Slide 1: Fourth Quarter and Full Year 2022 Earnings Call
Fourth Quarter and Full Year 2022 Earnings Call January 31, 2023
Slide 2: Introduction
Introduction Shivani Kak Head of Investor Relations Fourth Quarter and Full Year 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. Such statements involve estimates, projections, goals, forecasts, as
Slide 4: 4Q and Full Year 2022 Highlights
4Q and Full Year 2022 Highlights Rob Fauber President and Chief Executive Officer Fourth Quarter and Full Year 2022 - Earnings Call 4
Slide 5: Key Takeaways
Key Takeaways 1 MA achieved ARR1 growth of 10% as demand for our mission-critical solutions accelerated; FY 2022 adjusted operating margin expanded to 30.2% 2 MIS FY 2022 revenue declined to $2.7B on significant credit market uncertainty and challenging macroeconomic and geopolitical conditions; wel
Slide 6: MCO: Full Year 2022 Financial Results
MCO: Full Year 2022 Financial Results $5.5B $2.3B $8.57 MCO Adjusted MCO Adjusted MCO Revenue Operating Income1 Diluted EPS1 (12%) MIS revenue declined MA revenue grew MCO revenue contraction from 15% (29%) 42.6% 2021 MA ARR2 increased Rated issuance contracted MCO Adjusted Operating Margin1 10% (31
Slide 7: MCO: Full Year 2022 Operating and Strategic Highlights
MCO: Full Year 2022 Operating and Strategic Highlights Realizing the potential of our global integrated risk assessment opportunity Collaborate, Modernize People, Culture Customer First Invest with Intent & Innovate & Sustainability » Top overall ranking in » Expanded emerging » Integrated acquired
Slide 8: MIS: Expecting Moderate Improvement in 2023 Issuance
MIS: Expecting Moderate Improvement in 2023 Issuance 2023 Issuance Factors FY 2023 Issuance Outlook1,2 POLITICS & POLICY Total Issuance Total Issuance Low-single-digit % » Geopolitical risks » Energy, trade, climate, tax and regulatory policies I N F L A T I O N & C E N T R A L B A N K A Investment
Slide 9: MA: Strong Track Record of Recurring Revenue Growth
MA: Strong Track Record of Recurring Revenue Growth Organic C$ Recurring Revenue Growth Rate1 Spotlight on ARR3 Expansion 30% Projected Recurring Revenue Growth Range Low-double-digit % KYC & Compliance 25% FY 2022 ARR Growth 20% Life Insurance Banking 15% Orbis CreditView 11.1% 10% 9.7% 9.2% 5% Dec
Slide 10: MA: New Capabilities Introduced in 2022; Building Best-in-Class Solutions
MA: New Capabilities Introduced in 2022; Building Best-in-Class Solutions KYC & Compliance Climate Banking Company X Moody’s NYC Address: 7 World Trade Center, New York, USA Coordinates: (40.71342, -74.01193) Activity: Office Category Risk Level Earthquakes None Floods Medium Heat Stress Medium Hurr
Slide 11: MCO: Financial Outlook
MCO: Financial Outlook MCO Full Year 2023 Guidance1 Medium-Term Guidance with 2022 Base Year3, 4, 5 Increase in the mid-to-high-single-digit Revenue MCO Revenue At least 10% growth percent range Increase in the low-single-digit Expenses percent range MA Revenue Low-to-mid-teens % growth Adjusted Ope
Slide 12: Questions and Answers
Questions and Answers Rob Fauber President and Chief Executive Officer Mark Kaye Chief Financial Officer
Slide 13: Supplemental Information
Supplemental Information
Slide 14: MIS: Muted Issuance Across All Sectors Compared to a Record Prior Year
Performance MIS: Muted Issuance Across All Sectors Outlook Investment Thesis Compared to a Record Prior Year MIS Revenue Issuance2 $ Billions $871 (35%) $118 (34%) YoY $1,211 $137 $791 $576 Change $ Millions (20%) 4Q21 4Q22 $161 $94 $123 (10%) MIS Adjusted Operating Margin3 $94 (42%) $444 3.1% $253
Slide 15: 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 Organic C$1 YoY YoY 7% $714 Change Change 5.5% $668 $180 Flat 8% (0.5%) $180 (0.8%) $ Millions $181 4% 7% $174 $314 $353 12% 15% 30.2% 4Q21 4Q22 26.0% Decisio
Slide 16: 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 GDP2 Inflation & Unemployment Default Rates FX Rates & Credit Spreads 0% - 1% United States Global benchmark rates to remain elevated, Global inflat
Slide 17: MIS: Well-Positioned for Measured Issuance Rebound
Performance MIS: Well-Positioned for Measured Issuance Rebound Outlook Investment Thesis Following Relatively Muted Activity in 2022 Revenue1 Adjusted Operating Margin1 » Market uncertainty expected to continue through (at least) 1H 2023, with Increase in the Mid-50s percent intermittent opportunist
Slide 18: MA: Consistent Revenue Growth and Margin Expansion Through Macroeconomic Cycles
Performance MA: Consistent Revenue Growth and Margin Expansion Outlook Investment Thesis Through Macroeconomic Cycles ARR1,2 Revenue1 Adjusted Operating Margin1 Increase in the Increase by Approximately low-double-digit approximately 31% percent range 10% 10% 30.2% growth $2.8B YE 2022 YE 2023F 2022
Slide 19: MCO: Pairing Prudent Investment with Ongoing Cost Efficiency Actions
Performance MCO: Pairing Prudent and Disciplined Investment Outlook Investment Thesis with Ongoing Cost Efficiency Actions FY 2021 vs. FY 2022 3% 7% Update on Cost Flat Savings Programs (4%) » Delivered over $200M in $3.6B annualized savings as we $3.4B expanded and accelerated our expense efficienc
Slide 20: MIS: The Agency of Choice Providing Best-in-Class Insights
Performance MIS: The “Agency of Choice” Providing Best-in-Class Insights Outlook Investment Thesis and Broad Coverage to Serve Global Customer Needs EXPERTISE CREDIBILITY 1,700+ The Agency of Choice Seasoned analysts across a network of global Moody’s “best meets future needs” for more than half its
Slide 21: MIS: Refinancing Needs Remain Significant
Performance MIS: Following Outsized Issuance in 2020 and 2021, Outlook Investment Thesis Refinancing Needs Remain Significant MIS-Rated Non-Financial Global Corporate Investment Grade (IG) Issuance MIS-Rated Non-Financial Global Corporate High Yield (HY) Issuance IG Bond Issuance IG Bond Issuance Av
Slide 22: MA: Integrated Risk Assessment Strategy Delivers Impressive Results
Performance MA: Integrated Risk Assessment Strategy Outlook Investment Thesis Delivers Impressive Results LEVERAGING DEEP MARKET DELIVERING UNMATCHED CAPABILITIES CURRENTS RESULTS Extensive, Uniquely Outpacing Competitors in ARR2 Curated, Proprietary Data $30B+ Current Addressable 10% Rich Product M
Slide 23: MA: 15% Revenue and 10% ARR Growth Demonstrate Resilience
Performance MA: 15% Revenue and 10% ARR Growth1 Demonstrate Outlook Investment Thesis Resilience and Robust Customer Demand Revenue ARR1 by Line of Business 15% 10% Total MA 94% 93% 11% Decision Solutions 91% 85% 9% Research & Insights FY 2019 FY 2020 FY 2021 FY 2022 9% Data & Information Recurring
Slide 24: MCO: Disciplined Approach to Capital Management
Performance MCO: Disciplined Approach to Capital Management Outlook Investment Thesis Capital Allocation Priorities Increasing Dividends Through Market Cycles COVID-19 $3.50 Recession INVESTING FOR GROWTH $3.00 $2.50 Great 1 Reinvestment Accelerating organic growth $2.00 $1.50 $1.00 2001 Recession R
Slide 25: 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 26: Moody's Attendance at Upcoming Conferences
Moody’s Attendance at Upcoming Conferences MAR MAR 7 8 Raymond James 2023 Annual RBC Capital Markets 2023 Global Institutional Investors Conference Financial Institutions Conference Mike West, MIS President Mark Kaye, Chief Financial Officer DBAccess Global ESG Conference Nick Reed, MA Chief Product
Slide 27: Investor Relations
Investor Relations ir.moodys.com ir@moodys.com
Slide 28: Appendix
Appendix
Slide 29: 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 30: Key Assumptions Underlying our Medium-Term Targets
Key Assumptions Underlying our Medium-Term Targets Moody’s medium-term guidance refers to a time period within 5 years and reflects assumptions about numerous factors that could affect its business and is based on currently available information reviewed by management through and as of today’s date.
Slide 31: 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 32: 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. Fourth Quarter and Full
Slide 33: Financial Information by Segment (Continued)
Financial Information by Segment (Continued) 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. Fourth Quar
Slide 34: Organic Constant Currency Revenue Growth (Decline) / Constant Currency Revenue Growth (Decline)
Organic Constant Currency Revenue Growth (Decline) / Constant Currency Revenue Growth (Decline) Beginning in the second quarter of 2022, the Company began presenting organic constant currency revenue growth (decline) and constant currency revenue growth (decline) as its non-GAAP measure of revenue g
Slide 35: Organic Constant Currency Recurring Revenue Growth - MA
Organic Constant Currency Recurring Revenue Growth - MA The Company presents organic constant currency recurring revenue growth because management deems this metric to be a useful measure which provides additional perspective in assessing the revenue growth excluding the inorganic revenue impacts fr
Slide 36: 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 37: 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 38: Adjusted Net Income and Adjusted Diluted Earnings per Share
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 39: 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 40: Fourth Quarter and Full Year 2022 - 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