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 September 30, 2024 compared with three months ended September 30, 2023

Executive Summary

The following table provides an executive summary of key operating results for the quarter ended September 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 and adjustments have been made to 2023 amounts to reflect certain departmental reorganizations and M&A integrations

GLOBAL REVENUE

Three months ended September 30,

The increase in global revenue reflects growth in both segments, 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.

Third Quarter Operating Expense ⇑ $100 million

Third Quarter SG&A Expense ⇑ $31 million

Depreciation and amortization

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

Restructuring

The amounts in both periods reflect charges and 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 ⇑ 410 BPS

The ETR was higher than the prior year reflecting adjustments resulting from the finalization of income tax returns, coupled with increased earnings from non-U.S. operations subject to higher income tax rates.

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 September 30,

The 7% increase in global MA revenue reflects growth both in the U.S. (4%) and internationally (10%).

–ARR(2)increased 9% reflecting growth across all LOBs.

DECISION SOLUTIONS REVENUE

Three months ended September 30,

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

Global DS revenue grew 8% compared to the third quarter of 2023 and reflects increases in the U.S. (2%) and internationally (12%).

The most notable drivers of the growth are as follows:

–strong demand for an expanding suite of KYC solutions, reflecting increased customer and supplier risk data usage, which drove revenue and ARR(2) growth of 19% and 14%, respectively;

–Insurance revenue and ARR(2)grew 7% and 13%, respectively.

–recurring revenue growth of 11% in Insurance was attributable to strong demand resulting in new sales for subscription-based catastrophe and actuarial models.

–Banking revenue and ARR(2)grew 3% and 10%, respectively.

–recurring revenue growth of 10% within banking was supported by strong customer retention coupled with expansion of existing customer relationships to subscription-based banking offerings, which enable customers' lending, risk management and finance workflows;

–the aforementioned recurring revenue growth for Insurance and Banking was partially offset by a decline in transaction revenue of 50% and 17%, respectively, reflecting MA's continued strategic shift to subscription-based solutions.

The aforementioned factors contributed to overall ARR(2)growth for DS of 12%.

RESEARCH AND INSIGHTS REVENUE

Three months ended September 30,

Global R&I revenue increased 6% compared to the third quarter of 2023 and reflects growth in both the U.S. (3%) and internationally (9%). 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 September 30,

Global D&I revenue increased 7% compared to the third quarter of 2023 and reflects growth in both the U.S. (7%) and internationally (6%), mainly driven by continued strong demand for company data applications and ratings data feeds, which contributed to ARR(2)growth of 8%.

MA: Third Quarter Operating and SG&A Expense ⇑ $63 million

MA: Adjusted Operating Margin 30.3% ⇓ 330 BPS

Adjusted Operating Margin contraction for MA is due to operating and SG&A expense growth of 13% outpacing the 7% increase in global MA revenue.

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 and 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 third 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 September 30,

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

CFG REVENUE

Three months ended September 30,

Global CFG revenue for the three months ended September 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 49% reflects growth in both the U.S. (50%) and internationally (45%).

Transaction revenue increased $166 million compared to the same period in the prior year, with continued momentum in investment-grade and leveraged finance (which includes bank loans and speculative-grade bonds). The growth in these sectors resulted from:

–refinancing activity and new mandates resulting from continued tight corporate credit spreads;

–strong investor demand to capture yields ahead of further potential interest rate cuts; and

–bank loan issuance to fund M&A transactions.

SFG REVENUE

Three months ended September 30,

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

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

The increase in SFG revenue of 32% reflects growth in the U.S. (51%).

Transaction revenue increased $29 million compared to the third quarter of 2023, mainly attributable to strong issuance activity in U.S. CLOs and CMBS, supported by tighter spreads and strong investor demand.

FIG REVENUE

Three months ended September 30,

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

The increase in FIG revenue of 35% reflects growth in both the U.S. (73%) and internationally (8%).

Transaction revenue increased $40 million compared to the third 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 as well as higher overall rated issuance volumes.

PPIF REVENUE

Three months ended September 30,

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

The increase in PPIF revenue of 34% reflects growth in both the U.S. (45%) and internationally (17%).

Transaction revenue increased $39 million compared to the third quarter of 2023 primarily due to:

–increased investment-grade infrastructure finance activity in the U.S. and EMEA; and

–growth in issuance from U.S. Public Finance issuers, reflecting new deals in the state and local government sectors.

MIS: Third Quarter Operating and SG&A Expense ⇑ $68 million

MIS: Adjusted Operating Margin 59.6% ⇑ 640 BPS

The MIS Adjusted Operating Margin expansion primarily reflects the aforementioned 41% increase in revenue.

Restructuring

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

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Executive Summary

The following table provides an executive summary of key operating results for the nine months ended September 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

Nine months ended September 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 ⇑ $182 million

YTD SG&A Expense ⇑ $89 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 amounts in both periods reflect charges and 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.

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 ⇑ 890 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

Nine months ended September 30,

The 8% increase in global MA revenue reflects growth both in the U.S. (5%) and internationally (9%) across all LOBs.

–ARR(2) grew 9% reflecting increases across all LOBs.

.

DECISION SOLUTIONS REVENUE

Nine months ended September 30,

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

Global DS revenue grew 9% compared to the first nine months of 2023 and reflects increases in both the U.S. (3%) and internationally (13%).

The most notable drivers of the growth are as follows:

–strong demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage, which drove both revenue and ARR(2) growth of 18% and 14%, respectively;

–Insurance revenue and ARR(2) grew 9% and 13%, respectively.

–recurring revenue growth of 12% in Insurance was attributable to improved customer retention and strong demand resulting in new sales for subscription-based revenue for catastrophe and actuarial modeling tools.

–Banking revenue and ARR(2)grew 4% and 10%, respectively.

–recurring revenue growth of 9% within Banking supported by strong customer retention coupled with expansion of existing customer relationships to subscription-based banking offerings, which enable customers' lending, risk management and finance workflows;

–the aforementioned recurring revenue growth for Insurance and Banking was partially offset by a decline in transaction revenue of 36% and 12%, respectively, reflecting MA's continued strategic shift to subscription-based solutions.

The aforementioned factors also contributed to overall ARR(2) growth for DS of 12%.

RESEARCH AND INSIGHTS REVENUE

Nine months ended September 30,

Global R&I revenue increased 4% compared to the first nine months of 2023 and reflects growth in both the U.S. (4%) and internationally (5%). 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

Nine months ended September 30,

Global D&I revenue increased 9% compared to the first nine months of 2023 and reflects growth in both the U.S. (11%) and internationally (7%), mainly driven by continued strong demand for company data applications and ratings data feeds, which contributed to ARR(2)growth of 8% for D&I.

MA: YTD Operating and SG&A Expense ⇑ $131 million

MA: Adjusted Operating Margin 29.5% ⇓ 70 BPS

The modest decline in Adjusted Operating Margin is primarily due to operating and SG&A expense growth of 9% slightly outpacing the 8% increase in global MA revenue.

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 and 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 first nine months 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

Nine months ended September 30,

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

CFG REVENUE

Nine months ended September 30,

Global CFG revenue for the nine months ended September 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 47% reflects growth in both the U.S (48%) and internationally (44%).

Transaction revenue increased $487 million compared to the same period in the prior year, with continued momentum in leveraged finance (which includes bank loans and speculative-grade bonds) and investment-grade. The growth in these sectors resulted from:

–bank loan issuance to fund M&A transactions;

–refinancing activity and new mandates resulting from continued tight corporate credit spreads; and

–strong investor demand to capture yields ahead of further potential interest rate cuts.

SFG REVENUE

Nine months ended September 30,

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

The increase in SFG revenue of 25% reflects growth in the U.S. (43%), partially offset by modest declines in international revenue (3%).

Transaction revenue increased $71 million compared to the first nine months 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

Nine months ended September 30,

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

The increase in FIG revenue of 36% reflects growth in both the U.S. (55%) and internationally (19%).

Transaction revenue increased $134 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

Nine months ended September 30,

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

The 21% increase in PPIF revenue reflects increases in both the U.S. (25%) and internationally (15%).

Transaction revenue increased $75 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, healthcare and higher education sectors;

–increased U.S. and international investment-grade infrastructure finance activity; and

–higher U.S. Project Finance activity supported by continued market improvement.

MIS: YTD Operating and SG&A Expense ⇑ $140 million

Adjusted Operating Margin of 62.5% ⇑ 720 BPS

The MIS Adjusted Operating Margin expansion primarily reflected the aforementioned 37% increase in revenue, partially offset by growth of 14% in operating and SG&A expenses.

Restructuring Charges

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