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Moody's
🇺🇸 NYSE:MCO
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•
Mar 31, 2023

Moody's Q1 2023 Earnings Report

Moody's Corporation reported a decrease in revenue but an increase in diluted EPS and adjusted diluted EPS for the first quarter of 2023. Moody's Analytics recorded its 61st consecutive quarter of growth. The company updated its outlook for the full year 2023.

Key Takeaways

Moody's Corporation reported a 3% decrease in revenue to $1.5 billion for Q1 2023, while Moody's Analytics revenue increased by 6% to $737 million and Moody's Investors Service revenue decreased by 11% to $733 million. Diluted EPS increased by 1% to $2.72, and adjusted diluted EPS increased by 3% to $2.99. The company updated its full year 2023 outlook, projecting diluted EPS of $8.45 to $8.95 and adjusted diluted EPS of $9.50 to $10.00.

MCO revenue decreased by 3%, while MA revenue increased by 6% and MIS revenue decreased by 11% compared to the prior-year period.

MA recorded its 61st consecutive quarter of growth, contributing approximately 50% to overall MCO revenue.

MCO's diluted EPS increased by 1% to $2.72, and adjusted diluted EPS increased by 3% to $2.99.

The effective tax rate was 1.0%, significantly lower than the 18.2% reported in the prior-year period, due to favorable resolutions of uncertain tax positions.

Total Revenue
$1.47B
Previous year: $1.52B
-3.4%
EPS
$2.99
Previous year: $2.89
+3.5%
Operating Margin
37.7%
Previous year: 43.1%
-12.5%
Adjusted Operating Margin
44.6%
Previous year: 48.2%
-7.5%
Gross Profit
$1.04B
Previous year: $1.11B
-5.7%
Cash and Equivalents
$2.12B
Previous year: $1.75B
+21.1%
Free Cash Flow
$535M
Previous year: $411M
+30.2%
Total Assets
$14.7B
Previous year: $14.7B
-0.1%

Moody's

Moody's

Moody's Revenue by Segment

Forward Guidance

Moody's updated its outlook for full year 2023, reflecting assumptions about economic conditions, interest rates, inflation, foreign currency exchange rates, and capital markets' liquidity. The guidance includes specific macroeconomic assumptions for U.S. and Euro area GDP growth, global benchmark rates, U.S. high yield spreads, inflation rates, unemployment rate, and global high yield default rate.

Positive Outlook

  • Revenue: Increase in the mid-to-high-single-digit percent range
  • MA global revenue: Increase of approximately 10%
  • MIS global revenue: Increase in the low-to-mid-single-digit percent range
  • Diluted EPS: $8.45 to $8.95
  • Adjusted Diluted EPS: $9.50 to $10.00

Challenges Ahead

  • Operating expenses: Increase in the mid-single-digit percent range
  • Interest expense, net: $275 to $295 million
  • Effective tax rate: 15% to 17%
  • MA Adjusted Operating Margin: Approximately 31%
  • MIS Adjusted Operating Margin: Mid-50s percent range

Revenue & Expenses

Visualization of income flow from segment revenue to net income

Company Overview

Full financial data and analysis

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