Moody’s Corporation Q1 2022 Revenue Down 5%

Moody’s Corporation 1Q 2022 revenue of $1.5 billion, down just 5% from record 1Q 2021, as its integrated risk assessment offerings provide increased value during uncertain times
Moody’s Investors Service revenue of $827 million, down 20%, on rated issuance decline of 25%; Moody’s Analytics revenue grew 23% to $695 million, fifth consecutive quarter of double-digit growth

1Q 2022 diluted EPS of $2.68, down 31% from 1Q 2021; adjusted diluted EPS¹ of $2.89, down 29%

FY 2022 diluted EPS and adjusted diluted EPS¹guidance ranges reduced to $9.85 to $10.35 and $10.75 to $11.25, respectively

“Moody’s trusted insights and breadth of integrated risk assessment solutions are increasingly relevant in times of heightened uncertainty and market volatility,” said Rob Fauber, President and Chief Executive Officer of Moody’s. “Growth in our KYC solutions and credit research led to another impressive quarter in Moody’s Analytics. This increased demand demonstrates the benefit of MA’s highly recurring revenue business model, which balances the more cyclical nature of Moody’s Investors Service. While we are focused on strong execution across the business, as a result of MIS’s first quarter performance and our expectation for continued market volatility, we have lowered our full year 2022 adjusted diluted EPS guidance range to $10.75 to $11.25.”

Moody’s Corporation reported revenue of $1.5 billion for the three months ended March 31, 2022, down 5% from the prior-year period. Foreign currency translation unfavorably impacted Moody’s revenue by 2%.

Moody’s Investors Service (MIS) First Quarter Revenue Down 20%

Revenue for MIS in the first quarter of 2022 was $827 million, down 20% from the prior-year period, as geopolitical concerns, rising yields and elevated market uncertainty adversely affected issuance in all asset classes. Foreign currency translation unfavorably impacted MIS revenue by 1%.

Corporate finance revenue was $417 million, down 31%, largely due to the decline in leveraged finance issuance following a record prior-year period. Additionally, while global investment grade activity slowed in the quarter, there was a notable rebound in March compared to the first two months of the year.

Financial institutions revenue was $131 million, down 19%. This was primarily due to a decline in opportunistic issuance from infrequent U.S. banks and insurers on widening spreads and increased benchmark rates.

Public, project and infrastructure finance revenue was $123 million, down 14%. This reflected lower infrastructure finance supply as a result of high levels of cash on issuers’ balance sheets, combined with challenging market conditions.

Structured finance revenue was $144 million, up 24%. This was driven by both higher commercial and residential mortgage-backed security issuance, offsetting a decline in collateralized loan obligation refinancing activity.

Moody’s Analytics (MA) First Quarter Revenue Up 23%

Revenue for MA in the first quarter of 2022 was $695 million, up 23% from the prior-year period. Annualized Recurring Revenue² (ARR) as of March 31, 2022 was $2.6 billion, up 25% as compared to March 31, 2021. Recurring revenue comprised 94% of total MA revenue, up from 92% in the first quarter of 2021. Both organic revenue¹ and organic ARR², which excluded the impact of acquisitions completed in the prior twelve months, grew 9% each. Foreign currency translation unfavorably impacted both total and organic MA revenue by 2% each.

Decision Solutions (DS) revenue was $334 million, up 48%. Organic DS revenue¹ was $257 million, up 14%. Growth was led by KYC and Compliance offerings, and further supported by demand for risk and finance software solutions.

Research & Insights (R&I) revenue, which is 100% organic, was $183 million, up 7%, driven by demand for credit research, analytics and models.

Data & Information (D&I) revenue was $178 million, up 6%. Organic D&I revenue¹ was $176 million, up 5%, primarily driven by new sales of company data and ratings feeds. Foreign currency translation unfavorably impacted total D&I revenue by 4%.

First quarter 2022 operating expenses for Moody’s Corporation totaled $866 million, up 16% from the prior-year period. Operational and integration-related costs associated with recent acquisitions contributed approximately 13 percentage points of growth. Foreign currency translation favorably impacted operating expenses by 2%.

Operating income of $656 million was down 23% and adjusted operating income¹ of $734 million, which primarily excluded depreciation and amortization expenses, declined 20%. Moody’s operating margin was 43.1% and the adjusted operating margin¹ was 48.2%. The MIS adjusted operating margin was 58.6% and the MA adjusted operating margin was 32.1%.