Moody’s(US:MCO)2020-05-01 21:18Financial Performance - Moody's reported a net income of $487 million for the three months ended March 31, 2020, compared to $374 million for the same period in 2019, reflecting a year-over-year increase of 30.3%[15]. - Comprehensive income attributable to Moody's was $373 million for the three months ended March 31, 2020, up from $363 million in the prior year, representing a 2.8% increase[15]. - Total revenue for the first quarter of 2020 reached $1,290 million, an increase of 13% compared to $1,142 million in the same period of 2019[50]. - Total revenue for the three months ended March 31, 2020, was $1.29 billion, an increase from $1.14 billion in the same period of 2019, representing a growth of approximately 12.3%[57]. - Adjusted Operating Income for the consolidated entity was $649 million, compared to $519 million in the prior year, reflecting a 25.1% increase[156]. - Operating income for Q1 2020 was $592 million, reflecting a 28% increase from $462 million in Q1 2019[193]. - Diluted EPS increased by 33% to $2.57, compared to $1.93 in the same quarter of 2019, driven by higher operating income[191]. - The operating margin improved to 45.9%, up 540 basis points from 40.5% in the prior year, reflecting strong revenue growth[191]. Revenue Breakdown - Ratings revenue totaled $783 million, up 17.7% from $665 million year-over-year[52]. - Corporate finance (CFG) revenue increased to $453 million, a 27.7% rise from $355 million in the prior year[54]. - Research, data and analytics (RD&A) revenue grew to $358 million, representing a 16.3% increase from $308 million in the same quarter of 2019[52]. - Total external revenue for the MA segment was $496 million, up 5.1% from $472 million year-over-year[54]. - The U.S. contributed $503 million to the MIS segment, a 22.4% increase from $411 million in the same quarter of 2019[54]. - Non-U.S. revenue for the MIS segment was $291 million, up 12.3% from $259 million year-over-year[54]. - The United States accounted for $714 million of total revenue, an increase from $612 million in the same period of 2019[157]. - The EMEA region generated $363 million in revenue, up from $333 million year-over-year[157]. - The Asia-Pacific region's revenue increased slightly to $136 million from $132 million in the prior year[157]. Expenses and Liabilities - The company reported total expenses of $698 million for the three months ended March 31, 2020, up from $680 million in the prior year[156]. - Total current liabilities increased to $2,351 million as of March 31, 2020, compared to $1,912 million at December 31, 2019, an increase of 23.0%[18]. - Long-term debt increased to $6,303 million as of March 31, 2020, up from $5,581 million at December 31, 2019, representing a rise of 12.9%[18]. - The company reported an increase in salaries and benefits liabilities to $160 million as of March 31, 2020, from $152 million at the end of 2019[117]. - The amortization expense for acquired intangible assets was $28 million for the first quarter of 2020, compared to $26 million for the same period in 2019[106]. Cash Flow and Investments - Net cash provided by operating activities was $345 million for the three months ended March 31, 2020, compared to $367 million for the same period in 2019, a decrease of 6.0%[20]. - Net cash used in investing activities totaled $772 million for the three months ended March 31, 2020, compared to $7 million for the same period in 2019, indicating a significant increase in investment outflows[20]. - The company issued $700 million in notes during the financing activities for the three months ended March 31, 2020[20]. - Cash and cash equivalents rose to $2,141 million at the end of the period, up from $1,832 million at the beginning of the period, marking an increase of 16.9%[20]. Strategic Initiatives - Moody's continues to focus on expanding its subscription-based revenue streams, which are critical for long-term growth and stability[8]. - The company has made strategic acquisitions, including Regulatory DataCorp Inc. and Vigeo Eiris, to enhance its risk and compliance intelligence offerings[8]. - The Company completed acquisitions of RiskFirst, ABS Suite, and Regulatory DataCorp, which will impact year-over-year comparative results[187]. - The company is closely monitoring the impact of COVID-19, particularly in the MIS segment, where significant market disruption has been observed[186]. Accounting and Compliance - Moody's is adapting to new accounting standards, including updates to revenue recognition and credit loss measurement, which may impact future financial reporting[8]. - The company recorded a provision for expected credit losses of $24 million, primarily due to the estimated effects of COVID-19[44]. - The company has implemented policies to comply with the "expected credit loss" impairment model, refining the grouping of receivables based on risk characteristics[33]. - The effective tax rate (ETR) for the three months ended March 31, 2020, was 13.7%, an increase from 9.2% in the prior year, primarily due to changes in IRS regulations[70]. Market and Economic Impact - Moody's is closely monitoring the impact of COVID-19 on its business, with potential material impacts on revenue and cash flows[37]. - The company has suspended its share repurchase program to conserve cash amid the ongoing uncertainty[38]. - The company faced a penalty of approximately $35,000 imposed by SEBI related to credit ratings, which is currently under appeal[108]. - The company is addressing ongoing inquiries and allegations from SEBI, which may impact future operating results and goodwill[108].