Moody's Corporation · NYSE:MCO
Moody's — Q1 2023 Earnings Presentation
33 slides from Moody's's earnings presentation, Apr 25, 2023
Slide 1: First Quarter 2023 Earnings Call
First Quarter 2023 Earnings Call April 25, 2023
Slide 2: Introduction
Introduction Shivani Kak Head of Investor Relations First 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: 1Q 2023 Highlights
1Q 2023 Highlights Rob Fauber President and Chief Executive Officer First Quarter 2023 - Earnings Call 4
Slide 5: Key Takeaways
Key Takeaways MA delivered ARR1 growth of 10% as robust demand continues for MA’s mission-critical data, 1 analytics, and solutions 2 Strong investment grade activity driven by high-quality issuers; MIS adjusted operating margin of 56.8% reflects recent actions taken to improve operational leverage
Slide 6: MCO: First Quarter 2023 Financial Results
MCO: First Quarter 2023 Financial Results $1.5B $656M $2.99 MCO Adjusted MCO Adjusted MCO Revenue Operating Income1 Diluted EPS1 (3%) MIS revenue declined MA revenue grew MCO revenue contraction from 6% (11%) 44.6% 1Q22 MA ARR2 increased Rated issuance contracted MCO Adjusted Operating Margin1 10% (
Slide 7: MCO: Providing Clarity in Times of Uncertainty
MCO: Providing Clarity in Times of Uncertainty Stakeholders consistently turn to Moody’s during periods of macroeconomic and geopolitical uncertainty Delivering trusted thought-leadership, Moodys.com Visits timely insights, and best-in-class products and solutions COVID-19 Banking Stress Russia-Ukra
Slide 8: MA: ARR Growth Accelerating Amid Heightened Customer Demand
MA: ARR Growth Accelerating Amid Heightened Customer Demand for Integrated Solutions to Better Identify, Measure, and Manage Risk Reaffirming Low-Double-Digit ARR2,3 Growth P R O D U C T U T I L I Z AT I O N 1 Projected ARR Growth Range Low-double- +49% Asset Liability Management digit % 10% 9% +27%
Slide 9: MA Decision Solutions: Integrating Content and Capabilities Across Moody's
MA Decision Solutions: Integrating Content and Capabilities Across Moody's Workflow solutions that address key customer use cases Decision Solutions 1Q 2023 Performance1 KYC INSURANCE BANKING Key Use » Onboarding, Perpetual » Underwriting » Lending 11% ARR Cases Screening & Monitoring » Risk & Capit
Slide 10: MA: Expanding Customer Relationships Through Workflow Solutions
MA: Expanding Customer Relationships Through Workflow Solutions that Combine Data, Analytics, and Software CASE STUDY: A NORTH AMERICAN BANK Lending Customer Verification (KYC / KYS) BROADEN Customer Acquisition 5x Customer Onboarding Workflow Initial ARR2 Credit Decisions Solution Loan Monitoring S
Slide 11: MIS: Affirming Full Year Guidance
MIS: Affirming Full Year Guidance1 1Q23 Issuance vs. FY 2023 Outlook1,2 2023 Issuance Factors ~29% MACROECONOMICS & POLICY Total Issuance » Banking sector stress » Geopolitical risks » Energy, trade, climate, tax, and regulatory policies Investment Grade ~36% I N F L AT I O N R AT E S & C E N T R A
Slide 12: MIS: Long-term Revenue Growth Drivers Intact
MIS: Long-term Revenue Growth Drivers Intact LONG-TERM GROWTH BUILDING BLOCKS ECONOMIC VALUE DEVELOPING EXPANSION1 PROPOSITION CAPITAL MARKETS » GDP growth drives demand for debt capital to » Proven rating accuracy and deeply » Bank system capacity remains constrained fund business investments exper
Slide 13: MCO: Updated Full Year Guidance
MCO: Updated Full Year Guidance Full Year 2023 Revenue Increase in the mid-to-high-single-digit percent range Financial Outlook as Expenses Increase in the mid-single-digit percent range of April 25, 20231 Adjusted Operating Margin2 44% - 45% Interest Expense, Net $275 - $295 million Effective Tax R
Slide 14: Questions and Answers
Questions and Answers Rob Fauber President and Chief Executive Officer Mark Kaye Chief Financial Officer First Quarter 2023 - Earnings Call 14
Slide 15: Supplemental Information
Supplemental Information
Slide 16: MA: Delivering Robust Growth Through Mission-Critical Products
Performance MA: Delivering Robust Growth Outlook Investment Thesis Through Mission-Critical Products MA Revenue MA Adjusted Operating Margin1 C$1 YoY YoY $737 Change Change $695 (320 bps) $188 32.1% $178 6% 10% 28.9% $ Millions $183 $195 7% 8% $334 $354 6% 8% 1Q22 1Q23 1Q22 1Q23 Decision Solutions R
Slide 17: MIS: Solid Activity to Start the Year, but Market Uncertainty Remains
Performance MIS: Solid Activity to Start the Year, Outlook Investment Thesis but Market Uncertainty Remains MIS Revenue Issuance2 (13%) $827 $ Billions (11%) YoY $733 Change $123 $1,409 $1,231 $129 5% $131 $ Millions $142 1Q22 1Q23 $144 8% $99 (31%) MIS Adjusted Operating Margin3 58.6% (180 bps) $41
Slide 18: MA: Strong Customer Demand Reflected in ARR Growth Expectations
Performance MA: Strong Customer Demand Reflected Outlook Investment Thesis in ARR1,2 Growth Expectations ARR1,2 Revenue1 Adjusted Operating Margin1 Increase in the Increase by Approximately low-double-digit approximately 31% 10% percent range 10% growth 30.2% $2.8B YE 2022 Growth YE 2023F Growth 202
Slide 19: MIS: Outlook Unchanged Due to Ongoing Market Uncertainty
Performance MIS: Outlook Unchanged Due to Outlook Investment Thesis Ongoing Market Uncertainty Revenue1 Adjusted Operating Margin1 FY 2023 Issuance Outlook1,2 Increase in the Mid-50s percent Total Issuance Low-single-digit % low-to-mid-single- Total Issuance range digit percent range $2.7B 51.8% Inv
Slide 20: MIS: Macroeconomic Assumptions Underpinning our Full Year 2023 Outlook
Performance MIS: Macroeconomic Assumptions Outlook Investment Thesis Underpinning our Full Year 2023 Outlook Macroeconomic Assumptions1 Benchmark Rates Real GDP2 Inflation & Unemployment Default Rates FX Rates & Credit Spreads 0.5% - 1.5% U.S. Global benchmark rates to remain elevated, Global inflat
Slide 21: MIS: Following Outsized Issuance in 2020 and 2021, Refinancing Needs Remain Significant
Performance MIS: Following Outsized Issuance in 2020 and 2021, Outlook Investment Thesis Refinancing Needs Remain Significant MIS-Rated Q1 Non-Financial Global Corporate Investment Grade (IG) Issuance MIS-Rated Q1 Non-Financial Global Corporate High Yield (HY) Issuance IG Bond Issuance IG Bond Issua
Slide 22: Teleconference Details
Teleconference Details WEBCAST DIAL IN D I A L I N R E P L AY » 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: 9302
Slide 23: Moody's Attendance at Upcoming Conferences
Moody’s Attendance at Upcoming Conferences MAY Credit Suisse 5th Annual eXtreme Ideas Conference 5 » Tameka Alsop, Chief Administrative Officer MAY Barclays Americas Select Franchise Conference 9 » Keith Berry, MA General Manager – Know Your Customer MAY Morgan Stanley Business Services One-on-One D
Slide 24: Investor Relations
Investor Relations ir.moodys.com ir@moodys.com
Slide 25: Appendix
Appendix
Slide 26: Glossary of Terms and Abbreviations
Glossary of Terms and Abbreviations TERM DEFINITION CFG Corporate finance group; an LOB within MIS CRE Commercial Real Estate 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 27: 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 28: Financial Information by Segment
Financial Information by Segment The table below 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. First Quarter 2023 - Ea
Slide 29: Constant Currency Revenue Growth (Decline)
Constant Currency Revenue Growth (Decline) The Company presents constant currency revenue growth (decline) as its non-GAAP measure of revenue growth (decline). Management deems this revised measure to be useful in providing additional perspective in assessing the Company's revenue growth (decline) e
Slide 30: 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 31: 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 32: Adjusted Net Income and Adjusted Diluted EPS
Adjusted Net Income and Adjusted Diluted Earnings per Share 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. A
Slide 33: First Quarter 2023 - Earnings Call
© 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