MOODYS CORP /DE/

Moody's remains committed to using its cash flow to create value for shareholders by both investing in the Company's employees and growing the business through targeted organic initiatives and inorganic acquisitions aligned with strategic priorities. Additional excess capital is returned to the Company’s shareholders via a combination of dividends and share repurchases.

Cash Flow

The following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes:

(1) Free Cash Flow is a non-GAAP measure and is defined by the Company as net cash provided by operating activities minus cash paid for capital expenditures. Refer to “Non-GAAP Financial Measures” of this MD&A for further information on this financial measure.

Net cash provided by operating activities

Net cash flows from operating activities for the nine months ended September 30, 2026 increased by $428 million compared to the same period in 2025, with the most notable drivers reflecting:

–growth in operating income of $293 million coupled with various changes in working capital; and

–approximately $70 million in lower incentive compensation payments in 2026 (based on full-year 2025 financial and operating results) compared to payments made in the prior year (based on full-year 2024 financial and operating results).

Net cash (used in) provided by investing activities

The $174 million increase in cash used in investing activities in the nine months ended September 30, 2026 compared to the same period in 2025 was primarily due to:

–a $523 million decrease in sales and maturities of investments primarily due to the maturity of certificates of deposit in the first quarter of 2025, of which the proceeds were used to repay notes payable in the prior year;

–cash received from the divestiture of businesses of $200 million, primarily relating to the sale of the MA Regulatory Solutions business in the second quarter of 2026; and

–lower cash paid for acquisitions (net of cash acquired) of $204 million, primarily due to amounts paid for the acquisition of CAPE Analytics in the first quarter of 2025.

Net cash used in financing activities

The $736 million increase in cash used in financing activities in the nine months ended September 30, 2026 compared to the same period in the prior year was primarily attributed to:

–higher cash paid for treasury share repurchases in 2026 of $1.4 billion compared to the same period in the prior year;

–a $700 million repayment of notes payable in the prior year.

Cash and cash equivalents and short-term investments

The Company’s aggregate cash and cash equivalents and short-term investments of $1.6 billion at September 30, 2026 included approximately $1.3 billion located outside of the U.S. Approximately 28% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in EUR and GBP. The Company manages both its U.S. and non-U.S. cash flow to maintain sufficient liquidity in all regions to effectively meet its operating needs.

The Company regularly evaluates which entities will indefinitely reinvest earnings outside the U.S. The Company has provided deferred taxes for those entities whose earnings are not considered indefinitely reinvested. Accordingly, the Company continues to repatriate a portion of its non-U.S. cash in these subsidiaries and will continue to repatriate certain of its offshore cash in a manner that addresses compliance with local statutory requirements, sufficient offshore working capital and any other factors that may be relevant in certain jurisdictions. Notwithstanding the Tax Act, which generally eliminated federal income tax on future cash repatriation to the U.S., cash repatriation may be subject to state and local taxes or withholding or similar taxes.

Material Cash Requirements

The Company's material cash requirements consist of the following contractual and other obligations:

Financing Arrangements

Indebtedness

At September 30, 2026, Moody’s had $7.1 billion of outstanding principal on debt and $1 billion of additional capacity available under the Company’s CP Program, which is backstopped by the $1.25 billion 2024 Facility.

The repayment schedule for the Company’s borrowings outstanding at September 30, 2026 is as follows:

For additional information on the Company's outstanding debt, refer to Note 13 to the consolidated financial statements.

Future interest payments and fees associated with the Company's debt and credit facility are expected to be $3.4 billion, of which approximately $200 million is expected to be paid in each of the next five years, and the remaining amount expected to be paid thereafter.

Management may consider pursuing additional long-term financing when it is appropriate in light of cash requirements for operations, share repurchases and other strategic opportunities, which could result in higher financing costs.

Purchase Obligations

Purchase obligations generally include multi-year agreements with vendors to purchase goods or services and mainly include data center/cloud hosting fees and fees for information technology licensing and maintenance. As of September 30, 2026, these purchase obligations totaled approximately $1.2 billion, of which approximately 40% is expected to be paid in the next twelve months and another approximate 45% is expected to be paid over the next two subsequent years, with the remainder to be paid thereafter.

Leases

The Company has remaining payments relating to its operating leases of approximately $1.0 billion at September 30, 2026, primarily related to real estate leases, of which approximately $100 million in payments are expected over the next twelve months. For more information on the expected cash flows relating to the Company's operating leases, refer to Note 14 to the consolidated financial statements.

Pension and Other Retirement Plan Obligations

The Company does not anticipate making significant contributions to its funded pension plan in the next twelve months. This plan is overfunded at September 30, 2026, and accordingly holds sufficient investments to fund future benefit obligations. Payments for the Company's unfunded plans are not expected to be material in either the short or long-term.

Dividends and share repurchases

On October 20, 2026, the Board approved the declaration of a quarterly dividend of $1.03 per share for Moody’s common stock, payable December 11, 2026 to shareholders of record at the close of business on November 20, 2026. The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board.

On October 21, 2025, the Board approved $4.0 billion in share repurchase authority. At September 30, 2026, the Company had approximately $1.4 billion of remaining authority under this authorization.

Restructuring

As more fully discussed in Note 9 to the consolidated financial statements, the Company is currently in the process of executing the Strategic and Operational Efficiency Restructuring Program. Future cash outlays associated with this program are expected to be approximately $110 million to $155 million, which are expected to be paid out through 2028.

Sources of Funding to Satisfy Material Cash Requirements

The Company believes that it has the financial resources needed to meet its cash requirements and expects to have positive operating cash flow over the next twelve months. Cash requirements for periods beyond the next twelve months will depend, among other things, on the Company’s profitability and its ability to manage working capital requirements. The Company may also borrow from various sources as described above.