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MOODYS CORP /DE/ (MCO)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: Revenue topped $2.01B (+11% YoY), adjusted operating margin expanded 510 bps to 52.9%, and adjusted EPS rose 22% to $3.92; MIS set a third straight >$1B quarter while MA margin expanded to 34.3% .
  • Broad-based beats vs S&P Global consensus: Q3 revenue $2.007B vs $1.948B*, adjusted EPS $3.92 vs $3.68*, and EBITDA $1.064B vs $0.973B*; Q1 and Q2 also beat on revenue, EPS, and EBITDA* (see tables). Values retrieved from S&P Global.
  • Guidance raised: 2025 revenue growth to high-single-digit; operating margin to 43–44%; adjusted operating margin ~51%; EPS to $13.15–$13.40; adjusted EPS to $14.50–$14.75; FCF to ~$2.5B; buybacks “at least $1.5B” (up from $1.3B) .
  • Capital returns/catalysts: new $4B repurchase authorization; Q3 buybacks of 1.0M shares at $503.66; dividend declared $0.94; debt $7.0B; ETR refined to 22–23% with a Q4 one-time 200 bps benefit fully offset in net income/EPS .

What Went Well and What Went Wrong

  • What Went Well

    • “We exceeded $2 billion in quarterly revenue for the first time ever” and raised full-year outlook across most metrics, demonstrating operating leverage (adj. op margin ~53%) .
    • MIS revenue +12% YoY with strength in leveraged finance, bank issuance, CLOs, and U.S. public finance; third consecutive >$1B quarter and all-time record .
    • MA margin execution: adjusted margin 34.3% (+400 bps YoY); CFO raised full-year MA margin guidance to ~33% on efficiency wins .

  • What Went Wrong

    • Investment Grade revenue declined YoY vs a very strong prior-year comp; MIS transaction revenue lagged issuance due to lower-fee repricings .
    • MA transactional revenue −19% as mix shifts toward subscriptions; some earlier cancellations in Data & Info and U.S. government/ESG attrition persisted into 2025 context .
    • YTD operating cash flow and FCF trended lower vs prior year due to higher tax and incentive payments; Q3 ETR 25.4% vs 24.0% prior-year quarter .

Financial Results

Quarterly results vs prior quarters and S&P Global consensus:

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$1,924 $1,898 $2,007
Revenue Consensus Mean ($USD Millions)*$1,877.4*$1,847.5*$1,947.7*
Diluted EPS ($)$3.46 $3.21 $3.60
Adjusted Diluted EPS ($)$3.83 $3.56 $3.92
Primary EPS Consensus Mean ($)*$3.539*$3.389*$3.684*
Operating Margin (%)44.0% 43.1% 45.7%
Adjusted Operating Margin (%)51.7% 50.9% 52.9%
EBITDA ($USD Millions)*$996.0*$968.0*$1,064.0*
EBITDA Consensus Mean ($USD Millions)*$941.7*$912.7*$972.7*

Notes: *Values retrieved from S&P Global.

Q3 YoY comparison (selected):

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$1,813 $2,007
Diluted EPS ($)$2.93 $3.60
Operating Margin (%)40.7% 45.7%
Adjusted Operating Margin (%)47.8% 52.9%

Segment performance (revenues by line, $USD Millions):

SegmentQ1 2025Q2 2025Q3 2025
MA – Decision Solutions$405 $413 $424
MA – Research & Insights$236 $249 $252
MA – Data & Information$218 $226 $233
MIS – Corporate Finance$564 $512 $576
MIS – Structured Finance$138 $135 $146
MIS – Financial Institutions$191 $191 $208
MIS – Public, Project & Infrastructure$163 $162 $161
MIS – Other$9 $10 $7

KPIs and mix:

KPIQ1 2025Q2 2025Q3 2025
MA ARR – Total ($USD Millions)$3,266 $3,297 $3,361
• Banking ARR$453 $456 $466
• Insurance ARR$609 $616 $628
• KYC ARR$393 $395 $407
Company Mix: Transaction/Recurring ($MM)$769 / $1,155 $699 / $1,199 $787 / $1,220

Guidance Changes

MetricPeriodPrevious Guidance (Jul 23, 2025)Current Guidance (Oct 22, 2025)Change
MCO Revenue GrowthFY 2025Mid-single-digit increase High-single-digit increase Raised
Operating MarginFY 202542%–43% 43%–44% Raised
Adjusted Operating MarginFY 202549%–50% ~51% Raised
Diluted EPS ($)FY 2025$12.25–$12.75 $13.15–$13.40 Raised
Adjusted Diluted EPS ($)FY 2025$13.50–$14.00 $14.50–$14.75 Raised
Operating Cash Flow ($B)FY 2025$2.65–$2.85 ~ $2.85 Raised
Free Cash Flow ($B)FY 2025$2.30–$2.50 ~ $2.50 Raised
Share RepurchasesFY 2025≥ $1.3B ≥ $1.5B Raised
Effective Tax RateFY 202523%–25% 22%–23% (Q4 ~200bps one-time benefit fully offset) Lowered
MA RevenueFY 2025High-single-digit increase NC Maintained
MA Adjusted MarginFY 202532%–33% ~33% Maintained
MIS RevenueFY 2025Low- to mid-single-digit increase High-single-digit increase Raised
MIS Adjusted MarginFY 202561%–62% 63%–64% Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Private CreditQ1: 143 private-credit deals; 20% of SF growth; partnership with MSCI; first-time mandates up 20% . Q2: revenues +75% YoY; ~25% of FTMs; outperformance vs issuance .Q3: private credit-related deals +~70%; revenues +60% across MIS lines; more public refis from private due to ~200–400 bps savings .Strengthening tailwind
AI/GenAI commercializationQ1: Research Assistant uplift; new AI products (credit memo, EWS, KYC agent); 12+ products enabled . Q2: 40% of ARR AI-enabled; $~200M ARR from AI adopters growing 2x MA; Microsoft primary ops data partner .Q3: expanding with Salesforce Agentforce 360; 50+ domain agents; agentic AI solutions; MA AI programs driving margin .Broadening deployment
Data center/digital infra financingQ1: early-stage large CMBS and ABF activity for data centers .Q3: rated first-of-its-kind >$1B data center securitization; largest Asian corp bond (~$18B) for data center investment .Accelerating deal flow
MA margin trajectoryQ1: guide 32%–33% with efficiencies . Q2: 32.1% (+360 bps YoY), reaffirm .Q3: 34.3% (+400 bps YoY); guide ~33% .Ahead of plan
Macro/Issuance outlookQ1: widened issuance range; tariffs/headline risk . Q2: cautious optimism; mix tailwinds (CLOs, CMBS, IG) .Q3: robust pipeline; tight spreads; refi walls >$5T over 4 years; 2026 viewed constructive with M&A tailwind .Improving setup

Management Commentary

  • “We exceeded $2 billion in quarterly revenue for the first time ever… adjusted diluted EPS of $3.92… more than doubled from the same quarter three years ago” (CEO) .
  • “MA margin improvement ahead of our plans… increasing full-year margin outlook for MA to ~33%” (CEO) .
  • “We’re raising our guidance, most notably… adjusted diluted EPS to $14.50–$14.75, which represents 17% year-over-year growth at the midpoint” (CFO) .
  • “Private credit… grew over 60% in the third quarter across multiple MIS business lines” (CEO) .
  • “We are embedding our data and analytics within Salesforce’s Agentforce 360… and making our agentic AI sales tool available on Agent Exchange” (CEO) .

Q&A Highlights

  • Minimal issuance pull-forward; spec-grade more prone than IG; CLO strength expected to persist into 2026; 2026 overall setup has “more tailwinds than headwinds” with M&A and Fed easing potential .
  • KYC data moat: Orbis (derived, normalized), risk-relevant/PEP datasets (RDC heritage), AI-curated news, and unique ownership hierarchies underpin differentiation .
  • Refunding walls: article cited subset; broader four-year walls rising; shorter average tenors supportive beyond four years .
  • Private credit: limited direct lending ratings exposure but strong fund finance/BDC/ABF activity; investor demand for third-party assessments supports MSCI partnership .
  • MA sales cycles slightly longer but larger deals; strong banking demand (CreditLens low/mid-teens growth); insurance in digestion phase after large migrations; pipeline healthy .

Estimates Context

Actuals vs S&P Global consensus:

MetricQ1 2025Q2 2025Q3 2025
Revenue Actual vs Consensus ($MM)*$1,924 vs $1,877.4$1,898 vs $1,847.5$2,007 vs $1,947.7
EPS (Adj) Actual vs Primary EPS Consensus ($)*$3.83 vs $3.539$3.56 vs $3.389$3.92 vs $3.684
EBITDA Actual vs Consensus ($MM)*$996.0 vs $941.7$968.0 vs $912.7$1,064.0 vs $972.7

Notes: *Values retrieved from S&P Global.

Implications: All three quarters beat across revenue, EPS, and EBITDA, with Q3 delivering the largest EBITDA upside, aided by a favorable MIS mix and margin expansion .

Key Takeaways for Investors

  • Strong beat-and-raise quarter anchored by MIS leverage, constructive issuance, and deep-current demand (private credit, data centers, CLOs) .
  • Operating leverage is reasserting: adjusted operating margin reached 52.9% in Q3 as MA margin expansion compounds alongside MIS scale .
  • Forward setup remains favorable: robust issuance pipeline, tight spreads, growing refi walls, and rising M&A indicators (record RAS revenue) .
  • Structural tailwinds in MA (AI-enabled workflows, KYC expansion beyond FS, climate and specialty risk) support ARR growth with improving margin quality .
  • Capital deployment accelerates with a new $4B buyback authorization and higher 2025 repurchases guidance, providing downside support .
  • Watch risks: tariff/trade headlines, potential spread widening, and Q4 seasonality; management flagged uncertainty bands but still raised 2025 guidance .
  • Into 2026, management sees more tailwinds than headwinds, especially from M&A and digital infrastructure financing themes .

Additional Details and Data Points

  • Q3 revenue +11% YoY; MA +9%, MIS +12%; MA recurring is 96% of revenue (8% OC CAGR ARR growth) .
  • Q3 MIS adjusted margin 65.2% (+560 bps YoY); MA adjusted margin 34.3% (+400 bps YoY); MCO adjusted margin 52.9% (+510 bps YoY) .
  • Dividend $0.94 declared; shares outstanding 178.4M; repurchased 1.0M shares @ $503.66; debt $7.0B; undrawn $1.25B revolver .
  • Macro outlook updated: higher U.S./global GDP ranges; global MIS-rated issuance assumption shifted from decline to mid-single-digit increase .