Slide 1: First Quarter 2022 Earnings Call
First Quarter 2022 Earnings Call May 2, 2022
Slide 2: Introduction
Introduction Shivani Kak Head of Investor Relations First Quarter 2022 - 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. The forward-looking statements in this release are made as of the da
Slide 4: Overview & 1Q 2022 Results
Overview & 1Q 2022 Results Rob Fauber President and Chief Executive Officer First Quarter 2022 - Earnings Call 4
Slide 5: Executive Summary
Executive Summary 1 1Q 2022 financial results: MCO revenue of $1.5B; adjusted diluted EPS of $2.891 2 Updated FY 2022 guidance2: MCO revenue approximately flat; adjusted diluted EPS of $10.75 - $11.25 3 MIS’s business fundamentals remain firmly intact despite volatile short-term market conditions 4
Slide 6: Resilient Performance Amidst Challenging Backdrop
Resilient Performance Amidst Challenging Backdrop » MCO revenue contracted just 5% from record first quarter 2021 – MA revenue grew 23% – MIS revenue decreased 20% vs. a rated issuance decline of 25% » Adjusted diluted EPS1 of $2.89 MCO Revenue MCO Adjusted Operating Income and Margin1 MCO Adjusted
Slide 7: MIS: 2022 Issuance Factors
MIS: 2022 Issuance Factors GROWTH & INVESTMENT POLITICS & POLICY » Global GDP growth and post- » Trade, climate, tax and regulatory pandemic recovery policies » Ample dry powder at private equity » Government investment (e.g., U.S. firms supports M&A activity Infrastructure Bill and Next Generation
Slide 8: Issuance Increases Over Time, Despite Periods of Volatility
Issuance Increases Over Time, Despite Periods of Volatility Historical Quarterly MIS Rated Issuance1 2,000 ~21% 1,800 ~7% ~$1.4T 1,600 ~13% ~$1.2T 1,400 ~$1.1T ~$1.0T 1,200 $ Billions 1,000 800 600 400 200 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Slide 9: Medium-term Drivers Remain Strong
Medium-term Drivers Remain Strong GROWING GLOBAL GDP 1 INCREASING Expected to moderate off 2021 high with real R E F U N D I N G WAL L S 2 GDP growth for the next five years expected to $4T+ of refinancing needs between exceed the growth rate that prevailed prior to 2022 – 2025 the COVID-19 pandemic
Slide 10: MA: Strong Recurring Revenue Continues to Drive Growth
MA: Strong Recurring Revenue Continues to Drive Growth TTM Recurring and Transaction Revenue1 1Q22 Performance Highlights 9% Organic ARR2 Growth 93% 91% 84% 86% 23% Total Revenue 96% Growth 9% Retention Organic Rate4 Revenue3 1Q19 1Q20 1Q21 1Q22 Growth Recurring Transaction Recurring % 1. Trailing t
Slide 11: Integrated Risk Capabilities Enable Insurer To Modernize
Integrated Risk Capabilities Enable Insurer To Modernize CASE STUDY: LARGE MULTINATIONAL INSURANCE COMPANY To improve the speed and rigor of 2022 and Beyond their underwriting process, customer turned to Moody’s and Extensive opportunities DECISION streamlined their efforts by 70% SOLUTIONS (DS) to
Slide 12: Comprehensive Approach to ESG & Climate at MCO
Comprehensive Approach to ESG & Climate at MCO KEY LAUNCHES: Climate » Moody’s ESG360TM3: Consolidated view of Solutions ESG insights delivering decision-relevant Catastrophe ESG Models Measures data, scores and assessments ~$170 million » New climate change models in U.S. and Japan helping assess t
Slide 13: Increased Relevance in Times of Uncertainty
Increased Relevance in Times of Uncertainty Best-in-Class Insights and Breadth of Coverage 200,000+ MIS research reports readers1 70%+ YoY Growth2 KYC Screenings 26,000+ total visits3 to ‘Russia-Ukraine Crisis’ page on moodys.com 32,000+ attendees across 225+ live events hosted1 by Moody’s 1. For th
Slide 14: 1Q 2022 Analysis & Updated Outlook
1Q 2022 Analysis & Updated Outlook Mark Kaye Chief Financial Officer First Quarter 2022 - Earnings Call 14
Slide 15: 1Q22 MIS: Revenue Impacted by Volatile Market Conditions
1Q22 MIS: Revenue Impacted by Volatile Market Conditions MIS Revenue Issuance2 $1,036 (25%) $ Billions (20%) $116 $827 YoY Change $1,803 $143 $1,357 $144 24% $162 $ Millions $123 (14%) 1Q21 1Q22 $131 (19%) $605 MIS Adjusted Operating Margin3 $417 (31%) 1Q21 1Q22 67.7% (7.8%) CFG FIG PPIF SFG MIS Oth
Slide 16: 1Q22 MA: Fifth Consecutive Quarter of Double-digit Growth
1Q22 MA: Fifth Consecutive Quarter of Double-digit Growth MA Revenue MA Adjusted Operating Margin1 YoY $695 23% Change $564 $178 6% 3.5% $168 $ Millions $183 7% (4.3%) $171 32.9% 32.1% $334 48% $225 1Q21 1Q22 1Q21 MA Adjusted Underlying Margin Acquired 1Q22 MA Adjusted Operating Margin Expansion2 Co
Slide 17: Introducing Annualized Recurring Revenue (ARR)
Introducing Annualized Recurring Revenue (ARR)1 MA Annualized Recurring Revenue (ARR) Annualized run-rate of recurring revenue Low-double-digit Organic Growth highlights MA's ability to $2.62 generate new $0.3 subscription-based customers, as well as expand its relationships $ Billions $ Billions wi
Slide 18: Updated FY 2022 Corporate Guidance
Updated FY 2022 Corporate Guidance1 Macro assumptions underpinning our guidance4 Revenue Approximately flat Increase in the high-single-digit 2022 GDP Credit Spreads Expenses percent range 3.5% - 4.5% United States Global benchmark rates to increase Adjusted Operating Margin2 Approximately 47% from
Slide 19: Updated FY 2022 Issuance Guidance
Updated FY 2022 Issuance Guidance1 FY 2022 Issuance Total Issuance Decrease in the mid-teens % range » Rising yields, inflation concerns, Guidance1,2 a hawkish Federal Reserve and As of Feb. geopolitical tensions 10, 2022 » Uncertainty regarding the As of May Investment Grade (~10%) Russia-Ukraine c
Slide 20: Updated FY 2022 Segment-Level Guidance
Updated FY 2022 Segment-Level Guidance1 MIS Revenue MIS Adjusted Operating Margin1 MA Revenue MA Adjusted Operating Margin1 Low-double-digit % High-teens % $3.8B 62.2% Approximately Approximately decrease increase 59% 29% $2.4B 26.0% 2021 2022F 2021 2022F 2021 2022F 2021 2022F » Market uncertainty p
Slide 21: Balancing Strategic Investments with Cost Management
Balancing Strategic Investments with Cost Management 1Q 2021 vs. 1Q 2022 ~6% 16% ~13% (~1%) (~2%) $866M $747M 1Q 2021 Acquired Operating Growth, Incentive FX 1Q 2022 1 Operating Expenses Companies Including Organic Investments Compensation Operating Expenses and Efficiencies FY 2021 vs. FY 2022F2 ~4
Slide 22: Key Takeaways
Key Takeaways 1 Generated over $1.5B in revenue and adjusted diluted EPS1 of $2.89 2 Short-term market volatility affecting issuance levels; however, MIS fundamentals remain strong 3 MA’s continued recurring revenue growth and high retention rates provide ballast to MCO 4 Introducing new ARR2 metric
Slide 23: Questions and Answers
Questions and Answers Rob Fauber President and Chief Executive Officer Mark Kaye Chief Financial Officer
Slide 24: Replay Details
Replay Details Available from 3:30pm (Eastern Time) May 2, 2022 until 3:30pm (Eastern Time) May 31, 2022 Telephone Details Webcast Details » U.S. & Canada +1-888-203-1112 » Go to ir.moodys.com » Non-U.S. & Canada +1-719-457-0820 » Click on “Events & Presentations” » Passcode 4687337 » Click on the l
Slide 25: Moody's Attendance at Upcoming Conferences
Moody’s Attendance at Upcoming Conferences MAY Credit Suisse eXtreme Ideas Conference 4 » Steve Tulenko, MA President MAY Barclays Americas Select Franchise Conference 10 » David Platt, Chief Strategy Officer MAY Morgan Stanley Business Services One-on-One Day 12 » Mark Kaye, Chief Financial Officer
Slide 26: Investor Relations
Investor Relations ir.moodys.com ir@moodys.com
Slide 27: Glossary of Terms and Abbreviations
Glossary of Terms and Abbreviations TERM DEFINITION CFG Corporate finance group; an LOB of MIS CRE Commercial Real Estate D&I The Data & Information LOB within MA; which provides vast data sets on economies, companies, commercial properties and financial securities via data feeds and data applicatio
Slide 28: MA LOBs – Historical Revenue and Retention Rates for 2020 - 2021
MA LOBs – Historical Revenue and Retention Rates for 2020 - 2021 1 1. Retention rates exclude acquisitions of Regulatory DataCorp, Acquire Media, ZM Financial, Catylist, Cortera, RMS, RealXData, Bogard, and PassFort. First Quarter 2022 - Earnings Call 28
Slide 29: Annualized Recurring Revenue (ARR)
Annualized Recurring Revenue (ARR) The Company presents Annualized Recurring Revenue (“ARR”) and Organic ARR for its MA business as supplemental performance metrics to provide additional insight on the estimated value of MA's recurring revenue contracts at a given point in time. The Company uses the
Slide 30: Financial Information by Segment
Financial Information by Segment The table below presents revenue and adjusted operating income by reportable segment. The Company defines adjusted operating income as operating income excluding: i) depreciation and amortization; and ii) restructuring. First Quarter 2022 - Earnings Call 30
Slide 31: 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 32: Free Cash Flow
Free Cash Flow The table below reflects a reconciliation of the Company's net cash flow from operating activities to free cash flow. The Company defines free cash flow as net cash provided by operating activities minus payments for capital additions. Management deems capital expenditures essential t
Slide 33: Organic Revenue and Growth Measures – MA
Organic Revenue and Growth Measures – MA The Company presents organic revenue and organic revenue growth (including organic recurring revenue and organic recurring revenue growth) because management deems these metrics to be useful measures to provide additional perspective in assessing the revenue
Slide 34: 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 35: Adjusted Net Income and Adjusted Diluted EPS (Continued)
Adjusted Net Income and Adjusted Diluted Earnings per Share Attributable to Moody's Common Shareholders (Continued) 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 pe
Slide 36: First Quarter 2022 - Earnings Call
© 2022 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