Moody's Corporation

Moody’s reported third-quarter revenue above $2 billion for the third straight quarter. Adjusted operating margin was 52.6% and adjusted diluted EPS grew 6%. In Moody’s Investors Service (MIS), revenue was $1.1 billion, down 1% year over year, while MIS adjusted operating margin was 64.4%; issuance was down 2% year over year, with overall issuance at approximately $1.7 trillion. In Moody’s Analytics (MA), reported revenue grew 3% and 8% on an organic constant-currency basis; recurring organic constant-currency revenue grew 9%, transactional revenue declined 76% due mainly to the Learning Solutions divestiture, and ARR ended at $3.7 billion, up approximately 8% year over year. MA adjusted operating margin was 35.3%, up 100 basis points year over year. For the full year, Moody’s maintained guidance for revenue growth in the high single-digit percent range, adjusted operating margin of 52%-53%, and adjusted diluted EPS of $16.50-$17. MIS full-year revenue is expected to grow in the high single-digit percent range, with fourth-quarter issuance expected to decline in the mid-teens percent year over year and MIS revenue to grow in the low single-digit percent range year over year but decline sequentially versus Q3. MA full-year ARR growth is expected in the high single-digit percent range, with adjusted operating margin of 34%-35%.

Rob Fauber’s message was that Moody’s franchise is holding up well in a more uneven environment because of disciplined execution, strong analytics demand, and long-term financing needs tied to AI infrastructure, power, defense, transportation, and other capital-intensive sectors. He emphasized that the company is seeing real momentum in AI-related ratings activity, private credit, insurance, KYC, and digital infrastructure methodologies, while also reaffirming ratings rigor as the core of the franchise. His tone was confident and constructive, but measured on the macro backdrop and issuance volatility.

Noémie Heuland focused on the financial mechanics behind the quarter: MA revenue growth of 8% organic constant currency, ARR of $3.7 billion up about 8%, MA margin of 35.3% up 100 basis points, and MIS revenue of $1.1 billion with issuance down 2% year over year. She said the mix in corporate finance mattered, with investment-grade revenue up 18% while high yield and bank loan revenue fell 40% and 27%, respectively. She also highlighted capital allocation discipline: year to date Moody’s repurchased about $2.6 billion of stock, expects up to $3 billion for the full year, generated $2.2 billion of free cash flow year to date, and remains on track to return more than 130% of free cash flow to shareholders this year.

Analysts pressed on whether AI adoption is translating into incremental revenue or mostly retention; management said it is showing up across product adoption, renewals, win rates, and pipeline, with paying MCP customers more than doubling and open opportunities rising sharply, though it is still early. Questions on fourth-quarter issuance centered on AI and M&A financing, with management saying hyperscaler issuance could still be upside, but that the company assumes a mid-teens decline in issuance given tough comps, selective leveraged finance behavior, and fewer trading days. Other questions addressed KYC and private credit: management said recent AML/KYC fines reinforce the value of Moody’s tools and that private credit remains an opportunity because Moody’s rates both public and private deals, while its partnerships with Allvue and others aim to deepen independent credit analysis.