THIRD QUARTER 2022 SUMMARY | ||||||||||||||
Moody’s Corporation (MCO) Revenue | Moody’s Investors Service (MIS) Revenue | Moody’s Analytics (MA) Revenue | ||||||||||||
3Q 2022 | 3Q 2022 | 3Q 2022 | ||||||||||||
$1.3 billion ⇓ 16% | $590 million ⇓ 36% | $685 million ⇑ 14% | ||||||||||||
YTD 2022 | YTD 2022 | YTD 2022 | ||||||||||||
$4.2 billion ⇓ 11% | $2.1 billion ⇓ 28% | $2.1 billion ⇑ 18% | ||||||||||||
MCO Diluted EPS | MCO Adjusted Diluted EPS1 | MCO FY 2022 Projected | ||||||||||||
3Q 2022 | 3Q 2022 | Diluted EPS | ||||||||||||
$1.65 ⇓ 35% | $1.85 ⇓ 31% | $6.90 - $7.20 | ||||||||||||
YTD 2022 | YTD 2022 | Adjusted Diluted EPS1 | ||||||||||||
$6.10 ⇓ 36% | $6.96 ⇓ 30% | $8.20 - $8.50 |
“Moody’s plays a vital role in helping our customers navigate increasingly dynamic times.” “In this context, Moody’s Analytics again delivered impressive growth this quarter as our suite of data, digital insights and decision solutions helped customers identify and manage their risks. However, Moody’s Investors Service’s revenue was meaningfully impacted as global debt issuance declined sharply amid ongoing market volatility, persistent inflation and geopolitical tensions. We continue to prioritize financial discipline, as we balance our short-term performance with executing on our long-term integrated risk assessment strategy. Despite the strong performance of Moody’s Analytics, we recognize the need to take decisive actions to control and streamline our expense base. We are accelerating the Geolocation Restructuring Program announced last quarter and expanding it to include additional savings. In light of the ongoing macro uncertainties, we remain cautious about credit market activity for the remainder of 2022 and have reflected this in our updated full year 2022 adjusted diluted EPS guidance range.” | |||||
Rob Fauber President and Chief Executive Officer |
REVENUE |
Moody’s Corporation (MCO) |
Third Quarter 2022 | Year-to-Date 2022 | ||||
•Revenue declined 16% and 17% on a reported and organic constant currency basis1, respectively, from the prior-year period. •Foreign currency translation unfavorably impacted Moody's revenue by 4%. | •Revenue declined 11% and 13% on a reported and organic constant currency basis1, respectively, from the prior-year period. •Foreign currency translation unfavorably impacted Moody’s revenue by 3%. |
Moody’s Investors Service (MIS) |
Third Quarter 2022 | Year-to-Date 2022 | ||||
•Revenue declined 36% against a record prior-year period. •Credit market activity remained muted across all sectors given ongoing market volatility, central bank actions, high levels of corporate balance sheet cash, as well as heightened inflationary and recessionary concerns. •Strong prior-year comparable results amplified the impact of the decline in leveraged loan and high yield bond issuance. •Foreign currency translation unfavorably impacted MIS revenue by 3%. | •Revenue declined 28% against a record prior-year period. •Sustained weakness arising from inflationary concerns and geopolitical tensions continued to significantly dampen issuance, particularly for leveraged finance. •An unfavorable mix within Financial Institutions adversely impacted revenue as fewer infrequent issuers came to market. •Foreign currency translation unfavorably impacted MIS revenue by 2%. |
Moody’s Analytics (MA) |
Third Quarter 2022 | Year-to-Date 2022 | ||||
•Revenue grew 14% from the prior-year period, driven by the RMS acquisition, as well as sustained demand for Know Your Customer solutions, credit research and insights, and data feeds. •Organic constant currency revenue1 growth was 9%; ARR2 was $2.7 billion, up 9%, and now includes RMS following the one-year anniversary of the acquisition. •Foreign currency translation unfavorably impacted MA revenue by 7%. | •MA’s recurring revenue now comprises 94% of total MA revenue, up from 93% in the prior year. •Customer retention3 in the mid-90s percent range continues to demonstrate the value proposition of MA’s mission-critical solutions, particularly in an evolving and increasingly complex risk environment. •Organic constant currency revenue1 growth was 10%. Foreign currency translation unfavorably impacted MA revenue by 5%. |
2 Refer to Table 9 at the end of this press release for the definition of and further information on the Annualized Recurring Revenue (ARR) metric. 3 Retention rates exclude acquisitions of ZM Financial, Catylist, Cortera, RMS, RealXData, Bogard, and kompany. |
OPERATING EXPENSES |
Operating Expenses |
Third Quarter 2022 | Year-to-Date 2022 | ||||
•Operating expenses grew 1% from the prior-year period, including 6% from acquisitions completed in the prior twelve months. •Organic investments continued in high-priority growth markets; lower incentive compensation accruals and ongoing cost control initiatives held operating growth flat. •Foreign currency translation favorably impacted operating expenses by 5%. | •Operating expenses grew by 11% from the prior-year period, including 10% from costs associated with acquisitions completed in the prior twelve months (primarily RMS). •Expanded 2022 - 2023 Geolocation Restructuring Program accelerates real estate and personnel-related cost reduction initiatives. •Foreign currency translation favorably impacted operating expenses by 4%. |
Operating Margin and Adjusted Operating Margin1 |
Third Quarter 2022 | Year-to-Date 2022 | ||||
•MCO’s operating margin and adjusted operating margin1 both decreased from the prior-year period, primarily driven by lower MIS transaction revenue on significant weakness in the leveraged finance market, partially offset by growth in MA operating income. •Foreign currency translation had an immaterial impact on MCO’s and MIS’s adjusted operating margins1, but unfavorably impacted MA’s adjusted operating margin by 180 basis points. | •MCO’s adjusted operating margin1 declined from the prior-year period as ongoing macroeconomic uncertainty and geopolitical volatility constrained issuance levels. •Acquisitions completed in the prior twelve months unfavorably impacted MA’s adjusted operating margin by 110 basis points. |
EARNINGS PER SHARE (EPS) |
Diluted Earnings Per Share and Adjusted Diluted EPS1 |
Third Quarter 2022 | Year-to-Date 2022 | ||||
•Lower EPS than prior year reflects the 39% decline in operating income, primarily associated with the decline in MIS’s revenue, partially offset by continued and growing demand for MA’s global integrated risk assessment offerings. •The effective tax rate was 20.5%, down from 23.4% in the prior year. The decrease was primarily due to lower pre-tax income, which increased the percentage impact of our net beneficial discrete items, as well as a favorable mix of earnings in the jurisdictions in which Moody’s operates. | •The decline in EPS from the prior-year period is associated with the contraction in MIS revenue, partially offset by strong operating growth from MA. •The effective tax rate was 21.3%, up from 20.2%. The increase was primarily due to tax benefits realized upon resolution of uncertain tax positions during 2021 that did not recur to the same extent in 2022 and a non-deductible loss associated with the Company no longer conducting commercial operations in Russia. |
CAPITAL ALLOCATION AND LIQUIDITY |
Capital Returned to Shareholders & Free Cash Flow1 |
ASSUMPTIONS AND OUTLOOK |
Forecasted Item | Current assumption | Last publicly disclosed assumption | ||||||
U.S. GDP(1) growth | 1.0% - 2.0% | 1.5% - 2.5% | ||||||
Euro area GDP(1) growth | 1.5% - 2.5% | NC | ||||||
Global benchmark rates | Continue to rise | NC | ||||||
U.S. high yield spreads | Continue to fluctuate between 500 - 600 bps, on average, with periodic volatility for remainder of the year | Fluctuate around 500 bps with periodic volatility for remainder of the year | ||||||
U.S. inflation rate | 7.0% - 8.0% | 6.5% - 7.5% | ||||||
Euro area inflation rate | 8.0% - 10.0% | 6.0% - 8.0% | ||||||
U.S. unemployment rate | Rise to approximately 3.7% by end of 2022 | NC | ||||||
Global high yield default rate | Rise to 2.5% - 3.5% by end of 2022 | NC | ||||||
Global MIS rated issuance | Decrease in the mid-thirties percent range | Decrease by approximately 30% | ||||||
USD/GBP exchange rate | $1.12 for remainder of the year | $1.21 for remainder of the year | ||||||
USD/EUR exchange rate | $0.98 for remainder of the year | $1.05 for remainder of the year | ||||||
NC - There is no difference between the Company’s current assumption and the last publicly disclosed assumption for this item. Note: All current assumptions are as of October 25, 2022. All last publicly disclosed assumptions are as of July 26, 2022. (1) GDP growth represents real GDP. |
TELECONFERENCE DETAILS |
Date and Time | October 25, 2022, at 12:30 p.m. Eastern Time (ET). | |||||||
Webcast | The webcast and its replay can be accessed through Moody’s Investor Relations website, ir.moodys.com, within “Events & Presentations.” | |||||||
Dial In | U.S. and Canada | ‘+1-888-330-2508 | ||||||
Other callers | ‘+1-240-789-2735 | |||||||
Passcode | 9302427 | |||||||
Dial In Replay | A replay will be available immediately after the call on October 25, 2022, and until November 24, 2022. | |||||||
U.S. and Canada | ‘+1-800-770-2030 | |||||||
Other callers | ‘+1-647-362-9199 | |||||||
Passcode | 9302427 |
ABOUT MOODY’S CORPORATION |
“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Amounts in millions, except per share amounts | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Revenue | $ | 1,275 | $ | 1,526 | $ | 4,178 | $ | 4,679 | |||||||||||||||
Expenses: | |||||||||||||||||||||||
Operating | 393 | 394 | 1,203 | 1,152 | |||||||||||||||||||
Selling, general and administrative | 385 | 395 | 1,124 | 1,015 | |||||||||||||||||||
Depreciation and amortization | 83 | 61 | 242 | 180 | |||||||||||||||||||
Restructuring | 1 | — | 32 | 2 | |||||||||||||||||||
Total expenses | 862 | 850 | 2,601 | 2,349 | |||||||||||||||||||
Operating income | 413 | 676 | 1,577 | 2,330 | |||||||||||||||||||
Non-operating (expense) income, net | |||||||||||||||||||||||
Interest expense, net | (58) | (53) | (166) | (109) | |||||||||||||||||||
Other non-operating (expense) income, net | 26 | (4) | 22 | 18 | |||||||||||||||||||
Total non-operating (expense) income, net | (32) | (57) | (144) | (91) | |||||||||||||||||||
Income before provision for income taxes | 381 | 619 | 1,433 | 2,239 | |||||||||||||||||||
Provision for income taxes | 78 | 145 | 305 | 452 | |||||||||||||||||||
Net income attributable to Moody's Corporation | $ | 303 | $ | 474 | $ | 1,128 | $ | 1,787 | |||||||||||||||
Earnings per share attributable to Moody's common shareholders | |||||||||||||||||||||||
Basic | $ | 1.65 | $ | 2.55 | $ | 6.13 | $ | 9.58 | |||||||||||||||
Diluted | $ | 1.65 | $ | 2.53 | $ | 6.10 | $ | 9.51 | |||||||||||||||
Weighted average number of shares outstanding | |||||||||||||||||||||||
Basic | 183.2 | 186.0 | 184.1 | 186.6 | |||||||||||||||||||
Diluted | 183.9 | 187.3 | 184.9 | 188.0 |
Amounts in millions | September 30, 2022 | December 31, 2021 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 1,656 | $ | 1,811 | |||||||
Short-term investments | 89 | 91 | |||||||||
Accounts receivable, net of allowance for credit losses of $42 in 2022 and $32 in 2021 | 1,518 | 1,720 | |||||||||
Other current assets | 463 | 389 | |||||||||
Total current assets | 3,726 | 4,011 | |||||||||
Property and equipment, net of accumulated depreciation of $1,078 in 2022 and $1,010 in 2021 | 472 | 347 | |||||||||
Operating lease right-of-use assets | 387 | 438 | |||||||||
Goodwill | 5,617 | 5,999 | |||||||||
Intangible assets, net | 2,182 | 2,467 | |||||||||
Deferred tax assets, net | 336 | 384 | |||||||||
Other assets | 1,219 | 1,034 | |||||||||
Total assets | $ | 13,939 | $ | 14,680 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | 807 | $ | 1,142 | |||||||
Current portion of operating lease liabilities | 104 | 105 | |||||||||
Deferred revenue | 1,155 | 1,249 | |||||||||
Total current liabilities | 2,066 | 2,496 | |||||||||
Non-current portion of deferred revenue | 78 | 86 | |||||||||
Long-term debt | 7,476 | 7,413 | |||||||||
Deferred tax liabilities, net | 604 | 488 | |||||||||
Uncertain tax positions | 308 | 388 | |||||||||
Operating lease liabilities | 389 | 455 | |||||||||
Other liabilities | 588 | 438 | |||||||||
Total liabilities | 11,509 | 11,764 | |||||||||
Total Moody's shareholders' equity | 2,255 | 2,727 | |||||||||
Noncontrolling interests | 175 | 189 | |||||||||
Total shareholders' equity | 2,430 | 2,916 | |||||||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 13,939 | $ | 14,680 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Amounts in millions | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Interest: | |||||||||||||||||||||||
Expense on borrowings | $ | (54) | $ | (47) | $ | (152) | $ | (129) | |||||||||||||||
UTPs and other tax related liabilities (1) | (5) | (5) | (11) | 25 | |||||||||||||||||||
Net periodic pension costs - interest component | (4) | (4) | (12) | (12) | |||||||||||||||||||
Income | 5 | 3 | 9 | 7 | |||||||||||||||||||
Total interest expense, net | $ | (58) | $ | (53) | $ | (166) | $ | (109) | |||||||||||||||
Other non-operating (expense) income, net: | |||||||||||||||||||||||
FX gain/(loss) (2) | $ | 13 | $ | (2) | $ | (9) | $ | (2) | |||||||||||||||
Purchase Price Hedge Loss (3) | — | (13) | — | (13) | |||||||||||||||||||
Net periodic pension costs - other components (4) | 6 | 4 | 18 | 5 | |||||||||||||||||||
Income from investments in non-consolidated affiliates | 10 | 6 | 14 | 15 | |||||||||||||||||||
Other | (3) | 1 | (1) | 13 | |||||||||||||||||||
Other non-operating income (expense), net | 26 | (4) | 22 | 18 | |||||||||||||||||||
Total non-operating (expense) income, net | $ | (32) | $ | (57) | $ | (144) | $ | (91) |
(1) The amount for the nine months ended September 30, 2021 includes a $40 million benefit related to the reversal of tax-related interest accruals pursuant to the resolution of outstanding tax matters. (2) The amount for the nine months ended September 30, 2022 reflects $20 million of foreign exchange translation losses reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia. (3) Reflects a loss on a forward contract to hedge a portion of the RMS British pound-denominated purchase price in 2021. (4) The amount for the nine months ended September 30, 2021 reflects an $8 million loss related to a settlement of pension obligations in 2021 that did not reoccur in 2022. |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Amounts in millions | MIS | MA | Eliminations | Consolidated | MIS | MA | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||
Total external revenue | $ | 590 | $ | 685 | $ | — | $ | 1,275 | $ | 925 | $ | 601 | $ | — | $ | 1,526 | |||||||||||||||||||||||||||||||
Intersegment revenue | 43 | 2 | (45) | — | 42 | 2 | (44) | — | |||||||||||||||||||||||||||||||||||||||
Total revenue | 633 | 687 | (45) | 1,275 | 967 | 603 | (44) | 1,526 | |||||||||||||||||||||||||||||||||||||||
Operating, SG&A | 344 | 479 | (45) | 778 | 387 | 446 | (44) | 789 | |||||||||||||||||||||||||||||||||||||||
Adjusted Operating Income | $ | 289 | $ | 208 | $ | — | $ | 497 | $ | 580 | $ | 157 | $ | — | $ | 737 | |||||||||||||||||||||||||||||||
Adjusted Operating Margin | 45.7 | % | 30.3 | % | 39.0 | % | 60.0 | % | 26.0 | % | 48.3 | % | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | 21 | 62 | — | 83 | 17 | 44 | — | 61 | |||||||||||||||||||||||||||||||||||||||
Restructuring | — | 1 | — | 1 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Operating income | $ | 413 | $ | 676 | |||||||||||||||||||||||||||||||||||||||||||
Operating margin | 32.4 | % | 44.3 | % | |||||||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Amounts in millions | MIS | MA | Eliminations | Consolidated | MIS | MA | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||
Total external revenue | $ | 2,123 | $ | 2,055 | $ | — | $ | 4,178 | $ | 2,941 | $ | 1,738 | $ | — | $ | 4,679 | |||||||||||||||||||||||||||||||
Intersegment revenue | 129 | 5 | (134) | — | 124 | 6 | (130) | — | |||||||||||||||||||||||||||||||||||||||
Total revenue | 2,252 | 2,060 | (134) | 4,178 | 3,065 | 1,744 | (130) | 4,679 | |||||||||||||||||||||||||||||||||||||||
Operating, SG&A | 1,038 | 1,423 | (134) | 2,327 | 1,079 | 1,218 | (130) | 2,167 | |||||||||||||||||||||||||||||||||||||||
Adjusted Operating Income | $ | 1,214 | $ | 637 | $ | — | $ | 1,851 | $ | 1,986 | $ | 526 | $ | — | $ | 2,512 | |||||||||||||||||||||||||||||||
Adjusted Operating Margin | 53.9 | % | 30.9 | % | 44.3 | % | 64.8 | % | 30.2 | % | 53.7 | % | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | 60 | 182 | — | 242 | 53 | 127 | — | 180 | |||||||||||||||||||||||||||||||||||||||
Restructuring | 15 | 17 | — | 32 | — | 2 | — | 2 | |||||||||||||||||||||||||||||||||||||||
Operating income | $ | 1,577 | $ | 2,330 | |||||||||||||||||||||||||||||||||||||||||||
Operating margin | 37.7 | % | 49.8 | % |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
Amounts in millions | Transaction | Recurring | Total | Transaction | Recurring | Total | |||||||||||||||||||||||||||||
Corporate Finance | $ | 153 | $ | 124 | $ | 277 | $ | 366 | $ | 122 | $ | 488 | |||||||||||||||||||||||
55 | % | 45 | % | 100 | % | 75 | % | 25 | % | 100 | % | ||||||||||||||||||||||||
Structured Finance | $ | 51 | $ | 50 | $ | 101 | $ | 93 | $ | 50 | $ | 143 | |||||||||||||||||||||||
50 | % | 50 | % | 100 | % | 65 | % | 35 | % | 100 | % | ||||||||||||||||||||||||
Financial Institutions | $ | 41 | $ | 68 | $ | 109 | $ | 83 | $ | 70 | $ | 153 | |||||||||||||||||||||||
38 | % | 62 | % | 100 | % | 54 | % | 46 | % | 100 | % | ||||||||||||||||||||||||
Public, Project and Infrastructure Finance | $ | 50 | $ | 42 | $ | 92 | $ | 88 | $ | 42 | $ | 130 | |||||||||||||||||||||||
54 | % | 46 | % | 100 | % | 68 | % | 32 | % | 100 | % | ||||||||||||||||||||||||
MIS Other | $ | 1 | $ | 10 | $ | 11 | $ | 1 | $ | 10 | $ | 11 | |||||||||||||||||||||||
9 | % | 91 | % | 100 | % | 9 | % | 91 | % | 100 | % | ||||||||||||||||||||||||
Total MIS | $ | 296 | $ | 294 | $ | 590 | $ | 631 | $ | 294 | $ | 925 | |||||||||||||||||||||||
50 | % | 50 | % | 100 | % | 68 | % | 32 | % | 100 | % | ||||||||||||||||||||||||
Decision Solutions | $ | 37 | $ | 288 | $ | 325 | $ | 34 | $ | 216 | $ | 250 | |||||||||||||||||||||||
11 | % | 89 | % | 100 | % | 14 | % | 86 | % | 100 | % | ||||||||||||||||||||||||
Research & Insights | $ | 1 | $ | 183 | $ | 184 | $ | 2 | $ | 175 | $ | 177 | |||||||||||||||||||||||
1 | % | 99 | % | 100 | % | 1 | % | 99 | % | 100 | % | ||||||||||||||||||||||||
Data & Information | $ | — | $ | 176 | $ | 176 | $ | 1 | $ | 173 | $ | 174 | |||||||||||||||||||||||
— | % | 100 | % | 100 | % | 1 | % | 99 | % | 100 | % | ||||||||||||||||||||||||
Total MA | $ | 38 | $ | 647 | $ | 685 | $ | 37 | $ | 564 | $ | 601 | |||||||||||||||||||||||
6 | % | 94 | % | 100 | % | 6 | % | 94 | % | 100 | % | ||||||||||||||||||||||||
Total Moody's Corporation | $ | 334 | $ | 941 | $ | 1,275 | $ | 668 | $ | 858 | $ | 1,526 | |||||||||||||||||||||||
26 | % | 74 | % | 100 | % | 44 | % | 56 | % | 100 | % |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
Amounts in millions | Transaction | Relationship | Total | Transaction | Relationship | Total | |||||||||||||||||||||||||||||
Corporate Finance | $ | 645 | $ | 371 | $ | 1,016 | $ | 1,280 | $ | 363 | $ | 1,643 | |||||||||||||||||||||||
63 | % | 37 | % | 100 | % | 78 | % | 22 | % | 100 | % | ||||||||||||||||||||||||
Structured Finance | $ | 217 | $ | 151 | $ | 368 | $ | 251 | $ | 148 | $ | 399 | |||||||||||||||||||||||
59 | % | 41 | % | 100 | % | 63 | % | 37 | % | 100 | % | ||||||||||||||||||||||||
Financial Institutions | $ | 159 | $ | 209 | $ | 368 | $ | 252 | $ | 213 | $ | 465 | |||||||||||||||||||||||
43 | % | 57 | % | 100 | % | 54 | % | 46 | % | 100 | % | ||||||||||||||||||||||||
Public, Project and Infrastructure Finance | $ | 211 | $ | 126 | $ | 337 | $ | 276 | $ | 127 | $ | 403 | |||||||||||||||||||||||
63 | % | 37 | % | 100 | % | 68 | % | 32 | % | 100 | % | ||||||||||||||||||||||||
MIS Other | $ | 3 | $ | 31 | $ | 34 | $ | 3 | $ | 28 | $ | 31 | |||||||||||||||||||||||
9 | % | 91 | % | 100 | % | 10 | % | 90 | % | 100 | % | ||||||||||||||||||||||||
Total MIS | $ | 1,235 | $ | 888 | $ | 2,123 | $ | 2,062 | $ | 879 | $ | 2,941 | |||||||||||||||||||||||
58 | % | 42 | % | 100 | % | 70 | % | 30 | % | 100 | % | ||||||||||||||||||||||||
Decision Solutions | $ | 120 | $ | 851 | $ | 971 | $ | 111 | $ | 586 | $ | 697 | |||||||||||||||||||||||
12 | % | 88 | % | 100 | % | 16 | % | 84 | % | 100 | % | ||||||||||||||||||||||||
Research & Insights | $ | 4 | $ | 548 | $ | 552 | $ | 6 | $ | 517 | $ | 523 | |||||||||||||||||||||||
1 | % | 99 | % | 100 | % | 1 | % | 99 | % | 100 | % | ||||||||||||||||||||||||
Data & Information | $ | — | $ | 532 | $ | 532 | $ | 3 | $ | 515 | $ | 518 | |||||||||||||||||||||||
— | % | 100 | % | 100 | % | 1 | % | 99 | % | 100 | % | ||||||||||||||||||||||||
Total MA | $ | 124 | $ | 1,931 | $ | 2,055 | $ | 120 | $ | 1,618 | $ | 1,738 | |||||||||||||||||||||||
6 | % | 94 | % | 100 | % | 7 | % | 93 | % | 100 | % | ||||||||||||||||||||||||
Total Moody's Corporation | $ | 1,359 | $ | 2,819 | $ | 4,178 | $ | 2,182 | $ | 2,497 | $ | 4,679 | |||||||||||||||||||||||
33 | % | 67 | % | 100 | % | 47 | % | 53 | % | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Amounts in millions | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Operating income | $ | 413 | $ | 676 | $ | 1,577 | $ | 2,330 | |||||||||||||||
Depreciation and amortization | 83 | 61 | 242 | 180 | |||||||||||||||||||
Restructuring | 1 | — | 32 | 2 | |||||||||||||||||||
Adjusted Operating Income | $ | 497 | $ | 737 | $ | 1,851 | $ | 2,512 | |||||||||||||||
Operating margin | 32.4 | % | 44.3 | % | 37.7 | % | 49.8 | % | |||||||||||||||
Adjusted Operating Margin | 39.0 | % | 48.3 | % | 44.3 | % | 53.7 | % |
Nine Months Ended September 30, | |||||||||||
Amounts in millions | 2022 | 2021 | |||||||||
Net cash provided by operating activities | $ | 1,097 | $ | 1,706 | |||||||
Capital additions | (204) | (77) | |||||||||
Free Cash Flow | $ | 893 | $ | 1,629 | |||||||
Net cash used in investing activities | $ | (172) | $ | (2,161) | |||||||
Net cash (used in) provided by financing activities | $ | (957) | $ | 135 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
Amounts in millions | 2022 | 2021 | Change | Growth | 2022 | 2021 | Change | Growth | |||||||||||||||||||||||||||||||||||||||
MCO revenue | $ | 1,275 | $ | 1,526 | $ | (251) | (16)% | $ | 4,178 | $ | 4,679 | $ | (501) | (11)% | |||||||||||||||||||||||||||||||||
FX impact | 67 | — | 67 | 142 | — | 142 | |||||||||||||||||||||||||||||||||||||||||
Inorganic revenue from acquisitions | (70) | — | (70) | (232) | — | (232) | |||||||||||||||||||||||||||||||||||||||||
Organic constant currency MCO revenue | $ | 1,272 | $ | 1,526 | $ | (254) | (17)% | $ | 4,088 | $ | 4,679 | $ | (591) | (13)% | |||||||||||||||||||||||||||||||||
MA revenue | $ | 685 | $ | 601 | $ | 84 | 14% | $ | 2,055 | $ | 1,738 | $ | 317 | 18% | |||||||||||||||||||||||||||||||||
FX impact | 41 | — | 41 | 81 | — | 81 | |||||||||||||||||||||||||||||||||||||||||
Inorganic revenue from acquisitions | (70) | — | (70) | (232) | — | (232) | |||||||||||||||||||||||||||||||||||||||||
Organic constant currency MA revenue | $ | 656 | $ | 601 | $ | 55 | 9% | $ | 1,904 | $ | 1,738 | $ | 166 | 10% | |||||||||||||||||||||||||||||||||
Decision Solutions revenue | $ | 325 | $ | 250 | $ | 75 | 30% | $ | 971 | $ | 697 | $ | 274 | 39% | |||||||||||||||||||||||||||||||||
FX impact | 12 | — | 12 | 28 | — | 28 | |||||||||||||||||||||||||||||||||||||||||
Inorganic revenue from acquisitions | (70) | — | (70) | (230) | — | (230) | |||||||||||||||||||||||||||||||||||||||||
Organic constant currency Decision Solutions revenue | $ | 267 | $ | 250 | $ | 17 | 7% | $ | 769 | $ | 697 | $ | 72 | 10% | |||||||||||||||||||||||||||||||||
Research and Insights revenue | $ | 184 | $ | 177 | $ | 7 | 4% | $ | 552 | $ | 523 | $ | 29 | 6% | |||||||||||||||||||||||||||||||||
FX impact | 10 | — | 10 | 15 | — | 15 | |||||||||||||||||||||||||||||||||||||||||
Constant currency Research and Insights revenue | $ | 194 | $ | 177 | $ | 17 | 10% | $ | 567 | $ | 523 | $ | 44 | 8% | |||||||||||||||||||||||||||||||||
Data and Information revenue | $ | 176 | $ | 174 | $ | 2 | 1% | $ | 532 | $ | 518 | $ | 14 | 3% | |||||||||||||||||||||||||||||||||
FX impact | 19 | — | 19 | 38 | — | 38 | |||||||||||||||||||||||||||||||||||||||||
Inorganic revenue from acquisitions | — | — | — | (2) | — | (2) | |||||||||||||||||||||||||||||||||||||||||
Organic constant currency Data and Information revenue | $ | 195 | $ | 174 | $ | 21 | 12% | $ | 568 | $ | 518 | $ | 50 | 10% | |||||||||||||||||||||||||||||||||
MA recurring revenue | $ | 647 | $ | 564 | $ | 83 | 15% | $ | 1,931 | $ | 1,618 | $ | 313 | 19% | |||||||||||||||||||||||||||||||||
FX impact | 40 | — | 40 | 77 | — | 77 | |||||||||||||||||||||||||||||||||||||||||
Inorganic recurring revenue from acquisitions | (67) | — | (67) | (220) | — | (220) | |||||||||||||||||||||||||||||||||||||||||
Organic constant currency MA recurring revenue | $ | 620 | $ | 564 | $ | 56 | 10% | $ | 1,788 | $ | 1,618 | $ | 170 | 11% | |||||||||||||||||||||||||||||||||
Amounts in millions | September 30, 2022 | September 30, 2021 | Change | Growth | |||||||||||||||||||
ARR | |||||||||||||||||||||||
Decision Solutions | $ | 1,177 | $ | 1,071 | $ | 106 | 10% | ||||||||||||||||
Research and Insights | 740 | 688 | 52 | 8% | |||||||||||||||||||
Data and Information | 745 | 683 | 62 | 9% | |||||||||||||||||||
Total MA ARR | $ | 2,662 | $ | 2,442 | $ | 220 | 9% | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
Amounts in millions | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||
Net income attributable to Moody's common shareholders | $ | 303 | $ | 474 | $ | 1,128 | $ | 1,787 | |||||||||||||||||||||||||||
Pre-tax Acquisition-Related Intangible Amortization Expenses | $ | 48 | $ | 37 | $ | 150 | $ | 108 | |||||||||||||||||||||||||||
Tax on Acquisition-Related Intangible Amortization Expenses | (11) | (8) | (35) | (24) | |||||||||||||||||||||||||||||||
Net Acquisition-Related Intangible Amortization Expenses | 37 | 29 | 115 | 84 | |||||||||||||||||||||||||||||||
Pre-tax restructuring | $ | 1 | $ | — | $ | 32 | $ | 2 | |||||||||||||||||||||||||||
Tax on restructuring | (1) | — | (8) | — | |||||||||||||||||||||||||||||||
Net restructuring | — | — | 24 | 2 | |||||||||||||||||||||||||||||||
FX losses resulting from the Company no longer conducting commercial operations in Russia | — | — | 20 | — | |||||||||||||||||||||||||||||||
Adjusted Net Income | $ | 340 | $ | 503 | $ | 1,287 | $ | 1,873 | |||||||||||||||||||||||||||
Note: The tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
Amounts in millions | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||
Diluted earnings per share attributable to Moody's common shareholders | $ | 1.65 | $ | 2.53 | $ | 6.10 | $ | 9.51 | |||||||||||||||||||||||||||
Pre-tax Acquisition-Related Intangible Amortization Expenses | $ | 0.26 | $ | 0.20 | $ | 0.81 | $ | 0.57 | |||||||||||||||||||||||||||
Tax on Acquisition-Related Intangible Amortization Expenses | (0.06) | (0.04) | (0.19) | (0.13) | |||||||||||||||||||||||||||||||
Net Acquisition-Related Intangible Amortization Expenses | 0.20 | 0.16 | 0.62 | 0.44 | |||||||||||||||||||||||||||||||
Pre-tax restructuring | $ | 0.01 | $ | — | $ | 0.17 | $ | 0.01 | |||||||||||||||||||||||||||
Tax on restructuring | (0.01) | — | (0.04) | — | |||||||||||||||||||||||||||||||
Net restructuring | — | — | 0.13 | 0.01 | |||||||||||||||||||||||||||||||
FX losses resulting from the Company no longer conducting commercial operations in Russia | — | — | 0.11 | — | |||||||||||||||||||||||||||||||
Adjusted Diluted EPS | $ | 1.85 | $ | 2.69 | $ | 6.96 | $ | 9.96 | |||||||||||||||||||||||||||
Note: The tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates. |
Full Year 2022 Moody's Corporation Guidance as of October 25, 2022 | ||||||||
MOODY'S CORPORATION | Current guidance | Last publicly disclosed guidance | ||||||
Revenue | Decline in the low-double-digit percent range | Decline in the high-single-digit percent range | ||||||
Operating expenses | Increase in the mid-single-digit percent range | Increase in the high-single-digit percent range | ||||||
Operating margin | 34% to 35% | 37% to 38% | ||||||
Adjusted Operating Margin (1) | Approximately 42% | Approximately 44% | ||||||
Interest expense, net | $220 to $240 million | NC | ||||||
Effective tax rate | 20.5% to 22.5% | NC | ||||||
Diluted EPS | $6.90 to $7.20 | $8.10 to $8.60 | ||||||
Adjusted Diluted EPS (1) | $8.20 to $8.50 | $9.20 to $9.70 | ||||||
Operating cash flow | Approximately $1.5 billion | $1.7 to $1.9 billion | ||||||
Free Cash Flow (1) | Approximately $1.2 billion | $1.4 to $1.6 billion | ||||||
Share repurchases | Approximately $1.0 billion (subject to available cash, market conditions, M&A opportunities and other ongoing capital allocation decisions) | NC | ||||||
Moody's Investors Service (MIS) | Current guidance | Last publicly disclosed guidance | ||||||
MIS global revenue | Decline of approximately 30% | Decrease in the low-twenties percent range | ||||||
MIS Adjusted Operating Margin | Approximately 51% | 54% to 55% | ||||||
Moody's Analytics (MA) | Current guidance | Last publicly disclosed guidance | ||||||
MA global revenue | Increase in the mid-teens percent range | NC | ||||||
ARR (2) | Increase in the low-double-digit percent range | NC | ||||||
MA Adjusted Operating Margin | Approximately 30% | Approximately 29% | ||||||
NC - There is no difference between the Company’s current guidance and the last publicly disclosed guidance for this item. Note: All current guidance as of October 25, 2022. All last publicly disclosed guidance is as of July 26, 2022. (1) These metrics are adjusted measures. See below for reconciliation of these measures to their comparable U.S. GAAP measure. (2) Refer to Table 9 within this earnings release for the definition of and further information on the ARR metric. |
Projected for the Year Ended December 31, 2022 | |||||
Operating margin guidance | 34% to 35% | ||||
Depreciation and amortization | Approximately 6% | ||||
Restructuring Expense | Approximately 1.5% | ||||
Adjusted Operating Margin guidance | Approximately 42% | ||||
Projected for the Year Ended December 31, 2022 | |||||
Operating cash flow guidance | Approximately $1.5 billion | ||||
Less: Capital expenditures | Approximately $300 million | ||||
Free Cash Flow guidance | Approximately $1.2 billion | ||||
Projected for the Year Ended December 31, 2022 | |||||
Diluted EPS guidance | $6.90 to $7.20 | ||||
Acquisition-Related Intangible Amortization | Approximately $0.85 | ||||
Restructuring | Approximately $0.35 | ||||
FX losses resulting from the Company no longer conducting commercial operations in Russia | Approximately $0.11 | ||||
Adjusted Diluted EPS guidance | $8.20 to $8.50 |