Moody’s Corporation (NYSE:MCO) delivered better-than-expected second-quarter results on Wednesday, powered by strong growth in its analytics division, though shares dipped 0.83% in premarket trading following the release.
The credit ratings and analytics giant posted adjusted earnings per share of $3.56, ahead of the $3.38 average analyst estimate. Revenue also beat expectations, rising to $1.9 billion compared to the $1.85 billion consensus.
Total revenue climbed 4% from the same quarter last year, with the Moody’s Analytics unit leading the charge with 11% year-over-year growth. Meanwhile, the Moody’s Investors Service (MIS) division generated flat revenue of $1.0 billion despite a 12% drop in market issuance volume, benefiting from a favorable revenue mix.
“This past quarter, Moody’s provided the insights and expertise that helped markets make sense of a complex and rapidly changing global landscape,” said Rob Fauber, President and CEO. “We continue to innovate and invest in our business as we capitalize on the deep currents that are driving demand for our solutions.”
Profitability also improved, with Moody’s adjusted operating margin increasing by 130 basis points to 50.9%. The Moody’s Analytics segment delivered particularly strong results, with its margin expanding 360 basis points year-over-year to 32.1%, aided by both top-line growth and cost discipline.
In light of the solid quarter, Moody’s narrowed its full-year adjusted diluted EPS forecast to a range of $13.50 to $14.00, with the midpoint representing 10% growth over 2024. The company also provided updated expectations for issuance trends and revenue growth in its MIS segment.
“We are pleased to report a 4% increase in MCO’s second quarter revenues, driven by strong performance across both our business segments,” said Noémie Heuland, Chief Financial Officer. “This, combined with the significant expansion in our segments’ adjusted operating margins, highlights the success of our strategy and efficiency initiatives.”
Recurring revenue continues to be a key strength for Moody’s, making up 96% of total revenue within the analytics division. Reported recurring revenue rose 12%, while organic growth in constant currency came in at 8%. The firm’s Annualized Recurring Revenue reached $3.3 billion, an 8% gain versus the same period last year.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.