Moody's Corporation · NYSE:MCO
Moody's — Q1 2025 Earnings Presentation
47 slides from Moody's's earnings presentation, Apr 22, 2025
Slide 1: First Quarter 2025 Earnings Call
First Quarter 2025 Earnings Call April 22, 2025
Slide 2: Shivani Kak, Head of Investor Relations
Shivani Kak HEAD OF INVESTOR RELATIONS First Quarter 2025 - 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: Rob Fauber, President and Chief Executive Officer
Rob Fauber PRESIDENT AND CHIEF EXECUTIVE OFFICER First Quarter 2025 - Earnings Call 4
Slide 5: Key Takeaways
Key Takeaways Moody’s delivered a record quarter Revenue grew 8% across both businesses 1 Adjusted Operating Margin1 up 100bps to 51.7% Adjusted Diluted EPS1 increased 14% to $3.83 MIS achieved highest quarterly revenue on record, $1.1B Significant increase in Private Credit-related transact
Slide 6: MIS: Agency of Choice delivered record results
MIS: Agency of Choice delivered record results Momentum in Private Credit supported both Structured Finance and Fund Finance REVENUE ISSUANCE2 YoY $1,065 Change $1,924 $987 8% $1,767 9% 8% OC$ $163 16% $141 (2%) $ Millions $191 $195 $138 21% 1Q24 1Q25 $114 ADJUSTED OPERATING MARGIN 66.0% $529 $564 7
Slide 7: MA: durable growth, strong demand drivers
MA: durable growth, strong demand drivers 8% 96% 93% 30.0% REVENUE GROWTH1 RECURRING REVENUE2 RETENTION RATE3 ADJUSTED OPERATING MARGIN4 9% ARR GROWTH 5 17% 11% 8% 7% 6% KYC INSURANCE BANKING Decision Research Data & Solutions 12% & Insights Information 1. Year-over-year growth for the quarter ended
Slide 8: Deep currents underpin 2025 MCO outlook
Deep currents underpin 2025 MCO outlook1 Adjusted Adjusted Revenue Growth MSD% Operating Margin2 49% to 50% Diluted EPS2 $13.25 toMCO $14.00 Strengthening position Building scale across Accelerating platforming Optimizing our as the Agency of Choice high-growth areas and product innovation operating
Slide 9: Noémie Heuland, Chief Financial Officer
Noémie Heuland CHIEF FINANCIAL OFFICER First Quarter 2025 - Earnings Call 9
Slide 10: Issuance update
Issuance update FY 2025 ISSUANCE GUIDANCE1,2 KEY ASSUMPTIONS As of February 13, 2025 As of April 22, 2025 → 1Q rated issuance broadly as expected; high degree Decrease of of uncertainty for year-to-go Total MIS Rated Issuance LSD to HSD % → M&A activity expectations moderated as Approx. macroeconomi
Slide 11: MIS & MA: full year 2025 guidance
MIS & MA: full year 2025 guidance1 AS OF FEBRUARY 13, 2025 AS OF APRIL 22, 2025 MOODY’S INVESTORS SERVICE Issuance2 Increase in the LSD % range Decrease in the LSD to HSD % range Revenue Increase in the MSD to HSD % range Flat to increase in the MSD % range Adjusted Operating Margin 62% - 63% 61% -
Slide 12: MCO: full year 2025 guidance
MCO: full year 2025 guidance1 AS OF FEBRUARY 13, 2025 AS OF APRIL 22, 2025 MOODY’S CORPORATION Revenue Increase in the HSD % range Increase in the MSD % range Operating Expenses Increase in the LSD to MSD % range No change Adjusted Operating Margin2 Approximately 50% 49% to 50% Diluted EPS $12.75 to
Slide 13: Questions and Answers
Rob Fauber Questions and PRESIDENT AND CHIEF EXECUTIVE OFFICER Answers Noémie Heuland CHIEF FINANCIAL OFFICER First Quarter 2025 - Earnings Call 13
Slide 14: Supplemental Information
Supplemental Information First Quarter 2025 - Earnings Call 14
Slide 15: Best in Class Data, Analytics and Software
Best in Class Lending & Underwriting ESG & Climate Data, Analytics Origination Regulatory Portfolio Mgmt. Assessment Investment and Software Compliance KYC Analysis Solutions Decision Data & Solutions Research & Information Insights AI en Other Economic Sa Proprietary aS G Forecasts Data in g & Mode
Slide 16: MA: quarterly performance
MA: quarterly performance $859M $3.3B REVENUE1 ARR1,2 5% 8% Banking 11% DECISION SOLUTIONS 12% Banking 13% 11% Insurance 6% RESEARCH & INSIGHTS 7% Insurance 16% 3% DATA & INFORMATION 6% 17% KYC KYC 8% TOTAL MA 9% 1. Percentages represent year-over-year growth. 2. ARR: Annualized Recurring Revenue. A
Slide 17: MA: building on a foundation of strong customer retention
MA: building on a foundation of strong customer retention MA ARR1 GROWTH ATTRIBUTION 93% 7% 9% 109% As of March 31, 2025 Retained Base Upgrades and Price New Sales Business Base 94% 7% 9% 109% Year-end 20242 Retained Base Upgrades and Price New Sales Business Base 7% 9% 110% Year-end 94% 2023 Retain
Slide 18: MA: financial overview
MA: financial overview Decision Solutions Research & Insights Data & Information Revenue: Mix by Quarter Revenue: Distribution by Line of Business Revenue: Mix by Year 1,200 100% 3,500 90% 26% 26% 26% 26% 27% 26% 26% 25% 25% 3,000 80% $853 900 $789 $ Millions $ Millions 70% 2,500 $712 $218 $218 29%
Slide 19: MIS: the Agency of Choice today and tomorrow
MIS: the Agency of Choice today and tomorrow Long-term Revenue Growth Algorithm ECONOMIC EXPANSION1 VALUE PROPOSITION DEVELOPING CAPITAL MARKETS → GDP growth drives demand for debt → Proven rating accuracy and deeply → Bank system capacity remains constrained capital to fund business investments exp
Slide 20: MIS: macroeconomic assumptions underpinning full year 2025 outlook
MIS: macroeconomic assumptions underpinning our full year 2025 outlook1 MACROECONOMIC ASSUMPTIONS TAILWINDS → Real GDP2: U.S.: 0.0% - 1.0%; Euro area: 0.0% - 1.0%; Global: 1.0% - 2.0% ~$4.9T of refinancing needs between 2025 and 2028 → Global policy rates: expecting two cuts from U.S. Fed in 2H25. O
Slide 21: Strong refinancing needs support future issuance
Strong refinancing needs support future issuance DEBT MATURITIES: Moody’s-rated U.S. Non-Financial Corporate Bonds and Loans ($B)1,2 → Refinancing needs up from ~$4.4T to ~$4.9T Speculative Grade Bank Loans $980 over the next four Speculative Grade Bonds years $681 Investment Grade $548 $554 → U.S.
Slide 22: Overview of recent refunding wall studies
Overview of recent refunding wall studies1,2 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 $ Billions $1,825 $ Billions 2,000 2
Slide 23: Corporate Finance: issuance and revenue
Corporate Finance: issuance1 and revenue 4 Global Issuance2: Mix by Quarter MIS Revenue3: Mix by Year Other Investment Grade Speculative Grade Bank Loans Global Non-Financial Speculative-Grade Bonds 2,500 Global Non-Financial Investment-Grade Bonds 2,000 500 $287 $606 $527 $ Millions 1,500 $313 $352
Slide 24: Corporate Finance: revenue
Corporate Finance: revenue MIS Revenue1: Distribution by Geography Non-U.S. U.S. MIS Revenue1: Distribution by Recurring vs. Transaction Transaction Recurring 100% 100% 90% 90% 25% 24% 26% 26% 27% 80% 80% 35% 35% 38% 39% 37% 35% 70% 65% 70% 69% 65% 70% 67% 68% 70% 71% 67% 68% 69% 60% 60% 50% 50% 40%
Slide 25: Financial Institutions: issuance and revenue
Financial Institutions: issuance1 and revenue 4 Global Issuance2: Mix by Quarter MIS Revenue3: Mix by Year Banking Insurance Managed Investments Other Global Speculative Grade Financial Corporate Bonds 800 $14 Global Investment Grade Financial Corporate Bonds 700 $49 $10 700 600 $12 $10 $36 $214 $12
Slide 26: Financial Institutions: revenue
Financial Institutions: revenue MIS Revenue1: Distribution by Geography Non-U.S. U.S. MIS Revenue1: Distribution by Recurring vs. Transaction Transaction Recurring 100% 100% 90% 90% 80% 41% 80% 37% 41% 43% 43% 44% 49% 46% 50% 50% 50% 46% 47% 50% 53% 53% 53% 51% 55% 53% 70% 56% 70% 59% 60% 60% 50% 50
Slide 27: Infrastructure issuance; Public, Project & Infrastructure revenue
Infrastructure issuance1; Public, Project & Infrastructure revenue MIS Revenue3: Mix by Year 600 Public Finance and Sovereign Project & Infrastructure Finance Global Issuance2: Mix by Quarter Global Infrastructure Finance Speculative-Grade Bonds 500 Global Infrastructure Finance Investment-Grade Bon
Slide 28: Public, Project & Infrastructure: revenue
Public, Project & Infrastructure: revenue MIS Revenue1: Distribution by Geography MIS Revenue1: Distribution by Recurring vs. Transaction Transaction Recurring Non-U.S. U.S. 100% 100% 90% 90% 33% 34% 32% 29% 29% 32% 29% 80% 80% 39% 42% 37% 40% 70% 59% 60% 61% 61% 61% 64% 64% 64% 70% 65% 65% 65% 60%
Slide 29: Structured Finance: revenue
Structured Finance: revenue MIS Revenue1: Mix by Year MIS Revenue1: Mix by Quarter ABS RMBS CMBS Structured Credit Other ABS RMBS CMBS Structured Credit Other 160 600 $2 $3 140 $1 $1 $1 $0 500 $2 $2 $215 120 $1 $4 $3 $48 $193 $0 $49 $55 400 $1 $1 $50 $140 $1 $ Millions $ Millions $196 $2 100 $148 $3
Slide 30: Structured Finance: revenue
Structured Finance: revenue MIS Revenue1: Distribution by Geography Non-U.S. U.S. MIS Revenue1: Distribution by Recurring vs. Transaction Transaction Recurring 100% 100% 90% 90% 80% 80% 42% 42% 43% 44% 43% 53% 52% 53% 53% 48% 70% 59% 70% 55% 62% 64% 65% 62% 67% 70% 73% 74% 71% 72% 60% 60% 50% 50% 40
Slide 31: Default Rates Expected to Decline by Year-end
Default Rates Expected to Decline by Year-end DEFAULT RATES FOR GLOBAL SPECULATIVE- GRADE CORPORATE RATED ISSUANCE1,2 M&A2 ($T) Baseline Optimistic Moderately Pessimistic Severely Pessimistic M&A Volume 10-year Avg. 12% ~$5.0 ~$4.5 10% ~$4.3 8% 6% 4.2% global historical average 5.7% 4.6% 4% ~$1.3 3.
Slide 32: Strategic expense management supports investments in high-growth areas
Strategic expense management supports investments in high-growth areas FY 2024 vs. FY 2025F1,2 Increase in the LSD to MSD % ~1.0% 0.5% to 1.0% range 1.5% to 2.0% 2.5% to 3.5% ~(1.0%) (1.5% to 2.5%) $4.2B FY 2024 Incentive & Operating Growth, Acquired Depreciation and Restructuring Charges FY 2025F O
Slide 33: Investing for growth while returning capital to shareholders
Investing for growth while returning capital to shareholders Global Free Cash Flow (FCF)1 Share Repurchases Dividends FCF to Adjusted Net Income Conversion1 Shareholder Return % of FCF1 111% ~96% 103% 76% ~83% $0.6B ~$0.7B 56% $2.5B $2.3-2.5B $1.9B $0.6B $1.3B ~$1.3B $0.5B 2023 2024 2025F2,3 1. Refe
Slide 34: Disciplined approach to capital allocation
Disciplined approach to capital allocation CAPITAL ALLOCATION PRIORITIES INCREASING DIVIDENDS THROUGH MARKET CYCLES COVID-19 RECESSION INVESTING FOR GROWTH 1 Reinvestment Accelerating organic growth 2001 RECESSION GREAT RECESSION CAGR 17% 2 Acquisitions Advance global integrated risk assessment stra
Slide 35: Investment criteria and post-acquisition review
Investment criteria and post-acquisition review CLEAR INDUSTRIAL LOGIC DISCIPLINED FINANCIAL TARGETS POST-ACQUISITION REVIEW Strategic fit, the most important factor, Long held, clear financial framework for Disciplined and rigorous monitoring is the first screen external (and internal) investments
Slide 36: Teleconference details
Teleconference details DIAL IN REPLAY AVAILABLE FROM April 22, 2025, through April 29, 2025. Webcast Dial In Dial In Replay → Go to ir.moodys.com → U.S. & Canada: → U.S. & Canada: → Click on “Events & +1-888-596-4144 +1-800-770-2030 Presentations” → Non-U.S. & Canada: → Non-U.S. & Canada: → Click on
Slide 37: Moody's attendance at upcoming conferences
Moody’s attendance at upcoming conferences May 7 Barclays Americas Select Conference May 28 Autonomous Bernstein Strategic Decisions Conference June 3 William Blair Growth Stock Conference June 4 Baird Global Consumer, Technology and Services Conference June 10 Mizuho Technology Conference First Qua
Slide 38: Appendix
Appendix First Quarter 2025 - Earnings Call 38
Slide 39: Glossary of terms and abbreviations
Glossary of terms and abbreviations 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 subs
Slide 40: Annualized Recurring Revenue (ARR)
Annualized Recurring Revenue (ARR) The Company presents Annualized Recurring Revenue (“ARR”) on an organic constant currency 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 tim
Slide 41: 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. 1. During the three mon
Slide 42: 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 43: Free Cash Flow
Free Cash Flow 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 rep
Slide 44: 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 45: Organic constant currency revenue growth
Organic constant currency revenue growth The Company presents organic 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) exc
Slide 46: 2025 outlook reconciliations
2025 outlook reconciliations The following are reconciliations of the Company's adjusted forward looking measures to their comparable U.S. GAAP measure: First Quarter 2025 - Earnings Call 46
Slide 47: Moody's copyright and ratings disclaimer
© 2025 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising (collectively, “MOODY’S”). All rights rese