Moody’s(US:MCO)2025-10-22 14:02Financial Data and Key Metrics Changes - Moody's achieved record quarterly revenue exceeding $2 billion for the first time, marking an 11% increase from the same quarter last year [6] - Adjusted operating margin reached almost 53%, up over 500 basis points year-over-year, indicating significant operating leverage [6] - Adjusted diluted EPS was $3.92, reflecting a 22% increase from the previous year [6][34] Business Line Data and Key Metrics Changes - Moody's Investors Service (MIS) reported a 12% revenue growth, surpassing $1 billion in quarterly revenue for the third consecutive quarter [7][20] - Revenue from private credit grew over 60% in the third quarter, driven by strong demand in fund finance and business development companies [11] - Moody's Analytics (MA) revenue grew 9% year-over-year, with an ARR of nearly $3.4 billion, up 8% from last year [12][26] Market Data and Key Metrics Changes - The issuance pipeline remains robust, with projected refunding needs exceeding $5 trillion over the next four years, a 10% compound annual growth rate from 2018 to 2025 [9] - Spec-grade bond maturities in the U.S. increased by more than 20%, indicating a favorable backdrop for future issuance [10] - Investment-grade revenue declined by 17% year-over-year, reflecting a 6% drop in issuance, but overall activity remained solid due to large M&A transactions [22] Company Strategy and Development Direction - The company is focused on investing in scalable solutions across high-growth markets while simplifying its product suite [12][13] - Moody's is expanding its presence in emerging markets, acquiring a majority interest in Meris, a leading ratings agency in Egypt [18] - The strategy includes embedding AI into workflows and enhancing partnerships, such as with Salesforce, to drive growth [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the issuance environment heading into 2026, citing tight spreads and potential Fed easing as positive factors [56] - The company anticipates mid-single-digit issuance growth for the full year, with M&A activity expected to contribute positively [25] - Risks remain from ongoing trade negotiations and potential government shutdown impacts, but the updated guidance accounts for plausible scenarios [26] Other Important Information - The company is increasing its full-year guidance across almost all metrics, reflecting strong growth and operating leverage [5][19] - Free cash flow is anticipated to be approximately $2.5 billion, with share repurchase guidance increased to at least $1.5 billion [34] Q&A Session Summary Question: Thoughts on AI in the analytics business - Management indicated that AI is seen as an opportunity rather than a threat, with plans to embed AI into various workflow solutions and applications [37][39] Question: Impact of record issuance in Q3 - Management noted that pull forward activity is more prevalent in spec-grade than investment-grade issuers, with healthy maturity walls expected [43][44] Question: Proprietary data sets in KYC solutions - Management highlighted unique data sets such as Orbis and politically exposed persons data, which enhance the value of KYC solutions [46][48] Question: Differences in refi walls perception - Management clarified that the article referenced a decline in U.S. spec-grade refi walls, which is a subset of broader maturities that remain healthy [50][51] Question: Outlook for issuance in 2026 - Management expressed optimism about the issuance environment, citing tight spreads and a potential increase in M&A activity as tailwinds [56][60] Question: Growth expectations for Moody's Analytics - Management confirmed that the medium-term outlook for MA is high single-digit growth, with ongoing investments in strategic areas [72]