Slide 1: Second Quarter 2023 Earnings Call
Second Quarter 2023 Earnings Call July 25, 2023
Slide 2: Introduction
Introduction Shivani Kak Head of Investor Relations Moody’s | Decode risk. Unlock opportunity. Second 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: 2Q 2023 Highlights
2Q 2023 Highlights Rob Fauber President and Chief Executive Officer Moody’s | Decode risk. Unlock opportunity. Second Quarter 2023 - Earnings Call 4
Slide 5: Key Takeaways
Key Takeaways 1 Growth resumed in MIS, as rated issuance and revenue increased on constructive market conditions; 2023 guidance revised upwards 2 MA delivered 10% ARR1 growth; introducing additional revenue- related disclosures on the Decision Solutions businesses 2023 Adjusted EPS2 forecast raised
Slide 6: Moody's: Helping Customers Accelerate Value Creation in an Era of Exponential Risk
Moody’s: Helping Customers Accelerate Value Creation in an Era of Exponential Risk Research Data Decision Solutions Ratings & Insights & Information Banking Insurance KYC Moody’s Agency of Premier fixed income Unparalleled database on SaaS businesses serving Choice research business companies & cred
Slide 7: Constructive Markets Underpin Guidance Uplift
Constructive Markets Underpin Guidance Uplift Investment Grade Issuance Grew in 2Q 2023 FY 2023 Issuance Guidance1,2 As of April 25, 2023 As of July 25, 2023 Total Issuance Mid-Single-Digit % Investment Grade ~30% High Yield Bonds ~40% Leveraged Loans Mid-Single-Digit % Financial Institutions Approx
Slide 8: Strengthening our Position in the Markets of Tomorrow
Strengthening our Position in the Markets of Tomorrow Emerging Markets Digital Finance Sustainable Finance » Global Footprint: Closed on » Trusted Insights: Leading analytical » Thought Leadership: acquisition of SC Riesgo to further views on the digitalization of financial Groundbreaking research o
Slide 9: Incremental Disclosures Improve Investor Insight
Incremental Disclosures Improve Investor Insight 2Q 2023 Growth Revenue1 ARR2 12% 14% Decision Solutions 10% 10% Banking Banking 12% 7% Research & Insights 9% 6% Insurance Insurance 10% Data & Information 9% 20% 18% KYC KYC 11% Total MA 10% 1. Refers to reported quarterly revenue growth from 2Q 2022
Slide 10: Exponential Risk Leads to Significant Insurance Opportunity
Exponential Risk Leads to Significant Insurance Opportunity Customer Workflows Underwriting Growth Drivers Digitization and New Regulatory & ~$6B Automation Financial Oversight Risk & Capital Management Insurance - Current Addressable Market1 SaaS Adoption Need for Better Analytics & Insights Financ
Slide 11: Delivering Award-Winning Workflow Solutions with Significant Expansion Opportunity from Cross-Selling
Delivering Award-Winning Workflow Solutions with Significant Expansion Opportunity from Cross-Selling Average number of MA product families1 used by 900+2 Insurance customers Top 10 Customers Following 90 6-7 Customers Product Bottom 800+ Families Customers 4-5 Product Families 1-2 Product Families
Slide 12: Extensive Suite of AI Products and Capabilities
Extensive Suite of AI Products and Capabilities QUIQspread » Employs AI and Machine Learning for digitizing financial data from public and private companies in a user-friendly interface that allows an analyst to review and approve the machine output; analyst corrections are fed back into the AI mode
Slide 13: Moody's is Positioned to Win in a Generative AI World
Moody’s is Positioned to Win in a Generative AI World Exceptional Insights Moody's Data Estate Moody's CoPilot Decades of Extensive, Moody’s GenAI Engine to On Demand Proprietary and Historically Leverage Large Indexed Data, Analytics Language Models and Research Content Accelerates Value in Era of
Slide 14: Questions and Answers
Questions and Answers Rob Fauber President and Chief Executive Officer Mark Kaye Chief Financial Officer Moody’s | Decode risk. Unlock opportunity. Second Quarter 2023 - Earnings Call 14
Slide 15: Supplemental Information
Supplemental Information Moody’s | Decode risk. Unlock opportunity. Second Quarter 2023 - Earnings Call 15
Slide 16: MA: Growth Driven by Robust Customer Demand
Performance Outlook MA: Growth Driven by Robust Customer Demand Investment Thesis MA Revenue1 MA Adjusted Operating Margin2 YoY $747 Change $675 11% $196 10% 30.3% $178 28.0% (230 bps) $ Millions $217 7% $203 $294 $334 14% 2Q22 2Q23 2Q22 2Q23 Decision Solutions Research & Insights Data & Information
Slide 17: MIS: Solid Activity in the First Half of the Year
Performance Outlook MIS: Solid Activity in the First Half of the Year Investment Thesis MIS Revenue Issuance2 YoY $747 3% $ Billions $706 Change 6% $1,148 $127 4% $1,111 $122 $ Millions $128 $145 13% 2Q22 2Q23 $123 $102 (17%) MIS Adjusted Operating Margin3 $322 $365 13% 55.4% 55.9% 50bps 2Q22 2Q23 C
Slide 18: MA: Delivering Double-digit Growth; Capitalizing on Innovation Opportunities
Performance Outlook MA: Delivering Double-digit Growth; Investment Thesis Capitalizing on Innovation Opportunities ARR1 Revenue1 Adjusted Operating Margin1 Increase by Increase in the approximately 30.2% 30% - 31% low-double-digit 10% percent range $2.8B 10% growth YE 2022 Growth YE 2023F Growth 202
Slide 19: MIS: Full Year 2023 Forecast Raised on Constructive Market Conditions
Performance Outlook MIS: Full Year 2023 Forecast Raised on Investment Thesis Constructive Market Conditions Total MIS-rated Issuance1,2 Revenue1 Adjusted Operating Margin1 Increase in the Increase in the mid-single-digit high-single-digit 55% - 56% percentage range 51.8% 3 percentage range $4.2T $2.
Slide 20: MIS: Macroeconomic Assumptions Underpinning our Full Year 2023 Outlook
Performance Outlook MIS: Macroeconomic Assumptions Investment Thesis Underpinning our Full Year 2023 Outlook Macroeconomic Assumptions1 Tailwinds Rates nearing their peaks for most major central banks as inflation eases Real GDP2 U.S.: 0.5% - 1.5%; Euro area: 0.0% - 1.0%; Global 1.5% - 2.5% ~$4T of
Slide 21: Balancing Strategic Investments with Expense Management
Performance Outlook Balancing Strategic Investments with Expense Management Investment Thesis FY 2022 vs. FY 2023F1 Increase in the mid-single-digit ~2% ~1% 0% - 1% percent range 3% - 4% (~2%) $3.6B FY 2022 Incentive & Stock-Based Operating Growth, Depreciation and Restructuring Charges FX FY 2023F
Slide 22: MCO: Updated Full Year Guidance
Performance Outlook MCO: Updated Full Year Guidance Investment Thesis Full Year 2023 Revenue Increase in the high-single-digit percent range Financial Outlook as Expenses Increase in the mid-single-digit percent range of July 25, 20231 Adjusted Operating Margin2 44% - 45% Interest Expense, Net $260
Slide 23: MIS: Following Outsized Issuance in 2020 and 2021, Refinancing Needs Remain Significant
Performance Outlook MIS: Following Outsized Issuance in 2020 and 2021, Investment Thesis Refinancing Needs Remain Significant MIS-Rated Q2 Non-Financial Global Corporate Investment Grade (IG) Issuance MIS-Rated Q2 Non-Financial Global Corporate High Yield (HY) Issuance IG Bond Issuance IG Bond Issua
Slide 24: MA: Innovation Open House
MA: Innovation Open House Save the Date Moody’s will hold an event on September 14, 2023 Thursday, September 14, 2023, to showcase Moody’s Analytics’ innovative product suite and approach to new technologies. Additional details to follow. Moody’s | Decode risk. Unlock opportunity. Second Quarter 202
Slide 25: Teleconference Details
Teleconference Details Webcast Dial In Dial In Replay » 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: 9302427 » Pa
Slide 26: Moody's Attendance at Upcoming Conferences
Moody’s Attendance at Upcoming Conferences Aug 9 Wells Fargo FinTech and Services Conference Sep 11 Barclays Global Financial Services Conference Moody’s | Decode risk. Unlock opportunity. Second Quarter 2023 - Earnings Call 26
Slide 27: Appendix
Appendix Moody’s | Decode risk. Unlock opportunity. Second Quarter 2023 - Earnings Call 27
Slide 28: Glossary of Terms and Abbreviations
Glossary of Terms and Abbreviations Term Definition AI Artificial Intelligence 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 w
Slide 29: 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 30: Financial Information by Segment
Financial Information by Segment The following table 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. Moody’s | Decode ri
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 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 33: Adjusted Net Income and Adjusted Diluted EPS Attributable to Moody's Common Shareholders
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 34: Moody's Decode risk. Unlock opportunity.
© 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