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Sep 30, 2023
Moody's Q3 2023 Earnings Report
Moody's reported impressive double-digit revenue growth, driven by a rebound in issuance and increasing demand for research, data, and solutions. The company is investing in transformative technologies to enhance capabilities and reaffirmed its full-year adjusted diluted EPS guidance.
Key Takeaways
Moody's Corporation reported strong third-quarter results with a 15% increase in revenue to $1.5 billion. Diluted EPS increased by 28% to $2.11, and adjusted diluted EPS increased by 31% to $2.43. The company reaffirmed its full-year adjusted diluted EPS guidance of $9.75 to $10.25.
Revenue increased 15% from the prior-year period.
Moody’s Analytics (MA) revenue grew 13% from the prior-year period, and included double-digit growth across all lines of business.
Moody’s Investors Service (MIS) revenue grew 18%, relative to issuance growth of 12%, and benefitted from a favorable mix of leveraged finance and infrequent banking issuer activity.
Diluted and adjusted diluted EPS increased from the prior-year period on higher operating income, reflecting MA and MIS’s revenue growth and a disciplined approach to expense management.
Revenue by Segment
Forward Guidance
Moody's updated outlook for full year 2023 reflects assumptions about numerous factors that could affect its business and is based on currently available information reviewed by management.
Positive Outlook
- Revenue: Increase in the high-single-digit percent range
- Operating expenses: Increase in the mid-single-digit percent range
- Adjusted Operating Margin: 44% to 45%
- Effective tax rate: 16% to 18%
- Adjusted Diluted EPS: $9.75 to $10.25
Challenges Ahead
- Interest expense, net: $250 to $260 million
- U.S. high yield spreads: To fluctuate around 400 - 450 bps, with periodic volatility
- Global high yield default rate: Rise to 4.5% - 5.0% by year-end
- U.S. unemployment rate: Rise toward 3.8% by year-end
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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