MOODYS CORP /DE/

Moody's Corporation is a global integrated risk assessment firm that empowers organizations to anticipate, adapt and thrive in a new era of exponential risk. The Company operates in the financial information and enterprise risk software industries, competing against various diversified competitors, providers of software and analytic solutions, providers of economic data, financial research and analysis, providers of commercial and financial data, other credit rating agencies, and investment banks and brokerage firms that offer credit opinions and research. Moody's offerings are distinguished by its vast proprietary and curated data and validated analytical models, which provide the trusted foundation that enables customers to navigate an increasingly complex risk landscape.

Moody's has two reportable segments: Moody's Analytics and Moody's Investors Service. MA provides curated data, intelligence and analytical tools to help business and financial leaders make confident decisions, while MIS is a leading global provider of credit ratings, research, and risk analysis. The Company's revenue is generated from a mix of recurring and transactional income. For MA, recurring revenue represents subscription-based revenue and software maintenance revenue, while transaction revenue represents perpetual software license fees and revenue from software implementation services, risk management advisory projects, and training and certification services. For MIS, recurring revenue represents recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations, as well as revenue from programs such as commercial paper, medium-term notes and shelf registrations, while transaction revenue represents the initial rating of a new debt issuance as well as other one-time fees.

MA is comprised of three lines of business: Decision Solutions, Research and Insights, and Data and Information. DS provides subscription-based solutions supporting banking, insurance, and KYC workflows, utilizing components from the Data & Information and Research & Insights LOBs to provide risk assessment solutions. R&I provides models, scores, insights and commentary, including credit research, credit models and analytics, economics data and models, and structured finance solutions. D&I provides vast data sets on companies and securities via data feeds and data applications products. MIS publishes credit ratings and provides assessment services on a wide range of debt obligations, programs and facilities, and the entities that issue such obligations in markets worldwide, including various corporate, financial institution and governmental obligations, and structured finance securities. MIS is comprised of five LOBs: Corporate Finance, Structured Finance, Financial Institutions, Public, Project and Infrastructure Finance, and MIS Other, which consists of financial instruments pricing services in the Asia-Pacific region, ICRA non-ratings revenue, and revenue from professional services.

In the fiscal year ended December 31, 2025, Moody's total revenue was $7,718 million ¹, compared to $7,088 million ² in the prior year. Net income attributable to Moody's was $2,459 million ³, compared to $2,058 million ⁴ in 2024. Diluted EPS attributable to Moody's common shareholders was $13.67 ⁵, compared to $11.26 ⁶ in the prior year. Operating income was $3,351 million ⁷, compared to $2,875 million ⁸ in 2024. Adjusted Operating Income was $3,942 million ⁹, compared to $3,408 million ¹⁰ in the prior year. Operating margin was 43.4% ¹¹, compared to 40.6% ¹² in 2024. Adjusted Operating Margin was 51.1% ¹³, compared to 48.1% ¹⁴ in the prior year. Net cash provided by operating activities was $2,901 million ¹⁵, compared to $2,838 million ¹⁶ in 2024. Free Cash Flow was $2,575 million ¹⁷, compared to $2,521 million ¹⁸ in the prior year.

Moody's believes that the overall long-term outlook remains favorable for continued growth from the offerings of both of its reportable segments. Growth is influenced by several trends, including the enablement of Gen AI and Agentic AI, the health of the world's major economies, debt capital markets activity including Private Credit, disintermediation of credit markets, fiscal and monetary policy of governments, expansion of the market for integrated data and analytics solutions, and business investment spending including mergers and acquisitions. The Company believes it is well positioned to benefit from continued growth in global fixed-income market activity and more widespread use of credit ratings and integrated risk solutions.

For MA, growth is likely to be driven by landing new customers and expanding customer relationships across use cases over time. Strategic growth drivers include strong customer retention rates, cross-selling, upselling and pricing, expanding and fortifying the data estate, innovation and new product development, new distribution channels, and strategic partnerships. Market growth drivers include customers' need to understand a large range of interconnected and emerging risks, such as operational and reputational risks, digitization and artificial intelligence, the evolving regulatory environment, fluctuations in credit and financial markets, extreme weather impacts, and geopolitical risks. For MIS, strong secular trends should continue to provide long-term growth opportunities, driven by a long-term revenue growth algorithm including economic expansion, value proposition, and developing capital markets and evolving risks. Growth in global fixed income markets is dependent on many macroeconomic and capital market factors including interest rates, business investment spending, corporate refinancing needs, merger and acquisition activity, issuer financial health, consumer borrowing levels, securitization activity, expansion of ratings coverage, expansion into emerging markets, and rating fees paid by debt issuers.

Operating margin and Adjusted Operating Margin expansion reflects the 9% increase in revenue, partially offset by growth of 3% in operating and SG&A expenses. The Company's restructuring programs, including the Strategic and Operational Efficiency Restructuring Program approved by the CEO on December 19, 2024, are expected to generate estimated annual savings in the range of $150 million to $200 million ¹⁹ by the end of 2027. Future cash outlays associated with this program are expected to be between $110 million and $130 million ²⁰, which are expected to be paid out through 2027.

The Company's operations are conducted from 24 U.S. offices and 99 non-U.S. office locations, all of which are leased. Moody's invests in initiatives to implement the Company's strategy, including internally-led organic development and targeted acquisitions. The Company is investing to maintain a highly competitive offering in the evolving field of climate risk and is working with customers across all industries to better understand, manage, mitigate and report on their climate related risk exposures. The costs associated with the implementation of the decarbonization plan are not expected to be material.

On October 21, 2025, the Board authorized $4.0 billion ²¹ in share repurchase authority. At December 31, 2025, there was approximately $4.0 billion ²² of share repurchase authority remaining under this authorization. On February 10, 2026, the Board approved the declaration of a quarterly dividend of $1.03 ²³ per share for Moody's common stock. Capital additions for the year ended December 31, 2025 were $326 million ²⁴, compared to $317 million ²⁵ in the prior year.

The Company faces headwinds from the uncertain effects of U.S. and foreign government actions affecting international trade and economic policy, including changes and volatility in tariffs and trade policies and retaliatory actions, on credit markets, customers, and customer retention, and demand for products and services. The impact of general economic conditions, including significant government debt and deficit levels and inflation or recessions and related monetary policy actions by governments in response thereto, on worldwide credit markets and on economic activity, including on the level of merger and acquisition activity, and their effects on the volume of debt and other securities issued in domestic and/or global capital markets, also present constraints. Additionally, the uncertain effects of U.S. and foreign government initiatives and monetary policy to respond to the current economic climate, including instability of financial institutions, credit quality concerns, and other potential impacts of volatility in financial and credit markets, are flagged as headwinds.

Moody's faces material risks from the extensive and evolving regulation of the credit rating industry, including U.S. laws such as the Reform Act and Dodd-Frank Act, and foreign regulations in the EU, U.K., and other jurisdictions, which could increase costs, reduce demand for credit ratings, and alter the economics of the ratings business. The Company's business is highly dependent on the volume of debt securities issued in global capital markets, and conditions that reduce issuers' ability or willingness to issue debt securities, such as interest rate and market volatility, declining growth, or adverse economic trends, can materially and adversely affect revenue. Moody's faces exposure to litigation and government regulatory proceedings related to its rating opinions and other business practices, which can impose significant expenses and result in adverse judgments. The Company is exposed to risks related to cybersecurity and protection of confidential information, including from cyber-attacks, data breaches, and the increasing sophistication of threats, which could result in reputational harm, loss of customers, fines, and litigation. Moody's also faces risks related to the loss of skilled employees and compensation cost pressures, as competition for skilled individuals in the financial services and technology industries is intense.

Management's message emphasizes that Moody's is a global integrated risk assessment firm that empowers organizations to anticipate, adapt and thrive in a new era of exponential risk. The Company's mission is to be the leading source of relevant insights on exponential risk. The growth strategy is to invest with intent to grow and scale, invest with intent to grow and strengthen the core business with a foundation of credibility, transparency, technology, data and analytics and decision enablement, invest in integrated solutions to allow customers to manage multiple risks, bringing the best of Moody's capabilities, and invest to successfully scale in priority growth markets with highly differentiated products and services. Execution priorities include putting the customer first, developing people and culture, and collaborating, modernizing and innovating. Management believes that the overall long-term outlook remains favorable for continued growth from the offerings of both reportable segments.