Moody's Corporation · NYSE:MCO
Moody's — Q1 2024 Earnings Presentation
33 slides from Moody's's earnings presentation, May 2, 2024
Slide 1: First Quarter 2024 Earnings Call
MOODY’S First Quarter 2024 Earnings Call May 2, 2024
Slide 2: Shivani Kak, Head of Investor Relations
Shivani Kak HEAD OF INVESTOR RELATIONS
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
Slide 5: Moody's achieved exceptional results
Moody’s achieved exceptional results Revenue growth of 21% and Adjusted Diluted EPS! increased 13% to $3.37 in 1Q 2024 MIS’s revenue grew 35% and delivered strong operating leverage Issuance? increased 36%; Adjusted Operating Margin of 64.6% MA's ARR® grew 10%; affirming full year ARR guidance* Reve
Slide 6: Best-in-class Rating Agency, Strong Global Coverage
Best-in-class 12x Winner: Institutional Investor's Award for Best Credit Rating Agency Rating Agency Recognized with 100+ major global awards over last 5 years2 Strong Leading leveraged finance franchise Global Coverage Comprehensive Emerging and Domestic credit market presence Enhanced Private Cred
Slide 7: Rates, policy, investment drivers and credit markets
RATES & CENTRAL POLITICS & POLICY INVESTMENT DRIVERS CREDIT MARKETS & BANK ACTIONS Election results shaping Global growth remains SPREADS Major global central bank policy priorities positive, pace varies Liquidity, sentiment and rate cuts in 2H 2024 still Government investment across countries credi
Slide 8: Landing New Customers, Expanding Core Relationships
Landing Expanding New Core Customers Relationships
Slide 9: Navigators, Assistants, QuIQ Skills
ASSISTANTS QUIQ SKILLS NAVIGATORS Driving new insights and new Connecting Moody’s data, use cases by integrating and Improving existing content and analytics to synthesizing across all Gen AI product experience and deliver automation and drive capabilities ease of use productivity for customers 6+ p
Slide 10: Noémie Heuland, Chief Financial Officer
Noémie Heuland CHIEF FINANCIAL OFFICER
Slide 11: Second Quarter 2023
Second Quarter 2023 - Earnings Call 11
Slide 12: MCO and segment key metrics
MCO Revenue MCO Revenue MCO Adjusted MCO Adjusted MCO Free Cash Flow Growth1 Operating Margin2 Diluted EPS2 Growth1,2 MA Revenue MA ARR MA Adjusted MIS Revenue Rated Issuance MIS Adjusted Growth1 Growth1,3 Operating Margin Growth1 Growth1,4 Operating Margin
Slide 13: Rated issuance expectations for 2024
As of February 13, 2024 As of May 2, 2024 Rated ~37% of full year 2024 expected issuance Total Issuance ~Mid-to-high-single-digits% during 1Q 2024 Positive market conditions; strong investor demand; and historically tight credit spreads Investment Grade ~Mid-single-digits% Heightened refinancing lev
Slide 14: Full Year 2024 Guidance
Full Year 2024 Guidance! OUTLOOK AS OF MAY 2, 2024 hepa MOODY'S Revenue Operating Expenses Adjusted Operating Margin Interest Expense, Net Effective Tax Rate Diluted EPS Adjusted Diluted EPS” Operating Cash Flow Free Cash Flow Share Repurchases® MA Revenue* MA ARR® MA Adjusted Operating Margin MIS R
Slide 15: President and CEO, Chief Financial Officer
PRESIDENT AND CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
Slide 16: Call
First Quarter 2024 - Earnings Cal
Slide 17: MA: Quarterly Performance
MA: Quarterly Performance Revenue $799 change $737 8% $212 13% $188 E we $222 3% 3 9% $334 1Q24 1Q23 Decision Solutions mResearch&Insights ™Data & Information MOODY'S Adjusted Operating Margin 29.7% 28.9% 80 bps 1Q23 1Q24 First Quarter 2024 - Earnings Call 7
Slide 18: MA: ARR Growth Sustained at 10%
MA: ARR! Growth Sustained at 10% $799M $3.1B REVENUE? ARR*2 2% 9% 0, 0, Banking 9% DECISION SOLUTIONS 12% Banking 8% 0 ry 10% Insurance 3% RESEARCH & INSIGHTS 6% Insurance 24% 13% DATA & INFORMATION 11% 18% KYC KYC 8% TOTAL MA 10% larch 31, 2024. Refer to the Appendix for the definition of and furth
Slide 19: MA: Full Year 2024 Guidance
MA: Full Year 2024 Guidance! Affirming ARR? guidance; updating revenue guidance primarily due to FX headwinds ARR? Revenue Adjusted Operating Margin Increase in the low-double-digit Increase in the percent range high-single-digit 30.5% 30% - 31% 10% percent range / KC 2023 2024F 1. Guidance as of Ma
Slide 20: MIS: Quarterly Performance
MIS: Quarterly Performance Revenue $987 change 9% ie) $733 35% 37% E 15% = A 49% 1Q23 1924 =aCFG aSFG mFIG = PPIF m= MIS Other’ Issuance $1,722 g $1,264 36% = A 1Q23 1Q24 Adjusted Operating Margin 64.6% 56.8% 780bps 1923 1Q24 ay occur following the reporting cycle. First Quarter 2024 - Earnings Call
Slide 21: MIS: Full Year 2024 Guidance
Increase in the Increase in the high-single to 56% - 58% mid-to-high-single-digit low-double-digit percentage range 54.5% percentage range $4.4T $2.9B
Slide 22: Macro and credit market assumptions
Real GDP2: U.S.: 1.5% - 2.5%; Euro area: 0.5% - 1.5%; Global: 2.0% - 3.0% Central banks to cut rates as inflation eases in the latter half of the year Global policy rates to remain elevated, with some gradual rate reductions ~$4.4T of refinancing needs between 2024 and in the second half of 2024 202
Slide 23: MCO: Expense Bridge
MCO: Expense Bridge FY 2023 vs. FY 2024F' Increase in the mid-to-high-single-di; 4-6% 1-2% ~% percent range - 29 —_ — es 1- 2% as oO) $3.8B FY 2023 Incentive & Operating Growth, Depreciation and Restructuring FX FY 2024F Operating Expenses Stock-Based Including Investments Amortization Charges Opera
Slide 24: Dial In Replay
Dial In Replay Available from May 2, 2024, through June 1, 2024. → → → → → → → → →
Slide 25: Upcoming investor conferences
Barclays Americas Select Conference Deutsche Bank Global Financial Services Conference Autonomous Bernstein Strategic Decisions Conference William Blair Growth Stock Conference Stifel Cross Sector Conference
Slide 26: Appendix
‘ss First Quarter 2024 - Earnings Call _
Slide 27: Glossary of Terms and Abbreviations
Glossary of Terms and Abbreviations Term Definition CFG Corporate finance group; an LOB within MIS D&l 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
Slide 28: 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 29: 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.
Slide 30: 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; and ii) re
Slide 31: 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 32: 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 33: Moody's copyright and credit ratings notice
© 2024 Moody's Corporation, Moody's Investors Service, nc., Moody's Analytics, Inc. and/or ther licensors and affiliates (collectively, “MOODY'S”. All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES