Moody’s(US:MCO)2024-02-13 20:20Financial Data and Key Metrics Changes - Moody's reported an 8% revenue growth for 2023, with adjusted diluted EPS increasing by 16% [6][9] - The company achieved a recurring revenue base of over $4 billion, with a projected adjusted operating margin of 44% to 46% for 2024, indicating a 100 basis point improvement [9][23] Business Line Data and Key Metrics Changes - Moody's Analytics (MA) delivered an Annual Recurring Revenue (ARR) growth of 10%, with specific growth rates of 11% for decision solutions, 10% for data and information, and 7% for research and insights [6][7] - Moody's Investor Service (MIS) experienced a 19% growth in Q4 and a 6% growth for the full year, with corporate finance, financial institutions, and public project finance achieving double-digit revenue growth [7][21] Market Data and Key Metrics Changes - The company anticipates a constructive market environment in 2024, with expectations of mid to high single-digit growth in MIS rated issuance [21][22] - The Moody's Local initiative in Latin America saw organic revenue growth of 22% in 2023, highlighting strong demand in emerging markets [15] Company Strategy and Development Direction - Moody's is focusing on accelerating investments in three critical areas: GenAI, new product development, and technology platforming to capture growth opportunities [8][20] - The company aims to enhance its market position by expanding into new customer segments beyond financial services, with a 14% new sales compound annual growth rate over the last two years in corporate and public sectors [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in 2024, driven by strong demand for risk management tools and digital transformation solutions [6][21] - The company expects adjusted diluted EPS for 2024 to be in the range of $10.25 to $11, reflecting a 24% growth rate since 2022 [9][23] Other Important Information - Moody's announced the appointment of Noemie Heuland as the new Chief Financial Officer, effective April 1, 2024, bringing extensive experience in scaling high-growth companies [5][6] - The company received over 150 external accolades in 2023, reinforcing its market leadership in ratings and analytics [10] Q&A Session Summary Question: Incremental strategic investments in GenAI products and platforming - Management discussed the timing and expected benefits of investments in GenAI, indicating upfront costs but potential for significant long-term gains [26][27] Question: Normalized level of issuance - Management indicated that issuance levels are returning to normal, with expectations for 2024 to be slightly above long-term averages [31][32] Question: Cadence of issuance in 2024 - The company expects stronger issuance in the first half of 2024 compared to the second half, following historical patterns [35][38] Question: MIS margins and investments - Management clarified that while margins are expected to improve, investments in growth areas will impact margin flow-through [40][41] Question: ROI for strategic investments - Management emphasized that investments are focused on high-growth areas, with expectations for significant revenue growth from GenAI and enhanced solutions for corporate and public sectors [42][44] Question: Contribution of GenAI to revenue - Management indicated that the research and insights line will see the most significant contributions from GenAI products, with early sales trends showing promise [46][49] Question: MA division revenue and margins - Management provided insights on expected revenue growth and margin patterns for the MA division, indicating a steady ramp-up throughout the year [52][53]