10-QPeriod: Q3 FY2019

MOODYS CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 1, 2019For Securities:MCO

Summary

Moody's Corporation (MCO) reported solid financial results for the third quarter and the first nine months of 2019, demonstrating robust revenue growth driven by strong performance in both its Moody's Investors Service (MIS) and Moody's Analytics (MA) segments. For the three months ended September 30, 2019, total revenue increased by 15% year-over-year to $1,240.5 million. This growth was fueled by increased corporate debt issuance in MIS, benefiting from low borrowing costs, and continued demand for credit research, data feeds, and risk solutions in MA. Diluted Earnings Per Share (EPS) also saw a significant increase of 25% to $1.99. The company continued its strategic acquisition activities, integrating several new businesses to enhance its offerings in ESG research, climate risk analysis, and risk analytics solutions. Concurrently, Moody's is progressing with the planned divestiture of its MAKS business, expecting the transaction to close in the fourth quarter of 2019. The company also maintained a strong focus on capital allocation, with significant share repurchases completed under its Accelerated Share Repurchase (ASR) program contributing to a reduction in diluted weighted-average shares outstanding and supporting EPS growth.

Financial Highlights

55 data points
Beta

Revenue

$1.24B

71.8% Gross Margin

Net Income

$380.00M

30.6% Net Margin

EPS (Diluted)

$1.99

Total Assets

$9.48B

Cash & Equivalents

$1.18B

Free Cash Flow

$419.00M

Financial Statements
Beta
Revenue$1.24B
Cost of Revenue$350.00M
Gross Profit$890.00M
SG&A Expenses$292.00M
Operating Expenses$691.00M
Operating Income$549.00M
Net Income$380.00M
EPS (Basic)$2.01
EPS (Diluted)$1.99
Shares Outstanding (Basic)189.00M
Shares Outstanding (Diluted)191.10M

Key Highlights

  • 1Total revenue for the third quarter of 2019 increased by 15% to $1,240.5 million, driven by strong performance in both MIS and MA segments.
  • 2Diluted EPS grew by 25% to $1.99 for the third quarter of 2019, benefiting from robust operating income and a reduced share count due to share repurchases.
  • 3MIS segment revenue increased by 16% to $746.6 million, primarily due to higher corporate debt issuance and favorable market conditions.
  • 4MA segment revenue grew by 13% to $493.9 million, supported by strong demand for data products, risk solutions, and contributions from recent acquisitions.
  • 5The company completed several strategic acquisitions during the period, including Vigeo Eiris, Four Twenty Seven, and RiskFirst, to expand its service offerings.
  • 6Moody's is actively pursuing the divestiture of its MAKS business, with the transaction expected to close in Q4 2019.
  • 7Free Cash Flow for the first nine months of 2019 increased by 11% to $1,134.6 million, reflecting strong operating cash generation.

Frequently Asked Questions

Moody's experienced robust revenue growth primarily driven by an increase in corporate debt issuance, benefiting from favorable market conditions and low borrowing costs. Both the Moody's Investors Service (MIS) and Moody's Analytics (MA) segments contributed significantly to this growth.

Moody's executed an Accelerated Share Repurchase (ASR) program in the first quarter of 2019, which led to a reduction in diluted weighted-average shares outstanding. This, combined with strong operating income growth, contributed to a 25% increase in Diluted EPS to $1.99 for the third quarter.

Moody's initiated a plan to sell its MAKS business and expects the transaction to close in the fourth quarter of 2019. The assets and liabilities of MAKS were classified as held for sale as of June 30, 2019.

Moody's completed several strategic acquisitions during the period, including Vigeo Eiris, Four Twenty Seven, and RiskFirst. These acquisitions contributed to revenue growth, particularly in the MA segment, and expanded the company's capabilities in areas like ESG and climate risk analysis.