Moody’s reported revenue of $640.8 million for the three months ended June 30, 2012, up 6% from $605.2 million for the second quarter of 2011.  Operating income grew only by 3%.

Global revenue for Moody’s Investors Service (MIS) for the second quarter of 2012 was $441.2 million, about flat to the prior-year period.

Global revenue for Moody’s Analytics (MA) for the second quarter of 2012 was $199.6 million, up 19% from the second quarter of 2011. Excluding the impact of foreign currency translation, revenue growth was 21 percent. If this double digit growth rate continues Moody’s MA may soon be larger than MIS.

McGraw-Hill Companies, the parent of S&P, is getting ready to spin-off the education division by the year end.  One company will be known as McGraw-Hill Financial, the other company will become a separate entity, to be either sold or launched as a listed company:  McGraw-Hill Education.

The corporation is undergoing a corporation wide massive cost trimming exercise and made its Q2 growth numbers on operating income and EPS only with cost reductions, rather than by an increase in revenues.  With Moody’s revenues outpacing those of S&P the latter may be too preoccupied with cost cutting rather on sales.

McGraw-Hill Financial grew at 6% and similar to the Moody’s results Analytics saved the day. The following business units will be part of McGraw-Hill Financial:

S&P Ratings Services: Revenue increased 1% to $483 million and operating profit decreased 2% to $208 million in the second quarter compared to 2Q.  Domestic revenue increased 7% but was largely offset by a decrease of 6% in international revenue. Foreign exchange rates negatively impacted international revenue by $13 million but had a negligible impact on profit. International revenue represented 46% of S&P Ratings’ total second quarter revenue.

S&P Capital IQ / S&P Indices: Revenue increased 10% to $366 million and adjusted operating profit increased 17% to $115 million.

Commodities & Commercial: Revenue increased 9% to $241 million and operating profit grew by 45% to $71 million in the second quarter.

  • Commodities’ revenue grew 15% to $117 million.
  • Commercial’s revenue was down 1% as gains by J.D. Power and Associates, which is on track to record its best year ever, were offset by modest declines at McGraw-Hill Construction and Aviation Week.

Moody’s and McGraw-Hill Company stocks rose following the earnings releases.

We wrote on July 3, 2012 that analytics and platforms are becoming key differentiators in business information services.

The Q2 results of Moody’s and S&P provide the evidence how important these services have become in propelling growth:  Moody’s Analytics grew 19% while rating services revenues were flat.  S&P’s Capital IQ and Indices grew by 17% while S&P’s ratings increased only by 1%.

Source:  Moody’s and McGraw-Hill Companies Press Releases