Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis of financial condition and results of operations should be read in conjunction with the Moody’s Corporation condensed consolidated financial statements and notes thereto included elsewhere in this quarterly report on Form 10–Q.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains Forward-Looking Statements. See “Forward-Looking Statements” commencing on page 85 for a discussion of uncertainties, risks and other factors associated with these statements.

THE COMPANY

Moody’s is a global integrated risk assessment firm that empowers organizations and investors to make better decisions. Moody’s reports in two segments: MIS and MA.

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. Revenue is primarily derived from the originators and issuers of such transactions who use MIS ratings in the distribution of their debt issues to investors. Additionally, MIS earns revenue from certain non-ratings-related operations, which consist primarily of financial instrument pricing services in the Asia-Pacific region, revenue from providing ESG research, data and assessments and revenue from ICRA’s non-ratings operations. The revenue from these operations is included in the MIS Other LOB and is not material to the results of the MIS segment.

MA is a global provider of data and analytic solutions which help companies make better and faster decisions. MA’s analytic models, industry insights, software tools and proprietary data assets allow companies to inform and perform many critical business activities with trust and confidence. MA’s approach to aggregating, broadening and deepening available data, research, analytic tools and software solutions fosters a more integrated and efficient delivery to MA's customers resulting in better decisions around risks and opportunities.

Sustainability

Moody’s manages its business with the goal of delivering value to all of its stakeholders, including its customers, employees, business partners, local communities and stockholders. As part of this effort, Moody’s advances sustainability by considering environmental, social, and governance (“ESG”) factors throughout its operations and products and services. It uses its expertise and assets to make a positive difference through technology tools, research and analytical services that help other organizations and the investor community better understand the links between sustainability considerations and the global markets. Moody’s efforts to promote sustainability-related thought leadership, assessments and data to market participants include following the policies of recognized sustainability organizations that develop standards or frameworks and/or evaluate and assess performance, including the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and most recently World Economic Forum (WEF). Moody's also issues an annual report on how the Company has implemented the Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations. In the second quarter of 2021, Moody's published its progress through Moody's 2020 Stakeholder Sustainability Report, 2020 TCFD Report, 2020 GRI Report, 2020 SASB Report and 2020 WEF Report.

The Board oversees sustainability matters, with assistance from the Audit and Governance & Nominating Committees, as part of its oversight of management and the Company’s overall strategy.

COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. The Company continues to monitor regional developments relating to the COVID-19 pandemic to inform decisions on the reopening of its offices and its business travel policies. The Company has selectively reopened certain of its offices, most on a limited capacity basis.

The COVID-19 pandemic has not had a material adverse impact on the Company's reported results to date and is currently not expected to have a material adverse impact on its near-term outlook. However, Moody's is unable to predict the longer-term impact that the pandemic may have on its business, future results of operations, financial position or cash flows due to numerous uncertainties. Refer to Item 1A. “Risk Factors”, contained in the Company’s annual report on Form 10-K for the year ended December 31, 2020 for further disclosure relating to the risks of the COVID-19 pandemic on the Company's business.

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Critical Accounting Estimates

Moody’s discussion and analysis of its financial condition and results of operations are based on the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires Moody’s to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and revenue and expenses during the reporting periods. These estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, Moody’s evaluates its estimates, including those related to revenue recognition, accounts receivable allowances, contingencies, restructuring, goodwill and acquired intangible assets, pension and other retirement benefits, stock-based compensation, and income taxes. Actual results may differ from these estimates under different assumptions or conditions. Item 7, MD&A, in the Company’s annual report on Form 10-K for the year ended December 31, 2020, includes descriptions of some of the judgments that Moody’s makes in applying its accounting estimates in these areas. Since the date of the annual report on Form 10-K, there have been no material changes to the Company’s critical accounting estimates other than the update below relating to the results of the Company's reorganization of its MA reporting units completed in the second quarter of 2021 and annual impairment assessment as of July 31, 2021.

Goodwill and Other Acquired Intangible Assets

On July 31st of each year, Moody’s evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment (i.e., MIS and MA), or one level below an operating segment (i.e., a component of an operating segment).

Prior to the second quarter of 2021, MA's reporting unit structure consisted of five reporting units (Content, ERS, MALS, Bureau van Dijk and Reis). Pursuant to a strategic reorganization in the MA segment which was completed in the second quarter of 2021, MA's reporting unit structure has been reorganized into two reporting units. MA’s two new reporting units generally consist of: i) businesses offering data and data-driven analytical solutions; and ii) risk-management software, workflow and CRE solutions. This reorganization did not result in a change to the Company's reportable segments.

The Company performed qualitative assessments of the reporting units impacted by the reorganization immediately before and after the reorganization became effective. These qualitative assessments resulted in the Company determining that it was not more likely than not that the fair value of any reporting unit was less than its carrying amount

Subsequent to the aforementioned reorganization of the MA reporting units, the Company now has four reporting units: two within the Company’s ratings business (one for the ICRA business and one that encompasses all of Moody’s other ratings operations) and two reporting units within MA consisting of businesses that offer: i) data and data-driven analytical solutions; and ii) risk-management software, workflow and CRE solutions.

The RMS business was acquired on September 15, 2021 and $1,279 million of goodwill was assigned to the MA reporting unit consisting of risk-management software, workflow and CRE solutions, $90 million assigned to the MIS reporting unit, and $20 million was assigned to the MA reporting unit consisting of businesses offering data and data-driven analytical solutions. As the acquisition of RMS was completed shortly after the Company's annual impairment assessment date of July 31, 2021, goodwill acquired in this transaction was not subject to the Company's impairment assessment described below.

The Company evaluates the recoverability of goodwill using a two-step impairment test approach at the reporting unit level. In the first step, the Company assesses various qualitative factors to determine whether the fair value of a reporting unit may be less than its carrying amount. If a determination is made based on the qualitative factors that an impairment does not exist, the Company is not required to perform further testing. If the aforementioned qualitative assessment results in the Company concluding that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount, the fair value of the reporting unit will be quantitatively determined and compared to its carrying value including goodwill. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and the Company is not required to perform further testing. If the fair value of the reporting unit is less than the carrying value, the Company will record a goodwill impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value. The Company evaluates its reporting units on an annual basis, or more frequently if there are changes in the reporting structure of the Company due to acquisitions, realignments or if there are indicators of potential impairment. For the reporting units where the Company is consistently able to conclude that no impairment exists using only a qualitative approach, the Company’s accounting policy is to perform the second step of the aforementioned goodwill impairment assessment at least once every three years.

At July 31, 2021, the Company performed quantitative assessments for each of the four reporting units. These quantitative assessments were performed to provide new baseline valuations under the aforementioned new reporting unit structure. These quantitative assessments resulted in fair values that significantly exceeded carrying value for all reporting units. Accordingly, at the date of the filing of this quarterly report on Form 10-Q, the Company does not believe that any of its reporting units are at risk for impairment.

Determining the fair value of a reporting unit involves the use of significant estimates and assumptions, which are more fully described below. In addition, the Company also makes certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of its reporting units.

Other assets and liabilities, including applicable corporate assets, are allocated to the extent they are related to the operation of respective reporting units.

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Matters concerning the ICRA reporting unit:

ICRA has reported various matters relating to: (i) an adjudication order and fine imposed by the Securities and Exchange Board of India (SEBI) in connection with credit ratings assigned to one of ICRA’s customers and the customer’s subsidiaries, which are being appealed by ICRA; (ii) an increase in the original fine, which also is being appealed by ICRA; (iii) the completion of internal examinations regarding various anonymous complaints; and (iv) actions taken by ICRA’s board based on the examinations’ findings. As of the date of this quarterly report on Form 10-Q, the Company is unable to estimate the financial impact, if any, that may result from a potential unfavorable conclusion of these matters or any other ICRA inquiry. An unfavorable resolution of such matters may negatively impact ICRA’s future operating results, which could result in an impairment of goodwill and amortizable intangible assets in future quarters.

Methodologies and significant estimates utilized in determining the fair value of reporting units:

The following is a discussion regarding the Company’s methodology for determining the fair value of its reporting units, excluding ICRA, as of at July 31, 2021. As ICRA is a publicly traded company in India, the Company was able to observe its fair value based on its market capitalization. The fair value of each reporting unit, excluding ICRA, was estimated using a discounted cash flow methodology and comparable public company and precedent transaction multiples. The discounted cash flow analysis requires significant estimates, including projections of future operating results and cash flows of each reporting unit that are based on internal budgets and strategic plans, expected long-term growth rates, terminal values, weighted average cost of capital and the effects of external factors and market conditions. Changes in these estimates and assumptions could materially affect the estimated fair value of each reporting unit, that could result in an impairment charge to reduce the carrying value of goodwill, which could be material to the Company’s financial position and results of operations. Moody’s allocates newly acquired goodwill to reporting units based on the reporting unit expected to benefit from the acquisition.

The sensitivity analysis on the future cash flows and WACC assumptions described below. These key assumptions utilized in the discounted cash flow valuation methodology require significant management judgment:

• Future cash flow assumptions - The projections for future cash flows utilized in the models are derived from historical experience and assumptions regarding future growth and profitability of each reporting unit. These projections are consistent with the Company’s operating budget and strategic plan. Cash flows for the five years subsequent to the date of the quantitative goodwill impairment test were utilized in the determination of the fair value of each reporting unit. The growth rates assumed a gradual increase in revenue based on new customer acquisition and new products. Beyond five years, a terminal value was determined using a perpetuity growth rate based on inflation and real GDP growth rates. A sensitivity analysis of the revenue growth rates was performed on all reporting units. For each reporting unit analyzed, a 10% reduction in the revenue growth rates used would not have resulted in its carrying value exceeding its estimated fair value.

• WACC - The WACC is the rate used to discount each reporting unit’s estimated future cash flows. The WACC is calculated based on the proportionate weighting of the cost of debt and equity. The cost of equity is based on a risk-free interest rate and an equity risk factor, which is derived from public companies similar to the reporting unit and which captures the perceived risks and uncertainties associated with the reporting unit’s cash flows. The cost of debt component is calculated as the weighted average cost associated with all of the Company’s outstanding borrowings as of the date of the impairment test and was immaterial to the computation of the WACC. The cost of debt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the reporting unit being tested. The WACC for all reporting units ranged from 8.0% to 8.5% as of July 31, 2021. Differences in the WACC used between reporting units is primarily due to distinct risks and uncertainties regarding the cash flows of the different reporting units. A sensitivity analysis of the WACC was performed on all reporting units as of July 31, 2021 for each reporting unit. For all reporting units, an increase in the WACC of one percentage point would not result in the carrying value of the reporting unit exceeding its fair value.

Reportable Segments

The Company is organized into two reportable segments at September 30, 2021: MIS and MA, which are more fully described in the section entitled “The Company” above and in Note 19 to the condensed consolidated financial statements.

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RESULTS OF OPERATIONS

Impact of acquisitions/divestitures on comparative results

–Moody’s completed the following acquisitions, which impact the Company's year-over-year comparative results:

–Regulatory DataCorp on February 13, 2020;

–Acquire Media on October 21, 2020;

–ZM Financial Systems on December 7, 2020;

–Catylist on December 30, 2020;

–Cortera on March 19, 2021; and

–RMS on September 15, 2021.

Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definitions of how the Company determines certain organic growth measures used in this MD&A that exclude the impact of acquisition/divestiture activity.

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Three months ended September 30, 2021 compared with three months ended September 30, 2020

Executive Summary

–The following table provides an executive summary of key operating results for the quarter ended September 30, 2021. Following this executive summary is a more detailed discussion of the Company’s operating results as well as a discussion of the operating results of the Company’s reportable segments.

			Three Months Ended September 30,
Financial measure:			2021			2020			% Change Favorable (Unfavorable)			Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue			$	1,526		$	1,356		13		%	— reflects strong growth in both segments.
MIS External Revenue			$	925		$	825		12		%	— strong growth in U.S. bank loan issuance as issuers continued to take advantage of favorable market conditions to refinance existing debt and fund M&A activity; and — strength in CLO refinancing activity coupled with growth in CMBS activity reflecting continued low credit spreads for these asset classes; partially offset by: — declines in investment-grade and high-yield bond issuance volumes compared to a strong prior year period
MA External Revenue			$	601		$	531		13		%	— strong growth in KYC and compliance solutions, as well as research and data feeds; — ongoing recurring revenue growth in ERS from subscription-based sales to banking, insurance and asset management customers; and — inorganic growth from acquisitions; partially offset by: — a decline in ERS transaction-based revenue reflecting MA's strategic shift to higher margin SaaS-based products which produce recurring revenue
Total operating and SG&A expenses			$	789		$	635		(24		%)	— inorganic expense growth from acquisitions including $22 million in RMS acquisition-related costs; — higher incentive compensation accruals aligned with operating performance; and — higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency
Total non-operating (expense) income, net			$	(57)		$	(43)		(33		%)	— includes a $13 million loss on a forward contract used to hedge a portion of the GBP-denominated RMS purchase price.
Operating Margin			44.3		%	47.3		%	(300BPS)			— margins were suppressed by acquisition-related costs relating to the acquisition of RMS and additional incentive compensation accruals in the third quarter of 2021
Adjusted Operating Margin			48.3		%	53.2		%	(490BPS)
ETR			23.4		%	22.0		%	140BPS			— increase primarily due to a deferred tax benefit in 2020 resulting from a non-U.S. corporate reorganization
Diluted EPS			$	2.53		$	2.47		2		%	— generally in line with the prior year as strong underlying operating performance was offset by acquisition-related costs and higher incentive compensation accruals
Adjusted Diluted EPS			$	2.69		$	2.69		—		%

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Moody's Corporation

			Three Months Ended September 30,												% Change Favorable (Unfavorable)
			2021						2020
Revenue:
United States			$	844					$	729					16		%
Non-U.S.:
EMEA			439						401						9		%
Asia-Pacific			149						156						(4		%)
Americas			94						70						34		%
Total Non-U.S.			682						627						9		%
Total			1,526						1,356						13		%
Expenses:
Operating			394						364						(8		%)
SG&A			395						271						(46		%)
Depreciation and amortization			61						56						(9		%)
Restructuring			—						23						NM
Total			850						714						(19		%)
Operating income			$	676					$	642					5		%
Adjusted Operating Income (1)			$	737					$	721					2		%
Interest expense, net			$	(53)					$	(53)					—		%
Other non-operating income, net			(4)						10						(140		%)
Non-operating (expense) income, net			$	(57)					$	(43)					(33		%)
Net income attributable to Moody's			$	474					$	467					1		%
Diluted weighted average shares outstanding			187.3						189.3						1		%
Diluted EPS attributable to Moody's common shareholders			$	2.53					$	2.47					2		%
Adjusted Diluted EPS (1)			$	2.69					$	2.69					—		%
Operating margin			44.3		%				47.3		%
Adjusted Operating Margin(1)			48.3		%				53.2		%
Effective tax rate			23.4		%				22.0		%

(1) Adjusted Operating Income, Adjusted Operating Margin and Adjusted Diluted EPS are non-GAAP financial measures. Refer to the section entitled "Non-GAAP Financial Measures" of this Management Discussion and Analysis for further information regarding these measures.

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The table below shows Moody’s global staffing by geographic area:

									September 30,																		Change
									2021						2020												%
MIS
			U.S.						1,412						1,529												(8		%)
			Non-U.S.						3,650						3,537												3		%
			Total						5,062						5,066												—		%
MA
			U.S.						2,579						1,848												40		%
			Non-U.S.						3,691						3,045												21		%
			Total						6,270						4,893												28		%
MSS
			U.S.						733						710												3		%
			Non-U.S.						958						728												32		%
			Total						1,691						1,438												18		%
Total MCO
			U.S.						4,724						4,087												16		%
			Non-U.S.						8,299						7,310												14		%
			Total						13,023						11,397												14		%

Moody’s global staffing increased by approximately 1,400 employees mainly due to acquisitions completed subsequent to September 30, 2020.

GLOBAL REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

Global revenue ⇑ $170 million						U.S. Revenue ⇑ $115 million						Non-U.S. Revenue ⇑ $55 million

The increase in global revenue reflected growth across most regions for both MIS and MA. Refer to the section entitled “Segment Results” of this MD&A for a more fulsome discussion of the Company’s segment revenue.

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						Operating Expense ⇑ $30 million									SG&A Expense ⇑ $124 million

---------- ---------

Compensation expenses increased $21 million reflecting:												Compensation expenses increased $41 million reflecting:
— higher incentive compensation accruals aligned with actual/projected financial and operating performance;												— higher incentive compensation accruals aligned with actual/projected financial and operating performance;
— hiring and salary increases, including inorganic growth of acquisitions; and												— hiring and salary increases, including inorganic growth of acquisitions; and
— unfavorable changes in FX translation rates												— unfavorable changes in FX translation rates
Non-compensation expenses increased $9 million reflecting:												Non-compensation expenses increased $83 million reflecting:
— higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency; and												— operating and transaction-related costs associated with recent acquisitions, most notably $22 million in RMS acquisition-related costs;
— inorganic growth from acquisitions; partially offset by:												— lower legal accruals in 2020;
— ongoing disciplined cost management												— higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency;
												— an increase in charitable contributions via the Moody's Foundation; and
												— inorganic growth from acquisitions; partially offset by:
												— ongoing disciplined cost management

						Operating margin 44.3%, down 300 BPS									Adjusted Operating Margin 48.3%, down 490 BPS

Overall, margins were suppressed by acquisition-related costs relating to the acquisition of RMS and additional incentive compensation accruals in the third quarter of 2021 which are aligned with strong actual/forecasted underlying operating performance.

									Interest Expense, net was in line with prior year									Other non-operating income ⇓ $14 million

									Decrease in income is primarily due to:
									— a $13 million loss on a forward contract used to hedge a portion of the GBP-denominated RMS purchase price.

						ETR ⇑ 140 BPS

The increase in the ETR is primarily due to a deferred tax benefit in the prior year resulting from a non-U.S. corporate reorganization.

						Diluted EPS ⇑ $0.06												Adjusted Diluted EPS was flat compared to prior year

Diluted EPS was up modestly and Adjusted Diluted EPS was in line with prior year reflecting strong underlying operating performance being offset by acquisition-related costs and higher incentive compensation accruals. Refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for items excluded in the derivation of Adjusted Diluted EPS.

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Segment Results

Moody’s Investors Service

The table below provides a summary of revenue and operating results, followed by further insight and commentary:

			Three Months Ended September 30,												% Change Favorable (Unfavorable)
			2021						2020
Revenue:
Corporate finance (CFG)			$	488					$	461					6		%
Financial institutions (FIG)			153						134						14		%
Public, project and infrastructure finance (PPIF)			130						133						(2		%)
Structured finance (SFG)			143						88						63		%
Total ratings revenue			914						816						12		%
MIS Other			11						9						22		%
Total external revenue			925						825						12		%
Intersegment revenue			42						38						11		%
Total MIS revenue			967						863						12		%
Expenses:
Operating and SG&A (external)			385						308						(25		%)
Operating and SG&A (intersegment)			2						1						(100		%)
Depreciation and amortization			17						17						—		%
Restructuring			—						13						(100		%)
Total expense			404						339						(19		%)
Operating Income			$	563					$	524					7		%
Depreciation and amortization			17						17						—		%
Restructuring			—						13						(100		%)
Adjusted Operating Income			$	580					$	554					5		%
Operating margin			58.2		%				60.7		%
Adjusted Operating Margin			60.0		%				64.2		%

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MOODY'S INVESTORS SERVICE REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

MIS: Global revenue ⇑ $100 million			U.S. Revenue ⇑ $74 million			Non-U.S. Revenue ⇑ $26 million

–The increase in global MIS revenue mainly reflected growth in both CFG and SFG revenue in the U.S. and EMEA.

–Transaction revenue grew $83 million compared to the same period in the prior year.

CFG REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

CFG: Global revenue ⇑ $27 million			U.S. Revenue ⇑ $23 million			Non-U.S. Revenue ⇑ $4 million

Global CFG revenue for the three months ended September 30, 2021 and 2020 was comprised as follows:

(1) Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.

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The increase in CFG revenue of 6% reflected growth in both U.S. (7%) and internationally (3%).

Transaction revenue increased $19 million compared to the same period in the prior year.

The most notable drivers of the change compared to 2020 were:

–increases in U.S. bank loan activity driven by opportunistic refinancing activity and increased M&A activity;

partially offset by:

–declines in investment-grade rated issuance volumes across most regions, most notably in the U.S., compared to very strong issuance in the prior year period when large corporate issuers opportunistically bolstered their liquidity positions in light of uncertainties surrounding the COVID-19 crisis.

FIG REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

FIG: Global revenue ⇑ $19 million			U.S. Revenue ⇑ $12 million			Non-U.S. Revenue ⇑ $7 million

Global FIG revenue for the three months ended September 30, 2021 and 2020 was comprised as follows:

The increase in FIG revenue of 14% reflected growth in both U.S. (20%) and internationally (9%).

Transaction revenue increased $16 million compared to the third quarter of 2020.

The most notable driver of the 14% increase in FIG revenue was higher banking and insurance revenue in the U.S. as a result of banks and insurers opportunistically securing financing at continued low rates.

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PPIF REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

PPIF: Global revenue ⇓ $3 million			U.S. Revenue ⇓ $6 million			Non-U.S. Revenue ⇑ $3 million

Global PPIF revenue for the three months ended September 30, 2021 and 2020 was comprised as follows:

Transaction revenue decreased $4 million compared to the third quarter of 2020.

The modest decline in PPIF revenue of 2% reflected a decrease in the U.S. (7%) partially offset by growth internationally (6%).

The decrease in revenue was mainly a result of:

–a strong prior year comparative period in sovereign and U.S. public finance where issuers were bolstering their balance sheets in response to uncertainties relating to the COVID-19 crisis; and

–federal funding to U.S. public finance issuers related to the COVID-19 crisis leading to a decline in issuance activity.

SFG REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

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SFG: Global revenue ⇑ $55 million			U.S. Revenue ⇑ $44 million			Non-U.S. Revenue ⇑ $11 million

Global SFG revenue for the three months ended September 30, 2021 and 2020 was comprised as follows:

The 63% increase in SFG revenue reflected growth both in the U.S. (81%) and internationally (32%).

Transaction revenue increased $52 million compared to the third quarter of 2020.

The most notable drivers of the growth in SFG revenue were:

–higher CLO refinancing and securitization activity in the U.S. and EMEA as market conditions remain favorable for this asset class coupled with strength in bank loan issuance, which has resulted in higher collateral supply;

–an increase in U.S. CMBS activity, mainly from CRE-CLO transactions, as issuers continued to take advantage of favorable market conditions; and

–growth in U.S. RMBS revenue resulting from higher collateral supply (notably agency eligible loans in the private market).

						MIS: Operating and SG&A Expense ⇑ $77 million

The growth is primarily due to higher compensation costs of $34 million and higher non-compensation costs of $43 million with most notable drivers reflecting:

Compensation costs						Non-compensation costs
The increase is primarily due to:						The increase is primarily due to:
— higher incentive compensation accruals aligned with actual/projected financial and operating performance.						— lower legal accruals in 2020;
			— an increase in charitable contributions via the Moody's Foundation; and
						— higher costs to support the Company’s initiative to enhance technology infrastructure to enable automation, innovation and efficiency as well as to support business growth.

						MIS: Operating Margin 58.2% ⇓ 250 BPS									Adjusted Operating Margin 60.0% ⇓ 420 BPS

MIS operating margin and Adjusted Operating Margin both declined reflecting growth in operating and SG&A expenses outpacing MIS's strong revenue growth of 12%.

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Moody’s Analytics

The table below provides a summary of revenue and operating results, followed by further insight and commentary:

			Three Months Ended September 30,												% Change Favorable (Unfavorable)
			2021						2020
Revenue:
Research, data and analytics (RD&A)			$	445					$	386					15		%
Enterprise risk solutions (ERS)			156						145						8		%
Total external revenue			601						531						13		%
Intersegment revenue			2						1						100		%
Total MA revenue			603						532						13		%
Expenses:
Operating and SG&A (external)			404						327						(24		%)
Operating and SG&A (intersegment)			42						38						(11		%)
Depreciation and amortization			44						39						(13		%)
Restructuring			—						10						NM
Total expense			490						414						(18		%)
Operating income			$	113					$	118					(4		%)
Depreciation and amortization			44						39						(13		%)
Restructuring			—						10						NM
Adjusted Operating Income			$	157					$	167					(6		%)
Operating margin			18.7		%				22.2		%
Adjusted Operating Margin			26.0		%				31.4		%

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MOODY'S ANALYTICS REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

MA: Global revenue ⇑ $70 million			U.S. Revenue ⇑ $41 million			Non-U.S. Revenue ⇑ $29 million

The 13% increase in global MA revenue reflects growth both in the U.S. and internationally in both LOBs and includes revenue from the acquisitions of AM, ZMFS, Catylist, Cortera and RMS.

–Organic revenue growth (1) was 8%.

(1) Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.

RD&A REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

RD&A: Global revenue ⇑ $59 million			U.S. Revenue ⇑ $36 million			Non-U.S. Revenue ⇑ $23 million

Global RD&A revenue grew 15% compared to the third quarter of 2020 with the most notable drivers of the change reflecting:

–continued demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage;

–strong renewals and new sales related to credit research and data feeds; and

–inorganic revenue growth from the acquisitions of AM, Catylist, and Cortera.

Organic revenue growth for RD&A was 12%.

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ERS REVENUE

2021**-----------------------------------------------------------------------------------**2020

****_______****

ERS: Global revenue ⇑ $11 million			U.S. Revenue ⇑ $5 million			Non-U.S. Revenue ⇑ $6 million

Global ERS revenue increased 8% compared to the third quarter of 2020 mainly driven by:

–growth in organic recurring revenue of 13%, most notably for actuarial modeling tools in support of certain international accounting standards relating to insurance contracts and demand from asset managers for risk management solutions;

–inorganic revenue growth from the acquisitions of ZMFS and RMS;

partially offset by:

–lower non-recurring software revenue and services due to a de-emphasizing of these lower margin offerings.

Organic revenue for ERS decreased 2% reflecting the aforementioned decline in non-recurring software revenue being partially offset by strong growth in recurring revenue.

						MA: Operating and SG&A Expense ⇑ $77 million

The increase in operating and SG&A expenses compared to the third quarter of 2020 reflected growth in compensation costs of $27 million and in non-compensation costs of $50 million. The most notable drivers of these increases were:

Compensation costs						Non-compensation costs
— higher incentive compensation accruals aligned with actual/projected financial and operating performance; and						— higher costs to support the Company's initiative to enhance technology infrastructure to enable automation, innovation and efficiency as well as to support business growth;
— salary increases and inorganic expense growth from acquisitions.						— operating and transaction-related costs associated with recent acquisitions, most notably $22 million in RMS acquisition-related costs; and
						— an increase in charitable contributions via the Moody's Foundation

						MA: Operating Margin 18.7% ⇓ 350 BPS									Adjusted Operating Margin 26.0% ⇓ 540 BPS

The operating margin and Adjusted Operating Margin contraction for MA both reflect the expense growth (including the RMS acquisition-related costs) outpacing revenue growth of 13%.

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Nine months ended September 30, 2021 compared with nine months ended September 30, 2020

Executive Summary

–The following table provides an executive summary of key operating results for the nine months ended September 30, 2021. Following this executive summary is a more detailed discussion of the Company’s operating results as well as a discussion of the operating results of the Company’s reportable segments.

			Nine Months Ended September 30,
Financial measure:			2021			2020			% Change			Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue			$	4,679		$	4,081		15		%	— reflects strong growth in both segments
MIS External Revenue			$	2,941		$	2,557		15		%	— strong growth mainly driven by leveraged finance issuance as issuers refinanced existing debt and funded M&A activity; — increased CLO and CMBS activity amid favorable market conditions; and — favorable changes in FX translation rates
MA External Revenue			$	1,738		$	1,524		14		%	— strong growth in KYC and compliance solutions, as well as research and data feeds; — inorganic growth from acquisitions; — ongoing recurring revenue growth in ERS from subscription-based sales to banking, insurance and asset management customers; and — favorable changes in FX translation rates; partially offset by: — a decline in ERS transaction-based revenue reflecting MA's strategic shift to higher margin SaaS-based products which produce recurring revenue
Total operating and SG&A expenses			$	2,167		$	1,945		(11		%)	— higher incentive and stock-based compensation aligned with operating performance; — unfavorable changes in FX translation rates; — inorganic expense growth from acquisitions including $22 million in acquisition-related costs for RMS; — higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency; partially offset by — cost savings resulting from the COVID-19 crisis and disciplined expense management
Total non-operating (expense) income, net			$	(91)		$	(115)		21		%	— a $40 million benefit related to the reversal of tax-related interest accruals pursuant to the resolution of uncertain tax positions; partially offset by — a $13 million loss on a forward contract used to hedge a portion of the GBP denominated RMS purchase price.
Operating Margin			49.8		%	47.6		%	220 BPS			— margin expansion reflects strong revenue growth outpacing operating expense growth
Adjusted Operating Margin			53.7		%	52.3		%	140 BPS
ETR			20.2		%	20.0		%	20BPS			— higher benefits of approximately $40 million from the resolution of UTPs in 2021; offset by — lower Excess Tax Benefits in 2021
Diluted EPS			$	9.51		$	7.73		23		%	— increase reflects strong operating income/Adjusted Operating Income growth as described above and includes $0.48/share and $0.13/share in benefits related to the resolution of uncertain tax positions in 2021 and 2020, respectively.
Adjusted Diluted EPS			$	9.96		$	8.24		21		%

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Moody’s Corporation

			Nine Months Ended September 30,												% Change Favorable (Unfavorable)
			2021						2020
Revenue:
United States			$	2,560					$	2,280					12		%
Non-U.S.:
EMEA			1,398						1,137						23		%
Asia-Pacific			460						436						6		%
Americas			261						228						14		%
Total Non-U.S.			2,119						1,801						18		%
Total			4,679						4,081						15		%
Expenses:
Operating			1,152						1,066						(8		%)
SG&A			1,015						879						(15		%)
Depreciation and amortization			180						163						(10		%)
Restructuring			2						20						(90		%)
Loss pursuant to the divestiture of MAKS			—						9						100		%
Total			2,349						2,137						(10		%)
Operating income			2,330						1,944						20		%
Adjusted Operating Income (1)			2,512						2,136						18		%
Interest expense, net			(109)						(153)						29		%
Other non-operating income, net			18						38						(53		%)
Non-operating (expense) income, net			(91)						(115)						21		%
Net income attributable to Moody’s			$	1,787					$	1,464					22		%
Diluted weighted average shares outstanding			188.0						189.3						1		%
Diluted EPS attributable to Moody’s common shareholders			$	9.51					$	7.73					23		%
Adjusted Diluted EPS (1)			$	9.96					$	8.24					21		%
Operating margin			49.8		%				47.6		%
Adjusted Operating Margin (1)			53.7		%				52.3		%
Effective tax rate			20.2		%				20.0		%

(1)Adjusted Operating Income, Adjusted Operating Margin and Adjusted Diluted EPS attributable to Moody’s common shareholders are non-GAAP financial measures. Refer to the section entitled “Non-GAAP Financial Measures” of this Management Discussion and Analysis for further information regarding these measures.

GLOBAL REVENUE

2021**-----------------------------------------------------------------------------------**2020

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Global revenue ⇑ $598 million						U.S. Revenue ⇑ $280 million						Non-U.S. Revenue ⇑ $318 million

The increase in global revenue reflected growth in both reportable segments both in the U.S. and internationally. Refer to the section entitled “Segment Results” of this MD&A for a more fulsome discussion of the Company’s segment revenue.

–Foreign currency translation favorably impacted global revenue by two percent.

						Operating Expense ⇑ $86 million									SG&A Expense ⇑ $136 million

-------------------------------------

						Compensation expenses increased $70 million and reflected:									Compensation expenses increased $90 million reflecting:
						— higher incentive and stock-based compensation accruals aligned with actual/projected financial and operating performance;									— higher incentive and stock-based compensation accruals aligned with actual/projected financial and operating performance;
						— hiring and salary increases;									— hiring and salary increases;
						— inorganic growth from acquisitions; and									— inorganic growth from acquisitions; and
						— unfavorable changes in FX translation rates									— unfavorable changes in FX translation rates
						Non-compensation expenses increased $16 million reflecting:									Non-compensation expenses increased $46 million reflecting:
						— higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency; partially offset by:									— higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency;
						— lower travel costs in light of the COVID-19 crisis and continued disciplined cost management.						— costs associated with recent acquisitions, most notably $22 million in RMS acquisition-related costs; and
															— an increase in charitable contributions via the Moody's Foundation; partially offset by:
												— lower estimates for credit losses primarily reflecting an increase in reserves in 2020 resulting from the anticipated impact of the COVID-19 crisis; and
												— lower travel costs in light of the COVID-19 crisis and continued disciplined cost management.

Other Expenses

The restructuring charge in 2020 relates to the Company's 2020 Real Estate Rationalization Restructuring Program as more fully discussed in Note 11 to the condensed consolidated financial statements.

The 2020 amount includes a $9 million loss pursuant to the divestiture of MAKS relating to customary post-closing completion adjustments pursuant to the sale of the business in the fourth quarter of 2019.

						Operating margin 49.8%, up 220 BPS									Adjusted Operating Margin 53.7%, up 140 BPS

Operating margin and Adjusted Operating Margin expansion reflects strong revenue growth outpacing growth in total operating expenses.

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						Interest Expense, net ⇓ $44 million									Other non-operating income ⇓ $20 million

Decrease in expense is primarily due to:									Decrease in income is primarily due to:
— a $40 million benefit in 2021 related to the reversal of tax-related interest accruals pursuant to the resolution of uncertain tax positions									— a $13 million benefit in 2020 relating to statute of limitations lapses on certain indemnification obligations relating to the MAKS divestiture;
									— a $13 million loss on a forward contract used to hedge a portion of the GBP denominated RMS purchase price;
									— an $8 million loss on the settlement of pension obligations in 2021 resulting from lump sum distributions from the Company's defined benefit pension plans; partially offset by:
									— higher gains of $7 million in 2021 on certain of the Company's investments in equity securities/investments.

						ETR in line with prior year

The 2021 and 2020 ETR include $62 million and $22 million, respectively, in tax benefits relating to the resolution of uncertain tax positions. The aforementioned benefit to the 2021 ETR was diluted by higher income before provision for income taxes compared to the prior year. Additionally, there was a $23 million decrease in Excess Tax Benefits in the first nine months of 2021 compared to the prior year.

						Diluted EPS ⇑ $1.78									Adjusted Diluted EPS ⇑ $1.72

Diluted EPS in 2021 of $9.51 increased $1.78 compared to the same period in 2020 mainly due to higher operating income. Diluted EPS in 2021 and 2020 also include $0.48/share and $0.13/share, respectively, in benefits related to the aforementioned resolution of uncertain tax positions.						Adjusted Diluted EPS of $9.96 in 2021 increased $1.72 compared to the first half of 2020 mainly due to higher Adjusted Operating Income. Adjusted Diluted EPS in 2021 and 2020 includes $0.48/share and $0.13/share, respectively, in benefits related to the aforementioned resolution of uncertain tax positions. Refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for items excluded in the derivation of Adjusted Diluted EPS.

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Segment Results

Moody’s Investors Service

The table below provides a summary of revenue and operating results, followed by further insight and commentary:

			Nine Months Ended September 30,												% Change Favorable (Unfavorable)
			2021						2020
Revenue:
Corporate finance (CFG)			$	1,643					$	1,486					11		%
Financial institutions (FIG)			465						401						16		%
Public, project and infrastructure finance (PPIF)			403						375						7		%
Structured finance (SFG)			399						265						51		%
Total ratings revenue			2,910						2,527						15		%
MIS Other			31						30						3		%
Total external revenue			2,941						2,557						15		%
Intersegment royalty			124						110						13		%
Total			3,065						2,667						15		%
Expenses:
Operating and SG&A (external)			1,073						982						(9		%)
Operating and SG&A (intersegment)			6						5						(20		%)
Depreciation and amortization			53						52						(2		%)
Restructuring			—						12						(100		%)
Total expense			1,132						1,051						(8		%)
Operating income			$	1,933					$	1,616					20		%
Depreciation and amortization			53						52						(2		%)
Restructuring			—						12						(100		%)
Adjusted Operating Income			$	1,986					$	1,680					18		%
Operating margin			63.1		%				60.6		%
Adjusted Operating Margin			64.8		%				63.0		%

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MOODY'S INVESTORS SERVICE REVENUE

2021**-----------------------------------------------------------------------------------**2020

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MIS: Global revenue ⇑ $384 million			U.S. Revenue ⇑ $184 million			Non-U.S. Revenue ⇑ $200 million

–The increase in global MIS revenue reflected strong growth across all ratings LOBs.

–Foreign currency translation favorably impacted MIS revenue by two percentage points.

–Transaction revenue grew $331 million compared to the same period in the prior year.

CFG REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

CFG: Global revenue ⇑ $157 million			U.S. Revenue ⇑ $55 million			Non-U.S. Revenue ⇑ $102 million

Global CFG revenue for the nine months ended September 30, 2021 and 2020 was comprised as follows:

(1) Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.

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The increase in CFG revenue of 11% reflected growth both in the U.S. (5%) and internationally (23%) which resulted in a $138 million increase in transaction revenue.

The most notable drivers of this increase were:

– strong growth in bank loan and speculative-grade bond activity in the U.S. and EMEA as issuers refinanced existing debt in light of favorable market conditions and funded M&A activity;

partially offset by:

–lower investment grade rated issuance volumes following very strong issuance volumes in the prior year when issuers were bolstering their balance sheets in light of uncertainties relating to the COVID-19 crisis.

FIG REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

FIG: Global revenue ⇑ $64 million			U.S. Revenue ⇑ $37 million			Non-U.S. Revenue ⇑ $27 million

Global FIG revenue for the nine months ended September 30, 2021 and 2020 was comprised as follows:

The increase in FIG revenue of 16% reflected growth both in the U.S. (20%) and internationally (13%) which resulted in a $49 million increase in transaction revenue compared to the same period in the prior year.

The most notable driver of the increase was higher banking revenue in the U.S. and EMEA reflecting both the benefit of favorable changes in product mix and pricing increases coupled with opportunistic issuer activity in light of favorable market conditions.

Foreign currency translation favorably impacted FIG revenue by two percentage points.

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PPIF REVENUE

2021**-----------------------------------------------------------------------------------**2020

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PPIF: Global revenue ⇑ $28 million			U.S. Revenue ⇓ $4 million			Non-U.S. Revenue ⇑ $32 million

Global PPIF revenue for the nine months ended September 30, 2021 and 2020 was comprised as follows:

Transaction revenue increased $19 million compared to the same period in the prior year.

The 7% increase in PPIF revenue reflected growth internationally (23%) partially offset be a slight decline in the U.S. (2%). The growth was driven by:

–higher project and infrastructure finance revenue in EMEA mainly reflecting ongoing favorable conditions;

partially offset by:

–a decline in U.S. public finance revenue, as issuance volumes fell given high liquidity following strong issuance in the prior year and from the current infusion of federal funding related to the COVID-19 crisis.

Foreign currency translation favorably impacted PPIF revenue by two percentage points.

SFG REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

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SFG: Global revenue ⇑ $134 million			U.S. Revenue ⇑ $94 million			Non-U.S. Revenue ⇑ $40 million

Global SFG revenue for the nine months ended September 30, 2021 and 2020 was comprised as follows:

The increase in SFG revenue of 51% reflected growth both in the U.S. (59%) and internationally (38%). Transaction revenue increased $125 million compared to the first nine months of 2020.

The most notable drivers of the growth in SFG revenue were:

–higher CLO refinancing and securitization activity in the U.S. and EMEA, as market conditions remain favorable for this asset class; and

–an increase in U.S. CMBS activity reflecting a narrowing of credit spreads for this asset class compared to a challenging prior year period when securitization activity for retail and hotel properties was adversely impacted by the COVID-19 crisis.

Foreign currency translation favorably impacted SFG revenue by three percentage points.

						MIS: Operating and SG&A Expense ⇑ $91 million

The growth in operating and SG&A expense reflects an $89 million increase in compensation and a $2 million increase in non-compensation expenses. The most notable drivers of these changes are as follows:

Compensation costs						Non-compensation costs
The increase is primarily due to:						The slight increase is primarily due to:
— higher incentive and stock-based compensation accruals aligned with actual/projected financial and operating performance; and						— higher costs to support the Company’s initiative to enhance technology infrastructure to enable automation, innovation and efficiency as well as to support business growth with increased spend on strategic investments;
— unfavorable changes in FX translation rates
						— higher charitable contributions via the Moody's Foundation;
						mostly offset by:
						— lower estimates for credit losses primarily reflecting an increase in reserves in 2020 resulting from the anticipated impact of the COVID-19 crisis; and
						—lower travel costs and disciplined expense management in light of the COVID-19 pandemic

Other Expenses

The restructuring charge in 2020 relates to the Company's 2020 Real Estate Rationalization Restructuring Program as more fully discussed in Note 11 to the condensed consolidated financial statements.

						MIS: Operating Margin of 63.1% ⇑ 250 BPS									Adjusted Operating Margin of 64.8% ⇑ 180 BPS

MIS operating margin and Adjusted Operating Margin both increased reflecting strong revenue growth partially offset by growth in operating and SG&A expenses.

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Moody’s Analytics

The table below provides a summary of revenue and operating results, followed by further insight and commentary:

			Nine Months Ended September 30,												% Change Favorable (Unfavorable)
			2021						2020
Revenue:
Research, data and analytics (RD&A)			$	1,299					$	1,110					17		%
Enterprise risk solutions (ERS)			439						414						6		%
Total external revenue			1,738						1,524						14		%
Intersegment revenue			6						5						20		%
Total MA Revenue			1,744						1,529						14		%
Expenses:
Operating and SG&A (external)			1,094						963						(14		%)
Operating and SG&A (intersegment)			124						110						(13		%)
Depreciation and amortization			127						111						(14		%)
Restructuring			2						8						(75		%)
Loss pursuant to the divestiture of MAKS			—						9						100		%
Total expense			1,347						1,201						(12		%)
Operating income			$	397					$	328					21		%
Depreciation and amortization			127						111						(14		%)
Restructuring			2						8						(75		%)
Loss pursuant to the divestiture of MAKS			—						9						100		%
Adjusted Operating Income			$	526					$	456					15		%
Operating margin			22.8		%				21.5		%
Adjusted Operating Margin			30.2		%				29.8		%

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MOODY'S ANALYTICS REVENUE

2021**-----------------------------------------------------------------------------------**2020

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MA: Global revenue ⇑ $214 million			U.S. Revenue ⇑ $96 million			Non-U.S. Revenue ⇑ $118 million

The 14% increase in global MA revenue reflects growth both in the U.S. and internationally mainly within the RD&A LOB.

–Organic revenue growth was 10%.

–Foreign currency translation favorably impacted MA revenue by three percentage points.

RD&A REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

RD&A: Global revenue ⇑ $189 million			U.S. Revenue ⇑ $84 million			Non-U.S. Revenue ⇑ $105 million

Global RD&A revenue grew 17% compared to the first nine months of 2020 with the most notable drivers of the increase reflecting:

–strong renewals and new sales related to credit research and data feeds;

–strong demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage; and

–inorganic revenue growth from the acquisitions of RDC, AM, Catylist and Cortera.

Foreign currency translation favorably impacted RD&A revenue by four percentage points.

Organic revenue growth for RD&A was 13%.

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ERS REVENUE

2021**-----------------------------------------------------------------------------------**2020

_________________________________________********________________________________________

ERS: Global revenue ⇑ $25 million			U.S. Revenue ⇑ $12 million			Non-U.S. Revenue ⇑ $13 million

Global ERS revenue increased 6% compared to the first nine months of 2020 with the most notable drivers of the growth reflecting:

–inorganic revenue growth from the acquisitions of RMS and ZMFS;

–growth in subscription-based revenue, most notably for actuarial modeling tools in support of certain international accounting standards relating to insurance contracts and demand from asset managers for risk management solutions; and

–favorable foreign currency translation which impacted revenue by three percentage points.

partially offset by:

–lower non-recurring software and services revenue due to a de-emphasizing of these lower margin offerings.

Organic total revenue and organic recurring revenue for ERS grew 1% and 14%, respectively.

						MA: Operating and SG&A Expense ⇑ $131 million

The increase in operating and SG&A expenses compared to the first nine months of 2020 is primarily due to growth in both compensation and non-compensation costs of $69 million and $62 million, respectively, reflecting:

Compensation costs						Non-compensation costs
— salary increases and inorganic expense growth from acquisitions;						— higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency;
— higher incentive compensation accruals aligned with actual/projected financial and operating performance; and
— unfavorable changes in FX translation rates						— costs associated with recent acquisitions, most notably $22 million in RMS acquisition-related costs; and
						— higher charitable contributions via the Moody's Foundation; partially offset by:
						— lower estimates for credit losses primarily reflecting an increase in reserves in 2020 resulting from the anticipated impact of the COVID-19 crisis; and
						— lower travel costs in light of the COVID-19 crisis and continued disciplined expense management

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Other Expenses

The restructuring charges in both years relate to certain of the Company's restructuring programs as more fully discussed in Note 11 to the condensed consolidated financial statements.

The first nine months of 2020 includes a $9 million loss pursuant to the divestiture of MAKS and related to a customary post-closing completion adjustment pursuant to the sale of the business in the fourth quarter of 2019.

						MA: Operating Margin 22.8% ⇑ 130BPS									Adjusted Operating Margin 30.2% ⇑ 40BPS

The operating margin and Adjusted Operating Margin expansion for MA both reflect revenue growth outpacing expense growth. MA margins were suppressed by the aforementioned RMS acquisition-related costs.

Liquidity and Capital Resources

Cash Flow

The Company is currently financing its operations, capital expenditures, acquisitions and share repurchases from operating and financing cash flows.

The following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes:

			Nine Months Ended September 30,												$ Change Favorable (Unfavorable)
			2021						2020
Net cash provided by operating activities			$	1,706					$	1,488					$	218
Net cash used in investing activities			$	(2,161)					$	(853)					$	(1,308)
Net cash provided by financing activities			$	135					$	3					$	132
Free Cash Flow (1)			$	1,629					$	1,405					$	224

(1) Free Cash Flow is a non-GAAP measure and is defined by the Company as net cash provided by operating activities minus cash paid for capital expenditures. Refer to “Non-GAAP Financial Measures” of this MD&A for further information on this financial measure.

Net cash provided by operating activities

Net cash flows from operating activities in the nine months ended September 30, 2021 increased $218 million compared to the same period in 2020 with the most significant drivers reflecting:

–an increase in net income compared to the same period in the prior year (see section entitled “Results of Operations” for further discussion);

–a $99 million contribution to the Company's funded pension plan in 2020 that did not recur in 2021; and

–a $68 million payment made in 2020 in conjunction with the settlement of treasury lock interest rate forward contracts;

partially offset by:

–higher cash paid for income taxes of $127 million resulting from the Company's strong earnings growth in 2021; and

–various changes in working capital, most notably reflecting higher accounts receivable balances resulting from the Company's strong performance in the third quarter of 2021.

Net cash used in investing activities

The $1,308 million increase in cash used in investing activities in the nine months ended September 30, 2021 compared to the same period in 2020 primarily reflects increased cash paid for acquisitions of $1,327 million (refer to Note 8 to the condensed consolidated financial statements for further discussion on the Company's M&A activity).

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Net cash provided by financing activities

The $132 million increase in cash provided by financing activities in the nine months ended September 30, 2021 compared to the same period in the prior year was primarily attributed to:

–the issuance of $1.2 billion in long-term debt in 2021, compared to the net issuance of $691 million in long-term debt in 2020;

partially offset by:

–higher cash paid for treasury share repurchases of $375 million compared to the first nine months of 2020.

Cash and short-term investments held in non-U.S. jurisdictions

The Company’s aggregate cash and cash equivalents and short-term investments of $2.3 billion at September 30, 2021 consisted of approximately $1.7 billion located outside of the U.S. Approximately 22% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in euros and British pounds. The Company manages both its U.S. and non-U.S cash flow to maintain sufficient liquidity in all regions to effectively meet its operating needs.

As a result of the Tax Act, all previously net undistributed foreign earnings have now been subject to U.S. tax. The Company continues to evaluate which entities it will indefinitely reinvest earnings outside the U.S. The Company has provided deferred taxes for those entities whose earnings are not considered indefinitely reinvested. Accordingly, the Company has commenced repatriating a portion of its non-U.S. cash in these subsidiaries and will continue to repatriate certain of its offshore cash in a manner that addresses compliance with local statutory requirements, sufficient offshore working capital and any other factors that may be relevant in certain jurisdictions. Notwithstanding the Tax Act, which generally eliminated federal income tax on future cash repatriation to the U.S., cash repatriation may be subject to state and local taxes or withholding or similar taxes.

Other Material Future Cash Requirements

The Company believes that it has the financial resources needed to meet its cash requirements and expects to have positive operating cash flow for the next twelve months. Cash requirements for periods beyond the next twelve months will depend, among other things, on the Company’s profitability and its ability to manage working capital requirements. The Company may also borrow from various sources.

Moody's remains committed to using its strong cash flow to create value for shareholders by both investing in the Company's employees and growing the business through targeted organic initiatives and inorganic acquisitions aligned with strategic priorities. Additional excess capital is returned to the Company’s shareholders via a combination of dividends and share repurchases.

Dividends and share repurchases

On October 26, 2021, the Board of Directors of the Company declared a quarterly dividend of $0.62 per share of Moody’s common stock, payable December 14, 2021 to shareholders of record at the close of business on November 23, 2021. The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board.

On December 16, 2019, the Board approved $1 billion share repurchase authority, and on February 9, 2021, the Board approved an additional $1 billion in share repurchase authority. At September 30, 2021, there was a total remaining authority of approximately $1.2 billion under these authorizations. Future share repurchase activity is subject to available cash, market conditions and other ongoing capital allocation decisions.

Other cash requirements

In the third quarter of 2021, Moody's entered into an agreement to acquire a minority investment in BitSight, a cybersecurity ratings company, and completed the transaction on October 13, 2021. The consideration transferred by Moody's for this investment comprised $250 million in cash and the contribution of Moody's minority interest in VisibleRisk, a cybersecurity risk ratings joint venture. Moody's expects to recognize an approximate $30 to $40 million non-cash gain in the fourth quarter of 2021 relating to the exchange of its minority investment in VisibleRisk for shares of BitSight.

The Company has future cash requirements, including operating leases and debt service and payments as noted in the tables that follow as well as future payments related to the transition tax under the Tax Act.

Indebtedness

At September 30, 2021, Moody’s had $7.5 billion of outstanding debt and approximately $1 billion of additional capacity available under the Company’s CP program, which is backstopped by the 2018 Facility. At September 30, 2021, the Company was in compliance with all covenants contained within all of the debt agreements. All of the Company’s long-term debt agreements contain cross default provisions which state that default under one of the aforementioned debt instruments could in turn permit lenders under other debt instruments to declare borrowings outstanding under those instruments to be immediately due and payable. At September 30, 2021, there were no such cross defaults.

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The repayment schedule for the Company’s borrowings outstanding at September 30, 2021 is as follows:

For additional information on the Company's outstanding debt, refer to Note 16 to the condensed consolidated financial statements.

Management may consider pursuing additional long-term financing when it is appropriate in light of cash requirements for operations, share repurchases and other strategic opportunities, which would result in higher financing costs.

Off-Balance Sheet Arrangements

At September 30, 2021, Moody’s did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as special purpose or variable interest entities where Moody’s is the primary beneficiary, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, Moody’s is not exposed to any financing, liquidity market or credit risk that could arise if it had engaged in such relationships.

Contractual Obligations

The following table presents payments due under the Company’s contractual obligations as of September 30, 2021:

Payments Due by Period

			Payments Due by Period
(in millions)			Total						Less Than 1 Year						1 - 3 Years						3 - 5 Years						Over 5 Years
Indebtedness (1)			$	10,239					$	711					$	1,367					$	980					$	7,181
Operating lease obligations			626						120						224						171						111
Purchase obligations			227						131						91						5						—
Pension obligations (2)			105						2						22						21						60
Investment in BitSight (3)			250						250						—						—						—
Total (4)			$	11,447					$	1,214					$	1,704					$	1,177					$	7,352

(1)Reflects principal payments, related interest and applicable fees due on all indebtedness outstanding as described in Note 16 to the condensed consolidated financial statements.

(2)Reflects projected benefit payments relating to the Company’s U.S. unfunded DBPPs and Retirement and Other Plans described in Note 15 to the condensed consolidated financial statements.

(3)Includes a payment pertaining to the Company's minority investment in BitSight, as described in the section entitled "Other cash requirements" above.

(4)The table above does not include the Company's long-term tax liabilities of $492 million relating to UTPs (of which $103 million is indemnified via indemnification assets acquired as part of acquisition accounting), since the expected cash outflow of such amounts by period cannot be reasonably estimated. Additionally, the table above does not include approximately $33 million relating to indemnification liability resulting from the divestiture of MAKS and approximately $18 million relating to the remaining unpaid deemed repatriation liability resulting from the Tax Act enacted into law in the U.S. in December 2017.

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Non-GAAP Financial Measures:

In addition to its reported results, Moody’s has included in this MD&A certain adjusted results that the SEC defines as “non-GAAP financial measures.” Management believes that such adjusted financial measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company’s performance, facilitate comparisons to competitors’ operating results and can provide greater transparency to investors of supplemental information used by management in its financial and operational decision-making. These adjusted measures, as defined by the Company, are not necessarily comparable to similarly defined measures of other companies. Furthermore, these adjusted measures should not be viewed in isolation or used as a substitute for other GAAP measures in assessing the operating performance or cash flows of the Company. Below are brief descriptions of the Company’s adjusted financial measures accompanied by a reconciliation of the adjusted measure to its most directly comparable GAAP measure:

Adjusted Operating Income and Adjusted Operating Margin**:**

The Company presents Adjusted Operating Income and Adjusted Operating Margin because management deems these metrics to be useful measures to provide additional perspective on Moody's operating performance. Adjusted Operating Income excludes the impact of: i) depreciation and amortization; ii) restructuring charges/adjustments; and iii) a loss pursuant to the divestiture of MAKS. Depreciation and amortization are excluded because companies utilize productive assets of different ages and use different methods of acquiring and depreciating productive assets. Restructuring charges are excluded as the frequency and magnitude of these charges may vary widely across periods and companies. The loss pursuant to the divestiture of MAKS is excluded as the frequency and magnitude of divestiture activity may vary widely from period to period and across companies.

Management believes that the exclusion of the aforementioned items, as detailed in the reconciliation below, allows for an additional perspective on the Company’s operating results from period to period and across companies. The Company defines Adjusted Operating Margin as Adjusted Operating Income divided by revenue.

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
Operating income			$	676					$	642					$	2,330					$	1,944
Adjustments:
Depreciation and amortization			61						56						180						163
Restructuring			—						23						2						20
Loss pursuant to the divestiture of MAKS			—						—						—						9
Adjusted Operating Income			$	737					$	721					$	2,512					$	2,136
Operating margin			44.3		%				47.3		%				49.8		%				47.6		%
Adjusted Operating Margin			48.3		%				53.2		%				53.7		%				52.3		%

Adjusted Net Income and Adjusted Diluted EPS attributable to Moody's common shareholders:

The Company presents Adjusted Net Income and Adjusted Diluted EPS because management deems these metrics to be useful measures to provide additional perspective on Moody's operating performance. Adjusted Net Income and Adjusted Diluted EPS exclude the impact of: i) amortization of acquired intangible assets; ii) restructuring charges/adjustments; and iii) loss pursuant to the divestiture of MAKS.

The Company excludes the impact of amortization of acquired intangible assets as companies utilize intangible assets with different ages and have different methods of acquiring and amortizing intangible assets. These intangible assets were recorded as part of acquisition accounting and contribute to revenue generation. The amortization of intangible assets related to acquisitions will recur in future periods until such intangible assets have been fully amortized. Furthermore, the timing and magnitude of business combination transactions are not predictable and the purchase price allocated to amortizable intangible assets and the related amortization period are unique to each acquisition and can vary significantly from period to period and across companies. Restructuring charges are excluded as the frequency and magnitude of these charges may vary widely across periods and companies. The loss pursuant to the divestiture of MAKS is excluded as the frequency and magnitude of divestiture activity may vary widely from period to period and across companies.

The Company excludes the aforementioned items to provide additional perspective when comparing net income and diluted EPS from period to period and across companies as the frequency and magnitude of similar transactions may vary widely across periods.

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Below is a reconciliation of this measure to its most directly comparable U.S. GAAP amount:

			Three Months Ended September 30,																		Nine Months Ended September 30,
Amounts in millions			2021									2020									2021									2020
Net income attributable to Moody's common shareholders						$	474								$	467								$	1,787								$	1,464
Pre-Tax Acquisition-Related Intangible Amortization Expenses			$	37								$	31								$	108								$	90
Tax on Acquisition-Related Intangible Amortization Expenses			(8)									(7)									(24)									(20)
Net Acquisition-Related Intangible Amortization Expenses						29									24									84									70
Pre-Tax Restructuring			$	—								$	23								$	2								$	20
Tax on Restructuring			—									(5)									—									(4)
Net Restructuring						—									18									2									16
Loss pursuant to the divestiture of MAKS						—									—									—									9
Adjusted Net Income						$	503								$	509								$	1,873								$	1,559

			Three Months Ended September 30,																		Nine Months Ended September 30,
			2021									2020									2021									2020
Diluted earnings per share attributable to Moody's common shareholders						$	2.53								$	2.47								$	9.51								$	7.73
Pre-Tax Acquisition-Related Intangible Amortization Expenses			$	0.20								$	0.16								$	0.57								$	0.47
Tax on Acquisition-Related Intangible Amortization Expenses			(0.04)									(0.04)									(0.13)									(0.09)
Net Acquisition-Related Intangible Amortization Expenses						0.16									0.12									0.44									0.38
Pre-Tax Restructuring			$	—								$	0.12								$	0.01								$	0.10
Tax on Restructuring			—									(0.02)									—									(0.02)
Net Restructuring						—									0.10									0.01									0.08
Loss pursuant to the divestiture of MAKS						—									—									—									0.05
Adjusted Diluted EPS						$	2.69								$	2.69								$	9.96								$	8.24

Note: the tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates.

Free Cash Flow*:*

The Company defines Free Cash Flow as net cash provided by operating activities minus payments for capital additions. Management believes that Free Cash Flow is a useful metric in assessing the Company’s cash flows to service debt, pay dividends and to fund acquisitions and share repurchases. Management deems capital expenditures essential to the Company’s product and service innovations and maintenance of Moody’s operational capabilities. Accordingly, capital expenditures are deemed to be a recurring use of Moody’s cash flow. Below is a reconciliation of the Company’s net cash flows from operating activities to Free Cash Flow:

			Nine Months Ended September 30,
			2021						2020
Net cash flows provided by operating activities			$	1,706					$	1,488
Capital additions			(77)						(83)
Free Cash Flow			$	1,629					$	1,405
Net cash flows used in investing activities			$	(2,161)					$	(853)
Net cash flows provided by financing activities			$	135					$	3

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Organic Revenue:

The Company presents the organic revenue and organic revenue growth (including organic recurring revenue and organic recurring revenue growth for the ERS LOB) because management deems these metrics to be useful measures which provides additional perspective in assessing the revenue growth excluding the inorganic revenue impacts from certain acquisition activity. The following table details the periods excluded from each acquisition to determine organic revenue.

												Period excluded to determine organic revenue growth
Acquisition						Acquisition Date						Q3						YTD
Regulatory DataCorp						February 13, 2020						-						January 1, 2021 - February 12, 2021
Acquire Media						October 21, 2020						July 1, 2021 - September 30, 2021						January 1, 2021 - September 30, 2021
ZM Financial Systems						December 7, 2020						July 1, 2021 - September 30, 2021						January 1, 2021 - September 30, 2021
Catylist						December 30, 2020						July 1, 2021 - September 30, 2021						January 1, 2021 - September 30, 2021
Cortera						March 19, 2021						July 1, 2021 - September 30, 2021						March 19, 2021 - September 30, 2021
RMS						September 15, 2021						September 15, 2021 - September 30, 2021						September 15, 2021 - September 30, 2021

Below is a reconciliation of MA's reported revenue and growth rates to its organic revenue and organic growth rates:

			Three Months Ended September 30,																								Nine Months Ended September 30,
Amounts in millions			2021						2020						Change						Growth						2021						2020						Change						Growth
MA revenue			$	601					$	531					$	70					13%						$	1,738					$	1,524					$	214					14%
Inorganic revenue from acquisitions			(28)						—						(28)												(60)						—						(60)
Organic MA revenue			$	573					$	531					$	42					8%						$	1,678					$	1,524					$	154					10%
			Three Months Ended September 30,																								Nine Months Ended September 30,
Amounts in millions			2021						2020						Change						Growth						2021						2020						Change						Growth
RD&A revenue			$	445					$	386					$	59					15%						$	1,299					$	1,110					$	189					17%
Inorganic revenue from acquisitions			(14)						—						(14)												(41)						—						(41)
Organic RD&A revenue			$	431					$	386					$	45					12%						$	1,258					$	1,110					$	148					13%
			Three Months Ended September 30,																								Nine Months Ended September 30,
Amounts in millions			2021						2020						Change						Growth						2021						2020						Change						Growth
ERS revenue			$	156					$	145					$	11					8%						$	439					$	414					$	25					6%
Inorganic revenue from acquisitions			(14)						—						(14)												(19)						—						(19)
Organic ERS revenue			$	142					$	145					$	(3)					(2)%						$	420					$	414					$	6					1%
			Three Months Ended September 30,																								Nine Months Ended September 30,
Amounts in millions			2021						2020						Change						Growth						2021						2020						Change						Growth
ERS recurring revenue			$	141					$	113					$	28					25%						$	385					$	324					$	61					19%
Inorganic recurring revenue from acquisitions			(13)						—						(13)												(17)						—						(17)
Organic ERS recurring revenue			$	128					$	113					$	15					13%						$	368					$	324					$	44					14%

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Recently Issued Accounting Standards

Refer to Note 1 to the condensed consolidated financial statements located in Part I of this Form 10-Q for a discussion on the impact to the Company relating to recently issued accounting pronouncements.

Contingencies

Legal proceedings in which the Company is involved also may impact Moody’s liquidity or operating results. No assurance can be provided as to the outcome of such proceedings. In addition, litigation inherently involves significant costs. For information regarding legal proceedings, see Item 1 - "Financial Statements", Note 18 "Contingencies” in this Form 10-Q.

Regulation

MIS, certain of the Company's credit rating affiliates and many of the issuers and/or securities that MIS and the affiliates rate, are subject to extensive regulation in the U.S., EU and in other countries (including by state and local authorities). In addition, some of the services offered by MA and its affiliates are subject to regulation in a number of countries. MA also derives a significant amount of its sales from banks and other financial services providers who are subject to regulatory oversight and who are required to pass through certain regulatory requirements to key suppliers such as MA. Existing and proposed laws and regulations can impact the Company’s operations, products and the markets in which the Company operates. Additional laws and regulations have been proposed or are being considered. Each of the existing, adopted, proposed and potential laws and regulations can increase the costs and legal risk associated with the Company’s operations, including the issuance of credit ratings, and may negatively impact the Company’s profitability and ability to compete, or result in changes in the demand for the Company’s products and services, in the manner in which the Company’s products and services are utilized and in the manner in which the Company operates.

The regulatory landscape continues to evolve. In the U.S., CRAs are subject to extensive regulation primarily pursuant to the Reform Act and the Dodd-Frank Act. The Reform Act added Section 15E to the Exchange Act and provided the SEC with the authority to establish a registration and oversight program for CRAs registered as NRSROs. The Dodd-Frank Act added additional provisions to Section 15E. The transitions of the Presidential administration, Congress and SEC, in the U.S., as with any such government transition, could bring potential changes in the laws affecting CRAs and/or the enforcement of any new or existing legislation, regulation or directives by government authorities.

In the EU, the CRA industry is registered and supervised through a pan-EU regulatory framework. ESMA has direct supervisory responsibility for registered CRAs throughout the EU. MIS’ EU CRA subsidiaries are registered and are subject to formal regulation and periodic inspection. From time to time, ESMA publishes interpretive guidance, or thematic reports regarding various aspects of the CRA regulation and, annually, sets out its work program for the forthcoming year. In July 2021, the Commission announced further measures in respect of its sustainable finance strategy. These include further assessments in respect of both CRAs and sustainability ratings and research, which might lead to legislative action.

On December 31, 2020, the MIS U.K. registered CRA ceased to be registered with and regulated by ESMA and became subject to regulation by the U.K. Financial Conduct Authority (FCA). Regulatory arrangements also came into effect in both the U.K. and the EU to allow credit ratings to be available for regulatory use in both the EU and the U.K. MIS has put arrangements in place to endorse its U.K. credit ratings into the EU and its EU credit ratings into the U.K.

In light of the regulations that have gone into effect in both the EU and the U.S. (as well as many other countries), periodically and as a matter of course pursuant to their enabling legislation, regulatory authorities have, and will continue to, publish reports that describe their oversight activities. In addition, other legislation, regulation and/or interpretation of existing regulation relating to the Company’s operations, including credit rating, ancillary and research services has been or is being considered by local, national and multinational bodies and this type of activity is likely to continue in the future. Finally, in certain countries, governments may provide financial or other support to locally-based CRAs. If enacted, any such legislation and regulation could change the competitive landscape in which the Company operates. The legal status of CRAs has been addressed by courts in various decisions and is likely to be considered and addressed in legal proceedings from time to time in the future. Management of the Company cannot predict whether these or any other proposals will be enacted, the outcome of any pending or possible future legal proceedings, or regulatory or legislative actions, or the ultimate impact of any such matters on the competitive position, financial position or results of operations of the Company.

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Forward-Looking Statements

Certain statements contained in this quarterly report on Form 10-Q are forward-looking statements and are based on future expectations, plans and prospects for the business and operations of the Company that involve a number of risks and uncertainties. Such statements involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements. Those statements appear at various places throughout this quarterly report on Form 10-Q, including in the sections entitled “Contingencies” under Item 2, “MD&A”, commencing on page 50 of this quarterly report on Form 10-Q, under “Legal Proceedings” in Part II, Item 1, of this Form 10-Q, and elsewhere in the context of statements containing the words “believe”, “expect”, “anticipate”, “intend”, “plan”, “will”, “predict”, “potential”, “continue”, “strategy”, “aspire”, “target”, “forecast”, “project”, “estimate”, “should”, “could”, “may” and similar expressions or words and variations thereof relating to the Company’s views on future events, trends and contingencies or otherwise convey the prospective nature of events or outcomes generally indicative of forward-looking statements. Stockholders and investors are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements and other information are made as of the date of this quarterly report on Form 10-Q, and the Company undertakes no obligation (nor does it intend) to publicly supplement, update or revise such statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or otherwise, except as required by applicable law or regulation. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements.

Those factors, risks and uncertainties include, but are not limited to:

• the impact of COVID-19 on volatility in the U.S. and world financial markets, on general economic conditions and GDP in the U.S. and worldwide, and on the Company’s own operations and personnel;

• credit market disruptions or economic slowdowns, which could affect the volume of debt and other securities issued in domestic and/or global capital markets;

• other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including regulation, credit quality concerns, changes in interest rates, inflation and other volatility in the financial markets such as that due to Brexit and uncertainty as companies transition away from LIBOR;

• the level of merger and acquisition activity in the U.S. and abroad;

• the uncertain effectiveness and possible collateral consequences of U.S. and foreign government actions affecting credit markets, international trade and economic policy, including those related to tariffs, tax agreements and trade barriers;

• concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of independent credit agency ratings;

• the introduction of competing products or technologies by other companies;

• pricing pressure from competitors and/or customers;

• the level of success of new product development and global expansion;

• the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations;

• the potential for increased competition and regulation in the EU and other foreign jurisdictions;

• exposure to litigation related to Moody's Investors Service's rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquiries to which the Company may be subject from time to time;

• provisions in U.S. legislation modifying the pleading standards and EU regulations modifying the liability standards applicable to credit rating agencies in a manner adverse to credit rating agencies;

• provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services and the expansion of supervisory remit to include non-EU ratings used for regulatory purposes;

• the possible loss of key employees; failures or malfunctions of our operations and infrastructure;

• any vulnerabilities to cyber threats or other cybersecurity concerns;

• the outcome of any review by controlling tax authorities of the Company’s global tax planning initiatives;

• exposure to potential criminal sanctions or civil remedies if the Company fails to comply with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which the Company operates, including data protection and privacy laws, sanctions laws, anti-corruption laws, and local laws prohibiting corrupt payments to government officials;

• the impact of mergers, acquisitions or other business combinations and the ability of the Company to successfully integrate acquired businesses;

• currency and foreign exchange volatility;

• the level of future cash flows;

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• the levels of capital investments; and

• a decline in the demand for credit risk management tools by financial institutions.

Other factors, risks and uncertainties relating to our acquisition of RMS could cause our actual results to differ, perhaps materially, from those indicated by these forward-looking statements, including risks relating to the integration of RMS’s operations, products and employees into Moody’s and the possibility that anticipated synergies and other benefits of the acquisition will not be realized in the amounts anticipated or will not be realized within the expected timeframe; risks that the acquisition could have an adverse effect on the business of RMS or its prospects, including, without limitation, on relationships with vendors, suppliers or customers; claims made, from time to time, by vendors, suppliers or customers; changes in the U.S., Europe (primarily the U.K.), Japan, India or global marketplaces that have an adverse effect on the business of RMS; and other factors, risks and uncertainties relating to the transaction as set forth under the caption “‘Safe Harbor’ Statement under the Private Securities Litigation Reform Act of 1995 ” in the Company's report on Form 8-K filed on August 6, 2021, which are incorporated by reference herein. These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements are currently, or in the future could be, amplified by the COVID-19 outbreak, and are described in greater detail under “Risk Factors” in Part I, Item 1A of the Company’s annual report on Form 10-K for the year ended December 31, 2020 and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein. Stockholders and investors are cautioned that the occurrence of any of these factors, risks and uncertainties may cause the Company’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements, which could have a material and adverse effect on the Company’s business, results of operations and financial condition. New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the Company assess the potential effect of any new factors on it.

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