Moody's Tops Q1 Earnings Forecast

Core Insights - Moody's reported strong first-quarter results for 2025, exceeding analysts' expectations in both earnings and revenue [1][2] - The company achieved an adjusted EPS of $3.83, surpassing the expected $3.52, and revenue of $1.924 billion, slightly above the anticipated $1.875 billion [1][3] Financial Performance - Adjusted EPS for Q1 2025 was $3.83, a 13.7% increase from Q1 2024's $3.37 [3] - Revenue grew 8% year-over-year, with Q1 2025 revenue at $1.924 billion compared to $1.786 billion in Q1 2024 [3] - Operating margin was 44.0%, down from 44.8% in the previous year [3] - Adjusted free cash flow decreased by 3.6% to $672 million from $697 million in Q1 2024 [3] Business Segments - Moody's operates through two main segments: Moody's Investors Service (MIS) and Moody's Analytics (MA) [4] - MA reported Q1 revenue of $859 million, an 8% year-over-year increase, driven by 11% growth in Decision Solutions [6] - MIS achieved record-high quarterly revenue of $1.1 billion, also an 8% increase, supported by strong corporate and structured finance performance [6] Operating Expenses - Operating expenses rose by 9% year-over-year, influenced by investments, restructuring charges, and M&A costs [7] - The company incurred $33 million in charges related to its Strategic and Operational Efficiency Restructuring program [7] Strategic Initiatives - Moody's is focused on expanding integrated risk solutions and adopting advanced technologies like AI and cloud-based models [5][8] - The company is also pursuing sustainability and geographic expansion, particularly in emerging markets such as Africa and Latin America [8] Shareholder Returns - Moody's announced an increased quarterly dividend of $0.94 per share, reflecting an 11% increase from the previous year [9] - The company has approximately $1.2 billion in share repurchase authority remaining as of March 31, 2025 [9] Future Outlook - Management forecasts full-year adjusted EPS to range from $13.25 to $14 for fiscal 2025 [11] - Anticipated revenue growth in both segments is expected to be in the high-single-digit percentage range for MA and mid-to-high-single-digit for MIS [11] - Operating expenses are projected to increase in the low-to-mid-single-digit percent range in 2025 [11]