Moody’s Corporation (NYSE: MCO) has announced results for the third quarter of 2021 and updated its full year 2021 outlook.Moody’s Corporation 3Q 2021 revenue of $1.5 billion, up 13% from 3Q 2020

  • Moody’s Investors Service revenue of $925 million, up 12%; Moody’s Analytics revenue of $601 million, up 13%
  • 3Q 2021 diluted EPS of $2.53, up 2% from 3Q 2020; adjusted diluted EPS of $2.69, flat compared to the prior-year period
  • FY 2021 diluted EPS and adjusted diluted EPS guidance ranges raised and narrowed to $11.65 to $11.85 and $12.15 to $12.35, respectively

“In the third quarter, Moody’s delivered impressive double-digit revenue growth and invested significantly in its capabilities and product development in order to better serve a number of high-growth markets,” said Rob Fauber, President and Chief Executive Officer of Moody’s. “As a result of our robust year-to-date performance, we now project Moody’s full year 2021 revenue to increase in the low-teens percent range and are raising and narrowing our full year adjusted diluted EPS guidance range to $12.15 to $12.35.”

Third Quarter Revenue Up 13%

Moody’s Corporation reported revenue of $1.5 billion for the three months ended September 30, 2021, up 13% from the prior-year period. Foreign currency translation favorably impacted Moody’s revenue by 1%.

Moody’s Investors Service (MIS) Third Quarter Revenue Up 12%

Moody’s Analytics (MA) Third Quarter Revenue Up 13%

Revenue for MA in the third quarter of 2021 was $601 million, up 13% from the prior-year period. Recurring revenue grew 18% and comprised 94% of total MA revenue, up from 90%. Organic MA revenue was $573 million, up 8%, and excluded the impact of acquisitions completed in the prior twelve months. Foreign currency translation favorably impacted total MA revenue by 1%.

Third Quarter Operating Expenses and Operating Income

Third quarter 2021 operating expenses for Moody’s Corporation totaled $850 million, up 19% from the prior-year period. Approximately fifteen percentage points of this increase were attributable to operational and transaction-related costs associated with recent acquisitions, including RMS, as well as higher incentive and stock-based compensation accruals and a $16 million charitable contribution via The Moody’s Foundation. Organic strategic investments, as well as hiring and annual salary increases further elevated expenses by 7 percentage points, but were partially offset by ongoing efficiency initiatives. Foreign currency translation unfavorably impacted operating expenses by 1%.

Operating income of $676 million was up 5%. Adjusted operating income of $737 million was up 2%, and excluded depreciation and amortization, as well as the prior-year period’s restructuring-related charges. The impact of foreign currency translation was negligible for both operating income and adjusted operating income. Moody’s operating margin was 44.3% and the adjusted operating margin was 48.3%. The MIS adjusted operating margin was 60.0% and the MA adjusted operating margin was 26.0%.

Moody’s effective tax rate for the third quarter of 2021 was 23.4%, up from 22.0%. This increase was primarily due to a tax benefit associated with a non-U.S. corporate reorganization in 2020 that did not recur in 2021.

Source:  Moody’s Earnings Release