Executive Summary

Moody’s delivered a record quarter: revenue $1.924B (+8% YoY), MIS reached its highest-ever quarterly revenue ($1.065B), and adjusted diluted EPS was $3.83 (+14% YoY). Operating margin was 44.0% and adjusted operating margin expanded to 51.7% (+100 bps YoY) .
Results beat Wall Street consensus: EPS $3.83 vs $3.54* and revenue $1.924B vs $1.878B*, driven by strong MIS transactional activity and disciplined expense management; effective tax rate fell to 22.3% (from 23.3%) . Consensus figures from S&P Global*.
Guidance lowered and widened amid macro uncertainty and tariff headlines: FY25 adjusted EPS cut to $13.25–$14.00 (from $14.00–$14.50), MIS revenue now “flat to mid-single-digit” growth, MA ARR trimmed to high-single-digit, and company-level revenue growth reduced to mid-single-digit; free cash flow guided down to $2.30–$2.50B .
Capital allocation remains active: declared $0.94 quarterly dividend (+11% YoY), repurchased 0.8M shares at $481.77, ended Q1 with $6.8B debt and $2.139B cash; operating cash flow $757M and free cash flow $672M (down YoY due to higher incentive comp payments) .
Catalysts: Private credit tailwinds (143 private credit-related deals; growing contribution in Structured Finance) and AI-enabled product momentum (agentic AI in KYC, Research Assistant) support medium-term narrative; near-term volatility and tariff uncertainty pushed management to conservative guidance .

What Went Well and What Went Wrong

What Went Well

Record MIS performance: $1.065B revenue (+8% YoY) with adjusted operating margin 66.0% (+140 bps YoY); strength in IG corporates, structured finance refinancing (CLOs/CMBS), and private credit-related activity .
MA durability and mix: MA revenue $859M (+8% YoY), recurring revenue 96% (+9% YoY), ARR $3.266B (+9% YoY); Decision Solutions ARR +12% led by KYC (+17%) and Insurance (+11%) .
Cost discipline and leverage: Adjusted operating margin expanded 100 bps to 51.7%, with lower ETR (22.3%) supporting EPS growth; restructuring recognized ($33M) as part of efficiency program while margins improved .
Management quote: “Record quarter for our Ratings franchise… we run our business across market cycles” – Rob Fauber, CEO . “Adjusted Diluted EPS… $13.25 to $14.00… 9% YoY growth at the midpoint” – CFO Noémie Heuland .

What Went Wrong

Guidance reset on macro volatility: FY25 adjusted EPS cut to $13.25–$14.00, diluted EPS to $12.00–$12.75; revenue growth trimmed to mid-single-digit; MIS revenue now flat to mid-single-digit; MA ARR narrowed to high-single-digit .
April issuance softness and M&A downshift: Management now expects MIS rated issuance to decrease low-to-high single digit in 2025, and reduced announced M&A assumption to ~15% (from ~50%) on trade-policy uncertainty .
Cash flow down YoY: Operating cash flow $757M and FCF $672M declined versus prior year due to higher incentive comp payments, despite robust P&L; restructuring charges also elevated .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$1,786	$1,672	$1,924
Diluted EPS ($)	$3.15	$2.17	$3.46
Adjusted Diluted EPS ($)	$3.37	$2.62	$3.83
Operating Margin (%)	44.8%	33.6%	44.0%
Adjusted Operating Margin (%)	50.7%	43.8%	51.7%

Estimates vs Actual (Q1 2025):

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	1,877.44*	1,924.00	+46.56
EPS ($)	3.54*	3.83	+0.29

Segment Breakdown:

Segment	Q1 2024 Revenue ($MM)	Q1 2025 Revenue ($MM)	Q1 2024 Adj. Op Margin	Q1 2025 Adj. Op Margin
Moody’s Analytics (MA)	$799	$859	29.7%	30.0%
Moody’s Investors Service (MIS)	$987	$1,065	64.6%	66.0%
Consolidated	$1,786	$1,924	50.7%	51.7%

KPIs and Operating Metrics:

KPI	Q1 2024	Q1 2025
MA ARR ($MM)	$3,006	$3,266
Decision Solutions ARR ($MM)	$1,304	$1,455
Transaction vs Recurring Revenue (Corp) ($MM)	$724 vs $1,062	$769 vs $1,155
Effective Tax Rate (%)	23.3%	22.3%
Cash from Operations ($MM)	$775	$757
Free Cash Flow ($MM)	$697	$672
Dividend per Share ($)	$0.85 (prior year)	$0.94
Share Repurchases (M shrs / avg px)	—	0.8 @ $481.77
Debt Outstanding ($B)	$6.731 (Dec-24)	$6.8 (Mar-25)
Shares Outstanding (M)	180.3 (Dec-24)	179.9 (Mar-25)

Guidance Changes

Metric	Period	Previous Guidance (Feb 13, 2025)	Current Guidance (Apr 22, 2025)	Change
MCO Revenue Growth	FY 2025	High-single-digit	Mid-single-digit	Lowered
Operating Margin	FY 2025	~43%	42%–43%	Lowered/maintained
Adjusted Operating Margin	FY 2025	~50%	49%–50%	Lowered/maintained
Diluted EPS ($)	FY 2025	$12.75–$13.25	$12.00–$12.75	Lowered
Adjusted Diluted EPS ($)	FY 2025	$14.00–$14.50	$13.25–$14.00	Lowered
Operating Cash Flow ($B)	FY 2025	$2.75–$2.95	$2.65–$2.85	Lowered
Free Cash Flow ($B)	FY 2025	$2.40–$2.60	$2.30–$2.50	Lowered
Share Repurchases	FY 2025	≥$1.3B	NC	Maintained
MA Revenue Growth	FY 2025	High-single-digit	NC	Maintained
MA ARR Growth	FY 2025	High-single to low-double-digit	High-single-digit	Lowered
MA Adjusted Op Margin	FY 2025	32%–33%	NC	Maintained
MIS Revenue Growth	FY 2025	Mid-to-high-single-digit	Flat to mid-single-digit	Lowered
MIS Adjusted Op Margin	FY 2025	62%–63%	61%–62%	Lowered

Management updated macro assumptions: U.S. GDP cut to 0.0–1.0% (from 1.5–2.5%), euro area GDP to 0.0–1.0%, global GDP to 1.0–2.0%; U.S. high yield spreads to ~460 bps over next 12 months; inflation higher; global MIS rated issuance revised from low-single-digit increase to low-to-high single-digit decrease .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Private credit tailwinds	Highlighted as structural growth driver; debt velocity below historical avg implies future issuance tailwind	~400 private credit-related transactions in 2024; organized to capture across franchises	143 private credit-related deals in Q1’25; ~20% of SF growth attributable; strong FIG first-time mandates	Strengthening
Tariffs/macro uncertainty	Strong issuance year; watch exogenous events; Q4 issuance expected to decline mid-teens (later improved)	Guidance set assuming blue-sky days; tight spreads, lower defaults; detailed FY25 issuance assumptions	April softness, risk-off days, widened/lowered guidance; M&A assumption cut to ~15%	Deteriorating near-term
AI initiatives (MA)	Research Assistant adoption; slower at big banks; navigators and early warning system	GenAI investment; Research Assistant at >100 customers; margin expansion plan	First agentic AI KYC sale; AI screening agent; internal AI productivity (20% support reduction)	Accelerating use cases
MA ARR & mix	Decision Solutions ARR +12%; gov’t attrition and ESG customer transition to MSCI pressured D&I	ARR +9%; strong DS; Research Assistant boosted R&I	ARR +9%; DS +12%; recurring 96%; KYC +17%; Banking +8%; Insurance +11%	Steady high-single-digit
Structured Finance	CLO/CMBS momentum on tight spreads	Strong U.S. CLOs/CMBS; repricing in loans diluted revenue vs issuance	Refinancing-driven CLOs/CMBS; supportive spreads	Continued strength
Government exposure & ESG	Federal govt renewals at lower value; customers sourcing sustainability content directly from MSCI	Less than 1% consolidated revenue; partnership exploration with MSCI	Elevated U.S. govt attrition; ESG effects persist	Ongoing headwind

Management Commentary

“Record $1.9 billion in first quarter '25 revenue… adjusted diluted EPS grew 14% to $3.83” – Rob Fauber, CEO .
“Private credit emerging as a tailwind… 143 private credit-related deals… 20% of SF revenue growth attributable” .
“First agentic AI sale in KYC… multimillion-dollar contract… AI screening agent helps onboard customers more accurately and quickly” .
“We’re updating and widening full-year guidance… adjusted diluted EPS $13.25 to $14.00… 9% YoY growth at the midpoint” – CFO .
Updated macro assumptions include lower GDP, wider spreads, and revised issuance outlook reflecting April volatility .

Q&A Highlights

Issuance/M&A assumptions: Guidance reduced on tariff-driven uncertainty; announced M&A assumption cut to ~15% vs prior ~50%; visibility limited given April softness; bank loan repricings dilute transactional revenues .
MIS revenue vs issuance: Positive mix from pricing (3%–4%), lower repricing share, recurring monitoring up mid-single digits; explains revenue stability vs issuance declines .
Expense and margin levers: Efficiency program, incentive comp rebased toward target for 2025 ($400–$425M); MA margin to ramp into mid-30s over year; MIS margin 61%–62% despite conservatism .
MSCI partnership for private credit risk: Independent EDF-X credit scoring for private credit investors; long-term opportunity to build benchmarks/indices; revenue model undisclosed .
KYC demand in corporates: Tariff uncertainty catalyzing supplier risk/KYC use cases; MAKS corporate platform launched with 150 quoted opportunities .

Estimates Context

Q1 2025 results beat consensus: EPS $3.83 vs $3.54* and revenue $1,924M vs $1,877M*, with 20 EPS estimates and 18 revenue estimates supporting consensus breadth. Surprise drivers: MIS transactional strength, structured finance refinancing, and operating leverage .
Implications: Near-term estimate revisions likely to lower FY25 revenue/EPS given widened/lowered guidance and macro assumptions (GDP, spreads, issuance), though medium-term narrative (private credit, AI-enabled solutions) remains constructive .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Quality beat on EPS/revenue with margin expansion; however, management prudently lowered FY25 guidance amid April issuance weakness and tariff uncertainty—expect estimates to reset lower near term .
MIS remains the engine: record revenue, 66% adjusted margin, supportive pricing/mix and recurring monitoring fees; watch bank loan repricing mix and M&A trajectory into 2H .
MA’s recurring-heavy model provides resilience: ARR +9%, recurring 96%; KYC and Insurance are growth leaders; monitor U.S. government attrition and ESG transitions’ impact on D&I .
Private credit is a tangible tailwind: expanding flow across FIG, ABS/CLO, fund finance; MSCI partnership enhances analytics for LPs—potential multi-year revenue stream across MIS and MA .
AI commercialization progressing: first agentic AI KYC deployment, Research Assistant adoption; internal AI delivering productivity gains—supports MA margin expansion trajectory .
Cash returns intact despite FCF trim: dividend raised to $0.94, buybacks ≥$1.3B maintained; balance sheet capacity with $6.8B debt and undrawn $1.25B revolver .
Trading lens: Near-term volatility from macro/tariff headlines and lowered guide; medium-term thesis anchored in structural drivers (private credit, transition finance, AI, data-center infra) and operating leverage .

Additional Q1 2025 Materials

Earnings press release and 8-K (Item 2.02) furnished April 22, 2025, with full tables and FY25 outlook; teleconference details recorded .
Other Q1 press releases include date set for earnings release/teleconference (Apr 8) and investor conference appearances; CAPE Analytics acquisition announced Jan 13, 2025 (closed in Q1) .

MOODYS CORP /DE/ (MCO)·Q1 2025 Earnings Summary