MOODYS CORP DE
For the period ended Mar 31, 2025. Filed Apr 23, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 23, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
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Item 2. Results of Operations
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 March 31, 2025 compared with three months ended March 31, 2024
Executive Summary
The following table provides an executive summary of key operating results for the quarter ended March 31, 2025. 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.
| Three Months Ended March 31, | |||||
|---|---|---|---|---|---|
| Financial measure: · 2025 · 2024 · % Change Favorable(Unfavorable) · Insight and Key Drivers of Change Compared to Prior Year | |||||
| Moody's total revenue | $1,924 | $1,786 | 8% | — reflects revenue growth in both segments | |
| MA external revenue | $859 | $799 | 8% | — sustained demand for KYC and insurance offerings and SaaS-based banking solutions; — continued demand for credit research product offerings; and— ongoing strong demand for ratings data feeds and company data applications | |
| MIS external revenue | $1,065 | $987 | 8% | reflects growth across most LOBs resulting from:— increased U.S. investment-grade issuance activity, which included a favorable issuance mix from infrequent issuer activity;— increased issuance volumes in structured finance driven by refinancing activity for CLOs and CMBS, supported by continued tight spreads; and — increase in activity in the U.S. market for public and project finance | |
| Total operating and SG&A expenses | $930 | $880 | (6%) | — higher salaries and benefits reflecting an increase in headcount and annual salary increases in both segments | |
| Depreciation and amortization | $113 | $100 | (13%) | — higher amortization of internally developed software, primarily related to the development of MA SaaS solutions | |
| Restructuring | $33 | $5 | NM | — relates to the Company's restructuring programs, more fully discussed in Note 10 to the consolidated financial statements | |
| Charges related to asset abandonment | $2 | $— | NM | — costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, more fully discussed in Note 12 to the consolidated financial statements | |
| Total non-operating (expense) income, net | $(42) | $(49) | 14% | — primarily due to an increase in equity income recorded for the Company's investments in non-consolidated affiliates | |
| Operating margin | 44.0% | 44.8% | (80 | BPS) | — operating margin contraction is attributable to higher restructuring costs— Adjusted Operating Margin(1) expansion reflects revenue growth outpacing an increase in operating and SG&A expenses |
| Adjusted Operating Margin(1) | 51.7% | 50.7% | 100 | BPS | |
| ETR | 22.3% | 23.3% | (100 | BPS) | — primarily due to an increase in Excess Tax Benefits on stock-based compensation compared to the prior year |
| Diluted EPS | $3.46 | $3.15 | 10% | — increase reflects growth in operating income and Adjusted Operating Income(1) | |
| Adjusted Diluted EPS(1) | $3.83 | $3.37 | 14% | ||
Moody's Corporation
| Three Months Ended March 31, · % Change Favorable(Unfavorable) | |||
|---|---|---|---|
| 2025 · 2024 | |||
| Revenue: | |||
| United States | $1,065 | $969 | 10% |
| Non-U.S.: | |||
| EMEA | 569 | 542 | 5% |
| Asia-Pacific | 167 | 155 | 8% |
| Americas | 123 | 120 | 3% |
| Total Non-U.S. | 859 | 817 | 5% |
| Total | 1,924 | 1,786 | 8% |
| Expenses: | |||
| Operating | 491 | 467 | (5%) |
| SG&A | 439 | 413 | (6%) |
| Depreciation and amortization | 113 | 100 | (13%) |
| Restructuring | 33 | 5 | NM |
| Charges related to asset abandonment | 2 | — | NM |
| Total | 1,078 | 985 | (9%) |
| Operating income | $846 | $801 | 6% |
| Adjusted Operating Income(1) | $994 | $906 | 10% |
| Interest expense, net | $(61) | $(62) | 2% |
| Other non-operating income, net | 19 | 13 | 46% |
| Non-operating (expense) income, net | $(42) | $(49) | 14% |
| Net income attributable to Moody's | $625 | $577 | 8% |
| Diluted weighted average shares outstanding | 180.7 | 183.4 | 1% |
| Diluted EPS attributable to Moody's common shareholders | $3.46 | $3.15 | 10% |
| Adjusted Diluted EPS(1) | $3.83 | $3.37 | 14% |
| Operating margin | 44.0% | 44.8% | |
| Adjusted Operating Margin(1) | 51.7% | 50.7% | |
| ETR | 22.3% | 23.3% | |
The table below shows Moody’s global staffing by geographic area:
| March 31, · Change | ||||
|---|---|---|---|---|
| 2025 · 2024 · % | ||||
| MA | U.S. | 2,921 | 2,983 | (2%) |
| Non-U.S. | 5,093 | 4,922 | 3% | |
| Total | 8,014 | 7,905 | 1% | |
| MIS | U.S. | 1,572 | 1,512 | 4% |
| Non-U.S. | 4,196 | 4,083 | 3% | |
| Total | 5,768 | 5,595 | 3% | |
| MSS | U.S. | 711 | 725 | (2%) |
| Non-U.S. | 1,302 | 1,214 | 7% | |
| Total | 2,013 | 1,939 | 4% | |
| Total MCO | U.S. | 5,204 | 5,220 | —% |
| Non-U.S. | 10,591 | 10,219 | 4% | |
| Total | 15,795 | 15,439 | 2% | |
GLOBAL REVENUE
Three months ended March 31,
| Global revenue ⇑ $138 million | U.S. Revenue ⇑ $96 million | Non-U.S. Revenue ⇑ $42 million |
|---|
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.
First Quarter Operating Expense ⇑ $24 million
| Compensation expenses of $367 million increased $21 million, with the most notable driver reflecting: | Non-compensation expenses of $124 million increased $3 million: |
|---|---|
| — higher salaries and benefits that reflects hiring and salary increases to support continued growth in the business | — non-compensation expenses were generally in line compared to the prior year |
First Quarter SG&A Expense ⇑ $26 million
| Compensation expenses of $275 million increased $13 million, with the most notable driver reflecting: | Non-compensation expenses of $164 million increased $13 million, with the most notable driver reflecting: |
|---|---|
| — higher salaries and benefits and incentive and stock-based compensation, both reflecting growth in headcount and annual salary increases | — costs to support operating growth, including investments to support technology and innovation |
Depreciation and amortization
The increase is primarily driven by amortization of internally developed software, which relates to the development of MA SaaS solutions.
Restructuring
| Operating margin 44.0%, ⇓ 80 BPS | Adjusted Operating Margin(1) 51.7%, ⇑ 100 BPS |
|---|
Operating margin contraction is attributable to the increase in restructuring costs compared to the prior year.
Adjusted Operating Margin(1) expansion reflects revenue growth outpacing an increase in operating and SG&A expenses.
| Interest Expense, net ⇓ $1 million | Other non-operating income ⇑ $6 million |
|---|
| Interest expense was generally in line compared to the prior year | Increase in income is primarily due to: | |
|---|---|---|
| — an increase in equity income related to the Company's investments in non-consolidated affiliates of $11 million; partially offset by | ||
| — an increase in FX losses of $2 million |
ETR ⇓ 100 BPS
The ETR was lower than the prior year reflecting higher Excess Tax Benefits on stock-based compensation compared to the same period in 2024.
| Diluted EPS ⇑ $0.31 | Adjusted Diluted EPS(1) ⇑ $0.46 |
|---|
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
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
| Three Months Ended March 31, · % Change Favorable(Unfavorable) | |||
|---|---|---|---|
| 2025 · 2024 | |||
| Revenue: | |||
| Decision Solutions (DS) | $405 | $365 | 11% |
| Research and Insights (R&I) | 236 | 222 | 6% |
| Data and Information (D&I) | 218 | 212 | 3% |
| Total external revenue | 859 | 799 | 8% |
| Intersegment revenue | 3 | 3 | —% |
| Total MA revenue | 862 | 802 | 7% |
| Expenses: | |||
| Operating and SG&A (external) | 554 | 517 | (7%) |
| Operating and SG&A (intersegment) | 49 | 47 | (4%) |
| Total operating and SG&A | 603 | 564 | (7%) |
| Adjusted Operating Income | $259 | $238 | 9% |
| Adjusted Operating Margin | 30.0% | 29.7% | |
| Depreciation and amortization | 94 | 82 | (15%) |
| Restructuring | 26 | 2 | NM |
| Charges related to asset abandonment | 2 | — | NM |
MOODY'S ANALYTICS REVENUE
Three months ended March 31,
| MA: Global revenue ⇑ $60 million | U.S. Revenue ⇑ $38 million | Non-U.S. Revenue ⇑ $22 million |
|---|
The 8% increase in global MA revenue reflects growth both in the U.S. (11%) and internationally (5%).
–ARR(2)increased 9% reflecting growth across all LOBs.
DECISION SOLUTIONS REVENUE
Three months ended March 31,
| DS: Global revenue ⇑ $40 million | U.S. Revenue ⇑ $29 million | Non-U.S. Revenue ⇑ $11 million |
|---|
Global DS revenue for the three months ended March 31, 2025 and 2024 was comprised as follows:
Global DS revenue grew 11% compared to the first quarter of 2024 and reflects increases in the U.S. (21%) and internationally (5%).
The most notable drivers of the growth are as follows:
–strong demand for MA's suite of KYC solutions, reflecting increased customer and supplier risk data usage, coupled with sales growth from new customers, which drove revenue and ARR(2) growth of 16% and 17%, respectively;
–Insurance revenue and ARR(2)grew 13% and 11%, respectively
–recurring revenue growth of 17% in Insurance was attributable to strong demand resulting in new sales for subscription-based catastrophe and actuarial models, as well as the revenue impact from CAPE Analytics, which the Company acquired in the first quarter of 2025;
–Banking revenue and ARR(2)grew 5% and 8%, respectively
–recurring revenue growth of 10% within banking was supported by expansion of existing customer relationships to subscription-based banking offerings, which enable customers' lending, risk management and finance workflows, and also includes revenue from Numerated, which the Company acquired in the fourth quarter of 2024;
–the aforementioned recurring revenue growth for Insurance and Banking was partially offset by a decline in transaction revenue of 40% 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%.
Organic constant currency revenue(1) growth for DS was 9%.
RESEARCH AND INSIGHTS REVENUE
Three months ended March 31,
| R&I: Global revenue ⇑ $14 million | U.S. Revenue ⇑ $6 million | Non-U.S. Revenue ⇑ $8 million |
|---|
Global R&I revenue increased 6% compared to the first quarter of 2024 and reflects growth in both the U.S. (5%) and internationally (8%). This increase was mainly driven by sales growth from the credit research product offering, which contributed to R&I ARR(2) growth of 7%.
DATA AND INFORMATION REVENUE
Three months ended March 31,
| D&I: Global revenue ⇑ $6 million | U.S. Revenue ⇑ $3 million | Non-U.S. Revenue ⇑ $3 million |
|---|
Global D&I revenue increased 3% compared to the first quarter of 2024 and reflects growth in both the U.S. (4%) and internationally (2%), mainly driven by continued demand for ratings data feeds and company data applications, which contributed to ARR(2)growth of 6%.
Organic constant currency revenue(1) growth for D&I was 5%.
MA: First Quarter Operating and SG&A Expense ⇑ $37 million
| Compensation expenses of $362 million increased $25 million, with the most notable drivers reflecting: | Non-compensation expenses of $192 million increased $12 million, with the most notable driver reflecting: |
|---|---|
| — growth in salaries and benefits and incentive compensation both reflecting higher headcount and annual salary increases | — an increase in costs to support operating growth, including investments to support technology and innovation |
MA: Adjusted Operating Margin 30.0% ⇑ 30 BPS
Adjusted Operating Margin expansion primarily reflects the aforementioned 8% increase in global MA revenue, partially offset by growth of 7% 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
Moody’s Investors Service
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
| Three Months Ended March 31, · % Change Favorable(Unfavorable) | |||
|---|---|---|---|
| 2025 · 2024 | |||
| Revenue: | |||
| Corporate finance (CFG) | $564 | $529 | 7% |
| Structured finance (SFG) | 138 | 114 | 21% |
| Financial institutions (FIG) | 191 | 195 | (2%) |
| Public, project and infrastructure finance (PPIF) | 163 | 141 | 16% |
| Total ratings revenue | 1,056 | 979 | 8% |
| MIS Other | 9 | 8 | 13% |
| Total external revenue | 1,065 | 987 | 8% |
| Intersegment revenue | 49 | 47 | 4% |
| Total MIS revenue | 1,114 | 1,034 | 8% |
| Expenses: | |||
| Operating and SG&A (external) | 376 | 363 | (4%) |
| Operating and SG&A (intersegment) | 3 | 3 | —% |
| Total operating and SG&A | 379 | 366 | (4%) |
| Adjusted Operating Income | $735 | $668 | 10% |
| Adjusted Operating Margin | 66.0% | 64.6% | |
| Depreciation and amortization | 19 | 18 | (6%) |
| Restructuring | 7 | 3 | (133%) |
The following chart presents changes in rated issuance volumes compared to the first quarter of 2024. 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 March 31,
| MIS: Global revenue ⇑ $78 million | U.S. Revenue ⇑ $58 million | Non-U.S. Revenue ⇑ $20 million |
|---|
The increase in global MIS revenue reflects growth across all ratings LOBs, excluding FIG.
CFG REVENUE
Three months ended March 31,
| CFG: Global revenue ⇑ $35 million | U.S. Revenue ⇑ $19 million | Non-U.S. Revenue ⇑ $16 million |
|---|
Global CFG revenue for the three months ended March 31, 2025 and 2024 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 7% reflects growth in both the U.S. (5%) and internationally (10%).
Transaction revenue increased $28 million compared to the same period in the prior year, primarily driven by higher U.S. issuance activity within investment grade, which reflected:
–a favorable issuance mix from infrequent issuer activity;
–issuance to fund certain large M&A deals during the quarter; and
–strong investor demand as yields remained high in the first quarter of 2025.
SFG REVENUE
Three months ended March 31,
2025---------------------------------------------------------------------------2024
| SFG: Global revenue ⇑ $24 million | U.S. Revenue ⇑ $24 million | Non-U.S. Revenue was in line with prior year |
|---|
Global SFG revenue for the three months ended March 31, 2025 and 2024 was comprised as follows:
The increase in SFG revenue of 21% reflects growth in the U.S.
Transaction revenue increased $19 million compared to the first quarter of 2024, mainly attributable to continued momentum in U.S. CLO refinancing activity and increased issuance activity in CMBS, supported by tight spreads for the majority of the first quarter of 2025 and strong investor demand.
FIG REVENUE
Three months ended March 31,
| FIG: Global revenue ⇓ $4 million | U.S. Revenue ⇓ $3 million | Non-U.S. Revenue ⇓ $1 million |
|---|
Global FIG revenue for the three months ended March 31, 2025 and 2024 was comprised as follows:
The decrease in FIG revenue of 2% reflects declines in both the U.S. (3%) and internationally (1%).
Transaction revenue decreased $13 million compared to the first quarter of 2024, primarily due to:
–lower volumes from infrequent issuers in the insurance sector, compared to strong activity in the prior year;
partially offset by
–growth in Banking, where infrequent issuer activity remained strong.
PPIF REVENUE
Three months ended March 31,
| PPIF: Global revenue ⇑ $22 million | U.S. Revenue ⇑ $18 million | Non-U.S. Revenue ⇑ 4 million |
|---|
Global PPIF revenue for the three months ended March 31, 2025 and 2024 was comprised as follows:
The increase in PPIF revenue of 16% reflects growth in both the U.S. (21%) and internationally (7%).
Transaction revenue increased $20 million compared to the first quarter of 2024, primarily due to:
–higher issuance in U.S. Public Finance, primarily reflecting increased activity in the state and local government and higher education sectors; and
–higher U.S. Project Finance activity supported by ongoing funding requirements for large-scale infrastructure projects.
MIS: First Quarter Operating and SG&A Expense ⇑ $13 million
| Compensation expenses of $280 million increased $8 million, with the most notable drivers of the growth reflecting: | Non-compensation expenses of $96 million increased $5 million: |
|---|---|
| — growth in salaries and benefits and stock-based compensation both reflecting higher headcount and annual salary increases | — non-compensation expenses were generally in line compared to the prior year |
MIS: Adjusted Operating Margin 66.0% ⇑ 140 BPS
The MIS Adjusted Operating Margin expansion primarily reflects the aforementioned 8% increase in revenue, partially offset by growth of 4% in operating and SG&A expenses.
Restructuring
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