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    MCO
    Earnings call· Jun 2026(Q2 FY26)

    MOODYS CORP /DE/ MCO

    Jul 22, 2026 Source

    Executive summary

    Moody's Q2 FY26 — Standout Quarter with Broad-Based Strength and Raised Guidance

    Moody's delivered a standout second quarter, marked by broad-based strength across both its Investors Service and Analytics segments, driving significant revenue and earnings growth. The company raised its full-year EPS midpoint and share repurchase guidance, reflecting strong execution and capitalizing on diverse funding deep currents, including AI-related investments and private credit. While maintaining its revenue outlook despite an issuance upgrade due to mix, Moody's is extending its restructuring program to drive further efficiencies and reinvestment in growth.

    Highlights

    7

    • Enterprise revenue grew 15% YoY.

    • Adjusted operating income grew 25% YoY.

    • Adjusted operating margin expanded 440 bps to 55.3%.

    • Adjusted diluted EPS grew 31% to $4.68.

    • MIS transaction revenue grew 34%, rating over $2 trillion of debt for the second consecutive quarter.

    • MA ARR reached approximately $3.7 billion, up nearly 9% from prior year, with 95% TTM retention.

    • Full-year share repurchase guidance raised to up to $3 billion.

    Concerns

    3

    • MIS revenue outlook maintained despite issuance upgrade due to less rich mix from data center and financial institution transactions.

    • MA transactional revenue declined 72% year-over-year to about $10 million due to deliberate portfolio repositioning.

    • Full-year free cash flow guidance adjusted down by $100 million to $2.7 billion - $2.9 billion due to working capital and restructuring costs.

    Guidance & targets

    10
    CategoryTargetConfidence
    Adjusted Diluted EPS
    $16.50 to $17.00
    high materiality
    High
    Rated Issuance Growth
    Mid-single-digit percent growth
    high materiality
    High
    MIS Revenue Growth
    High single-digit range
    high materiality
    High
    MIS Revenue Growth
    Low single-digit growth
    medium materiality
    High
    MIS Revenue Growth
    Roughly flat
    medium materiality
    High
    MA ARR Growth
    High single-digit range
    high materiality
    High
    Full Year Tax Rate
    Towards the high end of 23% to 25%
    low materiality
    High
    Restructuring Program Envelope
    $100 million expansion
    medium materiality
    High
    Share Repurchase
    Up to $3 billion
    high materiality
    High
    Free Cash Flow
    $2.7 billion to $2.9 billion
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Moody's Investors Service (MIS)
    Broad-based strength across all asset classes, benefiting from favorable transaction mix and larger, more complex mandates. Pricing initiatives, new mandates, and growth in monitored credits supported recurring revenue.
    Transaction revenue growth: 34%Rated debt: >$2 trillion (for second consecutive quarter)Adjusted operating margin increase: 410 bps YoYRecurring revenue: $369MRecurring revenue growth: 6%First-time mandates increase: 45%RMP: 750-850 (expected for full year)Corporate Finance & PPIF transaction revenue growth: 33%Speculative grade & bank loan transaction revenue growth: 50%Global issuance: >$2 trillion (for second consecutive quarter), up 33% YoY, 20% YTD
    		—25%—68.3%
    Moody's Analytics (MA)
    Strong quarter with healthy recurring growth, disciplined investment, and operating leverage. Robust demand across the franchise, strong sales execution, proactive contract renewals, cross-sell, upsell, and new logo wins.
    Recurring revenue: 99% of MA revenueRecurring revenue growth: 7% reported, 9% organic constant currencyTransactional revenue decline: 72% YoY to ~$10MARR: ~$3.7BARR growth: nearly 9% YoYTTM retention: 95%Adjusted operating margin expansion: 150 bps YoYAdjusted operating margin expansion: >500 bps (over past 2 years)Decision Solutions ARR growth: 10% (44% of MA revenue)KYC ARR growth: 13%Banking ARR growth: 10% (mid-teens for lending)Insurance ARR growth: 9%Research and Insights ARR growth: 6%Data and Information ARR growth: 8%
    		4% reported, 8% organic constant currency——33.6%

    Operational metrics

    15
    Enterprise Revenue Growth
    15%YoY
    Q2 FY26

    Strong performance across the board.

    Adjusted Operating Income Growth
    25%YoY
    Q2 FY26

    Strong progression from top line to bottom line.

    Adjusted Operating Margin
    55.3%Up 440 bps YoY
    Q2 FY26

    Enterprise level.

    Adjusted Diluted EPS Growth
    31%YoY
    Q2 FY26

    To $4.68.

    MA Annual Recurring Revenue (ARR)
    ~$3.7BUp nearly 9% YoY
    Q2 FY26

    Strong performance in Moody's Analytics.

    MA Trailing 12-Month Retention
    95%Remaining strong
    Q2 FY26

    For Moody's Analytics.

    Restructuring Program Annualized Savings
    $300M to $350M
    Future

    Expected from the full program after $100M envelope expansion.

    Share Repurchases Executed
    $2.2B
    YTD FY26

    Year-to-date.

    AI-powered screening solutions false positive reduction
    ~50%
    Current

    Helping customers reduce costly and time-consuming false positive alerts.

    KYC ARR growth
    13%YoY
    Q2 FY26

    Driven by deeper penetration within existing banking customers and expansion beyond financial services.

    Banking ARR growth
    10%YoY
    Q2 FY26

    Lending an important contributor, delivering mid-teens growth.

    Insurance ARR growth
    9%YoY
    Q2 FY26

    Supported by strong demand for catastrophic data models and underwriting solutions.

    Research and Insights ARR growth
    6%YoY
    Q2 FY26

    Supported by demand for CreditView and early momentum from Moody's OneView.

    Data and Information ARR growth
    8%YoY
    Q2 FY26

    Driven by continued demand for ratings data fees and Orbis data in noncompliance workflows.

    Mega cap e-commerce and technology company ARR growth
    >2x
    Since end of 2024

    Now an 8-figure relationship, expanding from targeted credit decisioning to broader workflow deployment.

    Product announcements

    4
    ProductTypeDetails
    On-prem modeling solutions in insurancediscontinuation
    Token integration engineexpansion
    Intelligent Risk Platform (IRP)update
    Moody's OneViewlaunch

    Deals & partnerships

    7
    Amazon (AWS)Integration of Moody's connected intelligence into Amazon Quick, giving AWS customers access to ratings, research, and curated data.

    Enables AWS customers to access Moody's intelligence without leaving Amazon's AI experience.

    MicrosoftLaunched first AI skill on Microsoft 365 Copilot Co-Work.

    Enables agents to apply Moody's analytical frameworks and subject matter expertise. Joint go-to-market activity building momentum with >20 engagements globally and initial customer trials.

    Alpha Ledger (Solana)Extended token integration engine to Solana through Alpha Ledger.

    Embedding Moody's ratings directly into tokenized fixed income assets on a leading public blockchain. Reinforces network agnostic design.

    International Finance Corporation (IFC)Rated a second emerging market CLO.

    Sole agency on this unique transaction, securitizing corporate loans to borrowers in emerging markets, helping IFC broaden access to institutional capital.

    BlackRockRated BlackRock's tokenized money market fund.$2.6B

    World's largest at $2.6 billion market cap, cornerstone of tokenized liquidity stack as stable point reserve and on-chain cash entry point.

    HUT 8 (Beacon Point D.C.)Rated a roughly $4 billion financing for a 350-megawatt hyperscale campus developed by HUT 8.$4B

    Example of large data center transactions being rated across the U.S., illustrating AI's role in capital formation.

    German GovernmentExpanded long-standing relationship, embedding Moody's data and AI-enabled capabilities into core tax administration workflows.

    Includes audits, investigations, transfer pricing, and risk assessment. Source of double-digit growth within Data and Information business in EMEA.

    Risks & headwinds

    4
    Geopolitical VolatilityOngoing

    Not quantified

    Mitigation: Monitoring market conditions, observed in early July in high-yield market.

    Global Energy Flows Disruption

    Not quantified

    Mitigation: Could put pressure on inflation expectations and lead companies to defer M&A.

    Tough Comparables (H2 FY25)H2 FY26

    Not quantified

    Mitigation: Second half of FY25 was a very robust period, creating tough comparables for H2 FY26, incorporated into current guidance.

    Issuance Mix Impact on Revenue YieldFY26

    Higher issuance outlook doesn't change full-year revenue expectations

    Mitigation: Increased issuance from data center and financial institution transactions carries lower average revenue yields, but management maintains revenue guidance, acknowledging the mix impact.

    What to watch in Q3 FY26

    5

    MIS Issuance Mix

    Next quarter
    CurrentLess rich mix from data center and financial institution transactions.
    TargetShift towards more revenue-accretive areas like insurance issuers, CLOs, or CMBS.

    Why it matters

    A more favorable mix could provide upside to MIS revenue beyond current guidance.

    The issuance upside Meacham with a bit of mix that's a bit less rich than we'd expected. More of the growth is coming from data center, financial institution transactions and these tend to carry lower average yields given deal size and a bit less from areas like insurance issuers or CLOs or CMBS, which are typically more revenue accretive per dollar of issuance.

    Q&A highlights

    8

    Manav Patnaik asked for clarification on the assumptions behind the second half guidance, particularly for Q3 and Q4, noting that the guidance seemed conservative despite strong Q2 results and issuance pull-forward.

    Management explained that Q2 results represented a pull-forward of activity expected in Q3, effectively derisking the second half. While issuance outlook was raised, the revenue outlook remained unchanged due to a less rich mix from data center and financial institution transactions, which carry lower average yields. They emphasized that the full-year plan is on track with original expectations.

    “So I guess I'd say at the halfway point of the year, we're sitting where our full year plan always expected us to be. Now what that means for our issuance guidance, we're raising our outlook from low single digit to mid-single digit percent range growth. We're holding revenue guidance at high single-digit growth for the year. The issuance upside Meacham with a bit of mix that's a bit less rich than we'd expected.”

    asked by Manav Patnaik · answered by Noemie Heuland

    2 min read5 chapters

    Detailed Narrative

    01

    Q2 Performance Highlights

    Moody's reported a standout second quarter with enterprise revenue growth of 15%, adjusted operating income up 25%, and adjusted diluted EPS increasing 31% to $4.68. The adjusted operating margin expanded by 440 basis points to 55.3%. This strong performance was broad-based across both Moody's Investors Service (MIS) and Moody's Analytics (MA), demonstrating the power of the company's model in capitalizing on issuance activity and recurring revenue growth.

    02

    Moody's Investors Service (MIS) Drivers

    MIS revenue grew 25%, driven by broad-based strength across all asset classes and global issuance exceeding $2 trillion for the second consecutive quarter. The company upgraded its full-year issuance growth outlook to mid-single-digit percent. Key drivers included AI and data center financing (with hyperscalers exceeding 2026 forecasts), private credit (over 40% growth in related transactions), digital finance (ratings on chain, token integration to Solana), and emerging markets CLOs. Despite the issuance upgrade, the full-year revenue outlook was maintained due to a less rich mix from data center and financial institution transactions.

    03

    Moody's Analytics (MA) Growth & Strategy

    MA delivered strong results with ARR growing nearly 9% to approximately $3.7 billion and TTM retention at 95%. Adjusted operating margin expanded by 150 basis points to 33.6%. Recurring revenue grew 9% on an organic constant currency basis, now representing 99% of MA revenue. Decision Solutions, MA's primary growth engine, saw 10% ARR growth, with KYC up 13% and Banking up 10%. Insurance ARR grew 9%, supported by demand for catastrophic data models and underwriting solutions through the Intelligent Risk Platform (IRP).

    04

    AI & Digital Finance Initiatives

    Moody's is actively integrating its intelligence into AI platforms. Partnerships include bringing connected intelligence into Amazon Quick for AWS customers and launching an AI skill on Microsoft 365 Copilot Co-Work. The company extended its token integration engine to Solana and rated BlackRock's $2.6 billion tokenized money market fund. AI-powered screening solutions are helping customers achieve an approximately 50% reduction in false positive alerts, highlighting the demand for decision-grade intelligence in critical workflows.

    05

    Capital Allocation & Financial Outlook

    The company raised its full-year adjusted diluted EPS guidance midpoint to $16.75 and increased its full-year share repurchase guidance to up to $3 billion, having already executed $2.2 billion year-to-date. Free cash flow for the quarter was $688 million, up 47% YoY, though full-year FCF guidance was adjusted down by $100 million to $2.7 billion - $2.9 billion due to working capital and restructuring costs. Moody's is expanding its restructuring program envelope by $100 million through year-end 2027, targeting $300 million to $350 million in annualized savings.

    AI-generated summary of the company’s earnings call. Not investment advice.