What were the main drivers of Moody's revenue growth in Q1 2021?

Moody's revenue growth was driven by strong performance in both its segments. Moody's Investors Service (MIS) saw increased activity in corporate finance, financial institutions, and structured finance, benefiting from healthy debt issuance and refinancing markets. Moody's Analytics (MA) experienced growth in its Research, Data, and Analytics (RD&A) and Enterprise Risk Solutions (ERS) offerings, further bolstered by recent acquisitions.

How did profitability change compared to the prior year?

Profitability improved significantly. Operating income grew 44% year-over-year, and operating margins expanded by 740 basis points to 53.3%. This was driven by strong revenue growth that outpaced expense increases, as well as a substantial benefit from the resolution of uncertain tax positions which positively impacted net income and diluted EPS.

What significant acquisitions or divestitures occurred during the quarter?

During the first quarter of 2021, Moody's completed the acquisition of Cortera for $139 million. This acquisition is expected to strengthen Moody's Analytics segment. There were no significant divestitures mentioned for this specific quarter, although a prior year divestiture of MAKS was noted for its impact on the prior year's comparative results.

How is Moody's managing its capital and liquidity?

Moody's demonstrated strong liquidity with $2.8 billion in cash and short-term investments as of March 31, 2021. The company generated $676 million in cash from operating activities during the quarter. Moody's is committed to returning capital to shareholders through dividends and share repurchases, with approximately $1.7 billion remaining under its authorized share repurchase programs as of the end of the quarter. The company also has a healthy debt profile and maintains compliance with its debt covenants.

MCO 10-Q Quarterly Report Q1 FY2021 — Revenue, Net Income, EPS

Summary

Moody's Corporation (MCO) reported a strong first quarter for 2021, with significant year-over-year growth in revenue and net income. Total revenue increased by 24% to $1.6 billion, driven by robust performance in both the Moody's Investors Service (MIS) and Moody's Analytics (MA) segments. MIS saw a 30% revenue increase, largely due to strong activity in leveraged finance and other debt issuance categories. MA also demonstrated solid growth, up 14%, fueled by its Research, Data, and Analytics (RD&A) and Enterprise Risk Solutions (ERS) offerings, with acquisitions contributing to this expansion. Profitability also saw a substantial improvement. Operating income surged by 44% to $853 million, with operating margins expanding significantly to 53.3%. Diluted Earnings Per Share (EPS) grew by 52% to $3.90. The company benefited from a large reversal of tax-related interest accruals related to the resolution of uncertain tax positions, which positively impacted both net income and EPS. Moody's continues to manage its capital effectively, with strong operating cash flow and an active share repurchase program.

Financial Highlights

54 data points

Beta

Revenue

$1.60B

0.8% Gross Margin

Net Income

$736.00M

0.5% Net Margin

EPS (Diluted)

$3.90

Total Assets

$12.50B

Cash & Equivalents

$2.77B

Free Cash Flow

$662.00M

Financial Statements

Beta

Revenue	$1.60B
Cost of Revenue	$393.00M
Gross Profit	$1.21B
SG&A Expenses	$293.00M
Operating Expenses	$747.00M
Operating Income	$853.00M
Net Income	$736.00M
EPS (Basic)	$3.93
EPS (Diluted)	$3.90
Shares Outstanding (Basic)	187.20M
Shares Outstanding (Diluted)	188.60M

Key Highlights

1Total revenue increased 24% year-over-year to $1.6 billion, driven by broad-based growth across segments.
2Moody's Investors Service (MIS) revenue grew 30% to $1.04 billion, led by strong performance in corporate finance and financial institutions.
3Moody's Analytics (MA) revenue increased 14% to $564 million, supported by RD&A and ERS, and acquisitions.
4Operating income rose 44% to $853 million, with operating margin improving to 53.3% from 45.9% in the prior year.
5Diluted EPS increased 52% to $3.90, benefiting from strong operational performance and a significant tax benefit.
6The company completed the acquisition of Cortera for $139 million in March 2021, enhancing its MA segment capabilities.
7Moody's generated $676 million in cash from operating activities and maintained a strong liquidity position with $2.8 billion in cash and short-term investments.

MOODYS CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2021

Summary

Financial Highlights

Key Highlights

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