Moody's Corporation · NYSE:MCO
Moody's — Q3 2023 Earnings Presentation
30 slides from Moody's's earnings presentation, Oct 25, 2023
Slide 1: Third Quarter 2023 Earnings Call
Third Quarter 2023 Earnings Call October 25, 2023
Slide 2: Introduction
Introduction Shivani Kak Head of Investor Relations Moody’s | Decode risk. Unlock opportunity. Third Quarter 2023 - Earnings Call 2
Slide 3: Disclaimer
Disclaimer Certain statements contained in this document are forward-looking statements and are based on future expectations, plans and prospects for Moody’s business and operations that involve a number of risks and uncertainties. Such statements involve estimates, projections, goals, forecasts, as
Slide 4: 3Q 2023 Highlights
3Q 2023 Highlights Rob Fauber President and Chief Executive Officer Moody’s | Decode risk. Unlock opportunity. Third Quarter 2023 - Earnings Call 4
Slide 5: Key Takeaways
Key Takeaways 1 MCO reported revenue growth of 15% and adjusted diluted EPS1 grew 31%; FY 2023 adjusted diluted EPS2 guidance remains $9.75 to $10.25 2 MA delivered 13% revenue growth and quarterly adjusted operating margin result of 33.6%; ARR3 grew by 10% MIS revenue grew 18%; FY 2023 revenue is n
Slide 6: Business Investments & Innovation Fuel Growth
Business Investments & Innovation Fuel Growth Research & Data & Ratings Decision Solutions Insights Information Increased Emerging Previewing Research Enhanced Orbis Launched Launched Debt Markets Assistant with 150+ database with 250,000 Sanctions360 CreditLens Monitor Presence: VIS Rating customer
Slide 7: Investing in GenAI
Investing in GenAI Internal Innovation Customer Engagement Strategic Partnerships Product Launches Analysis, summarization, Positive feedback and Making great progress with Launching Research coding and content recognition of differentiated Microsoft to enable next- Assistant in December; generation
Slide 8: Decision Solutions: KYC Spotlight
Decision Solutions: KYC Spotlight Top Performer in a Fast-Growing Market Customer Workflows Growth Drivers Customer Acquisition & $308M ARR1 Digitization & Regulatory & Sanctions Onboarding Automation Requirements 18% ARR1 Growth in Payment Deeper Analytics Screening & Monitoring Growth Providers &
Slide 9: KYC: Land & Expand Strategy in Action
KYC: Land & Expand Strategy in Action Unparalleled Value Proposition ARR1 Mix by Customer Segment2 Moody’s SaaS Platform ~13% Gov’t & Education Workflow Capabilities Enabled by Software & APIs ~44% ~43% Financial Corporate Analytics Enabled by AI Land: Driving New Business New customer ARR1 attribut
Slide 10: MIS: Updated FY2023 Issuance Guidance
MIS: Updated FY2023 Issuance Guidance FY2023 Issuance Guidance1,2 2023 Issuance Factors As of October 25, 2023 As of July 25, 2023 Macroeconomics & Policy Total Issuance Low to Mid-Single-Digit % » Global GDP: recession or recovery » Geopolitical risks » Energy, trade, climate, and regulatory polici
Slide 11: MIS: Spotlight on 5-Year U.S. Refunding Wall
MIS: Spotlight on 5-Year U.S. Refunding Wall ~27% Growth in U.S. Speculative Grade Refinancing Needs1,2 Investment Grade Speculative Grade $3,123 ~21% $2,476 $2,537 $2,585 $2,241 $2,019 $2,099 $1,867 $ billions ~27% $1,412 $1,448 $1,466 $1,044 $1,185 $987 $1,054 $1,055 $1,064 $1,088 $1,118 ~12% $1,2
Slide 12: Questions and Answers
Questions and Answers Rob Fauber President and Chief Executive Officer Caroline Sullivan Interim Chief Financial Officer and Chief Accounting Officer Moody’s | Decode risk. Unlock opportunity. Third Quarter 2023 - Earnings Call 12
Slide 13: Supplemental Information
Supplemental Information Moody’s | Decode risk. Unlock opportunity. Third Quarter 2023 - Earnings Call 13
Slide 14: MA: Double-Digit Revenue Growth & Strong Margin
Performance Outlook MA: Double-Digit Revenue Growth & Strong Margin Investment Thesis Performance MA Revenue C$2 MA Adjusted Operating Margin1 YoY $776 YoY Change Change $685 13% $200 14% 9% 33.6% $176 11% (C$2) 30.3% 330 bps $ Millions $222 10% 9% $201 $308 $354 15% 13% 3Q22 3Q23 3Q22 3Q23 Decision
Slide 15: MA Outlook: Delivering Double-Digit Growth
Performance Outlook MA Outlook: Delivering Double-Digit Growth; Investment Thesis Capitalizing on Innovation Opportunities ARR1 Revenue1 Adjusted Operating Margin1 Increase in the Increase by low-double-digit approximately 30.2% 30% - 31% percent range $2.8B 10% 10% growth 2022 2023F 2022 2023F 2022
Slide 16: MIS: Strong 3Q Revenue Growth and Improved Margins
Performance Outlook MIS: Strong 3Q Revenue Growth and Improved Investment Thesis Margins MIS Revenue Issuance2 YoY $696 12% $ Billions Change $590 18% $115 25% $859 $965 $ Millions $92 $126 16% $109 $102 1% 3Q22 3Q23 $101 $346 25% MIS Adjusted Operating Margin3 $277 53.2% 3Q22 3Q23 45.7% 750bps 1 CF
Slide 17: MIS: Updated Full Year 2023 Forecast
Performance Outlook MIS: Updated Full Year 2023 Forecast Investment Thesis Total MIS-rated Issuance1,2 Revenue1 Adjusted Operating Margin1 Increase in the low Increase in the mid to mid-single-digit to high-single-digit ~ 55.0% 3 percentage range percentage range 51.8% $4.2T $2.7B 2022 2023F 2022 20
Slide 18: MCO: Updated Full Year Guidance
Performance Outlook MCO: Updated Full Year Guidance Investment Thesis Full Year 2023 Revenue Increase in the high-single-digit percent range Financial Outlook as Expenses Increase in the mid-single-digit percent range of October 25, 20231 Adjusted Operating Margin2 44% - 45% Interest Expense, Net $2
Slide 19: MIS: Macroeconomic Assumptions Underpinning our Full Year 2023 Outlook
Performance Outlook MIS: Macroeconomic Assumptions Investment Thesis Underpinning our Full Year 2023 Outlook Macroeconomic Assumptions1 Tailwinds Real GDP2 U.S.: 1.5% - 2.5%; Euro area: 0.0% - 1.0%; Global: Slow to Rates nearing their peaks for most major central banks as inflation eases about 2.5%
Slide 20: MIS: Sustained Refinancing Demand Post 2020/2021 Issuance Surge
Performance Outlook MIS: Sustained Refinancing Demand Post Investment Thesis Outsized 2020/2021 Issuance Surge Four-Year U.S. and EMEA Non-Financial Corporate Refinancing Walls1 2 Withdrawn Russian Debt $Trillions ~$4.0 ~$4.4 ~$2.0 2 Jan '13 Jan '14 Jan '15 Jan '16 Jan '17 Jan '18 Jan '19 Jan '20 Se
Slide 21: Teleconference Details
Teleconference Details Webcast Dial In Dial In Replay » Go to ir.moodys.com » U.S. & Canada: +1-888-330-2508 » U.S. & Canada: +1-800-770-2030 » Click on “Events & Presentations” » Non-U.S. & Canada: +1-240-789-2735 » Non-U.S. & Canada: +1-647-362-9199 » Click on the link for » Passcode: 930 2427 » P
Slide 22: Moody's Attendance at Upcoming Conferences
Moody’s Attendance at Upcoming Conferences Nov 16 J.P. Morgan's Ultimate Services Investor Conference Dec 5 Goldman Sachs Financials Conference Moody’s | Decode risk. Unlock opportunity. Third Quarter 2023 - Earnings Call 22
Slide 23: Appendix
Appendix Moody’s | Decode risk. Unlock opportunity. Third Quarter 2023 - Earnings Call 23
Slide 24: Glossary of Terms and Abbreviations
Glossary of Terms and Abbreviations Term Definition AI Artificial Intelligence CFG Corporate finance group; an LOB within MIS D&I The Data & Information LOB within MA, which provides vast data sets on companies and securities via data feeds and data applications products The Decision Solutions LOB w
Slide 25: Annualized Recurring Revenue (ARR)
Annualized Recurring Revenue (ARR) The Company presents Annualized Recurring Revenue (“ARR”) on a constant currency organic basis for its MA business as a supplemental performance metric to provide additional insight on the estimated value of MA's recurring revenue contracts at a given point in time
Slide 26: Financial Information by Segment
Financial Information by Segment The following table shows revenue and Adjusted Operating Income by reportable segment. Adjusted Operating Income is a financial metric utilized by the Company’s chief operating decision maker to assess the profitability of each reportable segment. Moody’s | Decode ri
Slide 27: Adjusted Operating Income and Adjusted Operating Margin
Adjusted Operating Income and Adjusted Operating Margin The Company presents Adjusted Operating Income and Adjusted Operating Margin because management deems these metrics to be useful measures to provide additional perspective on Moody's operating performance. Adjusted Operating Income excludes the
Slide 28: Free Cash Flow
Free Cash Flow The Company defines Free Cash Flow as net cash provided by operating activities minus payments for capital additions. Management believes that Free Cash Flow is a useful metric in assessing the Company’s cash flows to service debt, pay dividends and to fund acquisitions and share repu
Slide 29: Adjusted Net Income and Adjusted Diluted EPS
Adjusted Net Income and Adjusted Diluted EPS Attributable to Moody's Common Shareholders The Company presents Adjusted Net Income and Adjusted Diluted EPS because management deems these metrics to be useful measures to provide additional perspective on Moody's operating performance. Adjusted Net Inc
Slide 30: Moody's Decode risk. Unlock opportunity.
© 2023 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liabilit