10-QPeriod: Q1 FY2024

MOODYS CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2024

Filed May 2, 2024For Securities:MCO

Summary

Moody's Corporation (MCO) reported a strong first quarter for 2024, with total revenue increasing by 21% year-over-year to $1.786 billion. This growth was driven by robust performance in both its Moody's Analytics (MA) and Moody's Investors Service (MIS) segments. The MIS segment, in particular, saw a substantial 35% revenue increase, fueled by strong demand and opportunistic issuance across its various lines of business, benefiting from favorable market conditions. Profitability also saw significant improvement, with operating income up 45% to $801 million and diluted Earnings Per Share (EPS) growing 16% to $3.15. The company's effective tax rate (ETR) saw a substantial increase compared to the prior year, primarily due to one-time tax benefits recognized in Q1 2023. Management highlighted disciplined expense management alongside strong revenue growth as key drivers for margin expansion. The company also reiterated its commitment to shareholder value through dividends and share repurchases, maintaining healthy cash flow from operations.

Financial Highlights

55 data points
Beta

Revenue

$1.79B

73.9% Gross Margin

Net Income

$577.00M

32.3% Net Margin

EPS (Diluted)

$3.15

Total Assets

$15.01B

Cash & Equivalents

$2.48B

Free Cash Flow

$697.00M

Financial Statements
Beta
Revenue$1.79B
Cost of Revenue$467.00M
Gross Profit$1.32B
SG&A Expenses$413.00M
Operating Expenses$985.00M
Operating Income$801.00M
Net Income$577.00M
EPS (Basic)$3.16
EPS (Diluted)$3.15
Shares Outstanding (Basic)182.60M
Shares Outstanding (Diluted)183.40M

Key Highlights

  • 1Total revenue grew 21% year-over-year to $1.786 billion, driven by strong performance in both MA and MIS segments.
  • 2Moody's Investors Service (MIS) revenue surged 35%, attributed to increased issuance volumes and favorable market conditions.
  • 3Operating income increased significantly by 45% to $801 million, reflecting strong revenue growth outpacing expense increases.
  • 4Diluted EPS rose 16% to $3.15, demonstrating improved profitability for shareholders.
  • 5The company generated strong operating cash flow of $775 million, up from $608 million in the prior year.
  • 6Moody's maintained a healthy balance sheet with $2.476 billion in cash and cash equivalents.
  • 7Annualized Recurring Revenue (ARR) for Moody's Analytics (MA) grew 10%, indicating continued strength in its subscription-based offerings.

Frequently Asked Questions

Moody's revenue growth was primarily driven by a substantial increase in Moody's Investors Service (MIS) revenue, which rose 35%, due to strong rated issuance volumes across corporate finance, structured finance, financial institutions, and public finance sectors. Moody's Analytics (MA) also contributed with an 8% revenue increase, supported by demand for its KYC solutions, SaaS-based offerings, and data and information services.

Profitability improved significantly. Operating income increased by 45% to $801 million, and diluted EPS grew 16% to $3.15. This was due to strong revenue growth outpacing expense increases, and a significant improvement in operating margin to 44.8% from 37.7% in the prior year. The effective tax rate (ETR) increased substantially to 23.3% from 1.0% due to one-time tax benefits recognized in Q1 2023.

Moody's continues to focus on creating shareholder value through investments in the business, targeted acquisitions, dividends, and share repurchases. The company generated strong operating cash flow of $775 million and maintains a healthy cash position. As of March 31, 2024, approximately $1.2 billion of share repurchase authority remained.

Moody's Analytics (MA) demonstrated consistent performance with an 8% revenue increase. Notably, its Annualized Recurring Revenue (ARR) grew by 10%, reaching $3.059 billion. This growth was broad-based across its segments, with Decision Solutions showing 12% ARR growth, Data & Information at 11%, and Research & Insights at 6%, indicating the resilience and growth potential of its subscription-based services.