Financial Data and Key Metrics Changes - Moody's reported second quarter revenue of $1.9 billion, growing 4% year over year, despite a tough comparison to the previous year's 22% growth [5][6] - Adjusted operating margin reached 50.9%, up 130 basis points from a year ago, translating to adjusted diluted EPS of $3.56, a 9% increase [6][7] - The company narrowed its guidance ranges for rated issuance, MIS revenue, and EPS based on second quarter performance [6][7] Business Line Data and Key Metrics Changes - MIS revenue was flat year over year at $1 billion, with a 1% decline when adjusted for positive FX effects [25] - Corporate Finance transaction revenue declined 6% year on year, while Investment Grade transaction revenue grew 18% on 16% issuance growth [26] - Moody's Analytics revenue grew 11%, with recurring revenue increasing by 12% and Decision Solutions showing double-digit growth [30][31] Market Data and Key Metrics Changes - Private credit transactions accounted for nearly 25% of first-time mandates, with a 75% revenue growth in private credit across multiple lines of business [10][11] - The U.S. Public Finance group rated the highest quarterly issuance volume since 2007, with nearly 200 first-time mandates in the second quarter [28] - EMEA first-time mandates increased year over year, driven by private credit mandates [29] Company Strategy and Development Direction - Moody's is focused on strengthening its position in private credit markets and enhancing transparency and insights for investors [9][10] - The company is investing in partnerships, such as with MSCI, to leverage data and models for emerging investor needs [12][17] - Moody's aims to capitalize on digital transformation, AI adoption, and the expansion of private markets to drive long-term sustainable value [41] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of the year, citing key credit themes that could influence performance [9] - The company is monitoring macroeconomic and geopolitical uncertainties that may affect issuance volumes [38] - Management highlighted the importance of maintaining a strong pipeline and executing on growth strategies despite market challenges [52] Other Important Information - Moody's Analytics achieved a 32.1% adjusted operating margin, a 360 basis point improvement year over year [13] - The company completed the acquisition of ICR Chile, enhancing its presence in the Latin American bond market [17] - Moody's is integrating GenAI capabilities across its product portfolio, with 40% of products now including some form of GenAI enablement [20] Q&A Session Summary Question: Insights on Decision Solutions and KYC - Management acknowledged attrition from a strategic termination of a distribution partnership in KYC and ongoing ESG-related attrition, but emphasized strong growth in banking and insurance segments [45][46] Question: Potential Pull Forward of Issuance - Management indicated that there was no meaningful pull forward of issuance, noting healthy performance in both public and private credit markets [55][56] Question: Operating Margin Expansion - Management clarified that the operating margin expansion was due to disciplined expense management and not due to expense shifts from Q2 to later quarters [63][64] Question: Banking Sector Performance - Management noted that while there has been a decline in banking ARR, growth in lending products, particularly Credit Lens, is expected to drive future growth [70][71] Question: AI and GenAI Adoption - Management highlighted that while standalone AI revenue is not yet material, early adopters of GenAI are showing double the growth compared to other customers, indicating strong engagement [78][79] Question: Contribution of Private Credit to MIS Revenues - Management confirmed that private credit is contributing to several lines in the rating agency, with significant growth in asset-backed finance and first-time mandates [84][85]

Wall Street analysts forecast that Moody's (MCO) will report quarterly earnings of $3.42 per share in its upcoming release, pointing to a year-over-year increase of 4.3%. It is anticipated that revenues will amount to $1.85 billion, exhibiting an increase of 1.8% compared to the year-ago quarter.Over the last 30 days, there has been an upward revision of 1.5% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their ...

Moody’s Corporation (NYSE:MCO) Q4 2024 Earnings Conference Call February 13, 2025 11:30 AM ET Company Participants Shivani Kak – Head-Investor Relations Rob Fauber – President and Chief Executive Officer Noémie Heuland – Chief Financial Officer Steve Tulenko – President-Moody’s Analytics Mike West – President-Moody’s Investors Service Conference Call Participants Manav Patnaik – Barclays Ashish Sabadra – RBC Capital Markets Toni Kaplan – Morgan Stanley Alex Kramm – UBS Scott Wurtzel – Wolfe Research Owen La ...