10-QPeriod: Q1 FY2025

MOODYS CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2025

Filed April 23, 2025For Securities:MCO

Summary

Moody's Corporation (MCO) reported a solid first quarter for 2025, with total revenue increasing by 8% to $1.92 billion compared to the same period last year. This growth was driven by strong performance in both its Moody's Analytics (MA) and Moody's Investors Service (MIS) segments. Diluted Earnings Per Share (EPS) rose by 10% to $3.46, demonstrating the company's ability to translate revenue growth into increased profitability. The company also maintained a strong operating margin of 44.0%, though this was slightly impacted by restructuring charges. The company's strategic initiatives appear to be progressing well, with Moody's Analytics showing robust growth in its Decision Solutions, Research & Insights, and Data & Information offerings, supported by consistent Annual Recurring Revenue (ARR) growth. Moody's Investors Service benefited from increased U.S. investment-grade issuance activity and robust structured finance issuance. Despite the positive revenue and EPS performance, investors should note the impact of restructuring charges, which the company anticipates will improve operating efficiency over the long term.

Financial Highlights

55 data points
Beta

Revenue

$1.92B

74.5% Gross Margin

Net Income

$625.00M

32.5% Net Margin

EPS (Diluted)

$3.46

Total Assets

$15.10B

Cash & Equivalents

$2.14B

Free Cash Flow

$672.00M

Financial Statements
Beta
Revenue$1.92B
Cost of Revenue$491.00M
Gross Profit$1.43B
SG&A Expenses$439.00M
Operating Expenses$1.08B
Operating Income$846.00M
Net Income$625.00M
EPS (Basic)$3.47
EPS (Diluted)$3.46
Shares Outstanding (Basic)180.00M
Shares Outstanding (Diluted)180.70M

Key Highlights

  • 1Total revenue increased 8% year-over-year to $1.92 billion, driven by strong performance in both MA and MIS segments.
  • 2Diluted Earnings Per Share (EPS) grew 10% to $3.46, indicating effective profit translation from revenue increases.
  • 3Moody's Analytics (MA) reported an 8% revenue increase, with strong demand in KYC, insurance, and SaaS-based banking solutions.
  • 4Moody's Investors Service (MIS) saw an 8% revenue increase, supported by higher U.S. investment-grade issuance and structured finance activity.
  • 5Operating income grew 6% to $846 million, with an operating margin of 44.0%.
  • 6Adjusted Operating Income (a non-GAAP measure) increased 10% to $994 million, showcasing underlying operational strength.
  • 7The company repaid $700 million of notes payable and continued its share repurchase program, returning capital to shareholders.

Frequently Asked Questions

Moody's revenue growth of 8% to $1.92 billion was primarily driven by strong performance in both its Moody's Analytics (MA) and Moody's Investors Service (MIS) segments. MA benefited from sustained demand for KYC, insurance, and SaaS-based banking solutions, as well as credit research offerings. MIS saw increased U.S. investment-grade issuance and robust structured finance activity, contributing to an 8% rise in revenue for both segments.

Moody's demonstrated solid profitability with a 10% increase in Diluted EPS to $3.46. The reported operating income grew 6% to $846 million. While the operating margin was 44.0%, it was impacted by restructuring charges totaling $33 million. However, the company's Adjusted Operating Income, which excludes certain non-recurring items, increased by 10% to $994 million, highlighting strong underlying operational performance.

Moody's incurred $33 million in restructuring charges during the first quarter of 2025 as part of its Strategic and Operational Efficiency Restructuring Program. While these charges temporarily impacted the operating margin, the company expects this program to yield annualized savings of $250 million to $300 million and improve operating efficiency in the long term. The company also reported charges related to asset abandonment of $2 million.

Moody's generated strong operating cash flow and repaid $700 million of notes payable during the quarter. The company also continued its share repurchase program, with approximately $1.2 billion of authority remaining as of March 31, 2025. Additionally, the Board approved a quarterly dividend of $0.94 per share, indicating a commitment to returning capital to shareholders.