Moody’s (MCO) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 revenue of $1.81 billion, up 23% year-over-year, with strong growth in both Moody's Investors Service (MIS, +41%) and Moody's Analytics (MA, +7%).

• Adjusted diluted EPS rose 32% to $3.21, and diluted EPS increased 39% to $2.93; net income for Q3 was $534 million, up 37%.

• Operating margin expanded to 40.7% (up 440 bps), and adjusted operating margin reached 47.8% (up 320 bps), driven by robust MIS revenue.

• Growth was supported by favorable market conditions, strong demand for ratings, and high recurring revenue in MA (95% of MA revenue, 93% retention rate).

• Strong secular and cyclical tailwinds, including high refinancing needs and M&A activity, are expected to support future growth.

Financial highlights

• Q3 2024 revenue: $1.81 billion (+23% YoY); Q3 net income: $534 million (+37% YoY); Q3 diluted EPS: $2.93 (+39% YoY); adjusted diluted EPS: $3.21 (+32% YoY).

• MIS revenue up 41% to $982 million; MA revenue up 7% to $831 million; MA ARR grew 9% to $3.15 billion.

• MIS transactional revenue surged 70%, outpacing a 51% increase in issuance volume.

• Free cash flow for the first nine months: $1.92 billion (+30% YoY); full-year guidance raised to ~$2.3 billion.

• Adjusted operating margin: 47.8% (company), 59.6% (MIS), 30.3% (MA); effective tax rate for Q3: 24.0%.

Outlook and guidance

• Raised full-year 2024 adjusted diluted EPS guidance to $11.90–$12.10; diluted EPS expected at $10.85–$11.05.

• Revenue expected to grow in the high-teens percent range for 2024; adjusted operating margin guidance at 47–48%.

• MIS revenue growth guidance raised to high-twenties percent; MA revenue expected to grow at a high-single-digit percent rate.

• Free cash flow projected at approximately $2.3 billion for the year; share repurchases for 2024 expected to be ~$1.3 billion.

• Expect mid-30% range issuance growth for the full year, with Q4 issuance decline revised to mid-single digits.