10-KPeriod: FY2019

MOODYS CORP /DE/ Annual Report, Year Ended Dec 31, 2019

Filed February 24, 2020For Securities:MCO

Summary

Moody's Corporation (MCO) reported solid performance for the fiscal year ended December 31, 2019. The company demonstrated revenue growth across both its Moody's Investors Service (MIS) and Moody's Analytics (MA) segments, driven by favorable market conditions in debt issuance for MIS and increased demand for data and analytical tools from MA. Acquisitions made during the year, such as Vigeo Eiris, Four Twenty Seven, and RiskFirst, are expected to contribute to future growth, particularly in the ESG and risk management solutions areas. The company also completed the divestiture of its MAKS business, refining its strategic focus. Moody's continues to prioritize investments in technology and product development to enhance its offerings and maintain its competitive position in the global financial information and credit rating markets.

Financial Highlights

56 data points
Beta

Revenue

$4.83B

71.3% Gross Margin

Net Income

$1.42B

29.4% Net Margin

EPS (Diluted)

$7.42

Total Assets

$10.27B

Cash & Equivalents

$1.83B

Free Cash Flow

$1.61B

Financial Statements
Beta
Revenue$4.83B
Cost of Revenue$1.39B
Gross Profit$3.44B
SG&A Expenses$1.17B
Operating Expenses$2.83B
Operating Income$2.00B
Net Income$1.42B
EPS (Basic)$7.51
EPS (Diluted)$7.42
Shares Outstanding (Basic)189.30M
Shares Outstanding (Diluted)191.60M

Key Highlights

  • 1Total revenue increased by 9% to $4.829 billion, driven by growth in both MIS (6%) and MA (13%).
  • 2MIS external revenue benefited from strong corporate finance ratings, despite a decline in structured finance activity.
  • 3MA external revenue showed robust growth, particularly in Research, Data, and Analytics (RD&A) and Enterprise Risk Solutions (ERS), boosted by acquisitions.
  • 4The company completed several strategic acquisitions in 2019, including Vigeo Eiris (ESG research), Four Twenty Seven (climate risk data), and RiskFirst (risk analytics), expanding its capabilities in key growth areas.
  • 5Moody's completed the divestiture of its MAKS business in Q4 2019, streamlining its portfolio.
  • 6Diluted Earnings Per Share (EPS) increased by 10% to $7.42, reflecting improved operating income and the impact of share repurchases.
  • 7The company continued its share repurchase program, returning capital to shareholders.

Frequently Asked Questions

Revenue growth was driven by an increase in rating volumes for corporate debt within MIS, reflecting favorable market conditions and product mix. In MA, growth was fueled by strong demand for credit research and data feeds, along with contributions from acquisitions like Bureau van Dijk and new offerings in Enterprise Risk Solutions (ERS) for SaaS-based solutions.

Moody's made strategic acquisitions to bolster its capabilities in ESG research, climate risk data, and risk analytics (Vigeo Eiris, Four Twenty Seven, RiskFirst). It also acquired ABS Suite to strengthen its structured finance solutions. Concurrently, the company divested its MAKS business to focus on core financial intelligence and analytical tools.

The company views the long-term outlook for global fixed-income markets and financial information services as favorable. Growth is expected to be supported by global economic health, debt capital market activity, disintermediation trends, and increasing demand for credit analysis and risk management solutions, particularly with a focus on ESG and cybersecurity.

Key risks include the evolving regulatory landscape in the US and EU, potential litigation and government proceedings related to rating opinions, competition, cybersecurity threats, protection of intellectual property, and the impact of macroeconomic conditions and financial market volatility on debt issuance volumes.