Summary
Moody's Corporation (MCO) reported its third-quarter 2022 results, showing a notable decline in revenue driven primarily by a significant decrease in its Moody's Investors Service (MIS) segment. The MIS segment experienced a 36% drop in external revenue, largely due to a 41% reduction in rated issuance volumes, a consequence of ongoing market volatility, central bank actions, and macroeconomic concerns. Conversely, the Moody's Analytics (MA) segment demonstrated resilience, with a 14% increase in external revenue, bolstered by inorganic growth from acquisitions and sustained demand for its data and analytics solutions, particularly in KYC and compliance. Despite the revenue headwinds in MIS, the company's overall profitability was significantly impacted by the revenue decline and increased expenses, including those related to recent acquisitions and strategic initiatives. Diluted earnings per share fell by 35% year-over-year for the quarter. Management highlighted the ongoing macroeconomic uncertainties and geopolitical events as primary drivers for the reduced activity in credit markets, while also emphasizing the strategic growth of the MA segment and ongoing efforts to optimize operational efficiency, including a restructuring program aimed at annualized savings.
Financial Highlights
54 data points| Revenue | $1.27B |
| Cost of Revenue | $393.00M |
| Gross Profit | $882.00M |
| SG&A Expenses | $385.00M |
| Operating Expenses | $862.00M |
| Operating Income | $413.00M |
| Net Income | $303.00M |
| EPS (Basic) | $1.65 |
| EPS (Diluted) | $1.65 |
| Shares Outstanding (Basic) | 183.20M |
| Shares Outstanding (Diluted) | 183.90M |
Key Highlights
- 1Total revenue decreased by 16% to $1.275 billion in Q3 2022 compared to $1.526 billion in Q3 2021.
- 2Moody's Investors Service (MIS) external revenue declined significantly by 36% to $590 million, primarily due to a 41% decrease in rated issuance volumes.
- 3Moody's Analytics (MA) external revenue grew by 14% to $685 million, driven by acquisitions and strong demand for its solutions.
- 4Operating income for the quarter decreased by 39% to $413 million from $676 million in the prior year.
- 5Diluted earnings per share (EPS) decreased by 35% to $1.65 from $2.53 in the prior year.
- 6The company announced a 2022-2023 Geolocation Restructuring Program expected to yield $100-$135 million in annualized savings.
- 7Cash and cash equivalents decreased to $1.656 billion from $1.811 billion at the beginning of the year, with approximately $1.6 billion held outside the U.S.