Core Insights - Moody's latest analysis indicates that the U.S. is at a critical juncture of economic recession, with 53% of industries initiating layoffs, except for the healthcare sector which continues to see job growth [1] - The employment market has contracted significantly for three consecutive months, with July 2025 non-farm payrolls adding only 73,000 jobs, falling short of market expectations by 37,000 jobs [4] - A systemic weakening of economic indicators suggests an imminent recession risk, with notable consumer weakness and a manufacturing PMI below the growth threshold for six months [4] Employment Trends - The July 2025 non-farm payrolls were revised downwards, with May and June figures adjusted to 19,000 and 14,000 respectively, totaling a downward revision of 258,000 jobs [4] - 215 out of 400 industry classifications have experienced job reductions, marking the fourth time since 1970 that this ratio has exceeded 50% [4] Economic Indicators - Retail sales in July showed a minimal increase of 0.1%, while real consumer spending, adjusted for inflation, exhibited negative growth [4] - The manufacturing sector is under pressure, with a PMI of 48.3, the lowest since February 2024, and new orders dropping to 46.1 [4] - The housing market is also struggling, with 30-year mortgage rates rising to 7.25%, leading to existing home sales falling to an annualized rate of 3.87 million, the lowest since the beginning of 2025 [4] Policy and Structural Issues - The Federal Reserve's tight monetary policy, with a federal funds rate of 5.25%-5.5% amid a 3.2% inflation rate, limits policy flexibility [5] - Historical policy missteps, such as the steel and aluminum tariffs and immigration reform, have led to increased manufacturing costs and reduced labor supply, contributing to a 9.3% year-over-year increase in service sector wages [5] - Corporate profit margins have contracted to 7.8%, the lowest level since 2008, indicating significant economic strain [5] Future Outlook - The upcoming three quarters will be critical in determining the depth and breadth of the recession cycle, with traditional monetary policy tools nearing ineffectiveness [5]

Summary of Moody's (MCO) FY Conference Call - August 11, 2025 Company Overview - Moody's is primarily recognized as a credit rating agency but has expanded into software through Moody's Analytics, which accounted for approximately 46% of total revenue in the first half of the year [2][2]. Key Points and Arguments AI and Software Development - Moody's is actively investing in AI and software tools to enhance their analytics capabilities, particularly in the lending space, which is seeing significant digitalization [7][8]. - The company is focusing on creating ecosystems that integrate various services, such as KYC checks, credit scoring, and risk assessment, to provide comprehensive solutions for clients [41][41]. Growth Areas - The lending sector is a primary focus for growth, with ongoing investments in data tools and software applications to support banks in their lending operations [8][8]. - Moody's has made strategic acquisitions, such as Cape Analytics, to enhance their capabilities in insurance underwriting and risk assessment [9][9][50][50]. - The company is also expanding its KYC offerings, targeting corporate clients who are increasingly concerned about supply chain resiliency and regulatory compliance [60][60][62][62]. Product Development and Performance - Approximately 40% of Moody's products now include some form of Generative AI capabilities, contributing to higher growth rates compared to the overall product suite [16][16][18][18]. - The Net Promoter Score (NPS) is significantly higher for clients using AI-enhanced products, indicating increased customer satisfaction and engagement [24][24][26][26]. Market Position and Strategy - Moody's is positioning itself to provide insights and analytics for private credit markets, leveraging its extensive database and credit scoring capabilities [66][66][70][70]. - The company is also focusing on enhancing its existing products, such as CreditLens, to drive incremental revenue growth through cross-selling opportunities [39][39][41][41]. Expense Management and Efficiency - Moody's is undergoing a restructuring process aimed at improving efficiency and productivity, particularly through the use of AI tools in various operational areas [80][80][81][81]. - The company is committed to redeploying resources to areas with higher growth potential, such as lending and AI development [80][80]. Other Important Insights - The integration of Cape Analytics is expected to contribute to organic ARR in the following year, enhancing Moody's capabilities in property risk assessment [58][58]. - The KYC business has shown strong growth, with an ARR increase of about 15% in the second quarter, driven by the demand for third-party risk management tools [74][74][75][75]. This summary encapsulates the key insights from the Moody's FY Conference Call, highlighting the company's strategic focus on AI, software development, and market expansion while managing operational efficiency.

Group 1 - Warren Buffett's Berkshire Hathaway reported a significant asset write-down of $3.8 billion on its investment in Kraft Heinz, reducing its book value to $8.4 billion from over $17 billion at the end of 2017 [4] - Despite the apparent loss, an analysis revealed that Buffett had secured nearly 60% profit due to favorable terms negotiated during the transaction, showcasing his ability to turn a perceived failure into a profitable outcome [4][5] - Buffett's investment philosophy emphasizes long-term value and strategic positioning, which has allowed him to navigate market fluctuations effectively [5] Group 2 - Buffett's cautious outlook on the current U.S. stock market is evident, as he believes the S&P 500's price-to-earnings ratio exceeding 30 indicates inflated growth expectations, suggesting potential historical investment opportunities in the next five years [16] - Berkshire Hathaway's cash reserves reached a record high of $344 billion, providing a robust buffer against market volatility as Buffett prepares to pass the reins to his successor, Greg Abel [21] - The company holds a diversified portfolio, with significant investments in Apple, American Express, and Coca-Cola, which together account for over 50% of its stock investment portfolio [18][19] Group 3 - Buffett's investment strategy includes a focus on companies with strong fundamentals, as evidenced by his long-term holdings in Coca-Cola and Apple, which have shown resilience and growth despite market challenges [27][29] - The investment approach is characterized by a preference for businesses with a competitive edge and sustainable cash flow, avoiding speculative trends such as AI investments that do not align with his expertise [20][32] - Buffett's principles emphasize the importance of understanding the intrinsic value of investments, advocating for a long-term perspective rather than short-term speculation [28][30] Group 4 - Buffett's philanthropic efforts include significant donations to charitable causes, particularly the Gates Foundation, reflecting his belief in responsible wealth distribution and opposition to hereditary wealth [36] - His lifestyle remains modest despite immense wealth, highlighting a commitment to simplicity and frugality, which has become a notable aspect of his public persona [36]

展望上调反映了吉宏观经济和财政指标的改善以及潜在经济增长率的提高，这得益于关键改革的效 果、经济的全面发展以及基础设施领域投资增长。吉国家债务占比从2020年占GDP的64%降至2024年的 37%。穆迪强调，继续推进结构性改革、提高治理水平和增强抵御风险能力对吉评级进一步上调具有重 要意义。 （原标题：穆迪将吉评级展望由稳定上调至积极） 据吉尔吉斯斯坦24.kg新闻网7月15日报道，国际评级机构穆迪将吉主权信用评级展望从"稳定"上调 至"积极"，长期发行人评级确认为B3。 ...

Core Viewpoint - Moody's Corporation (NYSE: MCO) is viewed positively due to its pricing power and potential for upside if the macro environment improves [1] Group 1: Investment Philosophy - The investment approach is fundamentally driven, focusing on identifying businesses with potential for scaling and unlocking significant terminal value [1] - Key factors considered include competitive moat, unit economics, reinvestment opportunities, and management quality, which are essential for long-term free cash flow generation and shareholder value creation [1] - The focus is on sectors with strong secular tailwinds, indicating a preference for industries poised for growth [1] Group 2: Professional Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds sourced from friends and family [1] - The motivation for writing is to share investment insights and receive feedback from the investment community [1] - The aim is to help readers concentrate on the elements that drive long-term equity value [1]

Group 1 - The company aims to invest in firms with ideal qualitative attributes, purchasing them at attractive prices based on fundamentals and holding them indefinitely [1] - The investment strategy involves managing a concentrated portfolio to avoid underperformers while maximizing exposure to high-potential winners [1] - The company plans to publish articles on such investments approximately three times a week, including extensive quarterly follow-ups and constant updates [1] Group 2 - The company often rates high-quality firms as 'Hold' due to insufficient growth opportunities or excessive downside risks [1]

Core Viewpoint - Moody's has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Moody's Earnings Outlook - Moody's is projected to earn $13.80 per share for the fiscal year ending December 2025, with no year-over-year change expected [8]. - Over the past three months, the Zacks Consensus Estimate for Moody's has increased by 1.6%, reflecting a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Moody's to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

PART I. FINANCIAL INFORMATION [Financial Statements](index=10&type=section&id=Item%201.%20Financial%20Statements) The company reported increased revenue and net income for Q2 and H1 2025, with stable assets and decreased liabilities Consolidated Statements of Operations Highlights (Unaudited) | Financial Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue ($M)** | $1,898 | $1,817 | 4.5% | $3,822 | $3,603 | 6.1% | | **Operating Income ($M)** | $818 | $775 | 5.5% | $1,664 | $1,576 | 5.6% | | **Net Income Attributable to Moody's ($M)** | $578 | $552 | 4.7% | $1,203 | $1,129 | 6.6% | | **Diluted EPS ($)** | $3.21 | $3.02 | 6.3% | $6.66 | $6.16 | 8.1% | Consolidated Balance Sheets Highlights (Unaudited) | Balance Sheet Item | June 30, 2025 ($M) | December 31, 2024 ($M) | | :--- | :--- | :--- | | Cash and cash equivalents | $2,174 | $2,408 | | Goodwill | $6,481 | $5,994 | | **Total Assets ($M)** | **$15,487** | **$15,505** | | Long-term debt | $6,967 | $6,731 | | **Total Liabilities ($M)** | **$11,379** | **$11,778** | | **Total Moody's Shareholders' Equity ($M)** | **$3,949** | **$3,565** | Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2025 ($M) | Six Months Ended June 30, 2024 ($M) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $1,300 | $1,461 | | **Net cash provided by (used in) investing activities** | $98 | ($191) | | **Net cash used in financing activities** | ($1,780) | ($731) | | **(Decrease) increase in cash and cash equivalents** | ($234) | $505 | [Notes to the Consolidated Financial Statements (Unaudited)](index=18&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Notes detail accounting policies, revenue disaggregation, restructuring, and segment performance, including MA's reorganization - In Q1 2025, Moody's Analytics (MA) reorganized its management and reporting structure, resulting in its goodwill being evaluated as a single reporting unit instead of the previous two. This change did not affect the company's reportable segments[47](index=47&type=chunk) Revenue by Reportable Segment (Six Months Ended June 30) | Segment | 2025 Revenue ($M) | 2024 Revenue ($M) | % Change | | :--- | :--- | :--- | :--- | | **Moody's Analytics (MA)** | $1,747 | $1,601 | 9.1% | | **Moody's Investors Service (MIS)** | $2,075 | $2,002 | 3.6% | | **Total MCO** | **$3,822** | **$3,603** | **6.1%** | - The company initiated the 'Strategic and Operational Efficiency Restructuring Program' on December 19, 2024, to realign operations and improve efficiency. The program is expected to result in annualized savings of **$250 million** to **$300 million** and total pre-tax charges of **$200 million** to **$250 million**. As of June 30, 2025, cumulative expenses incurred were **$105 million**[93](index=93&type=chunk)[94](index=94&type=chunk) - In Q1 2025, the company fully repaid its **$700 million** 3.75% 2020 Senior Notes upon maturity. As of June 30, 2025, total long-term debt carrying value was **$6,967 million**[108](index=108&type=chunk)[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses H1 2025 revenue growth in MA and MIS segments, improved adjusted operating margin, and strong liquidity [Results of Operations](index=49&type=section&id=Results%20of%20Operations) H1 2025 total revenue grew 6% to **$3.82 billion**, driven by MA and MIS, with adjusted operating margin expanding 110 bps Q2 2025 vs Q2 2024 Performance Summary | Financial Measure | Q2 2025 ($M) | Q2 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $1,898 | $1,817 | 4% | | MA External Revenue | $888 | $802 | 11% | | MIS External Revenue | $1,010 | $1,015 | 0% | | **Operating Margin** | 43.1% | 42.7% | +40 BPS | | **Adjusted Operating Margin** | 50.9% | 49.6% | +130 BPS | | **Diluted EPS ($)** | $3.21 | $3.02 | 6% | | **Adjusted Diluted EPS ($)** | $3.56 | $3.28 | 9% | H1 2025 vs H1 2024 Performance Summary | Financial Measure | H1 2025 ($M) | H1 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $3,822 | $3,603 | 6% | | MA External Revenue | $1,747 | $1,601 | 9% | | MIS External Revenue | $2,075 | $2,002 | 4% | | **Operating Margin** | 43.5% | 43.7% | -20 BPS | | **Adjusted Operating Margin** | 51.3% | 50.2% | +110 BPS | | **Diluted EPS ($)** | $6.66 | $6.16 | 8% | | **Adjusted Diluted EPS ($)** | $7.38 | $6.65 | 11% | - MA's revenue growth was driven by sustained demand for KYC and insurance offerings, SaaS-based banking solutions, and credit research products. ARR increased by **8%**[141](index=141&type=chunk)[159](index=159&type=chunk) - MIS revenue growth was supported by strong investor demand and tight credit spreads in investment-grade, U.S. public and project finance, and CMBS, partially offset by declines in bank loans due to market volatility and subdued M&A activity[211](index=211&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$2.3 billion** in cash, despite decreased operating cash flow, and has **$0.9 billion** for share repurchases Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 ($M) | 2024 ($M) | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,300 | $1,461 | | Net cash provided by (used in) investing activities | $98 | ($191) | | Net cash used in financing activities | ($1,780) | ($731) | | **Free Cash Flow (Non-GAAP) ($M)** | **$1,140** | **$1,290** | - The decrease in operating cash flow was driven by **$198 million** in higher income tax payments and approximately **$100 million** in higher incentive compensation payments[277](index=277&type=chunk)[283](index=283&type=chunk) - The increase in cash used in financing activities was primarily due to a **$700 million** repayment of notes and **$273 million** more in treasury share repurchases compared to the prior year[280](index=280&type=chunk)[284](index=284&type=chunk) - As of June 30, 2025, the company had approximately **$0.9 billion** of remaining authority under its **$1.5 billion** share repurchase program authorized in October 2024[291](index=291&type=chunk) [Non-GAAP Financial Measures](index=79&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures like Adjusted Operating Income, Adjusted Diluted EPS, and Free Cash Flow for performance analysis Reconciliation of Operating Income to Adjusted Operating Income (Six Months Ended June 30) | Metric | 2025 ($M) | 2024 ($M) | | :--- | :--- | :--- | | Operating income | $1,664 | $1,576 | | Depreciation and amortization | $233 | $210 | | Restructuring | $60 | $7 | | Charges related to asset abandonment | $3 | $15 | | **Adjusted Operating Income ($M)** | **$1,960** | **$1,808** | Reconciliation of Diluted EPS to Adjusted Diluted EPS (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Diluted EPS | $6.66 | $6.16 | | Net Acquisition-Related Intangible Amortization Expenses | $0.46 | $0.40 | | Net restructuring | $0.25 | $0.03 | | Net charges related to asset abandonment | $0.01 | $0.06 | | **Adjusted Diluted EPS ($)** | **$7.38** | **$6.65** | - For the six months ended June 30, 2025, the company's organic constant currency revenue growth was **5%** for the total company, **7%** for MA, and **3%** for MIS[306](index=306&type=chunk)[307](index=307&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=86&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk primarily involves FX and interest rate fluctuations, mitigated by derivatives - The company is exposed to market risk from changes in FX rates, particularly the euro, Hong Kong dollar, and Singapore dollar, relative to the U.S. dollar[317](index=317&type=chunk)[318](index=318&type=chunk) - A hypothetical 10% strengthening of the euro versus the USD would cause a combined unfavorable impact of approximately **$580 million** to OCI from cross-currency swaps (**$433 million**) and designated euro-denominated debt (**$147 million**). This impact would be offset by gains on the hedged net investments[322](index=322&type=chunk)[323](index=323&type=chunk) [Controls and Procedures](index=87&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[324](index=324&type=chunk) - No material changes in the company's internal control over financial reporting occurred during the three-month period ended June 30, 2025[325](index=325&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=88&type=section&id=Item%201.%20Legal%20Proceedings) Details on legal proceedings are provided in Note 16, 'Contingencies,' within the financial statements - For details on legal proceedings, the report refers to Note 16 "Contingencies" in Part I, Item 1[329](index=329&type=chunk) [Risk Factors](index=88&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the company's 2024 Annual Report on Form 10-K - The company states there have been no material changes from the risk factors disclosed in its 2024 Form 10-K[330](index=330&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=88&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, Moody's repurchased **623,206 shares** at an average of **$460.76**, with **$0.9 billion** repurchase authority remaining Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | April 2025 | 246,913 | $430.63 | | May 2025 | 64,373 | $477.84 | | June 2025 | 311,920 | $480.87 | | **Total Q2** | **623,206** | **$460.76** | - At the end of Q2 2025, approximately **$0.9 billion** remained available for future repurchases under the Board's authorization from October 15, 2024[332](index=332&type=chunk) [Other Information](index=88&type=section&id=Item%205.%20Other%20Information) No information is reported under this item - Not applicable[333](index=333&type=chunk) [Exhibits](index=89&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents and CEO/CFO certifications - The exhibits filed with this report include CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and XBRL data files (Exhibits 101 and 104)[335](index=335&type=chunk)

Market Overview - The market capitalization of major US stocks shows varied performance, with Oracle at 762.30 billion, Mastercard at 321.36 billion, and Visa at 770.15 billion, reflecting increases of +0.66%, +0.86%, and +0.68% respectively [3] - Exxon Mobil's market cap is 679.53 billion, with a slight decrease of -0.98%, while Johnson & Johnson and Netflix show minor changes of -0.08% and -0.05% respectively [3] - Companies like Wells Fargo and Cisco have market caps of 270.15 billion and 279.59 billion, with respective increases of +0.98% and -0.58% [3] Notable Stock Movements - T-Mobile US Inc experienced a significant increase of +6.20%, reaching a market cap of 272.19 billion [3] - General Electric and Coca-Cola saw market caps of 285.05 billion and 298.76 billion, with increases of +0.37% and +0.91% respectively [3] - Companies like Disney and Goldman Sachs have market caps of 229.06 billion and 221.80 billion, with slight changes of +0.01% and -0.60% [3] Sector Performance - The technology sector shows mixed results, with Intel at 991.05 billion, down -3.28%, while AMD increased by +2.46% to 254.92 billion [5] - The consumer goods sector is represented by companies like Procter & Gamble and Coca-Cola, with market caps of 371.68 billion and 298.76 billion, showing slight increases [3][4] - The energy sector, represented by Exxon Mobil and Chevron, shows varied performance, with Exxon down -0.98% and Chevron up +0.66% [3] Summary of Key Companies - Oracle's market cap stands at 762.30 billion, reflecting a positive trend [3] - Mastercard and Visa show strong performance with market caps of 321.36 billion and 770.15 billion, both increasing [3] - Companies like Pfizer and Comcast have market caps of 1579.81 billion and 1332.00 billion, with Pfizer showing minimal change and Comcast down -3.16% [4][5]

Core Insights - Moody's reported second-quarter 2025 adjusted earnings of $3.56 per share, exceeding the Zacks Consensus Estimate of $3.44, with an 8.5% year-over-year growth [1][7] - The company's revenues improved to $1.90 billion, surpassing the Zacks Consensus Estimate of $1.85 billion, reflecting a 4.5% increase year-over-year [3][7] - Operating expenses rose to $1.08 billion, up 3.6% year-over-year, impacting overall profitability [3][7] Financial Performance - Net income attributable to Moody's was $578 million or $3.21 per share, an increase from $552 million or $3.02 per share in the prior-year quarter [2] - Adjusted operating income reached $966 million, a 7.1% increase year-over-year, with an adjusted operating margin of 50.9%, up from 49.6% a year ago [3] Segment Performance - Moody's Investors Service (MIS) revenues slightly declined to $1.06 billion due to weakness in Corporate Finance and Financial Institutions, partially offset by growth in Structured Finance [4] - Moody's Analytics (MA) revenues increased by 10.5% year-over-year to $891 million, driven by strong demand for proprietary data and analytical insights [4] Balance Sheet and Liquidity - As of June 30, 2025, Moody's had total cash, cash equivalents, and short-term investments of $2.29 billion, down from $2.97 billion as of December 31, 2024 [5] - The company reported $7 billion in outstanding debt and $1.25 billion in additional borrowing capacity under its revolving credit facility [5] Share Repurchase Activity - In the quarter, Moody's repurchased 0.6 million shares at an average price of $460.76, with $0.9 billion of share repurchase authorization remaining [6] Guidance and Outlook - Moody's updated its 2025 guidance, expecting adjusted earnings of $13.50-$14.00 per share, revised from the previous target of $13.25-$14.00 [7][8] - The MIS segment's revenue growth is now expected to be in the low to mid-single-digit range, adjusted from stable to mid-single-digit growth [8] Strategic Developments - In June, Moody's fully acquired ICR Chile, enhancing its presence in Latin America's domestic credit markets, although the transaction is not expected to materially impact 2025 financial results [9][10]