Financial Data and Key Metrics Changes - Moody's reported a record year in 2024, with revenue growth of 20% to over $7 billion and a 26% adjusted diluted EPS growth [9][37] - Adjusted operating margin expanded by over 400 basis points, reaching 51.3% in Q4 [9][38] - Q4 revenues were nearly $1.7 billion, up 13% year on year, with adjusted diluted EPS at $2.69, up 20% year on year [37][38] Business Line Data and Key Metrics Changes - Moody's Investors Service (MIS) achieved 18% total revenue growth, with a 29% growth in transactional revenue in Q4 [10][38] - Ratings revenue grew by 33% for the full year, with a 51.3% adjusted operating margin in Q4 [10][38] - Moody's Analytics (MA) reported Q4 revenue of $863 million, up 8% year on year, with recurring revenue growth of 10% [41][40] Market Data and Key Metrics Changes - MIS revenue growth was driven by a 134% increase in leveraged loan issuance activity in Q4 [39] - Strong performance in structured finance, particularly in U.S. CLOs and CMBS, contributed to revenue growth [39] - MA's Decision Solutions segment led with 12% ARR growth, driven by strong demand in banking, insurance, and KYC [41][42] Company Strategy and Development Direction - The company is focusing on strategic investments in technology, including Gen AI, to enhance operational efficiency and market position [13][17] - Moody's aims to capitalize on trends in private credit and transition finance, with significant investments in these areas [15][16] - The company plans to simplify its organizational structure and implement an efficiency program to enhance profitability [52][53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing expansion of debt capital markets and the increasing pace of digital transformation [29][30] - The company anticipates continued strong demand for its services, particularly in understanding financial impacts of extreme weather events [30][34] - Management highlighted the importance of maintaining robust internal controls while pursuing growth opportunities [20][34] Other Important Information - Moody's was named the best rating agency for the thirteenth consecutive year, reinforcing its leadership position in the market [14] - The company plans to incur restructuring charges of $200 to $250 million over two years, with expected annualized cost savings of $250 to $300 million [53] Q&A Session Summary Question: Clarification on medium-term guidance and organic numbers - Management confirmed that the medium-term guidance reflects organic growth, with less reliance on M&A than initially expected [64][67] Question: Insights on MIS margins and earnings growth - Management indicated that higher incentive compensation in 2024 would provide a tailwind for margins in 2025, while continuing investments in efficiency would support long-term growth [69][72] Question: Demand environment and sales cycles in MA - Management noted that sales cycles have not changed materially, with strong new business production and retention rates in 2024 [90][91] Question: Revenue growth expectations despite ARR growth - Management explained that the difference is driven by transactional revenue dynamics, which are expected to narrow as customers migrate to the platform [94][96] Question: Impact of federal government exposure and policy changes - Management stated that federal government exposure is minimal, accounting for less than 1% of consolidated revenue, with potential impacts from policy changes being sector-specific [106][107]

Fourth Quarter and Full Year 2024 Earnings Call February 13, 2025 Shivani Kak Certain statements contained in this document are forward-looking statements and are based on future expectations, plans and prospects for Moody's business and operations that involve a number of risks and uncertainties. Such statements involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those contemplated, expressed, projected, antic ...

Core Insights - Moody's reported revenue of $1.67 billion for the quarter ended December 2024, reflecting a 13% increase year-over-year, with EPS at $2.62 compared to $2.19 in the same quarter last year [1] - The revenue fell slightly short of the Zacks Consensus Estimate of $1.7 billion, resulting in a surprise of -1.41%, while the EPS exceeded the consensus estimate of $2.60 by +0.77% [1] Revenue Breakdown - Moody's Analytics generated $863 million, surpassing the average estimate of $858.01 million, marking an 8.4% year-over-year increase [4] - Moody's Investor Services reported $809 million, below the estimated $832.85 million, but showing an 18.3% increase compared to the previous year [4] - Decision Solutions within Moody's Analytics achieved $402 million, exceeding the estimate of $396.89 million, with an 11.4% year-over-year growth [4] - Data and Information segment reported $218 million, slightly below the estimate of $219.13 million, reflecting a 6.3% increase year-over-year [4] - Research and Insights segment generated $243 million, in line with the estimate of $242.74 million, showing a 5.7% year-over-year increase [4] - Corporate finance within Moody's Investor Services reported $381 million, below the estimate of $422.80 million, but still reflecting a 13.1% year-over-year increase [4] - Structured finance segment reported $138 million, exceeding the estimate of $127.13 million, with a significant 35.3% year-over-year increase [4] - Public, project, and infrastructure finance generated $115 million, below the estimate of $129.34 million, but still showing a 9.5% year-over-year increase [4] Stock Performance - Moody's shares have returned +7.2% over the past month, outperforming the Zacks S&P 500 composite's +3.9% change, indicating a positive market sentiment [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Group 1 - Moody's reported quarterly earnings of $2.62 per share, exceeding the Zacks Consensus Estimate of $2.60 per share, and up from $2.19 per share a year ago, representing an earnings surprise of 0.77% [1] - The company posted revenues of $1.67 billion for the quarter ended December 2024, which was 1.41% below the Zacks Consensus Estimate, compared to $1.48 billion in the same quarter last year [2] - Moody's shares have increased approximately 6.8% since the beginning of the year, outperforming the S&P 500's gain of 2.9% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $3.58 on revenues of $1.89 billion, and for the current fiscal year, it is $13.43 on revenues of $7.5 billion [7] - The Zacks Industry Rank for Financial - Miscellaneous Services is in the top 19% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Financial Performance - Moody's Corporation reported Q4 2024 revenue of $1.7 billion, a 13% increase year-over-year, and full year revenue of $7.1 billion, up 20%[1]. - Moody's Investors Service (MIS) revenue grew 18% in Q4 2024, with transactional revenue increasing by 29%, and full year revenue up 33%[16]. - Moody's Analytics (MA) revenue increased 8% in Q4 2024, driven by 11% growth in Decision Solutions, with full year revenue growth of 8%[12]. - The company achieved a diluted EPS of $2.17 in Q4 2024, a 17% increase, and a full year diluted EPS of $11.26, up 29%[28]. - Revenue for Q4 2024 was $1,672 million, a 13% increase from $1,480 million in Q4 2023[42]. - The company reported a total revenue of $7,088 million for the year ended December 31, 2024, compared to $5,916 million in 2023, marking a 20% increase[54]. - Adjusted Operating Income for 2024 was $3,408 million, up from $2,597 million in 2023, reflecting a 31% increase[65]. - Free Cash Flow for 2024 was $2,521 million, compared to $1,880 million in 2023, indicating a 34% growth[68]. Revenue Segments - The MA segment's total external revenue for Q4 2024 was $863 million, a 8% increase from $796 million in Q4 2023[58]. - The MIS segment generated $809 million in total revenue for Q4 2024, up from $684 million in Q4 2023, representing an 18% increase[58]. - Decision Solutions revenue increased by 10% to $1,516 million in 2024 from $1,383 million in 2023[70]. - Corporate Finance revenue surged by 39% to $1,950 million in 2024, up from $1,404 million in 2023[70]. - Total Decision Solutions revenue for 2024 was $1,516 million, with recurring revenue contributing 91%[60]. Future Projections - Moody's projects 2025 revenue growth in the high-single-digit percent range and Adjusted Diluted EPS between $14.00 and $14.50, reflecting a growth rate in the low-to-mid-teens[3]. - Moody's expects global GDP growth of 2.0% to 3.0% in 2025, with U.S. GDP growth projected at 1.5% to 2.5%[35]. - Moody's Corporation expects revenue growth in the high-single-digit percent range for 2025[84]. - The company projects an operating margin of approximately 43% and an adjusted operating margin of approximately 50% for 2025[84]. - Moody's Analytics (MA) revenue is expected to increase in the high-single-digit percent range for 2025[84]. - Moody's Investors Service (MIS) revenue is anticipated to grow in the mid-to-high-single-digit percent range for 2025[84]. - Operating cash flow guidance for 2025 is set between $2.75 billion and $2.95 billion[85]. - Free cash flow guidance for 2025 is projected to be between $2.40 billion and $2.60 billion[85]. Operating Metrics - Operating expenses for 2024 increased by 11%, with projections for 2025 to rise in the low-to-mid-single-digit percent range[20]. - Moody's operating margin was 33.6% in Q4 2024, with an adjusted operating margin of 43.8%, reflecting a 120 basis point improvement year-over-year[25]. - Adjusted Operating Income for Q4 2024 was $733 million, up from $631 million in Q4 2023, reflecting a margin of 43.8%[54]. - The Adjusted Operating Margin improved to 48.1% in 2024, compared to 43.9% in 2023[65]. Cash and Assets - Cash and cash equivalents at the end of Q4 2024 were $2,408 million, an increase from $2,130 million at the end of Q4 2023[46]. - Total assets increased to $15,505 million in 2024, up from $14,622 million in 2023[43]. - Total liabilities rose to $11,778 million in 2024, compared to $11,146 million in 2023[43]. - The company reported net cash provided by operating activities of $2,838 million for the year, an increase from $2,151 million in 2023[46]. - Capital additions for 2024 were $317 million, compared to $271 million in 2023[46]. - The company issued $496 million in notes during the financing activities of 2024[46]. - Moody's Corporation's net cash used in financing activities was $1,446 million in 2024, down from $1,584 million in 2023[68]. Dividends and Income - The company declared a quarterly dividend of $0.94 per share, an 11% increase from the previous dividend of $0.85[32]. - Interest income increased to $29 million in Q4 2024 from $19 million in Q4 2023, while interest expense decreased to $52 million from $66 million[49]. - The company reported a net periodic pension income of $5 million in Q4 2024, compared to $9 million in Q4 2023[49]. - Total non-operating income for the year ended December 31, 2024 was $61 million, an increase from $49 million in 2023[49]. - Adjusted Net Income for 2024 was $476 million, compared to $402 million in 2023, reflecting a growth of 18%[79]. - Adjusted Diluted EPS for 2024 was $2.62, up from $2.19 in 2023, marking an increase of 20%[80]. Strategic Focus - Moody's plans to continue focusing on new product development and global expansion to enhance competitive positioning[40]. - Recurring revenue in the Decision Solutions segment accounted for 91% of total revenue in Q4 2024, indicating strong subscription-based growth[58]. - The company incurred $43 million in charges related to asset abandonment during the year, primarily due to outsourcing production of sustainability content[54].

Core Insights - Analysts expect Moody's (MCO) to report quarterly earnings of $2.60 per share, reflecting an 18.7% year-over-year increase, with revenues projected at $1.7 billion, up 14.6% from the previous year [1] - The consensus EPS estimate has been adjusted upward by 0.9% over the past 30 days, indicating a reassessment by analysts [1][2] Revenue Estimates - Revenue from Moody's Analytics is projected to reach $858.01 million, indicating a year-over-year change of +7.8% [4] - Revenue from Moody's Investor Services is estimated at $832.85 million, reflecting a year-over-year increase of +21.8% [4] - Revenue from Moody's Analytics - Research and Insights is expected to be $242.74 million, suggesting a +5.5% change year over year [5] - Revenue from Moody's Analytics - Data and Information is forecasted at $219.13 million, indicating a +6.9% change from the prior year [5] - Revenue from Moody's Analytics - Decision Solutions is projected at $396.89 million, reflecting a +9.9% year-over-year change [6] - Intersegment revenue for Moody's Investor Services is expected to reach $50.00 million, indicating a +4.2% change from the previous year [6] - Revenue from Moody's Investor Services - Corporate Finance is estimated at $422.80 million, reflecting a +25.5% year-over-year increase [7] - Revenue from Moody's Investor Services - Structured Finance is projected at $127.13 million, indicating a +24.6% change from the prior year [8] - Revenue from Moody's Investor Services - Public, Project and Infrastructure Finance is expected to be $129.34 million, reflecting a +23.2% year-over-year change [8] - The combined revenue for Moody's Investor Services is estimated at $879.50 million, indicating a +20.2% change from the previous year [9] Stock Performance - Moody's shares have recorded returns of +11.2% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [9][10] - Moody's holds a Zacks Rank 2 (Buy), suggesting it is likely to outperform the overall market in the upcoming period [10]

I rate Moody's Corporation (NYSE: NYSE: MCO ) a Buy, for capital appreciation focused investors who are looking for long-term buy and hold investments. The most important factors that influence my opinion of the stock are:David A. Johnson is founder and principal of Endurance Capital Management, a New Jersey Limited Liability Company. As an investor entrepreneur, David invests in stocks, bonds, options, ETFs, REITs, real estate, closed end funds and alternative investment funds such as hedge funds and priva ...

The market expects Moody's (MCO) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on February 13, 2025, might help the stock move higher if these key numbers are ...

Company Overview - Moody's (MCO) currently has a Momentum Style Score of B, indicating a positive momentum outlook [2] - The company holds a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [3] Price Performance - Over the past week, Moody's shares have increased by 2.9%, outperforming the Zacks Financial - Miscellaneous Services industry, which rose by only 0.1% [5] - In the last month, Moody's stock has appreciated by 3.58%, compared to the industry's 0.33% [5] - Over the past quarter, Moody's shares have risen by 6.33%, and over the last year, they have increased by 25.07%, while the S&P 500 has moved 3.85% and 24.08% respectively [6] Trading Volume - Moody's has an average 20-day trading volume of 546,793 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the last two months, 7 earnings estimates for Moody's have been revised upwards, while none have been revised downwards, leading to an increase in the consensus estimate from $12.07 to $12.39 [9] - For the next fiscal year, 6 estimates have moved higher, with only 1 downward revision during the same period [9] Conclusion - Considering the positive momentum indicators and earnings outlook, Moody's is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a strong candidate for near-term investment [11]

Earnings Season and Market Trends - The current earnings season is unfolding, with significant attention on the emerging threat of DeepSeek [1] - The new frenzy around DeepSeek might indirectly create a strong tailwind for Moody's Corporation [1] Investment Strategy - The focus is on long-term growth and dividend growth investing, targeting undervalued stocks and high-quality dividend-growing companies in both the US and European markets [1] - Profitability is emphasized as a safer driver of gains compared to low valuation, with importance placed on margins, free cash flow stability and growth, and returns on invested capital [1] - Research is conducted within areas of competence, with a preference for high-quality companies that warrant in-depth analysis [1]