Moody’s Corporation reported revenue of $1.1 billion for the three months ended September 30, 2018, up 2% from the prior-year period.

U.S. revenue was $559.6 million, down 5%, and non-U.S. revenue was $521.2 million, up 10%. Revenue generated outside the U.S. constituted 48% of total revenue, up from 45% in the prior-year period. The impact of foreign currency translation on Moody’s revenue was negligible.

Operating expenses totaled $614.0 million, approximately flat to the prior-year period. Operating income was $466.8 million, up 4% from the third quarter of 2017. Adjusted operating income, which excludes depreciation and amortization, as well as non-recurring acquisition and integration expenses associated with the Bureau van Dijk acquisition (“Acquisition-Related Expenses”), was $514.2 million, up 3% from the prior-year period. Operating margin for the third quarter was 43.2% and the adjusted operating margin was 47.6%.

Raymond McDaniel:  “Moody’s third quarter performance reflected strong growth from Moody’s Analytics, partially offset by a decline at Moody’s Investors Service, as non-financial corporate debt issuance slowed versus the record level in the prior-year period,” said Raymond McDaniel, President and Chief Executive Officer of Moody’s. “We are reducing our outlook for full year diluted EPS to a range of $6.95 to $7.10 and adjusted diluted EPS to a range of $7.50 to $7.65, primarily reflecting our expectation for continued lighter debt issuance into the fourth quarter. In response, we intend to undertake cost management activities, which will result in a fourth quarter restructuring charge of $30 to $40 million and an aggregate charge through the first half of 2019 of $45 to $60 million. We expect this to result in incremental annualized savings of $30 to $40 million going forward.”

“We are just over a year into the Bureau van Dijk acquisition, and the business continues to perform well. The revenue growth is on track to meet our 2018 forecast, while the direct adjusted operating margin for the third quarter and year-to-date was in line with historical business performance at 49% and 44.3%, respectively.

We are particularly pleased with Bureau van Dijk’s very strong sales results. On an FX-neutral basis, sales were up 14% year-to-date, with 21% growth in the third quarter. This acceleration reflects strong demand for Bureau van Dijk’s product and the synergies that we’re realizing as we drive distribution of Bureau van Dijk data to more customers and more markets. Importantly, our success in this area positions us for better revenue growth as we move into 2019.”

MCO THIRD QUARTER REVENUE UP 2%

Moody’s Corporation reported revenue of $1.1 billion for the three months ended September 30, 2018, up 2% from the prior-year period.

U.S. revenue was $559.6 million, down 5%, and non-U.S. revenue was $521.2 million, up 10%. Revenue generated outside the U.S. constituted 48% of total revenue, up from 45% in the prior-year period. The impact of foreign currency translation on Moody’s revenue was negligible.

Segment Results

Moody’s Investors Service (MIS) Third Quarter Revenue Down 7%:

Revenue for MIS for the third quarter of 2018 was $644.8 million, down 7% from the prior-year period. U.S. revenue was $384.7 million, down 10%, and non-U.S. revenue was $260.1 million, down 2%. The impact of foreign currency translation on MIS revenue was negligible.

  • Corporate finance revenue was $296.1 million, down 15% from the prior-year period. This result primarily reflected a decline in U.S. investment grade and global high yield bond issuance activity. U.S. and non-U.S. corporate finance revenues were down 21% and 4%, respectively.
  • Structured finance revenue was $125.4 million, down 2% from the prior-year period. This result reflected lower U.S. CMBS rated issuance, partially offset by contribution from collateralized loan obligations. U.S. structured finance revenue was down 9%, while non-U.S. revenue was up 13%.
  • Financial institutions revenue was $119.5 million, up 17% from the prior-year period. This result reflected strong issuance activity primarily from M&A-related financing in the U.S. insurance sector. U.S. financial institutions revenue was up 48%, while non-U.S. revenue was down 3%.
  • Public, project and infrastructure finance revenue was $99.0 million, down 9% from the prior-year period. This result primarily reflected a decline in global infrastructure and project finance issuance. U.S. and non-U.S. public, project and infrastructure finance revenues were down 7% and 13%, respectively.

Moody’s Analytics (MA) Third Quarter Revenue Up 18%

Revenue for MA for the third quarter of 2018 was $436.0 million, up 18% from the prior-year period. U.S. revenue was $174.9 million, up 9%, and non-U.S. revenue was $261.1 million, up 26%. Foreign currency translation unfavorably impacted MA revenue by 1%. Organic MA revenue for the third quarter of 2018, which excluded Omega Performance and included Bureau van Dijk revenue as of August 11th, was $399.1 million, up 8% from the prior-year period.

  • Research, data and analytics (RD&A) revenue was $282.6 million, up 29% from the prior-year period. U.S. and non-U.S. RD&A revenues were up 9% and 50%, respectively. Organic RD&A revenue, which included Bureau van Dijk revenue as of August 11th, was $246.1 million, up 13%, driven by strength in sales of credit research and ratings data feeds.

Enterprise risk solutions (ERS) revenue was $113.0 million, approximately flat to the prior-year period. This result reflected strong growth in loan origination solutions and the timing of revenue recognition under the new revenue accounting standard, ASC-606, offset by declines in software licenses and implementation projects as the business continues to transition to subscription products sold on a software-as-a-service basis. U.S. ERS revenue was up 9%, while non-U.S. ERS revenue was down 4%.

Professional services revenue was $40.4 million, up 7% from the prior-year period. U.S. and non-U.S. professional services revenues were up 11% and 5%, respectively.

YEAR-TO-DATE REVENUE UP 11%

Moody’s Corporation reported record revenue of $3.4 billion for the first nine months of 2018, up 11% from the first nine months of 2017. U.S. revenue was $1.8 billion, up 3%, and non-U.S. revenue was $1.6 billion, up 23% from the prior-year period. Foreign currency translation favorably impacted Moody’s revenue by 1%.

MIS revenue totaled $2.1 billion for the first nine months of 2018, up 3% from the prior-year period. U.S. revenue was $1.3 billion, up 1%. Non-U.S. revenue was $847.7 million, up 8%, and represented 40% of MIS revenue, up from 38% in the first nine months of 2017. Foreign currency translation favorably impacted MIS revenue by 1%.

MA revenue totaled $1.3 billion for the first nine months of 2018, up 28% from the prior-year period. U.S. revenue of $513.4 million was up 9%. Non-U.S. revenue was $752.2 million, up 45%, and represented 59% of MA revenue, up from 52% in the first nine months of 2017. Foreign currency translation favorably impacted MA revenue by 2%. Organic MA revenue for the first nine months of 2018, which excluded Omega Performance and included Bureau van Dijk revenue as of August 11th, was $1.1 billion, up 9% from the prior-year period.

Source: Moody’s Earnings Release