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MOODYS CORP /DE/ (MCO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid top-line and margin performance: Revenue $1.672B (+13% YoY), Adjusted Operating Margin 43.8% (+120 bps YoY), and Adjusted Diluted EPS $2.62 (+20% YoY) .
  • MIS revenue rose 18% to $809M on broad-based issuance; MA revenue grew 8% to $863M with 95% recurring revenue and ARR up 9% to $3.278B .
  • 2025 guidance introduced: revenue up high-single digits, Adjusted Operating Margin ~50%, Adjusted Diluted EPS $14.00–$14.50; MA margin 32–33%, MIS margin 62–63%; dividend raised 11% to $0.94 per share .
  • Strategic catalysts: efficiency program (annualized savings $250–$300M by 2026), continued private credit momentum, and AI-enabled product adoption (Research Assistant, early warning systems) highlighted as durable demand drivers .

What Went Well and What Went Wrong

  • What Went Well

    • Record year: “Revenue grew 20% to over $7 billion... expanded adjusted operating margin by over 400 bps... 26% adjusted diluted EPS growth” (CEO) .
    • MIS strength: Q4 transactional revenue +29% YoY; 2024 MIS adjusted margin reached 60.1% on robust issuance; MIS rated ~$6.2T issuance in 2024 (+42% YoY) without meaningfully increasing analyst staffing (structural leverage) .
    • MA resilience: Recurring revenue +10% in Q4, Decision Solutions ARR +12% led by KYC (+17%), Insurance (+12%) and Banking (+9%); Research Assistant reached 100+ customers in Q4 (CFO) .

  • What Went Wrong

    • EPS seasonality and repricing mix: Q4 Diluted EPS $2.17 and Adjusted Diluted EPS $2.62 declined sequentially from Q3 amid lower revenue cadence and elevated loan repricings constraining transactional revenue despite 42% issuance growth (MIS) .
    • MA transactional headwinds: Banking-related transaction revenue declined (on-prem timing and services shift), widening the gap between ARR growth and revenue growth near term (CFO) .
    • Government/ESG pipeline friction: Data & Information growth impacted by large federal contract renewals at lower values and customers transitioning sustainability content to MSCI, pressuring ARR in H2 (Q3 commentary) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$1,817 $1,813 $1,672
Diluted EPS ($)$3.02 $2.93 $2.17
Adjusted Diluted EPS ($)$3.28 $3.21 $2.62
Operating Margin (%)42.7% 40.7% 33.6%
Adjusted Operating Margin (%)49.6% 47.8% 43.8%
Segment Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
Moody’s Analytics (MA)$802 $831 $863
Moody’s Investors Service (MIS)$1,015 $982 $809
Transaction vs Recurring ($USD Millions)Q2 2024Q3 2024Q4 2024
Transaction Revenue (Company)$731 $701 $527
Recurring Revenue (Company)$1,086 $1,112 $1,145
KPIsQ2 2024Q3 2024Q4 2024
MA ARR ($USD Millions, period-end)$3,105 $3,147 $3,278
MA Recurring Revenue (% of MA)95% 95% 95%
Share Repurchases (Qtr, shares/avg cost)0.7M @ $396.08 0.9M @ $464.77 1.0M @ $477.15
Dividend per share (declared)$0.85 $0.85 $0.94 (+11%)
Total Debt ($USD Billions, YE)——$7.4
Cash & Equivalents ($USD Millions, YE)——$2,408

Non-GAAP adjustments: Q4 adjusted EPS excludes amortization of acquired intangibles ($0.21), restructuring ($0.19), asset abandonment charges ($0.05), and a small investment gain impact (annual) per reconciliation .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth (MCO)FY 2025N/AHigh-single-digit % New
Operating Margin (MCO)FY 2025N/A~43% New
Adjusted Operating Margin (MCO)FY 2025N/A~50% New
Diluted EPS (MCO)FY 2025N/A$12.75–$13.25 New
Adjusted Diluted EPS (MCO)FY 2025N/A$14.00–$14.50 New
Operating Cash FlowFY 2025N/A$2.75–$2.95B New
Free Cash FlowFY 2025N/A$2.40–$2.60B New
Share RepurchasesFY 2025N/AAt least $1.3B New
MA RevenueFY 2025N/AHigh-single-digit % New
MA Adjusted Operating MarginFY 2025N/A32–33% New
MIS RevenueFY 2025N/AMid-to-high-single-digit % New
MIS Adjusted Operating MarginFY 2025N/A62–63% New
Dividend per shareQ1 2025$0.85 (prior quarter) $0.94 Raised 11%
Medium-term Adjusted EPS GrowthMedium-termLow double-digit % (prior target) Low-to-mid-teens % Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Private CreditStrategic focus; partnerships and building coverage; GCR stake increase AUM could reach up to $3T by 2028; ratings role in ecosystem emphasized Nearly 400 private credit-related mandates in 2024; BDC/fund finance momentum; dedicated teams Strengthening demand; growing revenue contribution
AI / GenAI InitiativesLaunched automated credit memo, early warning; expanded Copilot; product roadmap Research Assistant pipeline strong; higher usage/satisfaction; Navigators across 8 solutions Research Assistant reached 100+ customers; AI efficiencies in engineering/sales/support (CFO/MA President) Adoption improving; productivity gains emerging
MIS Issuance & MixRaised 2024 issuance and MIS revenue guidance; pull-forward expected in Q4 Mid-30s issuance growth for 2024; Q4 issuance decline mid-single digits vs PY expected 2024 MIS revenue +33%; Q4 transaction revenue +29% vs 42% issuance due to repricing-heavy bank loans Healthy issuance; mix effects temper transactional revenue
MA ARR & Revenue DynamicsARR +10%; widened ARR guide; transactional revenue down; focus on recurring ARR +9%; D&I impacted by government renewals, MSCI transition; retention ~93% ARR +9% to $3.278B; recurring revenue +10% (95% of MA); KYC ARR +17% Sustainable high-single-digit to low-double-digit ARR
Regulatory/Legal & EfficiencyLegal/regulatory reserve, asset abandonment charges in 2024 Efficiency setup discussed; MIS incentive comp accrual adjustments Efficiency program: $200–$250M restructuring charges by 2026; $250–$300M annualized savings; 2025 opex low-to-mid-single-digit increase Cost discipline intensifying
Climate/Extreme WeatherRMS integration; ARR acceleration; CRE risk tools; partnerships (NASDAQ, Lloyd’s) Debt velocity vs stock of debt; climate risk shaping demand across industries CAPE Analytics acquisition adds address-level risk insights for insurers/banks Expanding capabilities; rising multi-industry demand

Management Commentary

  • CEO: “We grew revenue by 20% to over $7 billion... expanded our adjusted operating margin by over 400 basis points... 26% adjusted diluted EPS growth” .
  • CEO: “We rated nearly $6.2 trillion of issuance in 2024... without meaningfully increasing our analytical staffing levels... maintaining robust controls” .
  • CFO: “For 2025... MCO revenue growth high single digit... Adjusted Operating Margin ~50%... Adjusted diluted EPS $14–$14.5; MIS rated issuance growth low-single digits; MIS margin 62–63%; MA margin 32–33%” .
  • CFO: “Announcing an efficiency program... $200–$250M restructuring charges over 2 years... expected $250–$300M annualized savings upon completion” .
  • CEO: “The transformative power of generative AI... potential unlock for owners of proprietary data and insights” .
  • CEO: “Their [CAPE] AI-powered technology delivers address-level risk insights, a natural complement to our catastrophe models” .

Q&A Highlights

  • MIS margins and mix: Strong leveraged finance and infrequent IG issuers drove favorable mix; Q4 bank loan repricings limited transactional revenue vs issuance growth (55% repricings in bank loans) .
  • ARR vs revenue gap (MA): Near-term headwinds from declining transactional/on-prem revenues; recurring revenue growth tracks ARR over TTM; KYC and Insurance lead ARR growth .
  • Private credit trajectory: Growing BDC/fund finance ratings and private assessments; ratings/independent opinions seen as essential by major market participants .
  • Incentive compensation cadence: 2024 total $507M; Q4 ~$133M; 2025 projected $420–$440M (CFO) .
  • Medium-term targets: Raising adjusted EPS growth to low-to-mid-teens; MA margin expansion to mid-to-high-30s by 2027 driven by platforming and simplification .

Estimates Context

  • Wall Street consensus EPS and revenue estimates for Q4 2024 via S&P Global were unavailable due to access limits; therefore, formal “vs. consensus” comparisons cannot be provided at this time [SPGI tool error].
  • Management noted Q4 MIS adjusted margin exceeded implied guidance and 2024 performance broadly surpassed prior expectations, suggesting potential upward bias to forward estimates in MIS; MA recurring growth remains aligned with ARR, with transactional headwinds moderating over time .

Key Takeaways for Investors

  • MIS operating leverage remains a core compounding engine: FY 2024 MIS adjusted margin 60.1%; 2025 guide 62–63% supports sustained EPS and FCF growth through cycle .
  • MA’s durable ARR (9–10%) underpins high-quality recurring revenue; KYC and Insurance lead growth; AI offerings (Research Assistant, early warning) enhance pricing power and stickiness .
  • Efficiency program provides tangible EPS upside: $250–$300M annualized savings by 2026, with 2025 opex growth held to low-to-mid-single digits despite ongoing investments .
  • Capital returns accelerating: Dividend raised 11% to $0.94 and 2025 share repurchases “at least $1.3B”; robust FCF guidance ($2.40–$2.60B) supports return profile .
  • Strategic positioning across private credit, transition finance, and climate analytics expands TAM and drives multi-year demand across MIS and MA .
  • Near-term trading: Watch issuance cadence and bank loan repricing mix (transaction revenue sensitivity), MA transactional headwinds/ESG pipeline transitions, and AI product adoption milestones as catalysts .

Appendix: Additional Relevant Q4-period Press Releases

  • Chartis RiskTech100: Moody’s ranked #1 for third consecutive year; won 12 category awards (validates MA technology leadership) .
  • Numerated Acquisition: Expands end-to-end lending origination; deepens banking workflow capabilities (Nov 2024) .

Citations:

  • Q4 2024 8-K Earnings Release: .
  • Q4 2024 Earnings Call Transcripts: and alternative version –.
  • Q3 2024 8-K and Call: –, –.
  • Q2 2024 8-K and Call: –, –.
  • Q4-related press: Chartis RiskTech100 ; Numerated acquisition .