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 59 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.			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) 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 subscription 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.

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, 2024, 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

This update should be read in conjunction with the critical accounting estimate disclosures made in the Company's Form 10-K for the year ended December 31, 2024.

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). Prior to 2025, MA's reporting unit structure consisted of two reporting units comprised of businesses that offer: i) data and data-driven analytical solutions; and ii) risk-management software, workflow and CRE solutions. During the first quarter of 2025, MA reorganized its management and reporting structure, which affected the composition of the reporting units within the MA reportable segment. As a result, MA's reporting unit structure now consists of one reporting unit, which is consistent with the segment's current management structure and operating model. This reorganization did not result in a change to the Company's reportable segments. The Company performed assessments of the reporting units impacted by the reorganization immediately before and after the reorganization became effective and determined that it was not more likely than not that the fair value of any reporting unit was less than its carrying amount.

Subsequent to the aforementioned reorganization of the MA reporting unit structure, the Company now has three reporting units: two within the Company’s ratings business (one for the ICRA business and one that encompasses all of Moody’s other ratings operations) and one reporting unit within MA.

Reportable Segments

The Company is organized into two reportable segments as of March 31, 2025: MA and MIS, which are more fully described in the section entitled “The Company” above and in Note 17 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, 2025 compared with three months ended March 31, 2024

Executive Summary

The following table provides an executive summary of key operating results for the quarter ended March 31, 2025. 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:			2025			2024			% Change Favorable (Unfavorable)			Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue			$	1,924		$	1,786		8		%	— reflects revenue growth in both segments
MA external revenue			$	859		$	799		8		%	— sustained demand for KYC and insurance offerings and SaaS-based banking solutions; — continued demand for credit research product offerings; and — ongoing strong demand for ratings data feeds and company data applications
MIS external revenue			$	1,065		$	987		8		%	reflects growth across most LOBs resulting from: — increased U.S. investment-grade issuance activity, which included a favorable issuance mix from infrequent issuer activity; — increased issuance volumes in structured finance driven by refinancing activity for CLOs and CMBS, supported by continued tight spreads; and — increase in activity in the U.S. market for public and project finance
Total operating and SG&A expenses			$	930		$	880		(6		%)	— higher salaries and benefits reflecting an increase in headcount and annual salary increases in both segments
Depreciation and amortization			$	113		$	100		(13		%)	— higher amortization of internally developed software, primarily related to the development of MA SaaS solutions
Restructuring			$	33		$	5		NM			— relates to the Company's restructuring programs, more fully discussed in Note 10 to the consolidated financial statements
Charges related to asset abandonment			$	2		$	—		NM			— costs related to the Company's decision to outsource the production of certain sustainability content utilized in our product offerings, more fully discussed in Note 12 to the consolidated financial statements
Total non-operating (expense) income, net			$	(42)		$	(49)		14		%	— primarily due to an increase in equity income recorded for the Company's investments in non-consolidated affiliates
Operating margin			44.0		%	44.8		%	(80		BPS)	— operating margin contraction is attributable to higher restructuring costs — Adjusted Operating Margin(1) expansion reflects revenue growth outpacing an increase in operating and SG&A expenses
Adjusted Operating Margin(1)			51.7		%	50.7		%	100		BPS
ETR			22.3		%	23.3		%	(100		BPS)	— primarily due to an increase in Excess Tax Benefits on stock-based compensation compared to the prior year
Diluted EPS			$	3.46		$	3.15		10		%	— increase reflects growth in operating income and Adjusted Operating Income(1)
Adjusted Diluted EPS(1)			$	3.83		$	3.37		14		%

Moody's Corporation

			Three Months Ended March 31,												% Change Favorable (Unfavorable)
			2025						2024
Revenue:
United States			$	1,065					$	969					10		%
Non-U.S.:
EMEA			569						542						5		%
Asia-Pacific			167						155						8		%
Americas			123						120						3		%
Total Non-U.S.			859						817						5		%
Total			1,924						1,786						8		%
Expenses:
Operating			491						467						(5		%)
SG&A			439						413						(6		%)
Depreciation and amortization			113						100						(13		%)
Restructuring			33						5						NM
Charges related to asset abandonment			2						—						NM
Total			1,078						985						(9		%)
Operating income			$	846					$	801					6		%
Adjusted Operating Income(1)			$	994					$	906					10		%
Interest expense, net			$	(61)					$	(62)					2		%
Other non-operating income, net			19						13						46		%
Non-operating (expense) income, net			$	(42)					$	(49)					14		%
Net income attributable to Moody's			$	625					$	577					8		%
Diluted weighted average shares outstanding			180.7						183.4						1		%
Diluted EPS attributable to Moody's common shareholders			$	3.46					$	3.15					10		%
Adjusted Diluted EPS(1)			$	3.83					$	3.37					14		%
Operating margin			44.0		%				44.8		%
Adjusted Operating Margin(1)			51.7		%				50.7		%
ETR			22.3		%				23.3		%

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

									March 31,																		Change
									2025						2024												%
MA			U.S.						2,921						2,983												(2		%)
			Non-U.S.						5,093						4,922												3		%
			Total						8,014						7,905												1		%
MIS			U.S.						1,572						1,512												4		%
			Non-U.S.						4,196						4,083												3		%
			Total						5,768						5,595												3		%
MSS			U.S.						711						725												(2		%)
			Non-U.S.						1,302						1,214												7		%
			Total						2,013						1,939												4		%
Total MCO			U.S.						5,204						5,220												—		%
			Non-U.S.						10,591						10,219												4		%
			Total						15,795						15,439												2		%

GLOBAL REVENUE

Three months ended March 31,

2025**-----------------------------------------------------------------------------------**2024

_________________________________________********________________________________________

Global revenue ⇑ $138 million						U.S. Revenue ⇑ $96 million						Non-U.S. Revenue ⇑ $42 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.

						First Quarter Operating Expense ⇑ $24 million

Compensation expenses of $367 million increased $21 million, with the most notable driver reflecting:						Non-compensation expenses of $124 million increased $3 million:
— higher salaries and benefits that reflects hiring and salary increases to support continued growth in the business						— non-compensation expenses were generally in line compared to the prior year

						First Quarter SG&A Expense ⇑ $26 million

Compensation expenses of $275 million increased $13 million, with the most notable driver reflecting:			Non-compensation expenses of $164 million increased $13 million, with the most notable driver reflecting:
— higher salaries and benefits and incentive and stock-based compensation, both reflecting growth in headcount and annual salary increases			— costs to support operating growth, including investments to support technology and innovation

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 reflect charges and adjustments related to the Company's restructuring programs as more fully discussed in Note 10 to the consolidated financial statements.

						Operating margin 44.0%, ⇓ 80 BPS									Adjusted Operating Margin**(1)** 51.7%, ⇑ 100 BPS

Operating margin contraction is attributable to the increase in restructuring costs compared to the prior year.

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

									Interest Expense, net ⇓ $1 million									Other non-operating income ⇑ $6 million

Interest expense was generally in line compared to the prior year									Increase in income is primarily due to:
			— an increase in equity income related to the Company's investments in non-consolidated affiliates of $11 million; partially offset by
			— an increase in FX losses of $2 million

						ETR ⇓ 100 BPS

The ETR was lower than the prior year reflecting higher Excess Tax Benefits on stock-based compensation compared to the same period in 2024.

						Diluted EPS ⇑ $0.31												Adjusted Diluted EPS**(1)** ⇑ $0.46

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 March 31,												% Change Favorable (Unfavorable)
			2025						2024
Revenue:
Decision Solutions (DS)			$	405					$	365					11		%
Research and Insights (R&I)			236						222						6		%
Data and Information (D&I)			218						212						3		%
Total external revenue			859						799						8		%
Intersegment revenue			3						3						—		%
Total MA revenue			862						802						7		%
Expenses:
Operating and SG&A (external)			554						517						(7		%)
Operating and SG&A (intersegment)			49						47						(4		%)
Total operating and SG&A			603						564						(7		%)
Adjusted Operating Income			$	259					$	238					9		%
Adjusted Operating Margin			30.0		%				29.7		%
Depreciation and amortization			94						82						(15		%)
Restructuring			26						2						NM
Charges related to asset abandonment			2						—						NM

MOODY'S ANALYTICS REVENUE

Three months ended March 31,

2025**-----------------------------------------------------------------------------------**2024

_________________________________________********________________________________________

MA: Global revenue ⇑ $60 million			U.S. Revenue ⇑ $38 million			Non-U.S. Revenue ⇑ $22 million

The 8% increase in global MA revenue reflects growth both in the U.S. (11%) and internationally (5%).

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

DECISION SOLUTIONS REVENUE

Three months ended March 31,

2025**-----------------------------------------------------------------------------------**2024

_________________________________________********________________________________________

DS: Global revenue ⇑ $40 million			U.S. Revenue ⇑ $29 million			Non-U.S. Revenue ⇑ $11 million

Global DS revenue for the three months ended March 31, 2025 and 2024 was comprised as follows:

Global DS revenue grew 11% compared to the first quarter of 2024 and reflects increases in the U.S. (21%) and internationally (5%).

The most notable drivers of the growth are as follows:

–strong demand for MA's suite of KYC solutions, reflecting increased customer and supplier risk data usage, coupled with sales growth from new customers, which drove revenue and ARR(2) growth of 16% and 17%, respectively;

–Insurance revenue and ARR(2) grew 13% and 11%, respectively

–recurring revenue growth of 17% in Insurance was attributable to strong demand resulting in new sales for subscription-based catastrophe and actuarial models, as well as the revenue impact from CAPE Analytics, which the Company acquired in the first quarter of 2025;

–Banking revenue and ARR(2) grew 5% and 8%, respectively

–recurring revenue growth of 10% within banking was supported by expansion of existing customer relationships to subscription-based banking offerings, which enable customers' lending, risk management and finance workflows, and also includes revenue from Numerated, which the Company acquired in the fourth quarter of 2024;

–the aforementioned recurring revenue growth for Insurance and Banking was partially offset by a decline in transaction revenue of 40% and 10%, respectively, reflecting MA's continued strategic shift to subscription-based solutions.

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

Organic constant currency revenue(1) growth for DS was 9%.

RESEARCH AND INSIGHTS REVENUE

Three months ended March 31,

2025**-----------------------------------------------------------------------------------**2024

_________________________________________________****__ ________________________________________________

R&I: Global revenue ⇑ $14 million			U.S. Revenue ⇑ $6 million			Non-U.S. Revenue ⇑ $8 million

Global R&I revenue increased 6% compared to the first quarter of 2024 and reflects growth in both the U.S. (5%) and internationally (8%). This increase was mainly driven by sales growth from the credit research product offering, which contributed to R&I ARR(2) growth of 7%.

DATA AND INFORMATION REVENUE

Three months ended March 31,

2025**-----------------------------------------------------------------------------------**2024

______________________________________________********__________________________________________________

D&I: Global revenue ⇑ $6 million			U.S. Revenue ⇑ $3 million			Non-U.S. Revenue ⇑ $3 million

Global D&I revenue increased 3% compared to the first quarter of 2024 and reflects growth in both the U.S. (4%) and internationally (2%), mainly driven by continued demand for ratings data feeds and company data applications, which contributed to ARR(2) growth of 6%.

Organic constant currency revenue(1) growth for D&I was 5%.

						MA: First Quarter Operating and SG&A Expense ⇑ $37 million

						Compensation expenses of $362 million increased $25 million, with the most notable drivers reflecting:												Non-compensation expenses of $192 million increased $12 million, with the most notable driver reflecting:
						— growth in salaries and benefits and incentive compensation both reflecting higher headcount and annual salary increases												— an increase in costs to support operating growth, including investments to support technology and innovation

						MA: Adjusted Operating Margin 30.0% ⇑ 30 BPS

Adjusted Operating Margin expansion primarily reflects the aforementioned 8% increase in global MA revenue, partially offset by growth of 7% in operating and SG&A expenses.

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 reflect charges and adjustments related to the Company's restructuring programs as more fully discussed in Note 10 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)
			2025						2024
Revenue:
Corporate finance (CFG)			$	564					$	529					7		%
Structured finance (SFG)			138						114						21		%
Financial institutions (FIG)			191						195						(2		%)
Public, project and infrastructure finance (PPIF)			163						141						16		%
Total ratings revenue			1,056						979						8		%
MIS Other			9						8						13		%
Total external revenue			1,065						987						8		%
Intersegment revenue			49						47						4		%
Total MIS revenue			1,114						1,034						8		%
Expenses:
Operating and SG&A (external)			376						363						(4		%)
Operating and SG&A (intersegment)			3						3						—		%
Total operating and SG&A			379						366						(4		%)
Adjusted Operating Income			$	735					$	668					10		%
Adjusted Operating Margin			66.0		%				64.6		%
Depreciation and amortization			19						18						(6		%)
Restructuring			7						3						(133		%)

The following chart presents changes in rated issuance volumes compared to the first quarter of 2024. 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,

2025**-----------------------------------------------------------------------------------**2024

_________________________________________********________________________________________

MIS: Global revenue ⇑ $78 million			U.S. Revenue ⇑ $58 million			Non-U.S. Revenue ⇑ $20 million

The increase in global MIS revenue reflects growth across all ratings LOBs, excluding FIG.

CFG REVENUE

Three months ended March 31,

2025**-----------------------------------------------------------------------------------**2024

_________________________________________********________________________________________

CFG: Global revenue ⇑ $35 million			U.S. Revenue ⇑ $19 million			Non-U.S. Revenue ⇑ $16 million

Global CFG revenue for the three months ended March 31, 2025 and 2024 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 7% reflects growth in both the U.S. (5%) and internationally (10%).

Transaction revenue increased $28 million compared to the same period in the prior year, primarily driven by higher U.S. issuance activity within investment grade, which reflected:

–a favorable issuance mix from infrequent issuer activity;

–issuance to fund certain large M&A deals during the quarter; and

–strong investor demand as yields remained high in the first quarter of 2025.

SFG REVENUE

Three months ended March 31,

2025**---------------------------------------------------------------------------**2024

_________________________________________********________________________________________

SFG: Global revenue ⇑ $24 million			U.S. Revenue ⇑ $24 million			Non-U.S. Revenue was in line with prior year

Global SFG revenue for the three months ended March 31, 2025 and 2024 was comprised as follows:

The increase in SFG revenue of 21% reflects growth in the U.S.

Transaction revenue increased $19 million compared to the first quarter of 2024, mainly attributable to continued momentum in U.S. CLO refinancing activity and increased issuance activity in CMBS, supported by tight spreads for the majority of the first quarter of 2025 and strong investor demand.

FIG REVENUE

Three months ended March 31,

2025**-----------------------------------------------------------------------------------**2024

_________________________________________********________________________________________

FIG: Global revenue ⇓ $4 million			U.S. Revenue ⇓ $3 million			Non-U.S. Revenue ⇓ $1 million

Global FIG revenue for the three months ended March 31, 2025 and 2024 was comprised as follows:

The decrease in FIG revenue of 2% reflects declines in both the U.S. (3%) and internationally (1%).

Transaction revenue decreased $13 million compared to the first quarter of 2024, primarily due to:

–lower volumes from infrequent issuers in the insurance sector, compared to strong activity in the prior year;

partially offset by

–growth in Banking, where infrequent issuer activity remained strong.

PPIF REVENUE

Three months ended March 31,

2025**-----------------------------------------------------------------------------------**2024

_________________________________________********________________________________________

PPIF: Global revenue ⇑ $22 million			U.S. Revenue ⇑ $18 million			Non-U.S. Revenue ⇑ 4 million

Global PPIF revenue for the three months ended March 31, 2025 and 2024 was comprised as follows:

The increase in PPIF revenue of 16% reflects growth in both the U.S. (21%) and internationally (7%).

Transaction revenue increased $20 million compared to the first quarter of 2024, primarily due to:

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

–higher U.S. Project Finance activity supported by ongoing funding requirements for large-scale infrastructure projects.

						MIS: First Quarter Operating and SG&A Expense ⇑ $13 million

						Compensation expenses of $280 million increased $8 million, with the most notable drivers of the growth reflecting:												Non-compensation expenses of $96 million increased $5 million:
						— growth in salaries and benefits and stock-based compensation both reflecting higher headcount and annual salary increases												— non-compensation expenses were generally in line compared to the prior year

												MIS: Adjusted Operating Margin 66.0% ⇑ 140 BPS

The MIS Adjusted Operating Margin expansion primarily reflects the aforementioned 8% increase in revenue, partially offset by growth of 4% in operating and SG&A expenses.

Restructuring

The amounts reflect charges and adjustments related to the Company's restructuring programs as more fully discussed in Note 10 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)
			2025						2024
Net cash provided by operating activities			$	757					$	775					$	(18)
Net cash provided by (used in) investing activities			$	224					$	(96)					$	320
Net cash used in financing activities			$	(1,298)					$	(308)					$	(990)
Free Cash Flow (1)			$	672					$	697					$	(25)

(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 for the three months ended March 31, 2025 decreased by $18 million compared to the same period in 2024. This decrease primarily resulted from various changes in working capital, driven most notably by higher incentive compensation and income tax payments in the first quarter of 2025 compared to the same period in 2024.

Net cash provided by (used in) investing activities

The $320 million increase in cash provided by investing activities in the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to:

–a $514 million increase in net sales and maturities of investments, primarily due to the maturity of certificates of deposit in the first quarter of 2025;

partially offset by:

–higher cash paid for acquisitions, net of cash acquired, of $211 million due to the acquisition of CAPE Analytics in the first quarter of 2025.

Net cash used in financing activities

The $990 million increase in cash used in financing activities in the three months ended March 31, 2025 compared to the same period in the prior year was primarily attributed to:

*–*a $700 million repayment of notes payable in 2025; and

– higher cash paid for treasury share repurchases in 2025 of $253 million compared to the same period in the prior year.

Cash and cash equivalents and short-term investments

The Company’s aggregate cash and cash equivalents and short-term investments of $2.2 billion at March 31, 2025 included approximately $1.8 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, 2025, Moody’s had $7.1 billion of outstanding principal on 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 March 31, 2025 is as follows:

For additional information on the Company's outstanding debt, refer to Note 14 to the consolidated financial statements.

Future interest payments and fees associated with the Company's debt and credit facility are expected to be $4.5 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, 2025, these purchase obligations totaled approximately $800 million, of which approximately 50% 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 $487 million at March 31, 2025, primarily related to real estate leases, of which $112 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 15 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, 2025, 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 21, 2025, the Board approved the declaration of a quarterly dividend of $0.94 per share for Moody’s common stock, payable June 6, 2025 to shareholders of record at the close of business on May 16, 2025. The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board.

On October 15, 2024, the Board approved $1.5 billion in share repurchase authority. At March 31, 2025, the Company had approximately $1.2 billion of remaining authority under this authorization. There is no established expiration date for the remaining authorization.

Restructuring

As more fully discussed in Note 10 to the consolidated financial statements, the Company is currently in the process of executing the Strategic and Operational Efficiency Restructuring Program. Future cash outlays associated with this program are expected to be approximately $145 million to $175 million, which are expected to be paid out through 2027.

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 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, which the Company believes are not reflective of its ongoing operating cost structure, are excluded as the frequency and magnitude of these charges may vary widely across periods and companies. Refer to Notes 10 and 12 to the consolidated financial statements for further information regarding the nature of the Company’s restructuring programs and asset abandonment, respectively.

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,
															2025						2024
Operating income															$	846					$	801
Adjustments:
Depreciation and amortization															113						100
Restructuring															33						5
Charges related to asset abandonment															2						—
Adjusted Operating Income															$	994					$	906
Operating margin															44.0		%				44.8		%
Adjusted Operating Margin															51.7		%				50.7		%

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

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

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 and charges related to asset abandonment, which the Company believes are not reflective of its ongoing operating cost structure, 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															2025									2024
Net Income attributable to Moody's common shareholders																								$	625								$	577
Pre-tax Acquisition-Related Intangible Amortization Expenses																					$	53								$	49
Tax on Acquisition-Related Intangible Amortization Expenses																					(13)									(12)
Net Acquisition-Related Intangible Amortization Expenses																								40									37
Pre-tax restructuring																					$	33								$	5
Tax on restructuring																					(8)									(1)
Net restructuring																								25									4
Pre-tax charges related to asset abandonment																					$	2								$	—
Tax on charges related to asset abandonment																					—									—
Net charges related to asset abandonment																								2									—
Adjusted Net Income																								$	692								$	618

									Three Months Ended March 31,
															2025									2024
Diluted earnings per share attributable to Moody's common shareholders																								$	3.46								$	3.15
Pre-tax Acquisition-Related Intangible Amortization Expenses																					$	0.29								$	0.27
Tax on Acquisition-Related Intangible Amortization Expenses																					(0.07)									(0.07)
Net Acquisition-Related Intangible Amortization Expenses																								0.22									0.20
Pre-tax restructuring																					$	0.18								$	0.03
Tax on restructuring																					(0.04)									(0.01)
Net restructuring																								0.14									0.02
Pre-tax charges related to asset abandonment																					$	0.01								$	—
Tax on charges related to asset abandonment																					—									—
Net charges related to asset abandonment																								0.01									—
Adjusted Diluted EPS																								$	3.83								$	3.37

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,
			2025						2024
Net cash provided by operating activities			$	757					$	775
Capital additions			(85)						(78)
Free Cash Flow			$	672					$	697
Net cash provided by (used in) investing activities			$	224					$	(96)
Net cash used in financing activities			$	(1,298)					$	(308)

Organic Constant Currency Revenue Growth (Decline):

The Company presents organic constant currency revenue growth (decline) as its non-GAAP measure of revenue growth (decline). Management deems this measure to be useful in providing additional perspective in assessing the Company's revenue growth (decline) excluding both the inorganic revenue impacts from certain acquisition activity and the impacts of changes in foreign exchange rates. The Company calculates the dollar impact of foreign exchange as the difference between the translation of its current period non-USD functional currency results using comparative prior period weighted average foreign exchange translation rates and current year reported results.

Below is a reconciliation of the Company's reported revenue and growth (decline) rates to its organic constant currency revenue growth (decline) measures:

						Three Months Ended March 31,
Amounts in millions						2025						2024						Change						Growth
Decision Solutions revenue						$	405					$	365					$	40					11%
FX impact						3						—						3
Inorganic revenue from acquisitions						(11)						—						(11)
Organic constant currency Decision Solutions revenue						$	397					$	365					$	32					9%
Data and Information revenue						$	218					$	212					$	6					3%
FX impact						4						—						4
Constant currency Data and Information revenue						$	222					$	212					$	10					5%

Key Performance Metrics:

The Company presents ARR on an organic constant currency 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						March 31, 2025						March 31, 2024						Change						Growth
MA ARR
Decision Solutions
Banking						$	453					$	421					$	32					8%
Insurance						609						548						61						11%
KYC						393						335						58						17%
Total Decision Solutions						$	1,455					$	1,304					$	151					12%
Research and Insights						945						884						61						7%
Data and Information						866						818						48						6%
Total MA ARR						$	3,266					$	3,006					$	260					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 16 "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 38 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 uncertain effects of U.S. and foreign government actions affecting international trade and economic policy, including changes in volatility in tariffs and trade policies and retaliatory actions, on credit markets, customers, and customer retention, and demand for our products and services;

• the impact of general economic conditions (including significant government debt and deficit levels and inflation or recessions and related monetary policy actions by governments in response thereto) on worldwide credit markets and on economic activity, including on the level of merger and acquisition activity, and their effects on the volume of debt and other securities issued in domestic and/or global capital markets;

• the uncertain effect 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 impacts of geopolitical events and actions, such as the Russia-Ukraine military conflict and military conflict in the Middle East, and of tensions and disputes in political and global relations, on volatility in world financial markets, on general economic conditions and GDP in the U.S. and worldwide 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 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;

• 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, corporate or government entities.

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, 2024, 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.