Moody's Corporation
MCO · NYSE
Next quarter
Expected to report Feb 17, 2027 — estimated from last year’s reporting date.
Consensus is $3.62 EPS for Dec 2026 across 8 estimates, ranging $3.40 to $4.08.
MCO Sep 2026
- 2.59%
- $4.25
- $4.14
- —
- $2.02B
Reported results
- $2.02B
- 74.10%
- $906.00M
- 44.78%
- $734.00M
- $4.24
Highlights
- EPS and expectations: Adjusted diluted EPS was $4.14, 2.6% below the supplied $4.25 consensus, but up 6% year over year; GAAP diluted EPS was $4.24, up 18%.
- Revenue and margins: Revenue increased 1% year over year to $2.023 billion, while GAAP operating margin fell 90 basis points to 44.8% and adjusted margin declined 30 basis points to 52.6%.
- Analytics recurring growth: Moody’s Analytics revenue grew 3% reported and 8% on an organic constant-currency basis; recurring revenue was 99% of the segment total, and ARR rose 8% to $3.688 billion.
- Ratings’ uneven markets: Moody’s Investors Service revenue declined 1% to $1.087 billion as transaction revenue fell 5%; investment-grade strength was offset by weaker leveraged finance.
- AI and infrastructure: Issuance tied to AI infrastructure and power investment increased about fourfold year over year; first-time rating mandates rose 40% to a five-year quarterly high.
- Cash generation and returns: Nine-month operating cash flow increased 21% to $2.471 billion and free cash flow rose 22% to $2.200 billion; shareholder returns totaled about $3.1 billion year to date.
- Guidance unchanged: Moody’s reaffirmed full-year adjusted diluted EPS guidance of $16.50–$17.00 and GAAP diluted EPS guidance of $16.00–$16.50.
Analysis
Moody’s posted a mixed but resilient Q3: revenue of $2.023 billion rose 1% year over year but was down from $2.19 billion in Q2, while adjusted diluted EPS of $4.14 grew 6% from $3.92 a year ago and missed the supplied $4.25 consensus by 2.6%. The release reports GAAP diluted EPS of $4.24, up 18% year over year, helped by a $115 million divestiture gain and a lower effective tax rate of 24.0% versus 25.4%. Operating income was $906 million, below $917 million last year and $1.05 billion in Q2; adjusted operating margin was 52.6%, down 30 basis points year over year.
The main counterweight to softer ratings transactions was Analytics’ recurring base: MA ARR reached $3.688 billion, up 8%, and recurring revenue represented 99% of segment revenue. MIS revenue slipped 1% as leveraged-finance weakness outweighed investment-grade and infrastructure-related activity; overall rated issuance fell 2% but remained the second-highest third quarter on record. Management reaffirmed full-year guidance, including adjusted EPS of $16.50–$17.00, while expecting Q4 issuance to decline in the mid-teens year over year. Cash generation remained strong, supporting $3.1 billion of shareholder returns year to date.
Earnings and guidance
- Revenue: Consolidated revenue was $2.023 billion, up 1% year over year and 3% on an organic constant-currency basis; it declined from $2.19 billion in Q2.
- Profitability: Operating income was $906 million versus $917 million a year ago and $1.05 billion in Q2. Operating margin was 44.8%, down 90 basis points year over year; adjusted operating margin was 52.6%, down 30 basis points.
- EPS bridge: GAAP diluted EPS of $4.24 compared with $3.60 a year ago and $5.03 in Q2. Adjusted diluted EPS was $4.14 versus $3.92 a year ago; it missed the supplied consensus of $4.25 by 2.6%. The GAAP result included a $115 million gain on the MA Regulatory Solutions divestiture. The 24.0% effective tax rate, down from 25.4%, also reflected tax benefits related to a lapsed statute of limitations and non-U.S. tax items.
- Full-year outlook: Guidance was reaffirmed at high-single-digit revenue growth, 52%–53% adjusted operating margin and $16.50–$17.00 adjusted diluted EPS. The company expects Q4 MIS revenue to decline sequentially with seasonality but grow at a low-single-digit rate year over year; Q4 issuance is forecast to fall in the mid-teens year over year.
Analytics recurring growth
Moody’s Analytics generated $936 million of revenue, up 3% reported and 8% on an organic constant-currency basis. Recurring revenue grew 6% reported and 9% organically, reaching $928 million, or 99% of MA revenue. ARR rose 8% to $3.688 billion, with trailing 12-month retention of 95%. The recurring mix and ARR growth underpinned management’s view that the segment remains on track for its full-year outlook.
Decision Solutions was the clearest growth contributor: organic constant-currency revenue increased 12% and ARR grew 10%. KYC ARR rose 12%, insurance ARR nearly 10%, and banking ARR 8%, including 12% growth in lending. Research and Insights revenue grew 3% against a prior-year comparison that benefited from large on-premise renewal revenue; its ARR increased 6%. Data and Information revenue rose 7% and ARR 7%. MA’s adjusted operating margin expanded 100 basis points to 35.3%, as revenue growth and efficiency measures supported investment while improving profitability. Transaction revenue fell 76%, primarily reflecting the Learning Solutions divestiture and the shift toward recurring sales.
Ratings market mix
MIS revenue declined 1% to $1.087 billion, against a record prior-year comparison, as transaction revenue fell 5% to $714 million. Rated issuance was down 2% year over year at about $1.7 trillion, but remained the second-highest third quarter on record. Revenue performance reflected the mix of issuance: large, frequent investment-grade borrowers and infrastructure-related financing were strong, while leveraged-finance activity moderated.
Corporate Finance revenue fell 8% to $530 million. Investment-grade revenue increased 18% on 16% issuance growth, while high-yield and leveraged-loan transaction revenue fell 40% and 27%, respectively. Other ratings lines were stronger: PPIF revenue rose 11%, Structured Finance 5%, and Financial Institutions 2%. MIS recurring revenue grew 8% to $373 million, supported by new mandates, pricing and growth in monitored credits. MIS adjusted margin was 64.4%, down 80 basis points year over year.
AI and future demand
- Infrastructure financing: Issuance tied to AI infrastructure and power investment increased about fourfold year over year. Management said broadly defined AI-related issuance accounted for a little over half of year-to-date issuance growth and about 40% of ratings revenue growth.
- Mandates and pipeline: First-time rating mandates increased 40% year over year to the highest quarterly total in five years; MIS raised its full-year mandate outlook to 900–950. Management cited more than $5 trillion of U.S. and EMEA refinancing needs over the next four years.
- Analytics adoption: In MA, MCP users more than quadrupled and usage rose more than tenfold over three months. Paying customers for MCP access more than doubled in the quarter, although management described the base as small and monetization as still developing.
- Product examples: Moody’s cited AI-enabled insurance tools, including data processing with about 95% first-pass accuracy, and said KYC agents were growing nearly three times faster than the KYC business overall, from a small base.
Cash and capital returns
- Cash flow: For the first nine months, operating cash flow was $2.471 billion, up 21%, and free cash flow was $2.200 billion, up 22%, primarily reflecting higher operating income in both segments.
- Shareholder returns: Moody’s returned approximately $3.1 billion year to date, comprising $2.6 billion of repurchases and $543 million of dividends. It continued to expect up to $3.0 billion of full-year repurchases.
- Dividend: The board declared a quarterly dividend of $1.03 per share, payable December 11, 2026, to shareholders of record November 20.
