Moody's Corporation

Moody’s reported second-quarter enterprise revenue growth of 15%, adjusted operating income growth of 25%, adjusted operating margin of 55.3% (up 440 bps), and adjusted diluted EPS of $4.68 (up 31%). In Moody’s Investor Service, revenue grew 25% and adjusted operating margin was 68.3% (up 410 bps). In Moody’s Analytics, revenue rose 4% reported, or 8% organic constant currency, recurring revenue grew 7% reported and 9% organic constant currency, and transactional revenue declined 72% to about $10 million. MA ARR ended at nearly $3.7 billion, up nearly 9%, with 95% trailing-12-month retention, and MA adjusted operating margin was 33.6% (up 150 bps). Free cash flow was $688 million, up 47% year over year. For full-year 2026, management raised issuance growth to mid-single digits, kept MIS revenue and MA ARR guidance in the high single-digit range, guided adjusted diluted EPS to $16.50-$17.00, raised share repurchase guidance to up to $3 billion, and lifted free cash flow guidance to $2.7 billion-$2.9 billion. The tax rate is expected toward the high end of the 23%-25% range, and the restructuring program envelope was expanded by $100 million with expected annualized savings of $300 million-$350 million when complete.

Robert Fauber characterized the quarter as a “standout” with broad-based strength and said the company is benefiting from multiple “funding deep currents,” especially AI-related infrastructure, private credit, digital finance, and emerging-market activity. He emphasized that Moody’s is increasingly embedded in customer workflows through ratings, analytics, AI integrations, and connected intelligence, and said the company is well positioned to monetize these trends over time. His tone was confident and upbeat, while also noting some conservatism in full-year revenue guidance because of mix and seasonality.

Noemie Heuland focused on the durability of the financial model: MA revenue grew 4% reported, recurring revenue was 99% of MA revenue, and transactional revenue fell to about $10 million as planned. She said MIS recurring revenue rose 6% to $369 million, first-time mandates increased about 45%, and issuance strength did not fully flow through to revenue because more volume came from lower-yield data-center and bank deals. She also highlighted $688 million of quarterly free cash flow, $2.2 billion of year-to-date buybacks, a raised 2026 buyback target of up to $3 billion, and the enlarged restructuring program that should create $300 million-$350 million of annualized savings.

Analysts pressed on why guidance stayed relatively conservative despite strong results and whether second-half issuance could surprise to the upside. Management said some of the expected second-half recovery pulled into Q2, that the higher issuance outlook is concentrated in lower-yield deal types, and that the second half still faces a tough comp, though they see constructive conditions. Questions also focused on MCP adoption, multiyear demand from private credit and infrastructure, MA growth sustainability, and AI/token-cost dynamics; management answered that adoption is early but encouraging, private credit and AI infrastructure remain multiyear tailwinds, and lower token costs should help usage and Moody’s own efficiency rather than weaken its moat.