10-QPeriod: Q3 FY2024

MOODYS CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 23, 2024For Securities:MCO

Summary

Moody's Corporation (MCO) reported a strong third quarter and a robust first nine months of 2024, demonstrating significant revenue growth across both its Moody's Analytics (MA) and Moody's Investors Service (MIS) segments. Total revenue increased by 23% year-over-year for the quarter and 22% for the nine-month period, driven by notable strength in MIS, which saw a 41% revenue increase in Q3 and 37% for the year-to-date, fueled by favorable market conditions for debt issuance. MA also contributed positively with 7% and 8% revenue growth for the respective periods, driven by consistent demand for its solutions. Profitability metrics showed substantial improvement, with diluted EPS growing by 39% in the quarter and 32% year-to-date. The company also saw expansion in its operating margins, reflecting the strong top-line performance outpacing expense growth. Investments in technology and personnel continue, but are being managed effectively to support growth. Moody's continues to return capital to shareholders through dividends and share repurchases, underscoring its financial strength and commitment to shareholder value.

Financial Statements
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Key Highlights

  • 1Total revenue increased by 23% to $1.81 billion for the third quarter of 2024 and by 22% to $5.42 billion for the nine months ended September 30, 2024.
  • 2Moody's Investors Service (MIS) revenue surged by 41% to $982 million in Q3 and 37% to $2.98 billion year-to-date, driven by strong debt issuance across all lines of business.
  • 3Moody's Analytics (MA) external revenue grew by 7% to $831 million in Q3 and 8% to $2.43 billion year-to-date, supported by sustained demand for its various solutions.
  • 4Diluted Earnings Per Share (EPS) rose significantly, up 39% to $2.93 for the quarter and 32% to $9.09 for the nine months.
  • 5Operating margin improved to 40.7% in Q3 and 42.7% year-to-date, with Adjusted Operating Margin reaching 47.8% and 49.4% respectively, indicating strong operational leverage.
  • 6The company generated substantial operating cash flow, with $2.16 billion for the nine months ended September 30, 2024, enabling continued investment and shareholder returns.
  • 7Moody's declared a quarterly dividend of $0.85 per share and continues its share repurchase program, demonstrating confidence in its financial position and commitment to shareholder value.

Frequently Asked Questions

Revenue growth was primarily driven by a significant increase in debt issuance across all lines of business within Moody's Investors Service (MIS), which saw a 41% surge. Moody's Analytics (MA) also contributed positively with a 7% increase in revenue, supported by sustained demand for its solutions like KYC and insurance offerings.

Profitability showed strong improvement. Diluted EPS increased by 39% year-over-year to $2.93 in the third quarter, and operating margins expanded to 40.7%. Adjusted Operating Margin also saw healthy growth, reaching 47.8%.

Moody's generated strong operating cash flow of $2.16 billion for the first nine months of 2024. The company remains committed to returning capital to shareholders, recently approving a quarterly dividend of $0.85 per share and having substantial remaining share repurchase authorization.

Operating and SG&A expenses increased, largely due to higher incentive and stock-based compensation, as well as increased salaries and benefits to support business growth and headcount. The company also recorded charges related to asset abandonment for outsourcing sustainability content production, and restructuring charges related to its 2022-2023 Geolocation Restructuring Program.