Slide 1: Moody's Third Quarter 2024 Earnings Call
MOODY’S Third Quarter 2024 qc Chartis Earnings Call w RiskKTech100 AS 2025 October 22, 2024 #1
Slide 2: Shivani Kak, Head of Investor Relations
Shivani Kak HEAD OF INVESTOR RELATIONS Third Quarter 2024 - Earnings Call 2
Slide 3: Forward-looking statements
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, assumptions a
Slide 4: Rob Fauber, President and Chief Executive Officer
Rob Fauber PRESIDENT AND CHIEF EXECUTIVE OFFICER Third Quarter 2024 - Earnings Call 4
Slide 5: Moody's delivered record-breaking results
Moody’s delivered record-breaking results 3Q revenue grew 23%; Adjusted Operating Margin1 up 320bps to 47.8%; Adjusted Diluted EPS1 increased 32% to $3.21 MIS achieved record 3Q revenue Revenue grew 41%; transactional revenue grew 70%; Adjusted Operating Margin up 640bps to 59.6%; raising full year
Slide 6: Refunding walls, M&A and evolving trends
REFUNDING WALLS1 ($T) M&A2 ($T) EVOLVING TRENDS Investment Grade Speculative Grade M&A Volume 10-year Avg. Private Credit $4.9 $5.0 $4.5 $4.4 11% $3.6 $3.1 Sustainable & Transition $2.6 Finance Emerging & Domestic Jan '18 Sep '23 Sep '24 2014 2016 2018 2020 2022 2024 Debt Markets YTD Increase in ref
Slide 7: Moody's Analytics: cloud adoption, partnerships and customer base
ACCELERATED CLOUD EXPANDED INDUSTRY TOP TIER INTEGRATION & ADOPTION PARTNERSHIPS CUSTOMER BASE4 EXPANSION HIGH-DEFINITION MODELS INSURANCE ECOSYSTEM 10 OF THE TOP 10 CASUALTY ANALYTICS Launched enhanced modeling Launched customer-centric approach Global reinsurance brokers capabilities leveraging cl
Slide 8: Noémie Heuland, Chief Financial Officer
Noémie Heuland CHIEF FINANCIAL OFFICER Third Quarter 2024 - Earnings Call 8
Slide 9: MCO third quarter financial results
MCO Revenue MCO Revenue MCO Adjusted MCO Adjusted MCO Free Cash Growth1 Operating Margin2 Diluted EPS2 Flow Growth2,3 Revenue Recurring ARR Adjusted Revenue Transaction Rated Adjusted Growth1 Revenue Growth1,4 Operating Growth1 Revenue Issuance Operating Growth1 Margin Growth1 Growth1,5 Margin 1. Ye
Slide 10: FY 2024 MIS rated issuance guidance
FY 2024 MIS RATED ISSUANCE GUIDANCE1,2 FIRST TIME MANDATES As of July 23, 2024 As of October 22, 2024 ~700 Total MIS Rated Issuance Mid-30’s % ~1,135 ~895 ~750 ~700 ~595 ~450 Investment Grade ~30% 2018 2019 2020 2021 2022 2023 2024E1 High Yield Bonds ~65% U.S. HIGH YIELD (HY) SPREADS Leveraged Loans
Slide 11: Segment guidance: MIS and MA
AS OF JULY 23, 2024 AS OF OCTOBER 22, 2024 MOODY’S INVESTORS SERVICE Revenue Growth High-teens % range High-20's % range Adjusted Operating Margin 58% - 59% 59% - 60% MOODY’S ANALYTICS Revenue Growth HSD % range No Change ARR Growth2 HSD to LDD % range No Change Adjusted Operating Margin 30% - 31% N
Slide 12: Moody's Corporation guidance
AS OF JULY 23, 2024 AS OF OCTOBER 22, 2024 MOODY’S CORPORATION Revenue Growth Low-teens % range High-teens % range Operating Expense HSD % range Approximately 10% Adjusted Operating Margin2 46% to 47% 47% to 48% Diluted EPS $9.95 - $10.35 $10.85 - $11.05 Adjusted Diluted EPS2 $11.00 - $11.40 $11.90
Slide 13: Questions: CEO and CFO
PRESIDENT AND CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER Third Quarter 2024 - Earnings Call 13
Slide 14: Appendix
Third Quarter 2024 - Earnings Call 14
Slide 15: Moody's Analytics: revenue, ARR and retention
REVENUE GROWTH1 RECURRING REVENUE RETENTION RATE ADJUSTED OPERATING MARGIN ARR2 GROWTH KYC INSURANCE BANKING Decision Data & Research Solutions Information & Insights 1. Year-over-year growth for the nine months ended September 30. 2. ARR: Annualized Recurring Revenue. ARR growth as of September 30,
Slide 16: Moody's Analytics revenue and adjusted operating margin
REVENUE ADJUSTED OPERATING MARGIN $831 YoY C$1 YoY 33.6% $776 7% Change Change (330bps) 30.3% 6% (C$)1 $213 7% 6% $200 $ Millions $235 6% 5% $222 $354 $383 8% 8% 3Q23 3Q24 3Q23 3Q24 Decision Solutions Research & Insights Data & Information 1. Refer to the Appendix for the definition of constant curr
Slide 17: Moody's Analytics revenue and ARR growth by line of business
REVENUE1 ARR2 3% 10% Banking DECISION SOLUTIONS Banking 7% RESEARCH & INSIGHTS 13% Insurance Insurance 19% DATA & INFORMATION 14% KYC KYC TOTAL MA 1. Percentages represent year-over-year quarterly growth. 2. ARR: Annualized Recurring Revenue. ARR growth as of September 30, 2024. Refer to the Appendi
Slide 18: MA ARR growth attribution
MA ARR1 GROWTH ATTRIBUTION 93% 7% 9% 109% As of Sept. 30, 2024 Retained Base Upgrades and Price New Sales Business Base 7% 9% 110% Year-end 94% 2023 Retained Base Upgrades and Price New Sales Business Base 94% 7% 9% 110% Year-end 2022 Retained Base Upgrades and Price New Sales Business Base MA ARR1
Slide 19: MA revenue mix and distribution
Decision Solutions Research & Insights Data & Information Revenue: Mix by Quarter Revenue: Distribution by Line of Business Revenue: Mix by Year 900 3,500 26% 25% 26% 26% 26% 26% 27% 26% 26% 3,000 $210 $213 $205 $212 $789 $196 $200 $ Millions $ Millions $180 $188 2,500 600 $176 $712 29% 29% 29% 29%
Slide 20: MIS year-to-date revenue and issuance
REVENUE ISSUANCE2 $2,984 YoY Change Total MIS Rated Issuance 46% $449 21% 37% Leveraged Loans 133% $2,176 $560 36% $ Millions $371 High Yield Bonds 85% $380 25% $413 Investment Grade 35% $303 47% $1,569 Structured Finance 60% $1,067 Financial Institutions 23% YTD23 YTD24 Public, Project and Infrastr
Slide 21: MIS third quarter revenue and issuance
REVENUE ISSUANCE2 YoY $982 Change $1,504 $ Billions 34% 51% $154 41% $994 $696 $170 35% $ Millions $115 $135 32% 3Q23 3Q24 $126 $102 ADJUSTED OPERATING MARGIN $515 49% 59.6% $346 640bps 53.2% 3Q23 3Q24 CFG SFG FIG PPIF MIS Other 1 3Q23 3Q24 1. MIS Other revenue was approximately $7 million and $8 mi
Slide 22: Macroeconomic assumptions, tailwinds and headwinds
MACROECONOMIC ASSUMPTIONS1 TAILWINDS Real GDP2: U.S.: 1.5% - 2.5%; Euro area: 0.5% - 1.5%; Global: 2.0% - 3.0% Central banks continue to cut rates as inflation eases Global policy rates to gradually decline through 2024 and 2025 ~$4.9T of refinancing needs between 2025 and U.S. high yield spreads to
Slide 23: Debt maturities: U.S. and EMEA
DEBT MATURITIES: Moody’s-rated U.S. Non-Financial Corporate Bonds and Loans ($B)1,2 → Refinancing needs up from ~$4.4T to Speculative Grade Bank Loans $980 ~$4.9T over the next Speculative Grade Bonds four years $681 Investment Grade $548 $554 → U.S. refinancing $372 $173 $278 needs grew ~17% and $6
Slide 24: Investment and speculative grade refunding wall studies
INVESTMENT GRADE 4-YEAR REFUNDING WALL STUDIES SPECULATIVE GRADE 4-YEAR REFUNDING WALL STUDIES U.S. Investment Grade EMEA Investment Grade U.S. Spec Grade EMEA Spec Grade 3,000 $2,684 3,000 $2,372 $2,549 ~7% ~5% $2,180 $1,825 $ Billions $ Billions 2,000 2,000 $1,664 ~19% ~10% 1,000 1,000 0 0 Sep '22
Slide 25: Corporate finance: issuance and MIS revenue mix
Global Issuance2: Mix by Quarter MIS Revenue3: Mix by Year Other 4 Investment Grade Speculative Grade Bank Loans Global Non-Financial Speculative-Grade Bonds 2,500 Global Non-Financial Investment-Grade Bonds 2,000 500 $606 $287 1,500 $ Millions $313 $352 $411 $292 $379 $275 1,000 $258 $150 400 $175
Slide 26: MIS revenue distribution by geography and product
MIS Revenue1: Distribution by Geography Non-U.S. U.S. MIS Revenue1: Distribution by Recurring vs. Transaction Transaction Recurring 25% 26% 26% 39% 35% 35% 38% 39% 37% 45% 50% 68% 63% 66% 65% 67% 68% 65% 69% 70% 70% 71% 75% 74% 74% 61% 65% 65% 62% 61% 63% 55% 50% 32% 37% 34% 35% 33% 32% 35% 31% 30%
Slide 27: Financial institutions: issuance and MIS revenue mix
MIS Revenue3: Mix by Year Banking Insurance Managed Investments Other4 Global Issuance2: Mix by Quarter 700 Global Speculative Grade Financial Corporate Bonds $10 Global Investment Grade Financial Corporate Bonds 600 $10 $36 $12 $12 $28 $13 $32 700 500 $145 $13 $28 $25 $123 $ Millions $25 $137 400 $
Slide 28: MIS revenue distribution by geography and product
MIS Revenue1: Distribution by Geography Non-U.S. U.S. MIS Revenue1: Distribution by Recurring vs. Transaction Transaction Recurring 41% 37% 41% 43% 47% 45% 44% 46% 46% 50% 49% 50% 53% 53% 51% 50% 53% 58% 57% 59% 55% 62% 59% 63% 59% 57% 53% 55% 56% 54% 54% 50% 51% 50% 47% 47% 49% 50% 47% 42% 43% 41%
Slide 29: Public, project and infrastructure finance: issuance and revenue
MIS Revenue3: Mix by Year Public Finance and Sovereign Project & Infrastructure Finance Global Issuance2: Mix by Quarter 600 Global Infrastructure Finance Speculative-Grade Bonds Global Infrastructure Finance Investment-Grade Bonds 500 100 $4 400 $246 $277 $ Millions $2 $224 $271 $8 300 $234 $206 80
Slide 30: MIS revenue distribution by geography and product
MIS Revenue1: Distribution by Geography Non-U.S. U.S. MIS Revenue1: Distribution by Recurring vs. Transaction Transaction Recurring 33% 34% 32% 29% 29% 39% 39% 42% 37% 46% 45% 62% 60% 62% 59% 60% 61% 61% 61% 64% 65% 65% 67% 68% 71% 71% 61% 66% 61% 63% 54% 55% 58% 38% 40% 38% 41% 40% 39% 39% 39% 36%
Slide 31: Structured finance: MIS revenue mix
MIS Revenue1: Mix by Year ABS RMBS CMBS Structured Credit Other MIS Revenue1: Mix by Quarter ABS RMBS CMBS Structured Credit Other 160 600 $2 140 $1 $0 500 $2 $2 $215 120 $1 $4 $3 $49 $0 $0 $1 $1 $50 400 $1 $140 $ Millions 100 $ Millions $196 $2 $1 $39 $148 $129 $31 $34 $32 $34 $105 80 $32 300 $102
Slide 32: MIS revenue distribution by geography and product
MIS Revenue1: Distribution by Geography Non-U.S. U.S. MIS Revenue1: Distribution by Recurring vs. Transaction Transaction Recurring 43% 42% 42% 50% 52% 53% 52% 53% 53% 48% 59% 55% 63% 67% 62% 64% 65% 62% 67% 68% 70% 73% 57% 58% 58% 50% 48% 47% 48% 47% 47% 52% 41% 45% 37% 33% 38% 36% 35% 38% 33% 32%
Slide 33: FY 2023 vs. FY 2024F operating expenses
FY 2023 vs. FY 2024F1 Increase of approximately ~5.5% ~1.5% 1.0% to 1.5% 10% 3.5% to 4.0% ~(2.0%) $3.8B FY 2023 Incentive & Operating Growth, Depreciation and Restructuring Charges Related to FY 2024F Operating Expenses Stock-Based Including Investments Amortization Charges Asset Abandonment 3 Opera
Slide 34: Webcast and dial-in replay information
DIAL IN REPLAY AVAILABLE FROM Webcast Dial In Dial In Replay October 22, 2024, through → Go to → U.S. & Canada: → U.S. & Canada: November 21, 2024. ir.moodys.com +1-888-596-4144 +1-800-770-2030 → Click on “Events & → Non-U.S. & Canada: → Non-U.S. & Canada: Presentations” +1-646-968-2525 +1-609-800-9
Slide 35: Upcoming investor conferences
J.P. Morgan Ultimate Services Investor Conference UBS Global Technology Conference Redburn Atlantic CEO Conference Goldman Sachs Global Financial Services Conference Third Quarter 2024 - Earnings Call 35
Slide 36: Appendix
Third Quarter 2024 - Earnings Call 36
Slide 37: Term definitions
Term Definition 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 within MA that provides SaaS solutions supporting banking, insur
Slide 38: Annualized Recurring Revenue definition
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. The Company uses ARR to manage an
Slide 39: Revenue and Adjusted Operating Income 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. 1. During the nine months ended September 30, 2024, the
Slide 40: Adjusted Operating Income and Margin reconciliation
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 impact of: i) depreciation and amortization; ii) restru
Slide 41: Free Cash Flow reconciliation
The Company defines Free Cash Flow as net cash provided by operating activities minus cash paid 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 repurchases. Manag
Slide 42: Adjusted Net Income and Adjusted Diluted EPS
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 Income and Adjusted Diluted EPS exclude the impact of: i) amortization of acquired intangibl
Slide 43: Adjusted Net Income and Adjusted Diluted EPS
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 Income and Adjusted Diluted EPS exclude the impact of: i) amortization of acquired intangibl
Slide 44: Constant currency revenue growth reconciliation
The Company presents constant currency revenue growth (decline) as its non-GAAP measure of revenue growth (decline). Management deems this measure to be useful in providing additional perspective in assessing the Company's revenue growth (decline) excluding the impacts of changes in foreign exchange
Slide 45: Reconciliation of adjusted forward-looking measures
The following are reconciliations of the Company's adjusted forward looking measures to their comparable U.S. GAAP measure: Third Quarter 2024 - Earnings Call 45
Slide 46: Third Quarter 2024 Earnings Call legal notices
© 2024 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers “MOODY’S”). All rights reserved.