MOODYS CORP DE

This section of this Form 10-K generally discusses the year ended December 31, 2024 and 2023 financial results and year-to-year comparisons between these years. Discussions related to the year ended December 31, 2023 financial results and year-to-year comparisons between the years ended December 31, 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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.

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Year ended December 31, 2024 compared with year ended December 31, 2023

Executive Summary

The following table provides an executive summary of key operating results for the year ended December 31, 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.

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Moody’s Corporation

GLOBAL REVENUE

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 fulsome discussion of the Company’s segment revenue.

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Operating Expense ⇑ $258 million

SG&A Expense ⇑ $103 million

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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 reflect charges and adjustments related to the Company's restructuring programs 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 22 to the consolidated financial statements.

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

ETR ⇑ 680BPS

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 that did not recur in 2024.

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 $0.76 per share benefit in the prior year related to the resolution of tax matters in the first quarter of 2023.

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Segment Results

Moody’s Analytics

The table below provides a summary of revenue and operating results, followed by further insight and commentary:

MOODY'S ANALYTICS REVENUE

The 8% increase in global MA revenue reflects growth both in the U.S. (5%) and internationally (10%) across all LOBs.

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

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DECISION SOLUTIONS REVENUE

Global DS revenue for the for the years ended December 31, 2024 and 2023 was comprised as follows:

Global DS revenue grew 10% and reflects increases in both the U.S. (4%) and internationally (14%).

The most notable drivers of the growth reflect:

–strong demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage, coupled with sales growth from new customers, drove both revenue and ARR(2) growth of 18% and 17%, respectively;

–Insurance revenue and ARR(2) grew 9% and 12%, respectively.

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

–Banking revenue and ARR(2) grew 6% and 9%, respectively.

–recurring revenue growth of 11% 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 39% and 10%, respectively, reflecting MA's continued strategic shift to subscription-based solutions.

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

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RESEARCH AND INSIGHTS REVENUE

Global R&I revenue increased 5% compared to 2023 and reflects growth in both the U.S. (5%) 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

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

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MA: Operating and SG&A Expense ⇑ $155 million

MA: Adjusted Operating Margin 30.7% ⇑ 20BPS

Modest Adjusted Operating Margin expansion for MA is primarily due to the 8% increase in global MA revenue, offset by an 8% increase in operating and SG&A expenses.

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 relate to the Company's restructuring programs 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 22 to the consolidated financial statements.

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Moody’s Investors Service

The table below provides a summary of revenue and operating results, followed by further insight and commentary:

The following chart presents changes in rated issuance volumes compared to 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.

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MOODY'S INVESTORS SERVICE REVENUE

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

CFG REVENUE

Global CFG revenue for the years ended December 31, 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.

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The increase in CFG revenue of 39% reflects increases in both the U.S (40%) and internationally (37%).

Transaction revenue increased $528 million compared to the prior year, with continued momentum in leveraged finance (which includes bank loans and speculative-grade bonds) and investment-grade issuance. The growth in these sectors resulted from:

–strong refinancing activity and new mandates, resulting from:

–continued tight credit spreads and declining interest rates; and

–strong investor demand as yields remained high for the majority of the year; and

–bank loan and investment-grade issuance to fund M&A transactions.

SFG REVENUE

Global SFG revenue for the years ended December 31, 2024 and 2023 was comprised as follows:

The increase in SFG revenue of 28% reflects growth in the U.S. (46%), partially offset by modest declines in international revenue (2%).

Transaction revenue increased $102 million compared to 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 asset class, reflecting tightening credit spreads, declining interest rates and strong investor demand.

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FIG REVENUE

Global FIG revenue for the years ended December 31, 2024 and 2023 was comprised as follows:

The increase in FIG revenue of 33% reflects growth in both the U.S. (53%) and internationally (17%).

Transaction revenue increased $164 million compared to 2023, primarily driven by issuance growth in the insurance and banking sector, which was supported by a favorable issuance mix from infrequent issuer activity.

PPIF REVENUE

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Global PPIF revenue for the years ended December 31, 2024 and 2023 was comprised as follows:

The 18% increase in PPIF revenue reflects increases in both the U.S. (23%) and internationally (11%).

Transaction revenue increased $83 million compared to 2023, primarily due to:

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

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

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

MIS: Operating and SG&A Expense ⇑ $206 million

MIS: Adjusted Operating Margin of 60.1% ⇑ 560BPS

The MIS Adjusted Operating Margin expansion primarily reflected the aforementioned 33% increase in revenue, partially offset by growth of 15% in operating and SG&A expenses.

Restructuring Charges

The restructuring charges relate to the Company's restructuring programs as more fully discussed in Note 9 to the consolidated financial statements.

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