AI, credit ratings & analytics power Moody’s next growth phase

Overview

Moody’s Corporation closed 2024 on a strong note, delivering 20% full-year revenue growth, driven by record issuance volumes and sustained demand for its analytics and risk management solutions. The company reported a 33% revenue increase in its Moody’s Investors Service (MIS) segment and 8% revenue growth in Moody’s Analytics (MA).

President & CEO Rob Fauber highlighted Moody’s strategic positioning in data, analytics, and AI-driven solutions, stating: “We sit at the intersection of deep currents transforming the way companies do business and markets function.”

Q4 2024 vs. Q4 2023:

• Total revenue increased to $1.7bn (+13% YoY), fueled by strong issuance volumes and growing demand for workflow solutions.
  • MA revenue was $863m (+8% vs. Q4 2023), supported by 11% growth in Decision Solutions, with notable contributions from Banking (+11%), Insurance (+9%) and KYC (+15%).
  • MIS revenue rose to $809m (+18% YoY), reaching decades-high fourth-quarter issuance levels.
• GAAP diluted EPS was $2.17 (+17% YoY), reflecting strong revenue and cost discipline, while adjusted diluted EPS was $2.62 (+20% YoY), exceeding expectations.
• Operating margin recorded a value of 33.6%, with adjusted margin at 43.8% (+120 bps vs. 2023).
• Free cash flow reached $635m (+80% YoY), reflecting strong operating cash flow and disciplined capital allocation.

Full-Year 2024 highlights:

• Total revenue recorded a value of $7.1bn (+20% YoY), surpassing expectations with growth in both MIS and MA.
  • MA revenue was $3.3bn (+8% YoY), driven by 9% ARR growth and strong adoption in banking and insurance.
  • MIS revenue increased to $3.8bn (+33% YoY), fueled by high investment-grade and leveraged finance issuance. MIS transactional revenue rose +54% YoY, outpacing 42% issuance growth, underscoring Moody’s leadership in credit ratings.
• Net income reached $2.06bn (+28% vs. 2023), with adjusted diluted EPS of $12.47 (+26% vs. 2023), reflecting operating leverage and margin expansion.
• Operating margin was 40.6%, with an adjusted margin of 48.1% (+420 bps YoY).
• Free cash flow also saw a significant improvement, reaching $2.5bn (+34% YoY), reflecting the company’s very good profitability and liquidity. The company also returned $1.9bn to shareholders (+81% vs. 2023), via dividends and share repurchases, highlighting a commitment to capital efficiency.

Moody’s anticipates another year of strong performance in 2025, driven by sustained growth in credit markets, AI-powered analytics, and enterprise solutions. Total revenue is expected to grow in the high-single-digit percentage range, supported by continued MIS issuance activity and expanding MA subscription adoption. Adjusted diluted EPS is forecasted to range between $14.00 – $14.50, reflecting low-to-mid teens percentage growth, while operating margin is projected at ~43%, with an adjusted margin of ~50%, highlighting efficiency improvements and cost discipline. Free cash flow is expected to reach $2.4bn – $2.6bn, with at least $1.3bn allocated to share repurchases, reinforcing Moody’s commitment to shareholder returns. Moody’s Analytics ARR is anticipated to grow in the high-single-digit to low-double-digit percentage range, driven by strong demand for risk and compliance solutions. Additionally, Moody’s Investors Service revenue is forecasted to grow in the mid-to-high-single-digit percentage range, benefiting from global credit issuance trends and favorable capital markets conditions.

The publication of the quarterly and annual results did not bring any major surprises to the market, with MCO’s share price continuing its usual upward trend, gaining a steady +3.5% this week. Year-to-date, MCO is trading at a +40% higher price, once again proving the company’s potential and its important position on the market.

Author: Andreea-Roxana Danci