10-QPeriod: Q2 FY2023

MOODYS CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 26, 2023For Securities:MCO

Summary

Moody's Corporation (MCO) reported strong revenue growth of 8% to $1.49 billion for the second quarter of 2023, driven by robust performance in its Moody's Analytics (MA) segment, which saw an 11% increase in revenue. The Moody's Investors Service (MIS) segment also contributed with a 6% revenue increase, although this was partially offset by declines in Structured Finance. Net income rose by 15% to $377 million, with diluted earnings per share (EPS) increasing by 16% to $2.05. The company's effective tax rate decreased significantly to 23.4% from 26.2% in the prior year, mainly due to higher tax benefits from stock-based compensation and the resolution of uncertain tax positions. Despite increased operating and SG&A expenses, Moody's maintained its operating margin at 36.8%, demonstrating effective cost management relative to revenue growth.

Financial Highlights

55 data points
Beta

Revenue

$1.49B

71.5% Gross Margin

Net Income

$377.00M

25.2% Net Margin

EPS (Diluted)

$2.05

Total Assets

$14.69B

Cash & Equivalents

$2.28B

Free Cash Flow

$550.00M

Financial Statements
Beta
Revenue$1.49B
Cost of Revenue$426.00M
Gross Profit$1.07B
SG&A Expenses$415.00M
Operating Expenses$944.00M
Operating Income$550.00M
Net Income$377.00M
EPS (Basic)$2.05
EPS (Diluted)$2.05
Shares Outstanding (Basic)183.50M
Shares Outstanding (Diluted)184.10M

Key Highlights

  • 1Total revenue increased 8% year-over-year to $1.49 billion in Q2 2023.
  • 2Moody's Analytics (MA) segment revenue grew 11% to $747 million, driven by strong demand in Decision Solutions, Research & Insights, and Data & Information.
  • 3Moody's Investors Service (MIS) segment revenue increased 6% to $747 million, boosted by Corporate Finance and Financial Institutions, but tempered by a decline in Structured Finance.
  • 4Net income attributable to Moody's rose 15% to $377 million.
  • 5Diluted EPS increased 16% to $2.05.
  • 6The effective tax rate decreased to 23.4% from 26.2% due to tax benefits and lower FX translation losses.
  • 7The company returned $1.085 billion in Free Cash Flow during the first six months of 2023.

Frequently Asked Questions

Moody's reported total revenue of $1.49 billion for the three months ended June 30, 2023, an increase of 8% compared to $1.38 billion in the same period of 2022. This growth was driven by both the Moody's Analytics (MA) and Moody's Investors Service (MIS) segments.

The MA segment's revenue grew by 11% to $747 million, fueled by sustained demand for KYC and insurance solutions, continued growth from SaaS-based banking offerings, and strong retention and new sales for ratings data feeds. Decision Solutions saw a 14% increase, driven by KYC, banking, and insurance products.

MIS revenue increased by 6% to $747 million, primarily due to higher investment-grade and speculative-grade corporate debt issuance and growth in Financial Institutions. However, this was partially offset by declines across most asset classes in Structured Finance, reflecting decreased securitization activity amidst capital market volatility.

Moody's generated $1.085 billion in Free Cash Flow during the first six months of 2023. The company remains committed to investing in growth initiatives, returning excess capital to shareholders through dividends and share repurchases, and maintaining a strong liquidity position.