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 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 55 for a discussion of uncertainties, risks and other factors associated with these statements.

THE COMPANY

In a world shaped by increasingly interconnected risks, Moody's data, insights, and innovative technologies help customers develop a holistic view of their world and unlock opportunities. With a rich history of experience in global markets and a diverse workforce of approximately 15,000 across more than 40 countries, Moody's gives customers the comprehensive perspective needed to act with confidence and thrive. Moody’s has two reportable segments: MA and MIS.

Moody's Analytics						Moody's Investors Service
MA provides data, intelligence and analytical tools to help business and financial leaders make confident decisions.			Global risk assessment firm that empowers organizations to anticipate, adapt and thrive in a new era of exponential risk. Our data, analytical solutions and insights help decision-makers identify opportunities and manage the risks of doing business with others.			For more than 115 years, MIS has been a leading provider of credit ratings, research, and risk analysis helping businesses, governments, and other entities around the globe to anticipate, adapt and thrive in this era of exponential risk.

MA is comprised of: i) a premier fixed income and economic research business (Research & Insights); ii) a data business powered by the world’s largest database on companies and credit (Data & Information); and iii) three cloud-based SaaS businesses serving banking, insurance and KYC workflows (Decision Solutions).

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.

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 its commitment to sustainability by considering ESG factors in its operations, value chain, 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. During the first quarter of 2024, Moody's received the following awards and recognition for its sustainability-related efforts:

• Recognized among America’s 100 Most JUST Companies by JUST Capital and CNBC for its commitment to serving its workforce, customers, communities, the environment, and stockholders for its sustainability-related efforts;

• Made CDP's 2023 Climate Change 'A' List, in recognition of Moody's leadership in corporate transparency and actions taken to mitigate climate change; and

• Named to the 2023 Dow Jones Sustainability Indices (DJSI) - World and North America, an annual listing of publicly traded companies, recognizing Moody's for its strong corporate sustainability practices.

The Board oversees sustainability matters via the Audit, Governance & Nominating and Compensation & Human Resources Committees, as part of its oversight of management and the Company’s overall strategy. The Audit Committee oversees financial, risk and other disclosures made in the Company’s annual and quarterly reports related to sustainability and has overseen the expanded voluntary disclosures the Company has made in its periodic filings. The Governance & Nominating Committee oversees sustainability matters, including significant issues of corporate social and environmental responsibility, as they pertain to the Company’s business and to long-term value creation for the Company and its stockholders, and makes recommendations to the Board regarding these issues. This has helped to develop the Company’s robust ESG strategy. Finally, the Compensation & Human Resources Committee oversees inclusion of sustainability-related performance goals for determining compensation of all senior executives. This oversight has resulted in the Company more fully integrating sustainability-related performance metrics into the strategic & operational compensation metric of all senior executives. The Board also oversees Moody’s policies for assessing and managing the Company's exposure to risk, including climate-related risks such as business continuity disruption and reputational or credibility concerns stemming from incorporation of climate-related risks into the credit methodologies and credit ratings of MIS, or analysis of such risks within MA's products and services. The Board maintains its collective knowledge of

sustainability topics through ongoing education, such as regular presentations from management on various ESG issues, including climate and the integration of ESG factors into Moody’s products and solutions.

Three Pillars of Moody's Sustainability Strategy
Our Actions									Our Influence									Our Support
the decisions and actions we can take related to impacts under our direct control									the actions that we can demand or request from entities providing us with products and services									the steps we take to support or enable direct action by other organizations or communities

Current Matters Impacting Moody's Business

Current Macroeconomic Uncertainties/Market Volatility

The Company continues to monitor current macroeconomic and geopolitical uncertainties that had contributed to volatility in rated issuance volumes in 2022 and 2023. These uncertainties include, but are not limited to: i) inflation levels; ii) higher interest rates; and iii) volatility in the global capital markets partly resulting from the ongoing military conflicts further discussed below. A substantial portion of MIS’s revenue is impacted by the level of issuance activity in the fixed income capital markets, both in the U.S. and internationally. Due to various uncertainties, Moody's is unable to predict the severity and duration of current macroeconomic and geopolitical uncertainties and their potential impact on future rated issuance volumes. Refer to Item 1A. “Risk Factors” contained in the Company’s annual report on Form 10-K for the year ended December 31, 2023 for further disclosure relating to these risks.

Military Conflicts

The Company continues to closely monitor the impact of the ongoing Russia-Ukraine military conflict and the military conflict in Israel and surrounding areas on all aspects of its business. In response to the Russia-Ukraine military conflict, the Company is no longer conducting commercial operations in Russia for both MA and MIS and is complying with all applicable regulatory restrictions set forth by authorities in the jurisdictions in which Moody's operates. Furthermore, the Company has withdrawn MIS credit ratings on Russian entities.

While Moody's operations and net assets in Russia, Israel and the surrounding areas are not material, broader global market volatility, which partially relates to uncertainties surrounding these military conflicts, may contribute to volatility in rated issuance volumes in the future. The Company is unable to predict either the near-term or longer-term impact that these military conflicts may have on its financial position and operating results due to numerous uncertainties regarding the severity and duration of military conflicts and their broader potential macroeconomic impact.

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 GAAP. 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, goodwill and acquired intangible assets, pension and other retirement benefits, investments in non-consolidated affiliates, 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, 2023, 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 disclosures.

Reportable Segments

The Company is organized into two reportable segments as of March 31, 2024: MA and MIS, which are more fully described in the section entitled “The Company” above and in Note 16 to the consolidated financial statements.

RESULTS OF OPERATIONS

The following footnotes are applicable throughout the discussion of the Company's results of operations:

(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.

(2) Refer to the section entitled "Key Performance Metrics" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.

Three months ended March 31, 2024 compared with three months ended March 31, 2023

Executive Summary

The following table provides an executive summary of key operating results for the quarter ended March 31, 2024. 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 March 31,
Financial measure:			2024			2023			% Change Favorable (Unfavorable)			Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue			$	1,786		$	1,470		21		%	— reflects strong growth in both segments
MA external revenue			$	799		$	737		8		%	— sustained demand for KYC solutions, as well as continued growth from SaaS-based banking and insurance offerings; and — ongoing strong retention for ratings data feeds and company data applications
MIS external revenue			$	987		$	733		35		%	— reflects growth across all LOBs, as opportunistic issuers took advantage of tight credit spreads and strong investor demand ahead of potential macroeconomic and geopolitical-related volatility later in the year
Total operating and SG&A expenses			$	880		$	814		(8		%)	— higher salaries and benefits reflecting an increase in headcount and annual salary increases within both segments; and — higher incentive and stock-based compensation aligned with headcount growth and projected financial and operating performance
Depreciation and amortization			$	100		$	88		(14		%)	— higher amortization of internally developed software, primarily related to the development of MA SaaS solutions
Restructuring			$	5		$	14		64		%	— relates to the Company's 2022 - 2023 Geolocation Restructuring Program, more fully discussed in Note 9 to the consolidated financial statements
Total non-operating (expense) income, net			$	(49)		$	(48)		(2 %)			In line with the prior year with key offsetting drivers being: — a net decrease of $23 million in foreign exchange losses recorded during the year mainly attributable to an immaterial out-of-period adjustment relating to the 2022 fiscal year recorded in the first quarter of 2023, mostly offset by: — higher tax-related interest expense of $22 million due to a reduction in tax-related interest accruals in the prior year related to the favorable resolution of tax matters
Operating margin			44.8		%	37.7		%	710		BPS	— operating margin and Adjusted Operating Margin(1) expansion reflects strong revenue growth outpacing operating and SG&A expense growth
Adjusted Operating Margin(1)			50.7		%	44.6		%	610		BPS
ETR			23.3		%	1.0		%	(2,230		BPS)	— higher ETR primarily reflects tax benefits recognized in the first quarter of 2023, which resulted from the resolutions of UTPs in various U.S. and non-U.S. tax jurisdictions
Diluted EPS			$	3.15		$	2.72		16		%	— increase reflects growth in operating income/Adjusted Operating Income(1), partially offset by: — a $0.75 per share benefit in the prior year resulting from the resolutions of tax matters in the first quarter of 2023
Adjusted Diluted EPS(1)			$	3.37		$	2.99		13		%

Moody's Corporation

			Three Months Ended March 31,												% Change Favorable (Unfavorable)
			2024						2023
Revenue:
United States			$	969					$	763					27		%
Non-U.S.:
EMEA			542						460						18		%
Asia-Pacific			155						149						4		%
Americas			120						98						22		%
Total Non-U.S.			817						707						16		%
Total			1,786						1,470						21		%
Expenses:
Operating			467						428						(9		%)
SG&A			413						386						(7		%)
Depreciation and amortization			100						88						(14		%)
Restructuring			5						14						64		%
Total			985						916						(8		%)
Operating income			$	801					$	554					45		%
Adjusted Operating Income(1)			$	906					$	656					38		%
Interest expense, net			$	(62)					$	(48)					(29		%)
Other non-operating income, net			13						—						NM
Non-operating (expense) income, net			$	(49)					$	(48)					(2		%)
Net income attributable to Moody's			$	577					$	501					15		%
Diluted weighted average shares outstanding			183.4						184.1						—		%
Diluted EPS attributable to Moody's common shareholders			$	3.15					$	2.72					16		%
Adjusted Diluted EPS(1)			$	3.37					$	2.99					13		%
Operating margin			44.8		%				37.7		%
Adjusted Operating Margin(1)			50.7		%				44.6		%
ETR			23.3		%				1.0		%

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

									March 31,																		Change
									2024						2023(a)												%
MA			U.S.						2,983						2,876												4		%
			Non-U.S.						4,922						4,621												7		%
			Total						7,905						7,497												5		%
MIS			U.S.						1,512						1,462												3		%
			Non-U.S.						4,083						3,690												11		%
			Total						5,595						5,152												9		%
MSS			U.S.						725						708												2		%
			Non-U.S.						1,214						1,061												14		%
			Total						1,939						1,769												10		%
Total MCO			U.S.						5,220						5,046												3		%
			Non-U.S.						10,219						9,372												9		%
			Total						15,439						14,418												7		%

(a) Certain reclassifications have been made to 2023 amounts to reflect certain departmental reorganizations and M&A integrations

GLOBAL REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

_________________________________________********________________________________________

Global revenue ⇑ $316 million						U.S. Revenue ⇑ $206 million						Non-U.S. Revenue ⇑ $110 million

The increase in global revenue reflects growth in both MA and MIS, both in the U.S. and internationally. Refer to the section entitled “Segment Results” of this MD&A for a more comprehensive discussion of the Company’s segment revenue.

						First Quarter Operating Expense ⇑ $39 million

Compensation expenses of $346 million increased $34 million reflecting:						Non-compensation expenses of $121 million increased $5 million:
— higher salaries and benefits that reflects hiring and salary increases, primarily in MA, to support continued growth in the business; and						— the increase is mostly attributable to operating growth, including investments to support technology, innovation and product development; partially offset by:
— higher incentive and stock-based compensation aligned with headcount growth and projected financial and operating performance						— disciplined expense management

						First Quarter SG&A Expense ⇑ $27 million

Compensation expenses of $262 million increased $16 million reflecting:			Non-compensation expenses of $151 million increased $11 million:
— higher salaries and benefits reflecting an increase in headcount and annual salary increases; and			— increase reflects costs to support operating growth; partially offset by
— higher incentive and stock-based compensation aligned with headcount growth and projected financial and operating performance			— disciplined expense management

Depreciation and amortization

The increase is driven by amortization of internally developed software, which is primarily related to the development of MA SaaS solutions.

Restructuring

The amounts in both periods reflect charges/adjustments related to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 9 to the consolidated financial statements.

						Operating margin 44.8%, ⇑ 710 BPS									Adjusted Operating Margin**(1)** 50.7%, ⇑ 610 BPS

Operating margin and Adjusted Operating Margin(1) expansion reflects strong revenue growth partially offset by an increase in operating and SG&A expenses.

									Interest Expense, net ⇑ $14 million									Other non-operating income ⇑ $13 million

Increase in expense is primarily due to:									Increase in income is primarily due to:
— a $22 million reduction in tax-related interest reflecting the favorable resolution of tax matters in the prior year; partially offset by									— a $23 million net decrease in foreign currency losses mainly attributable to an immaterial out-of-period adjustment relating to the 2022 fiscal year recorded in the first quarter of 2023; partially offset by
— higher interest income of $12 million reflecting higher cash balances and interest yields									— a benefit of $9 million in the prior year related to the favorable resolution of various tax matters

						ETR ⇑ 2,230 BPS

The increase in the ETR primarily reflects $113 million in tax benefits recognized in the first quarter of 2023, which resulted from the resolutions of UTPs in various U.S. and non-U.S. tax jurisdictions.

						Diluted EPS ⇑ $0.43												Adjusted Diluted EPS**(1)** ⇑ $0.38

Both diluted EPS and Adjusted Diluted EPS(1) growth is mostly attributable to higher operating income and Adjusted Operating Income(1), the components of which are more fully described above. This was partially offset by a $0.75 per share benefit in the prior year related to the resolution of tax matters in the first quarter of 2023.

Segment Results

Moody’s Analytics

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

			Three Months Ended March 31,												% Change Favorable (Unfavorable)
			2024						2023
Revenue:
Decision Solutions (DS)			$	365					$	334					9		%
Research and Insights (R&I)			222						215						3		%
Data and Information (D&I)			212						188						13		%
Total external revenue			799						737						8		%
Intersegment revenue			3						3						—		%
Total MA revenue			802						740						8		%
Expenses:
Operating and SG&A (external)			517						481						(7		%)
Operating and SG&A (intersegment)			47						45						(4		%)
Total operating and SG&A			564						526						(7		%)
Adjusted Operating Income			$	238					$	214					11		%
Adjusted Operating Margin			29.7		%				28.9		%
Depreciation and amortization			82						70						(17		%)
Restructuring			2						8						75		%

MOODY'S ANALYTICS REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

_________________________________________********________________________________________

MA: Global revenue ⇑ $62 million			U.S. Revenue ⇑ $20 million			Non-U.S. Revenue ⇑ $42 million

The 8% increase in global MA revenue reflects growth both in the U.S. (6%) and internationally (10%).

**–**ARR(2) increased 10% reflecting growth across all LOBs.

DECISION SOLUTIONS REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

_________________________________________********________________________________________

DS: Global revenue ⇑ $31 million			U.S. Revenue ⇑ $6 million			Non-U.S. Revenue ⇑ $25 million

Global DS revenue for the three months ended March 31, 2024 and 2023 was comprised as follows:

Global DS revenue grew 9% compared to the first quarter of 2023 and reflects increases in the U.S. (5%) and internationally (12%).

The most notable drivers of the growth reflect:

–sustained demand for KYC solutions reflecting increased customer and supplier risk data usage, which drove ARR(2) growth of 18% for these solutions;

–higher demand for subscription-based actuarial and catastrophe models supported insurance growth which resulted in ARR(2) growth of 10%; and

–growth across Moody's SaaS-based banking solutions which enable customers' lending, risk management and finance workflows, resulting in ARR(2) growth of 9%.

The aforementioned factors contributed to overall ARR(2) growth for DS of 12%.

RESEARCH AND INSIGHTS REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

_________________________________________________****__ ________________________________________________

R&I: Global revenue ⇑ $7 million			U.S. Revenue ⇑ $4 million			Non-U.S. Revenue ⇑ $3 million

Global R&I revenue increased 3% compared to the first quarter of 2023 and reflects growth in both the U.S. (3%) and internationally (3%). This increase was mainly driven by sales growth from the CreditView product offering, which contributed to R&I ARR(2) growth of 6%.

DATA AND INFORMATION REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

______________________________________________********__________________________________________________

D&I: Global revenue ⇑ $24 million			U.S. Revenue ⇑ $10 million			Non-U.S. Revenue ⇑ $14 million

Global D&I revenue increased 13% compared to the first quarter of 2023 and reflects growth in both the U.S. (15%) and internationally (12%), mainly driven by improved customer retention, coupled with continued growth in new sales and higher price realization, supported by strong demand for company data and ratings feeds.

The aforementioned revenue growth factors also contributed to ARR(2) growth of 11% for D&I.

						MA: First Quarter Operating and SG&A Expense ⇑ $36 million

						Compensation expenses of $337 million increased $31 million:												Non-compensation expenses of $180 million increased $5 million:
						— the growth in salaries and benefits reflects higher headcount and annual salary increases to support business growth; and												— the modest increase is mostly attributable to costs to support operating growth, including investments to support technology, innovation and product development
						— the increase in incentive and stock-based compensation is driven by higher headcount and projected financial and operating performance

						MA: Adjusted Operating Margin 29.7% ⇑ 80 BPS

The Adjusted Operating Margin expansion for MA is primarily due to the 8% increase in global MA revenue, mostly offset by increases in operating and SG&A expenses of 7%.

Depreciation and amortization

The increase in depreciation and amortization expense primarily reflects higher amortization of internally developed software relating to the development of SaaS-based solutions.

Restructuring

The amounts in both periods reflect charges/adjustments related to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 9 to the consolidated financial statements.

Moody’s Investors Service

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

			Three Months Ended March 31,												% Change Favorable (Unfavorable)
			2024						2023
Revenue:
Corporate finance (CFG)			$	529					$	356					49		%
Structured finance (SFG)			114						99						15		%
Financial institutions (FIG)			195						142						37		%
Public, project and infrastructure finance (PPIF)			141						129						9		%
Total ratings revenue			979						726						35		%
MIS Other			8						7						14		%
Total external revenue			987						733						35		%
Intersegment revenue			47						45						4		%
Total MIS revenue			1,034						778						33		%
Expenses:
Operating and SG&A (external)			363						333						(9		%)
Operating and SG&A (intersegment)			3						3						—		%
Total operating and SG&A			366						336						(9		%)
Adjusted Operating Income			$	668					$	442					51		%
Adjusted Operating Margin			64.6		%				56.8		%
Depreciation and amortization			18						18						—		%
Restructuring			3						6						50		%

The following chart presents changes in rated issuance volumes compared to the first quarter of 2023. To the extent that changes in rated issuance volumes had a material impact to MIS's revenue compared to the prior year, those impacts are discussed below.

MOODY'S INVESTORS SERVICE REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

_________________________________________********________________________________________

MIS: Global revenue ⇑ $254 million			U.S. Revenue ⇑ $186 million			Non-U.S. Revenue ⇑ $68 million

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

CFG REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

_________________________________________********________________________________________

CFG: Global revenue ⇑ $173 million			U.S. Revenue ⇑ $126 million			Non-U.S. Revenue ⇑ $47 million

Global CFG revenue for the three months ended March 31, 2024 and 2023 was comprised as follows:

• 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.

The increase in CFG revenue of 49% reflects growth in both the U.S. (51%) and internationally (43%).

Transaction revenue increased $169 million compared to the same period in the prior year, with the most notable drivers of the growth reflecting:

–higher rated issuance volumes in leveraged finance (speculative-grade bonds and bank loans) reflecting opportunistic refinancing activity that was supported by tightening credit spreads; and

–higher investment grade rated issuance activity supported by several large M&A-related deals.

SFG REVENUE

Three months ended March 31,

2024**---------------------------------------------------------------------------**2023

_________________________________________********________________________________________

SFG: Global revenue ⇑ $15 million			U.S. Revenue ⇑ $15 million			Non-U.S. Revenue was in line with prior year

Global SFG revenue for the three months ended March 31, 2024 and 2023 was comprised as follows:

The increase in SFG of 15% reflects growth in the U.S. (25%), with international revenue remaining in line with the prior year.

Transaction revenue increased $14 million compared to the first quarter of 2023, mainly attributable to increased issuance activity from the ABS and Structured Credit asset classes, reflecting tightening credit spreads and strong investor demand, including from first time issuers.

FIG REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

_________________________________________********________________________________________

FIG: Global revenue ⇑ $53 million			U.S. Revenue ⇑ $35 million			Non-U.S. Revenue ⇑ $18 million

Global FIG revenue for the three months ended March 31, 2024 and 2023 was comprised as follows:

The increase in FIG revenue of 37% reflects revenue growth in both the U.S. (56%) and internationally (23%).

Transaction revenue increased $52 million compared to the first quarter of 2023, mainly due to growth in the insurance and banking sectors, which was attributable to improved issuance volumes coupled with a favorable issuance mix from infrequent issuer activity.

PPIF REVENUE

Three months ended March 31,

2024**-----------------------------------------------------------------------------------**2023

_________________________________________********________________________________________

PPIF: Global revenue ⇑ $12 million			U.S. Revenue ⇑ $10 million			Non-U.S. Revenue ⇑ 2 million

Global PPIF revenue for the three months ended March 31, 2024 and 2023 was comprised as follows:

The increase in PPIF revenue of 9% reflects growth in both the U.S. (13%) and internationally (4%).

Transaction revenue increased $10 million compared to the first quarter of 2023 primarily due to increased issuance from U.S. Public Finance issuers, reflecting refunding activity in the healthcare and higher education sectors.

						MIS: First Quarter Operating and SG&A Expense ⇑ $30 million

						Compensation expenses of $272 million increased $18 million:												Non-compensation expenses of $91 million increased $12 million:
						— the growth in salaries and benefits reflects higher headcount and annual salary increases; and												— the increase is mostly attributable to costs to support operating growth, including investments to support technology and innovation
						— the increase in incentive and stock-based compensation is driven by higher headcount and projected financial and operating performance

												MIS: Adjusted Operating Margin 64.6% ⇑ 780 BPS

The MIS Adjusted Operating Margin expansion primarily reflects the aforementioned 35% increase in revenue.

Restructuring

The amounts in both periods reflect charges/adjustments related to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 9 to the consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

Moody's remains committed to using its 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.

Cash Flow

The Company is currently financing its operations, capital expenditures 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:

			Three Months Ended March 31,												$ Change Favorable (Unfavorable)
			2024						2023
Net cash provided by operating activities			$	775					$	608					$	167
Net cash used in investing activities			$	(96)					$	(63)					$	(33)
Net cash used in financing activities			$	(308)					$	(216)					$	(92)
Free Cash Flow (1)			$	697					$	535					$	162

(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 three months ended March 31, 2024 increased by $167 million compared to the same period in 2023, primarily due to higher cash flows correlated with operating income growth partly offset by various changes in working capital.

Net cash used in investing activities

The $33 million increase in cash used in investing activities in the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to:

–higher net purchases of investments in 2024 of $14 million; and

–higher cash paid of $12 million in the current year for certain immaterial acquisitions completed in the first quarter of 2024.

Net cash used in financing activities

The $92 million increase in cash used in financing activities in the three months ended March 31, 2024 compared to the same period in the prior year was primarily attributed to higher cash paid in 2024 for treasury share repurchases of $79 million and dividends of $14 million.

Cash and cash equivalents and short-term investments

The Company’s aggregate cash and cash equivalents and short-term investments of $2.5 billion at March 31, 2024 included approximately $1.9 billion located outside of the U.S. Approximately 45% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in euros and GBP. 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 continues to repatriate 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.

Material Cash Requirements

The Company's material cash requirements consist of the following contractual and other obligations:

Financing Arrangements

Indebtedness

At March 31, 2024, Moody’s had $6.9 billion of outstanding debt and approximately $1 billion of additional capacity available under the Company’s CP Program, which is backstopped by the $1.25 billion 2021 Facility.

The repayment schedule for the Company’s borrowings outstanding at March 31, 2024 is as follows:

For additional information on the Company's outstanding debt, refer to Note 13 to the consolidated financial statements.

Future interest payments and fees associated with the Company's debt and credit facility are expected to be $4.8 billion, of which approximately $300 million is expected to be paid in each of the next five years, and the remaining amount expected to be paid thereafter.

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 could result in higher financing costs.

Purchase Obligations

Purchase obligations generally include multi-year agreements with vendors to purchase goods or services and mainly include data center/cloud hosting fees and fees for information technology licensing and maintenance. As of March 31, 2024, these purchase obligations totaled $722 million, of which approximately 50% is expected to be paid in the next twelve months and another approximate 40% expected to be paid over the next two subsequent years, with the remainder to be paid thereafter.

Leases

The Company has remaining payments relating to its operating leases of $415 million at March 31, 2024, primarily related to real estate leases, of which $119 million in payments are expected over the next twelve months. For more information on the expected cash flows relating to the Company's operating leases, refer to Note 14 to the consolidated financial statements.

Pension and Other Retirement Plan Obligations

The Company does not anticipate making significant contributions to its funded pension plan in the next twelve months. This plan is overfunded at March 31, 2024, and accordingly holds sufficient investments to fund future benefit obligations. Payments for the Company's unfunded plans are not expected to be material in either the short or long-term.

Dividends and share repurchases

On April 26, 2024, the Board approved the declaration of a quarterly dividend of $0.85 per share for Moody’s common stock, payable June 7, 2024 to shareholders of record at the close of business on May 17, 2024. The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board.

On February 7, 2022, the Board approved $750 million in share repurchase authority, and on February 5, 2024, the Board approved an additional $1 billion in share repurchase authority. At March 31, 2024, the Company had approximately $1.2 billion of remaining authority. There is no established expiration date for the remaining authorizations.

Restructuring

As more fully discussed in Note 9 to the consolidated financial statements, the Company has substantially completed the 2022 - 2023 Geolocation Restructuring Program. Future cash outlays associated with this program, which will consist of personnel-related costs, are expected to be $24 million, substantially all of which are expected to be paid through 2024.

Sources of Funding to Satisfy Material 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 over 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 as described above.

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; and ii) restructuring charges/adjustments. Depreciation and amortization are excluded because companies utilize productive assets of different estimated useful lives and use different methods of acquiring and depreciating productive assets. Restructuring charges/adjustments are excluded as the frequency and magnitude of these charges may vary widely across periods and 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 March 31,
			2024						2023
Operating income			$	801					$	554
Adjustments:
Depreciation and amortization			100						88
Restructuring			5						14
Adjusted Operating Income			$	906					$	656
Operating margin			44.8		%				37.7		%
Adjusted Operating Margin			50.7		%				44.6		%

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; and ii) restructuring charges/adjustments.

The Company excludes the impact of amortization of acquired intangible assets as companies utilize intangible assets with different estimated useful lives 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/adjustments are excluded as the frequency and magnitude of these items may vary widely across periods and 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.

			Three Months Ended March 31,
Amounts in millions			2024									2023
Net Income attributable to Moody's common shareholders						$	577								$	501
Pre-tax Acquisition-Related Intangible Amortization Expenses			$	49								$	51
Tax on Acquisition-Related Intangible Amortization Expenses			(12)									(12)
Net Acquisition-Related Intangible Amortization Expenses						37									39
Pre-tax restructuring			$	5								$	14
Tax on restructuring			(1)									(4)
Net restructuring						4									10
Adjusted Net Income						$	618								$	550

			Three Months Ended March 31,
			2024									2023
Diluted earnings per share attributable to Moody's common shareholders						$	3.15								$	2.72
Pre-tax Acquisition-Related Intangible Amortization Expenses			$	0.27								$	0.28
Tax on Acquisition-Related Intangible Amortization Expenses			(0.07)									(0.06)
Net Acquisition-Related Intangible Amortization Expenses						0.20									0.22
Pre-tax restructuring			$	0.03								$	0.08
Tax on restructuring			(0.01)									(0.03)
Net restructuring						0.02									0.05
Adjusted Diluted EPS						$	3.37								$	2.99

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 cash paid 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:

			Three Months Ended March 31,
			2024						2023
Net cash provided by operating activities			$	775					$	608
Capital additions			(78)						(73)
Free Cash Flow			$	697					$	535
Net cash used in investing activities			$	(96)					$	(63)
Net cash used in financing activities			$	(308)					$	(216)

Key Performance Metrics:

The Company presents Annualized Recurring Revenue (“ARR”) on a constant currency organic basis for its MA business as a supplemental performance metric to provide additional insight on the estimated value of MA's recurring revenue contracts at a given point in time. The Company uses ARR to manage and monitor performance of its MA operating segment and believes that this metric is a key indicator of the trajectory of MA's recurring revenue base.

The Company calculates ARR by taking the total recurring contract value for each active renewable contract as of the reporting date, divided by the number of days in the contract and multiplied by 365 days to create an annualized value. The Company defines renewable contracts as subscriptions, term licenses, maintenance and renewable services. ARR excludes transaction sales including training, one-time services and perpetual licenses. In order to compare period-over-period ARR excluding the effects of foreign currency translation, the Company bases the calculation on currency rates utilized in its current year operating budget and holds these FX rates constant for the duration of all current and prior periods being reported. Additionally, ARR excludes contracts related to acquisitions to provide additional perspective in assessing growth excluding the impacts from certain acquisition activity.

The Company’s definition of ARR may differ from definitions utilized by other companies reporting similarly named measures, and this metric should be viewed in addition to, and not as a substitute for, financial measures presented in accordance with GAAP.

Amounts in millions						March 31, 2024						March 31, 2023						Change						Growth
MA ARR
Decision Solutions
Banking						$	424					$	389					$	35					9%
Insurance						552						500						52						10%
KYC						344						291						53						18%
Total Decision Solutions						$	1,320					$	1,180					$	140					12%
Research and Insights						895						843						52						6%
Data and Information						844						761						83						11%
Total MA ARR						$	3,059					$	2,784					$	275					10%

RECENTLY ISSUED ACCOUNTING STANDARDS

Refer to Note 1 to the 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 15 "Contingencies” in this Form 10-Q.

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 Company's business and operations 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 34 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 in this document 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 general economic conditions (including significant government debt and deficit levels and inflation and related monetary policy actions by governments in response to inflation) on worldwide credit markets and on economic activity, including on the volume of mergers and acquisitions, and their effects on the volume of debt and other securities issued in domestic and/or global capital markets;

• the uncertain effectiveness and possible collateral consequences of U.S. and foreign government initiatives and monetary policy to respond to the current economic climate, including instability of financial institutions, credit quality concerns, and other potential impacts of volatility in financial and credit markets;

• the global impacts of the Russia-Ukraine military conflict and the military conflict in Israel and the surrounding areas on volatility in world financial markets, on general economic conditions and GDP in the U.S. and worldwide, on global relations and on the Company's own operations and personnel;

• other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including regulation, increased utilization of technologies that have the potential to intensify competition and accelerate disruption and disintermediation in the financial services industry, as well as the number of issuances of securities without ratings or securities which are rated or evaluated by non-traditional parties;

• 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;

• the impact of MIS’s withdrawal of its credit ratings on countries or entities within countries and of Moody’s no longer conducting commercial operations in countries where political instability warrants such actions;

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

• the introduction or development of competing and/or emerging technologies and products;

• 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 jurisdictions in which we operate, including the EU;

• exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquiries to which Moody’s 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 CRAs in a manner adverse to CRAs;

• 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;

• uncertainty regarding the future relationship between the U.S. and China;

• the possible loss of key employees and the impact of the global labor environment;

• failures or malfunctions of our operations and infrastructure;

• any vulnerabilities to cyber threats or other cybersecurity concerns;

• the timing and effectiveness of our restructuring programs, such as the 2022 - 2023 Geolocation Restructuring Program;

• currency and foreign exchange volatility;

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

• exposure to potential criminal sanctions or civil remedies if Moody’s fails to comply with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which Moody’s 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, such as our acquisition of RMS, or other business combinations and the ability of Moody’s to successfully integrate acquired businesses;

• the level of future cash flows;

• the levels of capital investments; and

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

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 described in greater detail under “Risk Factors” in Part I, Item 1A of Moody’s annual report on Form 10-K for the year ended December 31, 2023, 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. Forward-looking and other statements in this document may also address our corporate responsibility progress, plans, and goals (including sustainability and environmental matters), and the inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be disclosed in the Company’s filings with the Securities and Exchange Commission. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.