Slide 1: Fourth Quarter and Full Year 2023 Earnings Call
Fourth Quarter and Full Year 2023 Earnings Call February 13, 2024
Slide 2: Introduction
Introduction Shivani Kak Head of Investor Relations Moody’s | Decode risk. Unlock opportunity. Fourth Quarter and Full Year 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: 4Q and Full Year 2023 Highlights
4Q and Full Year 2023 Highlights Rob Fauber President and Chief Executive Officer Moody’s | Decode risk. Unlock opportunity. Fourth Quarter and Full Year 2023 - Earnings Call 4
Slide 5: Key Takeaways
Key Takeaways 1 Moody’s delivered FY revenue growth of 8% and Adjusted Diluted EPS1 of $9.90; embraced Gen AI across the organization and accelerated the pace of innovation MA achieved ARR2 of $3.0B, up 10%, with strong growth from all business lines; FY 2 2024 revenue3 and ARR3 expected to grow app
Slide 6: Highlights for 2023
Highlights for 2023 $448M $4B+ 16% ~$74T MCO Adjusted Total MIS-rated MCO Revenue MCO Recurring Diluted EPS1,2 Debt Growth1 Revenue Growth Outstanding Recognition Relationships People 12X 2X 4X WINNER WINNER WINNER 97% 87% of Fortune 100 of Forbes 1,000 150+ awards in 2023 are Moody’s customers 1. R
Slide 7: Delivering for our customers
Delivering Ratings Research Data Decision for our & Insights & Information Solutions customers Strengthened thought leadership: Accelerated pace of innovation: Increased depth and utility of our vast Delivered best-in- class workflow data estate: solutions: Invested to » Increased presence in » Expa
Slide 8: Our Strategy to Drive Growth
Our Strategy to Drive Growth Landing Expanding Core Innovating and Embracing New Customers Relationships Market Trends Increase growth contribution from Leverage MA’s strong Financial Gen AI Innovation Corporate and Government Entities Services customer base » 14%1 new sales growth » 95%4 Retention
Slide 9: Accelerating Organic Investments in Three Key Areas to Deliver on Medium Term Targets
Accelerating Organic Investments in Three Key Areas to Deliver on Medium Term Targets Gen AI New Products & Platforming Enhanced Offerings & Modernizing ~$60M » External: deliver market- » Develop products that » Platform our data and leading suite of Gen AI- serve new use cases, engineering capabil
Slide 10: Expecting Improved Issuance Growth in 2024
Expecting Improved Issuance Growth in 2024 Macro Assumptions Informing Guidance FY2024 Issuance Guidance1 Macroeconomics & Policy Total Issuance ~Mid-to-high-single-digits% » Global growth prospects » Geopolitical risks » Energy, trade, climate, and regulatory policies Investment Grade ~Mid-single-d
Slide 11: Financial Outlook
Financial Outlook MCO Full Year 2024 Guidance1 Medium Term Guidance3,5,6 Revenue Increase in the high-single to low-double-digit % range MCO Revenue At least 10% growth Operating Expenses Increase in the mid-to-high-single-digit % range Adjusted Operating Margin2 44% - 46% MA Revenue Low-to-mid-teen
Slide 12: Questions and Answers
Questions and Answers Rob Fauber President and Chief Executive Officer Caroline Sullivan Interim Chief Financial Officer and Chief Accounting Officer Stephen Tulenko President – Moody’s Analytics Michael West President – Moody’s Investors Service Moody’s | Decode risk. Unlock opportunity. Fourth Qua
Slide 13: Supplemental Information
Supplemental Information Moody’s | Decode risk. Unlock opportunity. Fourth Quarter and Full Year 2023 - Earnings Call 13
Slide 14: MA: Double-Digit Revenue Growth & Strong Margin Performance in 4Q
Performance Outlook MA: Double-Digit Revenue Growth & Strong Margin Investment Thesis Performance in 4Q MA Revenue MA Adjusted Operating Margin C$1 $796 YoY YoY 31.4% 11% Change Change 310 bps $714 28.3% 10% (C$1) $205 14% 11% $180 $ Millions $230 12% 11% $205 $329 $361 10% 8% 4Q22 4Q23 4Q22 4Q23 De
Slide 15: MA: Strong Growth Across All Business Lines in 2023
Performance Outlook MA: Strong Growth Across All Business Lines in 2023 Investment Thesis $3.1B $3.0B Revenue1 ARR2 8% 9% Banking 11% Decision Solutions 11% Banking 9% 9% Research & Insights 7% 11% Insurance Insurance 20% 11% Data & Information 10% 17% KYC KYC 10% Total MA 10% 1. Percentages represe
Slide 16: MA: Capitalizing on Innovation Opportunities in 2024
Performance Outlook MA: Capitalizing on Innovation Opportunities in 2024 Investment Thesis ARR1 Revenue1 Adjusted Operating Margin1 Increase in the Increase by low-double-digit approximately 30.5% 30% - 31% percent range 10% $3.1B 10% growth 2023 2024F 2023 2024F 2023 2024F 1. Guidance as of Februar
Slide 17: MIS: Robust 4Q Revenue Growth and Improved Margins
Performance Outlook MIS: Robust 4Q Revenue Growth and Improved Investment Thesis Margins MIS Revenue Issuance2 19% $942 $791 $ Billions YoY $684 Change 19% $576 $105 12% $94 $132 7% 4Q22 4Q23 $ Millions $123 $102 9% MIS Adjusted Operating Margin $94 51.9% 780bps $337 33% 44.1% $253 4Q22 4Q23 CFG SFG
Slide 18: MIS: Rebounded in 2023 Following a Weak Prior Year
Performance Outlook MIS: Rebounded in 2023 Following a Weak Prior Year Investment Thesis 2023 issuance recovery driven by corporate finance Revenue increased in line with issuance 2023 vs. 2022 MIS-rated Issuance Revenue $2,860 Total Issuance ~5% $2,699 6% $ Millions Investment Grade ~20% 2022 2023
Slide 19: MIS: Full Year 2024 Forecast
Performance Outlook MIS: Full Year 2024 Forecast Investment Thesis Total MIS-rated Issuance1,2 Revenue1 Adjusted Operating Margin1 Increase in the mid- Increase in the high- to-high-single-digit single to low-double- percentage range digit percentage range 55.5% - 57.5% 54.5% $4.4T $2.9B 2023 2024F
Slide 20: MIS: Macroeconomic Assumptions Underpinning our Full Year 2024 Outlook
Performance Outlook MIS: Macroeconomic Assumptions Investment Thesis Underpinning our Full Year 2024 Outlook Macroeconomic Assumptions1 Tailwinds Real GDP2 U.S.: 1.0% - 2.0%; Euro area: 0.5% - 1.5%; Most central banks expected to cut rates as inflation eases Global: 2.0% - 3.0% ~$4.4T of refinancing
Slide 21: Strategically Investing with Intent to Grow and Scale
Performance Outlook Strategically Investing with Intent to Grow and Scale Investment Thesis FY 2023 vs. FY 2024F1 Increase in the mid-to- high-single-digit 4 - 6% 1-2% 1% percent range 1% - 2% (2%) $3.8B 1 FY 2023 Incentive & Stock-Based Operating Growth, Including Depreciation and Restructuring Cha
Slide 22: MIS: Sustained Refinancing Demand Post Outsized 2020/2021 Issuance Surge
Performance Outlook MIS: Sustained Refinancing Demand Post Investment Thesis Outsized 2020/2021 Issuance Surge Four-Year U.S. and EMEA Non-Financial Corporate Refinancing Walls1 Withdrawn Russian Debt 2 ~$4.0 ~$4.4 $Trillions ~$2.0 Jan '13 Jan '14 Jan '15 Jan '16 Jan '17 Jan '18 Jan '19 Jan '20 Sep
Slide 23: 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: 930 2427 » P
Slide 24: Moody's Attendance at Upcoming Conferences and Events
Moody’s Attendance at Upcoming Conferences and Events Feb 29 MA: Gen AI and AI Showcase (UK) Mar 5 Raymond James Institutional Investors Conference RBC Global Financial Institutions Conference Mar 14 Wolfe Research FinTech Forum Bank of America Information and Business Services Conference Moody’s |
Slide 25: Appendix
Appendix Moody’s | Decode risk. Unlock opportunity. Third Quarter 2023 - Earnings Call 25
Slide 26: 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 DS The Decision Solutions LOB within MA that provides S
Slide 27: 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 28: 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 29: 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 30: 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 31: 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 32: Constant Currency Revenue Growth
Constant Currency Revenue Growth The Company presents constant currency revenue growth as its non-GAAP measure of revenue growth. Management deems this measure to be useful in providing additional perspective in assessing the Company's revenue growth excluding the impacts of changes in foreign excha
Slide 33: 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 34: Moody's Decode risk. Unlock opportunity.
© 2024 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit