Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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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 77 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 16,000 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.

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

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. We use our specialized knowledge 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 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;
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; and
Recognized as a 2023 CDP Supplier Engagement leader for the fourth consecutive year, ranking among the top 4% companies assessed for supplier engagement on climate change.

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

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, 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 other than the update below relating to the Company's annual assessment of goodwill for impairment.

Goodwill and Other Acquired Intangible Assets

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

The Company has four reporting units: 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, and two within the Company’s ratings business (one for the ICRA business and one that encompasses all of Moody’s other ratings operations).

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, 2024, the Company performed quantitative assessments for each of the four reporting units in accordance with the aforementioned policy. 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.

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 July 31, 2024. 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 analyses on the future cash flows and WACC assumptions are 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. 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 still result in fair values that significantly exceeded carrying values.

–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 10.0% to 10.5% as of July 31, 2024. 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, 2024 for each reporting unit. For all reporting units, an increase in the WACC of one percentage point would still result in fair values that significantly exceeded carrying values.

Reportable Segments

The Company is organized into two reportable segments as of September 30, 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 September 30, 2024 compared with three months ended September 30, 2023

Executive Summary

The following table provides an executive summary of key operating results for the quarter ended September 30, 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 September 30,
Financial measure:	2024			2023			% Change Favorable (Unfavorable)		Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue	$	1,813		$	1,472		23	%	— reflects revenue growth in both segments
MA external revenue	$	831		$	776		7	%	— sustained demand for KYC and insurance offerings; — ongoing strong retention and new sales for ratings data feeds and company data applications; and — continued demand for credit research product offerings
MIS external revenue	$	982		$	696		41	%	reflects issuance growth across all LOBs resulting from: — favorable market conditions for issuers, due to sustained tight credit spreads; and — demand from investors, as yields remain high ahead of potential future interest rate cuts
Total operating and SG&A expenses	$	946		$	815		(16	%)	— higher incentive and stock-based compensation aligned with actual/projected financial and operating performance; and — higher salaries and benefits reflecting an increase in headcount and annual salary increases in both segments
Depreciation and amortization	$	108		$	95		(14	%)	— higher amortization of internally developed software, primarily related to the development of MA SaaS solutions
Restructuring	$	6		$	27		78	%	— relates to the Company's 2022 - 2023 Geolocation Restructuring Program, more fully discussed in Note 9 to the consolidated financial statements
Charges related to asset abandonment	$	15		$	—		NM		— costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, which is more fully discussed in Note 11 to the consolidated financial statements
Total non-operating (expense) income, net	$	(35)		$	(48)		27	%	— an increase in interest income due to higher cash and short-term investment balances and higher interest rates; and — gains recorded on previously held equity investments, more fully discussed in Note 11 to the consolidated financial statements
Operating margin	40.7		%	36.3		%	440	BPS	— operating margin and Adjusted Operating Margin(1) expansion reflects strong revenue growth, particularly within MIS, outpacing an increase in operating and SG&A expenses
Adjusted Operating Margin(1)	47.8		%	44.6		%	320	BPS
ETR	24.0		%	19.9		%	(410	BPS)	— reflects adjustments resulting from the finalization of income tax returns, coupled with increased earnings from non-U.S. operations subject to higher income tax rates
Diluted EPS	$	2.93		$	2.11		39	%	— increase reflects growth in operating income and Adjusted Operating Income(1) driven mainly by strong MIS revenue growth
Adjusted Diluted EPS(1)	$	3.21		$	2.43		32	%

Moody's Corporation


	Three Months Ended September 30,						% Change Favorable (Unfavorable)
	2024			2023
Revenue:
United States	$	999		$	762		31	%
Non-U.S.:
EMEA	546			465			17	%
Asia-Pacific	157			143			10	%
Americas	111			102			9	%
Total Non-U.S.	814			710			15	%
Total	1,813			1,472			23	%
Expenses:
Operating	512			412			(24	%)
SG&A	434			403			(8	%)
Depreciation and amortization	108			95			(14	%)
Restructuring	6			27			78	%
Charges related to asset abandonment	15			—			NM



Total	1,075			937			(15	%)
Operating income	$	738		$	535		38	%
Adjusted Operating Income(1)	$	867		$	657		32	%
Interest expense, net	$	(60)		$	(66)		9	%
Other non-operating income, net	25			18			39	%
Non-operating (expense) income, net	$	(35)		$	(48)		27	%

Net income attributable to Moody's	$	534		$	389		37	%
Diluted weighted average shares outstanding	182.5			184.0			1	%
Diluted EPS attributable to Moody's common shareholders	$	2.93		$	2.11		39	%
Adjusted Diluted EPS(1)	$	3.21		$	2.43		32	%
Operating margin	40.7		%	36.3		%
Adjusted Operating Margin(1)	47.8		%	44.6		%
ETR	24.0		%	19.9		%

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


		September 30,		Change
		2024	2023(a)	%

MA	U.S.	2,971	3,049	(3	%)
	Non-U.S.	5,182	4,829	7	%
	Total	8,153	7,878	3	%
MIS	U.S.	1,559	1,469	6	%
	Non-U.S.	4,136	3,822	8	%
	Total	5,695	5,291	8	%


MSS	U.S.	689	729	(5	%)
	Non-U.S.	1,239	1,145	8	%
	Total	1,928	1,874	3	%

Total MCO	U.S.	5,219	5,247	(1	%)
	Non-U.S.	10,557	9,796	8	%
	Total	15,776	15,043	5	%

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

GLOBAL REVENUE


Three months ended September 30,

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

_________________________________________********________________________________________

1249 1254 1263 1268


Global revenue ⇑ $341 million						U.S. Revenue ⇑ $237 million						Non-U.S. Revenue ⇑ $104 million

The increase in global revenue reflects growth in both segments, 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.


						Third Quarter Operating Expense ⇑ $100 million

1510


Compensation expenses of $394 million increased $93 million, with the most notable drivers reflecting:						Non-compensation expenses of $118 million increased $7 million, with the most notable driver reflecting:
— higher incentive and stock-based compensation aligned with actual/projected financial and operating performance and headcount growth; and						— an increase in costs to support operating growth, including investments to support technology and innovation
— higher salaries and benefits that reflects hiring and salary increases to support continued growth in the business


						Third Quarter SG&A Expense ⇑ $31 million

1515


Compensation expenses of $274 million increased $23 million, with the most notable driver reflecting:			Non-compensation expenses of $160 million increased $8 million, with the most notable driver reflecting:
— higher incentive and stock-based compensation aligned with actual/projected financial and operating performance and headcount growth			— costs to support operating growth


Depreciation and amortization

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


Restructuring

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


Charges related to asset abandonment

Reflects costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, which is more fully discussed in Note 11 to the consolidated financial statements.


						Operating margin 40.7%, ⇑ 440 BPS									Adjusted Operating Margin(1) 47.8%, ⇑ 320 BPS

Operating margin and Adjusted Operating Margin(1) expansion reflects strong revenue growth, particularly in MIS, outpacing an increase in operating and SG&A expenses.


									Interest Expense, net ⇓ $6 million									Other non-operating income ⇑ $7 million


The most notable driver of the decrease in expense is due to:									Increase in income is primarily due to:
— higher interest income of $9 million reflecting higher cash and short term investment balances and interest yields									— gains of $7 million recorded on previously held equity investments, more fully discussed in Note 11 to the consolidated financial statements


						ETR ⇑ 410 BPS

The ETR was higher than the prior year reflecting adjustments resulting from the finalization of income tax returns, coupled with increased earnings from non-U.S. operations subject to higher income tax rates.


						Diluted EPS ⇑ $0.82												Adjusted Diluted EPS(1) ⇑ $0.78

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.

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 September 30,						% Change Favorable (Unfavorable)
	2024			2023
Revenue:
Decision Solutions (DS)	$	383		$	354		8	%
Research and Insights (R&I)	235			222			6	%
Data and Information (D&I)	213			200			7	%
Total external revenue	831			776			7	%
Intersegment revenue	3			3			—	%
Total MA revenue	834			779			7	%
Expenses:
Operating and SG&A (external)	533			470			(13	%)
Operating and SG&A (intersegment)	48			47			(2	%)
Total operating and SG&A	581			517			(12	%)











Adjusted Operating Income	$	253		$	262		(3	%)


Adjusted Operating Margin	30.3		%	33.6		%

Depreciation and amortization	88			76			(16	%)
Restructuring	4			22			82	%
Charges related to asset abandonment	15			—			NM

MOODY'S ANALYTICS REVENUE


Three months ended September 30,

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

_________________________________________********________________________________________

358 360 369 371


MA: Global revenue ⇑ $55 million			U.S. Revenue ⇑ $12 million			Non-U.S. Revenue ⇑ $43 million

The 7% increase in global MA revenue reflects growth both in the U.S. (4%) and internationally (10%).

**–**ARR(2) increased 9% reflecting growth across all LOBs.

DECISION SOLUTIONS REVENUE


Three months ended September 30,

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

_________________________________________********________________________________________

748 752 753 755


DS: Global revenue ⇑ $29 million			U.S. Revenue ⇑ $3 million			Non-U.S. Revenue ⇑ $26 million

Global DS revenue for the three months ended September 30, 2024 and 2023 was comprised as follows:

840

Global DS revenue grew 8% compared to the third quarter of 2023 and reflects increases in the U.S. (2%) and internationally (12%).

The most notable drivers of the growth are as follows:

–strong demand for an expanding suite of KYC solutions, reflecting increased customer and supplier risk data usage, which drove revenue and ARR(2) growth of 19% and 14%, respectively;

–Insurance revenue and ARR(2) grew 7% and 13%, respectively.

–recurring revenue growth of 11% in Insurance was attributable to strong demand resulting in new sales for subscription-based catastrophe and actuarial models.

–Banking revenue and ARR(2) grew 3% and 10%, respectively.

–recurring revenue growth of 10% within banking was supported by strong customer retention coupled with expansion of existing customer relationships to subscription-based banking offerings, which enable customers' lending, risk management and finance workflows;

–the aforementioned recurring revenue growth for Insurance and Banking was partially offset by a decline in transaction revenue of 50% and 17%, respectively, reflecting MA's continued strategic shift to subscription-based solutions.

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

RESEARCH AND INSIGHTS REVENUE


Three months ended September 30,

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

_________________________________________________****__ ________________________________________________

1890 1891 1892 1894


R&I: Global revenue ⇑ $13 million			U.S. Revenue ⇑ $4 million			Non-U.S. Revenue ⇑ $9 million

Global R&I revenue increased 6% compared to the third quarter of 2023 and reflects growth in both the U.S. (3%) and internationally (9%). This increase was driven by sales growth from credit and economic research product offerings, which contributed to R&I ARR(2) growth of 6%.

DATA AND INFORMATION REVENUE


Three months ended September 30,

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

______________________________________________********__________________________________________________

2388 2389 2390 2392


D&I: Global revenue ⇑ $13 million			U.S. Revenue ⇑ $5 million			Non-U.S. Revenue ⇑ $8 million

Global D&I revenue increased 7% compared to the third quarter of 2023 and reflects growth in both the U.S. (7%) and internationally (6%), mainly driven by continued strong demand for company data applications and ratings data feeds, which contributed to ARR(2) growth of 8%.


						MA: Third Quarter Operating and SG&A Expense ⇑ $63 million

2805


						Compensation expenses of $350 million increased $46 million, with the most notable drivers reflecting:												Non-compensation expenses of $183 million increased $17 million:
						— growth in salaries and benefits reflecting higher headcount and annual salary increases to support business growth; and												— the increase is mostly attributable to costs to support operating growth, including investments to support technology, innovation and product development
						— an increase in incentive compensation driven by higher headcount coupled with higher stock-based compensation aligned with actual/projected financial and operating performance


						MA: Adjusted Operating Margin 30.3% ⇓ 330 BPS

Adjusted Operating Margin contraction for MA is due to operating and SG&A expense growth of 13% outpacing the 7% increase in global MA revenue.


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


Charges related to asset abandonment

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)
	2024			2023
Revenue:
Corporate finance (CFG)	$	515		$	346		49	%
Structured finance (SFG)	135			102			32	%
Financial institutions (FIG)	170			126			35	%
Public, project and infrastructure finance (PPIF)	154			115			34	%
Total ratings revenue	974			689			41	%
MIS Other	8			7			14	%
Total external revenue	982			696			41	%
Intersegment revenue	48			47			2	%
Total MIS revenue	1,030			743			39	%
Expenses:
Operating and SG&A (external)	413			345			(20	%)
Operating and SG&A (intersegment)	3			3			—	%
Total operating and SG&A	416			348			(20	%)








Adjusted Operating Income	$	614		$	395		55	%


Adjusted Operating Margin	59.6		%	53.2		%

Depreciation and amortization	20			19			(5	%)
Restructuring	2			5			60	%

The following chart presents changes in rated issuance volumes compared to the third 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.

388

MOODY'S INVESTORS SERVICE REVENUE


Three months ended September 30,

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

_________________________________________********________________________________________

620 622 630 632


MIS: Global revenue ⇑ $286 million			U.S. Revenue ⇑ $225 million			Non-U.S. Revenue ⇑ $61 million

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

CFG REVENUE


Three months ended September 30,

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

_________________________________________********________________________________________

927 929 937 939


CFG: Global revenue ⇑ $169 million			U.S. Revenue ⇑ $122 million			Non-U.S. Revenue ⇑ $47 million

Global CFG revenue for the three months ended September 30, 2024 and 2023 was comprised as follows:

1025

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. (50%) and internationally (45%).

Transaction revenue increased $166 million compared to the same period in the prior year, with continued momentum in investment-grade and leveraged finance (which includes bank loans and speculative-grade bonds). The growth in these sectors resulted from:

–refinancing activity and new mandates resulting from continued tight corporate credit spreads;

–strong investor demand to capture yields ahead of further potential interest rate cuts; and

–bank loan issuance to fund M&A transactions.

SFG REVENUE


Three months ended September 30,

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

_________________________________________********________________________________________

2058 2063 2072 2077


SFG: Global revenue ⇑ $33 million			U.S. Revenue ⇑ $33 million			Non-U.S. Revenue was in line with prior year

Global SFG revenue for the three months ended September 30, 2024 and 2023 was comprised as follows:

2164

The increase in SFG revenue of 32% reflects growth in the U.S. (51%).

Transaction revenue increased $29 million compared to the third quarter of 2023, mainly attributable to strong issuance activity in U.S. CLOs and CMBS, supported by tighter spreads and strong investor demand.

FIG REVENUE


Three months ended September 30,

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

_________________________________________********________________________________________

2773 2778 2787 2792


FIG: Global revenue ⇑ $44 million			U.S. Revenue ⇑ $38 million			Non-U.S. Revenue ⇑ $6 million

Global FIG revenue for the three months ended September 30, 2024 and 2023 was comprised as follows:

2878

The increase in FIG revenue of 35% reflects growth in both the U.S. (73%) and internationally (8%).

Transaction revenue increased $40 million compared to the third quarter of 2023, mainly due to growth in the insurance and banking sectors, which was primarily attributable to a favorable issuance mix from infrequent issuer activity as well as higher overall rated issuance volumes.

PPIF REVENUE


Three months ended September 30,

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

_________________________________________********________________________________________

3394 3399 3407 3412


PPIF: Global revenue ⇑ $39 million			U.S. Revenue ⇑ $31 million			Non-U.S. Revenue ⇑ 8 million

Global PPIF revenue for the three months ended September 30, 2024 and 2023 was comprised as follows:

3499

The increase in PPIF revenue of 34% reflects growth in both the U.S. (45%) and internationally (17%).

Transaction revenue increased $39 million compared to the third quarter of 2023 primarily due to:

–increased investment-grade infrastructure finance activity in the U.S. and EMEA; and

–growth in issuance from U.S. Public Finance issuers, reflecting new deals in the state and local government sectors.


						MIS: Third Quarter Operating and SG&A Expense ⇑ $68 million

3992


						Compensation expenses of $318 million increased $70 million, with the most notable drivers of the growth reflecting:												Non-compensation expenses of $95 million decreased $2 million:
						— an increase in incentive and stock-based compensation driven by actual/projected financial and operating performance and higher headcount; and												— non-compensation expenses were generally in line compared to the prior year
						— growth in salaries and benefits reflecting higher headcount and annual salary increases


												MIS: Adjusted Operating Margin 59.6% ⇑ 640 BPS

The MIS Adjusted Operating Margin expansion primarily reflects the aforementioned 41% increase in revenue.


Restructuring

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Executive Summary

The following table provides an executive summary of key operating results for the nine months ended September 30, 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.


	Nine Months Ended September 30,
Financial measure:	2024			2023			% Change Favorable (Unfavorable)		Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue	$	5,416		$	4,436		22	%	— reflects revenue growth in both segments
MA external revenue	$	2,432		$	2,260		8	%	— sustained demand for KYC, insurance offerings and SaaS-based banking solutions; — ongoing strong retention for ratings data feeds and company data applications; and — continued demand for credit and economic research product offerings
MIS external revenue	$	2,984		$	2,176		37	%	reflects issuance growth across all LOBs resulting from: — favorable market conditions for issuers, due to sustained tight credit spreads and opportunistic issuance ahead of expected interest rate reductions and potential volatility later in the year; and — demand from investors, as yields remain high ahead of potential future interest rate cuts
Total operating and SG&A expenses	$	2,741		$	2,470		(11	%)	— higher incentive and stock-based compensation aligned with actual/projected financial and operating performance; and — higher salaries and benefits reflecting an increase in headcount and annual salary increases in both segments
Depreciation and amortization	$	318		$	276		(15	%)	— higher amortization of internally developed software, primarily related to the development of MA SaaS solutions
Restructuring	$	13		$	51		75	%	— relates to the Company's 2022 - 2023 Geolocation Restructuring Program, more fully discussed in Note 9 to the consolidated financial statements
Charges related to asset abandonment	$	30		$	—		NM		— costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, which is more fully discussed in Note 11 to the consolidated financial statements
Total non-operating (expense) income, net	$	(140)		$	(154)		9	%	— a net decrease of $22 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; and — an increase in interest income of $29 million due to higher cash and short-term investment balances and higher interest rates; partially offset by: — an increase in tax-related interest expense of $22 million mainly due to the favorable resolution of tax matters in the prior year
Operating margin	42.7		%	36.9		%	580 BPS		— operating margin and Adjusted Operating Margin(1) expansion reflects strong revenue growth, particularly in MIS, outpacing operating and SG&A expense growth
Adjusted Operating Margin(1)	49.4		%	44.3		%	510 BPS
ETR	23.5		%	14.6		%	(890 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	$	9.09		$	6.88		32	%	— increase reflects growth in operating income/Adjusted Operating Income(1) driven mainly by increases in MIS revenue, 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)	$	9.85		$	7.71		28	%

Moody’s Corporation


	Nine Months Ended September 30,						% Change Favorable (Unfavorable)
	2024			2023
Revenue:
United States	$	2,942		$	2,300		28	%
Non-U.S.:
EMEA	1,654			1,404			18	%
Asia-Pacific	476			437			9	%
Americas	344			295			17	%
Total Non-U.S.	2,474			2,136			16	%
Total	5,416			4,436			22	%
Expenses:
Operating	1,448			1,266			(14	%)
SG&A	1,293			1,204			(7	%)
Depreciation and amortization	318			276			(15	%)
Restructuring	13			51			75	%
Charges related to asset abandonment	30			—			NM


Total	3,102			2,797			(11	%)
Operating income	2,314			1,639			41	%
Adjusted Operating Income (1)	2,675			1,966			36	%
Interest expense, net	(185)			(185)			—	%
Other non-operating income, net	45			31			45	%
Non-operating (expense) income, net	(140)			(154)			9	%

Net income attributable to Moody’s	$	1,663		$	1,267		31	%
Diluted weighted average shares outstanding	183.0			184.1			1	%
Diluted EPS attributable to Moody’s common shareholders	$	9.09		$	6.88		32	%
Adjusted Diluted EPS (1)	$	9.85		$	7.71		28	%
Operating margin	42.7		%	36.9		%
Adjusted Operating Margin (1)	49.4		%	44.3		%
Effective tax rate	23.5		%	14.6		%

GLOBAL REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

563 568 577 579


Global revenue ⇑ $980 million						U.S. Revenue ⇑ $642 million						Non-U.S. Revenue ⇑ $338 million

Growth in global revenue reflected increases 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.


						YTD Operating Expense ⇑ $182 million

819


Compensation expenses of $1,086 million increased $166 million, with the most notable drivers reflecting:						Non-compensation expenses of $362 million increased $16 million, with the most notable driver reflecting:
— higher salaries and benefits reflecting hiring and salary increases to support continued growth in the business; and						— costs to support operating growth, including investments to support technology, innovation and product development
— higher incentive and stock-based compensation aligned with actual/projected financial and operating performance and headcount growth


						YTD SG&A Expense ⇑ $89 million

825


Compensation expenses of $804 million increased $51 million, with the most notable drivers reflecting:			Non-compensation expenses of $489 million increased $38 million, with the most notable drivers reflecting:
— higher incentive and stock-based compensation aligned with headcount growth and actual/projected financial and operating performance; and			— a charge in 2024 relating to a regulatory investigation, which is more fully discussed in Note 15 to the consolidated financial statements; and
— higher salaries and benefits reflecting an increase in headcount and annual salary increases			— increases in costs to support operating growth


Depreciation and amortization

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


Restructuring


Charges related to asset abandonment


						Operating margin 42.7%, ⇑ 580 BPS									Adjusted Operating Margin(1) 49.4%, ⇑ 510 BPS

Increases in both Operating margin and Adjusted Operating Margin(1) is due to strong revenue growth, particularly within MIS, partially offset by an increase in operating and SG&A expenses.


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


Interest expense was in line with prior year with the following offsetting factors:		Increase in income is primarily due to:
— higher interest income of $29 million reflecting higher cash and short-term investment balances and interest yields; offset by		— a $22 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; and
— an increase of $22 million in tax-related interest mainly reflecting the favorable resolution of tax matters in the prior year
	— gains of $7 million recorded on previously held equity investments, more fully discussed in Note 11 to the consolidated financial statements; partially offset by
		— a benefit of $9 million in the prior year related to the favorable resolution of various tax matters


						ETR ⇑ 890 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 ⇑ $2.21									Adjusted Diluted EPS(1) ⇑ $2.14

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.

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)
	2024			2023
Revenue:
Decision Solutions (DS)	$	1,114		$	1,022		9	%
Research and Insights (R&I)	683			654			4	%
Data and Information (D&I)	635			584			9	%
Total external revenue	2,432			2,260			8	%
Intersegment revenue	10			10			—	%
Total MA Revenue	2,442			2,270			8	%
Expenses:
Operating and SG&A (external)	1,577			1,446			(9	%)
Operating and SG&A (intersegment)	144			138			(4	%)


Total operating and SG&A expense	1,721			1,584			(9	%)


Adjusted Operating Income	$	721		$	686		5	%

Adjusted Operating Margin	29.5		%	30.2		%

Depreciation and amortization	260			220			(18	%)
Restructuring	7			38			82	%
Charges related to asset abandonment	30			—			NM

MOODY'S ANALYTICS REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

357 359 368 370


MA: Global revenue ⇑ $172 million			U.S. Revenue ⇑ $50 million			Non-U.S. Revenue ⇑ $122 million

The 8% increase in global MA revenue reflects growth both in the U.S. (5%) and internationally (9%) across all LOBs.

–ARR(2) grew 9% reflecting increases across all LOBs.

DECISION SOLUTIONS REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

770 774 775 777


DS: Global revenue ⇑ $92 million			U.S. Revenue ⇑ $14 million			Non-U.S. Revenue ⇑ $78 million

Global DS revenue for the nine months ended September 30, 2024 and 2023 was comprised as follows:

860

Global DS revenue grew 9% compared to the first nine months of 2023 and reflects increases in both the U.S. (3%) and internationally (13%).

The most notable drivers of the growth are as follows:

–strong demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage, which drove both revenue and ARR(2) growth of 18% and 14%, respectively;

–Insurance revenue and ARR(2) grew 9% and 13%, respectively.

–recurring revenue growth of 12% in Insurance was attributable to improved customer retention and strong demand resulting in new sales for subscription-based revenue for catastrophe and actuarial modeling tools.

–Banking revenue and ARR(2) grew 4% and 10%, respectively.

–recurring revenue growth of 9% within Banking supported by strong customer retention coupled with expansion of existing customer relationships to subscription-based banking offerings, which enable customers' lending, risk management and finance workflows;

*–*the aforementioned recurring revenue growth for Insurance and Banking was partially offset by a decline in transaction revenue of 36% and 12%, respectively, reflecting MA's continued strategic shift to subscription-based solutions.

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

RESEARCH AND INSIGHTS REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

1890 1891 1892 1894


R&I: Global revenue ⇑ $29 million			U.S. Revenue ⇑ $13 million			Non-U.S. Revenue ⇑ $16 million

Global R&I revenue increased 4% compared to the first nine months of 2023 and reflects growth in both the U.S. (4%) and internationally (5%). This increase was attributable to sales growth for credit and economic research product offerings, which contributed to ARR(2) growth of 6%.

DATA AND INFORMATION REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

2387 2388 2389 2391


D&I: Global revenue ⇑ $51 million			U.S. Revenue ⇑ $23 million			Non-U.S. Revenue ⇑ $28 million

Global D&I revenue increased 9% compared to the first nine months of 2023 and reflects growth in both the U.S. (11%) and internationally (7%), mainly driven by continued strong demand for company data applications and ratings data feeds, which contributed to ARR(2) growth of 8% for D&I.


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

2782


						Compensation expenses of $1,023 million increased $102 million:												Non-compensation expenses of $554 million increased $29 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 actual/projected financial and operating performance


						MA: Adjusted Operating Margin 29.5% ⇓ 70 BPS

The modest decline in Adjusted Operating Margin is primarily due to operating and SG&A expense growth of 9% slightly outpacing the 8% increase in global MA revenue.


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


Charges related to asset abandonment

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)
	2024			2023
Revenue:
Corporate finance (CFG)	$	1,569		$	1,067		47	%
Structured finance (SFG)	380			303			25	%
Financial institutions (FIG)	560			413			36	%
Public, project and infrastructure finance (PPIF)	449			371			21	%
Total ratings revenue	2,958			2,154			37	%
MIS Other	26			22			18	%
Total external revenue	2,984			2,176			37	%
Intersegment royalty	144			138			4	%
Total	3,128			2,314			35	%
Expenses:
Operating and SG&A (external)	1,164			1,024			(14	%)
Operating and SG&A (intersegment)	10			10			—	%
Total operating and SG&A expense	1,174			1,034			(14	%)

Adjusted Operating Income	$	1,954		$	1,280		53	%

Adjusted Operating Margin	62.5		%	55.3		%

Depreciation and amortization	58			56			(4	%)
Restructuring	6			13			54	%

The following chart presents changes in rated issuance volumes compared to the first nine months 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.

388

MOODY'S INVESTORS SERVICE REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

619 621 629 631


MIS: Global revenue ⇑ $808 million			U.S. Revenue ⇑ $592 million			Non-U.S. Revenue ⇑ $216 million

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

CFG REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

916 918 926 928


CFG: Global revenue ⇑ $502 million			U.S. Revenue ⇑ 351 million			Non-U.S. Revenue ⇑ $151 million

Global CFG revenue for the nine months ended September 30, 2024 and 2023 was comprised as follows:

995

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 47% reflects growth in both the U.S (48%) and internationally (44%).

Transaction revenue increased $487 million compared to the same period in the prior year, with continued momentum in leveraged finance (which includes bank loans and speculative-grade bonds) and investment-grade. The growth in these sectors resulted from:

–bank loan issuance to fund M&A transactions;

–refinancing activity and new mandates resulting from continued tight corporate credit spreads; and

–strong investor demand to capture yields ahead of further potential interest rate cuts.

SFG REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

2041 2043 2052 2053


SFG: Global revenue ⇑ $77 million			U.S. Revenue ⇑ $80 million			Non-U.S. Revenue ⇓ $3 million

Global SFG revenue for the nine months ended September 30, 2024 and 2023 was comprised as follows:

2120

The increase in SFG revenue of 25% reflects growth in the U.S. (43%), partially offset by modest declines in international revenue (3%).

Transaction revenue increased $71 million compared to the first nine months of 2023, mainly attributable to:

–higher CLO issuance, with new deals supported by increased bank loan activity, coupled with refinancing activity; and

–increased issuance activity from the CMBS and ABS asset classes, reflecting tightening credit spreads and strong investor demand, including from first time issuers.

FIG REVENUE


Nine months ended September 30,

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

_________________________________________********________________________________________

2828 2830 2839 2841


FIG: Global revenue ⇑ $147 million			U.S. Revenue ⇑ $104 million			Non-U.S. Revenue ⇑ $43 million

Global FIG revenue for the nine months ended September 30, 2024 and 2023 was comprised as follows:

2908

The increase in FIG revenue of 36% reflects growth in both the U.S. (55%) and internationally (19%).

Transaction revenue increased $134 million compared to the same period in the prior year, primarily driven by growth in the insurance and banking sectors, which was mainly attributable to a favorable issuance mix from infrequent issuer activity.

PPIF REVENUE


Nine months ended September 30,

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

****_______****___

3471 3473 3482 3484


PPIF: Global revenue ⇑ $78 million			U.S. Revenue ⇑ $56 million			Non-U.S. Revenue ⇑ $22 million

Global PPIF revenue for the nine months ended September 30, 2024 and 2023 was comprised as follows:

3553

The 21% increase in PPIF revenue reflects increases in both the U.S. (25%) and internationally (15%).

Transaction revenue increased $75 million compared to the same period in the prior year, primarily due to:

–higher issuance from U.S. Public Finance issuers, reflecting increased activity in the state and local government, healthcare and higher education sectors;

–increased U.S. and international investment-grade infrastructure finance activity; and

–higher U.S. Project Finance activity supported by continued market improvement.


						MIS: YTD Operating and SG&A Expense ⇑ $140 million

4014


						Compensation expenses of $867 million increased $115 million with the most notable drivers of the growth reflecting:												Non-compensation expenses of $297 million increased $25 million with the most notable drivers of the growth reflecting:
						— an increase in incentive and stock-based compensation driven by higher headcount and actual/projected financial and operating performance; and												— a charge relating to a regulatory investigation, which is more fully discussed in Note 15 to the consolidated financial statements; and
						— growth in salaries and benefits reflecting higher headcount and annual salary increases												— an increase in costs to support operating growth, including investments to support technology and innovation


						Adjusted Operating Margin of 62.5% ⇑ 720 BPS

The MIS Adjusted Operating Margin expansion primarily reflected the aforementioned 37% increase in revenue, partially offset by growth of 14% in operating and SG&A expenses.


Restructuring Charges

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:


	Nine Months Ended September 30,				$ Change Favorable (Unfavorable)
	2024		2023
Net cash provided by operating activities	$	2,164	$	1,674	$	490
Net cash used in investing activities	$	(875)	$	(193)	$	(682)
Net cash used in financing activities	$	(812)	$	(1,231)	$	419
Free Cash Flow (1)	$	1,921	$	1,476	$	445

(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, 2024 increased by $490 million compared to the same period in 2023, with the most notable drivers reflecting:

–growth in operating income of $675 million;

partially offset by:

–$178 million in higher income tax payments in the current year.

Net cash used in investing activities

The $682 million increase in cash used in investing activities in the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to:

–higher net purchases of investments in 2024 of $528 million;

–higher cash paid for acquisitions, net of cash acquired, of $107 million primarily due to the acquisitions of GCR and Praedicat in the third quarter of 2024, coupled with certain immaterial acquisitions completed in the first quarter of 2024; and

–higher cash paid for capital additions of $45 million compared to the prior year reflecting both costs to support investments in company-wide technology infrastructure coupled with costs related to the development of SaaS-based solutions in MA.

Net cash used in financing activities

The $419 million decrease in cash used in financing activities in the nine months ended September 30, 2024 compared to the same period in the prior year was primarily attributed to:

*–*a $500 million repayment of notes payable in 2023; and

–a $496 million issuance of notes in the third quarter of 2024;

partially offset by:

– higher cash paid for treasury share repurchases in 2024 of $534 million compared to the prior year.

Cash and cash equivalents and short-term investments

The Company’s aggregate cash and cash equivalents and short-term investments of $3.2 billion at September 30, 2024 included approximately $2.1 billion located outside of the U.S. Approximately 31% 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 September 30, 2024, Moody’s had $7.6 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 2024 Facility.

The repayment schedule for the Company’s borrowings outstanding at September 30, 2024 is as follows:

435

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 September 30, 2024, these purchase obligations totaled $683 million, of which approximately 40% is expected to be paid in the next twelve months and another approximate 45% 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 $376 million at September 30, 2024, primarily related to real estate leases, of which $118 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 September 30, 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 October 21, 2024, the Board approved the declaration of a quarterly dividend of $0.85 per share for Moody’s common stock, payable December 13, 2024 to shareholders of record at the close of business on November 22, 2024. The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board.

On February 5, 2024, the Board approved $1 billion in share repurchase authority. At September 30, 2024, the Company had approximately $547 million of remaining authority under this authorization. On October 15, 2024, the Board authorized an additional $1.5 billion in share repurchase authority. There is no established expiration date for the remaining authorizations.

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; ii) restructuring charges/adjustments; and iii) charges related to an asset abandonment. 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 and charges related to asset abandonment 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 September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Operating income	$	738		$	535		$	2,314		$	1,639
Adjustments:
Depreciation and amortization	108			95			318			276
Restructuring	6			27			13			51
Charges related to asset abandonment	15			—			30			—
Adjusted Operating Income	$	867		$	657		$	2,675		$	1,966
Operating margin	40.7		%	36.3		%	42.7		%	36.9		%
Adjusted Operating Margin	47.8		%	44.6		%	49.4		%	44.3		%

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; iii) charges related to asset abandonment; and iv) gains on previously held equity method investments.

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, charges related to asset abandonment, and gains on previously held equity method investments 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 September 30,								Nine Months Ended September 30,
Amounts in millions	2024				2023				2024				2023
Net Income attributable to Moody's common shareholders			$	534			$	389			$	1,663			$	1,267



Pre-tax Acquisition-Related Intangible Amortization Expenses	$	51			$	49			$	148			$	150
Tax on Acquisition-Related Intangible Amortization Expenses	(12)				(12)				(36)				(36)
Net Acquisition-Related Intangible Amortization Expenses			39				37				112				114

Pre-tax restructuring	$	6			$	27			$	13			$	51
Tax on restructuring	(1)				(6)				(3)				(12)
Net restructuring			5				21				10				39

Pre-tax charges related to asset abandonment	$	15			$	—			$	30			$	—
Tax on charges related to asset abandonment	(3)				—				(7)				—
Net charges related to asset abandonment			12				—				23				—
Pre-tax gain on previously held equity method investments	$	(7)			$	—			$	(7)			$	—
Tax on gain on previously held equity method investments	2				—				2				—
Net gain on previously held equity method investments			(5)				—				(5)				—
Adjusted Net Income			$	585			$	447			$	1,803			$	1,420


	Three Months Ended September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
Diluted earnings per share attributable to Moody's common shareholders			$	2.93			$	2.11			$	9.09			$	6.88



Pre-tax Acquisition-Related Intangible Amortization Expenses	$	0.28			$	0.27			$	0.81			$	0.81
Tax on Acquisition-Related Intangible Amortization Expenses	(0.07)				(0.06)				(0.20)				(0.19)
Net Acquisition-Related Intangible Amortization Expenses			0.21				0.21				0.61				0.62

Pre-tax restructuring	$	0.03			$	0.15			$	0.07			$	0.28
Tax on restructuring	—				(0.04)				(0.02)				(0.07)
Net restructuring			0.03				0.11				0.05				0.21

Pre-tax charges related to asset abandonment	$	0.08			$	—			$	0.16			$	—
Tax on charges related to asset abandonment	(0.01)				—				(0.03)				—
Net charges related to asset abandonment			0.07				—				0.13				—
Pre-tax gain on previously held equity method investments	$	(0.04)			$	—			$	(0.04)			$	—
Tax on gain on previously held equity method investments	0.01				—				0.01				—
Net gain on previously held equity method investments			(0.03)				—				(0.03)				—
Adjusted Diluted EPS			$	3.21			$	2.43			$	9.85			$	7.71

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:



	Nine Months Ended September 30,
	2024		2023
Net cash provided by operating activities	$	2,164	$	1,674
Capital additions	(243)		(198)
Free Cash Flow	$	1,921	$	1,476
Net cash used in investing activities	$	(875)	$	(193)
Net cash used in financing activities	$	(812)	$	(1,231)

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 one-time training, 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	September 30, 2024		September 30, 2023		Change		Growth






MA ARR
Decision Solutions
Banking	$	439	$	400	$	39	10%
Insurance	579		514		65		13%
KYC	360		316		44		14%
Total Decision Solutions	$	1,378	$	1,230	$	148	12%
Research and Insights	910		860		50		6%
Data and Information	859		796		63		8%
Total MA ARR	$	3,147	$	2,886	$	261	9%

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 39 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 the Middle East 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 any restructuring programs;
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, 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.

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