. (16%) and internationally (14%).

Transaction revenue increased $37 million compared to the same period in the prior year, primarily due to:

–higher issuance from U.S. Public Finance issuers, reflecting increased activity in the state and local government and higher education and housing sectors; and

–higher Project Finance activity in the U.S. and Canada supported by continued market improvement.

MIS: YTD Operating and SG&A Expense ⇑ $72 million

Adjusted Operating Margin of 63.9% ⇑ 760 BPS

The MIS Adjusted Operating Margin expansion primarily reflected the aforementioned 35% increase in revenue, partially offset by growth of 11% in operating and SG&A expenses.

Restructuring Charges

The amounts in both periods reflect charges/adjustments related to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 9 to the consolidated financial statements.