Core Viewpoint - Moody's has maintained France's sovereign credit rating at Aa3 but has downgraded the outlook from "stable" to "negative" due to concerns over weakened institutional governance and risks of regression in structural reforms [1] Group 1: Credit Rating Changes - Moody's is the third major international rating agency to adjust France's sovereign credit rating, following Fitch and Standard & Poor's, which downgraded France's rating to "A+" with a stable outlook [1] - The downgrade in outlook reflects concerns about the long-term fragmentation of France's political landscape, which may affect the normal functioning of national institutions [1] Group 2: Fiscal Concerns - Moody's warns that France's fiscal deficit is expected to remain high for an extended period, with projections indicating that the deficit could rise to 5.8% of GDP by 2026 and further to 6.2% in 2027 and 2028, stabilizing around 6.3% in 2029 and 2030 if no policy adjustments are made [1] - The French Minister of Economy and Finance, Roland Lescure, emphasized the necessity for France to reach a compromise on the budget, aiming for a fiscal deficit of 5.4% of GDP by 2025 and below 3% by 2029 [1] Group 3: Legislative Process - The 2026 fiscal bill is currently under review in the National Assembly, with discussions expected to last approximately 70 days before a vote is held in both houses of parliament [2]

Core Insights - The Eurasian Development Bank's report indicates that Kyrgyzstan's debt structure is coordinated and overall manageable [1] - By the end of 2023, Kyrgyzstan's debt-to-GDP ratio is expected to decrease to 49.5%, a reduction of 14.1 percentage points compared to 2020 [1] - Over 80% of Kyrgyzstan's national debt is composed of loans from multilateral development institutions, which feature longer grace periods and lower interest rates [1] - In May 2024, Moody's is expected to upgrade Kyrgyzstan's sovereign credit rating, changing the outlook from "negative" to "stable" [1]

Core Viewpoint - The analyst maintains a buy rating for Moody's Corporation (NYSE: MCO) based on the attractive upside potential over the next two years if the company meets consensus FY28 adjusted EPS expectations [1] Group 1: Investment Philosophy - The investment approach is fundamentally driven, focusing on identifying businesses with potential for scaling and unlocking significant terminal value [1] - Key factors considered include competitive moat, unit economics, reinvestment runway, and management quality, which are essential for long-term free cash flow generation and shareholder value creation [1] - The analyst emphasizes the importance of fundamental research and targets sectors with strong secular tailwinds [1] Group 2: Professional Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds sourced from friends and family [1] - The motivation for writing on Seeking Alpha is to share investment insights and receive feedback from fellow investors [1] - The aim is to help readers focus on the drivers of long-term equity value, with a belief that good analysis should be both analytical and accessible [1]

Core Viewpoint - The analyst maintains a buy rating for Moody's Corporation (NYSE: MCO), anticipating attractive upside potential over the next two years if the company meets consensus FY28 adjusted EPS expectations [1]. Group 1: Investment Philosophy - The investment approach is fundamentally driven, focusing on identifying businesses with potential for scaling and unlocking significant terminal value [1]. - Key factors considered include competitive moat, unit economics, reinvestment runway, and management quality, which are essential for long-term free cash flow generation and shareholder value creation [1]. - The analyst emphasizes the importance of fundamental research and targets sectors with strong secular tailwinds [1]. Group 2: Professional Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds sourced from friends and family [1]. - The motivation for writing is to share investment insights and receive feedback from fellow investors, aiming to help readers focus on long-term equity value drivers [1]. - The analyst believes that good analysis should be both analytical and accessible, contributing value to readers seeking high-quality, long-term investment opportunities [1].

Financial Performance - Revenue for Q3 2025 reached $2,007 million, a 10.7% increase from $1,813 million in Q3 2024[16] - Operating income for Q3 2025 was $917 million, up 24.3% from $738 million in Q3 2024[16] - Net income attributable to Moody's for Q3 2025 was $646 million, representing a 21% increase compared to $534 million in Q3 2024[16] - Earnings per share (EPS) for Q3 2025 were $3.61, a 22.7% increase from $2.94 in Q3 2024[16] - Comprehensive income for the nine months ended September 30, 2025, was $1,951 million, compared to $1,728 million for the same period in 2024[19] - Net income for the nine months ended September 30, 2025, was $1,851 million, an increase from $1,664 million in 2024, representing a growth of 11.2%[24] - Total external revenue of $5,829 million for the nine months ended September 30, 2025, up from $5,416 million in the same period of 2024, representing a growth of 7.6%[52] - Adjusted Operating Income for the three months ended September 30, 2025, was $1,062 million, compared to $867 million for the same period in 2024, reflecting a year-over-year increase of 22.5%[127] Assets and Liabilities - Total assets as of September 30, 2025, were $15,415 million, slightly down from $15,505 million at the end of 2024[22] - Total liabilities decreased to $11,303 million from $11,778 million at the end of 2024, indicating improved financial health[22] - Cash and cash equivalents stood at $2,181 million, down from $2,408 million at the end of 2024[22] - Total shareholders' equity increased to $4,068 million as of September 30, 2024, up from $3,938 million at June 30, 2024, reflecting a growth of 3.3%[25] - As of September 30, 2025, total shareholders' equity stood at $4,112 million, an increase from $3,727 million at the end of 2024[35] - The company reported a total long-term debt of $7,168 million, with a carrying value of $6,983 million after adjustments for unamortized discounts and issuance costs[110] Cash Flow and Investments - Net cash provided by operating activities decreased to $2,043 million in 2025 from $2,164 million in 2024, a decline of 5.6%[24] - Cash flows from investing activities showed a net inflow of $44 million in 2025, a significant recovery compared to a net outflow of $875 million in 2024[24] - The company repurchased treasury shares amounting to $1,170 million in the nine months ended September 30, 2025, compared to $812 million in the same period of 2024[24] - Dividends paid in the nine months ended September 30, 2025, totaled $534 million, an increase from $465 million in 2024, marking a rise of 14.8%[24] Revenue Segmentation - Decision Solutions (DS) revenue for the third quarter of 2025 was $424 million, a 10.7% increase from $383 million in the third quarter of 2024[50] - Research and Insights (R&I) revenue increased to $252 million in Q3 2025 from $235 million in Q3 2024, reflecting a growth of 7.2%[50] - Data and Information (D&I) revenue rose to $233 million in Q3 2025, compared to $213 million in Q3 2024, marking a growth of 9.4%[50] - Corporate Finance (CFG) revenue for the third quarter of 2025 was $576 million, up from $515 million in the same quarter of 2024, an increase of 11.8%[51] - Total ratings revenue for the third quarter of 2025 was $1,091 million, a 12.0% increase from $974 million in Q3 2024[52] Restructuring and Efficiency - The company reported a restructuring charge of $21 million in Q3 2025, up from $6 million in Q3 2024, indicating ongoing adjustments in operations[16] - The Strategic and Operational Efficiency Restructuring Program is expected to yield annualized savings of $250 million to $300 million, with completion anticipated by the end of 2026[96] - Total restructuring expenses for the three months ended September 30, 2025, amounted to $21 million, while for the nine months, it was $81 million, leading to a cumulative expense of $126 million[97] Tax and Compliance - The effective tax rate (ETR) for the nine months ended September 30, 2025, was 24.2%, up from 23.5% in the same period of 2024, reflecting an increase of 0.7%[68] - The company paid $644 million in income taxes for the nine months ended September 30, 2025, compared to $391 million for the same period in 2024, indicating a significant increase of 65%[72] - The company expects to reverse $64 million in reserves for uncertain tax positions in the fourth quarter of 2025 due to a lapse of a statute of limitations[71] Employee and Stock Compensation - The company granted 0.1 million employee stock options with a weighted average grant date fair value of $163.59 per share during the first nine months of 2025[64] - Stock-based compensation expenses rose to $174 million in 2025 from $166 million in 2024, reflecting a growth of 4.8%[24] - The total number of employees decreased by 2% to 15,952 as of September 30, 2025, compared to 15,776 in the previous year[147] Market and Segment Insights - Moody's has two reportable segments: MA (Moody's Analytics) and MIS (Moody's Investors Service), focusing on integrated risk assessment solutions and credit ratings respectively[38] - Moody's Analytics (MA) external revenue increased by 9% to $909 million, driven by sustained demand for insurance and KYC offerings, as well as credit research products[146] - Moody's Investors Service (MIS) external revenue rose by 12% to $1,098 million, supported by strong investor demand and increased leveraged finance issuance[146]

Core Insights - Moody's Corporation has been ranked 1 in the 2026 Chartis RiskTech100® report, marking its fourth consecutive year at the top of the ranking [1] - The RiskTech100® is recognized as a leading guide for risk and compliance technology providers, highlighting Moody's industry-leading solutions and commitment to customers [1] - Moody's sustained leadership is attributed to a clear strategy and dedication to innovation in risk management technology [1]

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Core Insights - Moody's reported third-quarter 2025 adjusted earnings of $3.92 per share, exceeding the Zacks Consensus Estimate of $3.70, with a year-over-year growth of 22.1% [1][8] - The revenue for the quarter was $2.01 billion, surpassing the Zacks Consensus Estimate of $1.96 billion, and reflecting a 10.7% increase year over year [3][8] - The company's liquidity position remained strong, although operating expenses increased, presenting a challenge [1][3] Financial Performance - Net income attributable to Moody's was $646 million or $3.60 per share, up from $534 million or $2.93 per share in the prior-year quarter [2] - Total expenses rose to $1.09 billion, an increase of 1.4% year over year [3] - Adjusted operating income was $1.06 billion, marking a 22.5% increase year over year, with an adjusted operating margin of 52.9%, up from 47.8% a year ago [3] Segment Performance - Moody's Investors Service (MIS) revenues increased by 11.8% year over year to $1.10 billion, driven by strong performance across various finance sectors [4] - Moody's Analytics (MA) revenues rose 9.4% year over year to $909 million, supported by growth in Decision Solutions, Research and Insights, and Data & Information [4] Balance Sheet and Cash Flow - As of September 30, 2025, Moody's had total cash and short-term investments of $2.26 billion, down from $2.97 billion at the end of 2024 [5] - The company reported $7 billion in outstanding debt and $1.25 billion in additional borrowing capacity [5] Share Repurchase Program - In the quarter, Moody's repurchased 1 million shares at an average price of $503.66, with $398 million of share repurchase authorization remaining [6] - The board authorized an additional $4 billion in share repurchase authority with no expiration date [6] Updated Guidance - Moody's updated its 2025 guidance, expecting adjusted earnings of $14.50-$14.75 per share, up from the previous target of $13.50-$14.00 [9] - Revenue growth is projected in the high-single-digit percent range, an increase from the prior mid-single-digit range [9] - The adjusted operating margin is expected to be 51%, up from the previously mentioned 49-50% [10] Strategic Developments - Moody's announced plans to secure majority equity ownership in MERIS, enhancing its presence in the Middle East and Africa [12]

Financial Data and Key Metrics Changes - Moody's achieved record quarterly revenue exceeding $2 billion for the first time, marking an 11% increase from the same quarter last year [6] - Adjusted operating margin reached almost 53%, up over 500 basis points year-over-year, indicating significant operating leverage [6] - Adjusted diluted EPS was $3.92, reflecting a 22% increase from the previous year [6] Business Line Data and Key Metrics Changes - The Ratings business (MIS) reported a 12% revenue growth, surpassing $1 billion in quarterly revenue for the third consecutive quarter [7] - Transaction revenue in MIS rose 14%, with recurring revenue increasing by 8% year-over-year [20] - Moody's Analytics (MA) experienced a 9% revenue growth, with ARR reaching nearly $3.4 billion, up 8% compared to last year [12][26] Market Data and Key Metrics Changes - The issuance pipeline remains robust, with demand for debt financing strong in private credit, AI-powered data center expansion, and infrastructure development [8][9] - Refunding needs over the next four years are projected to exceed $5 trillion, indicating a compound annual growth rate of 10% from 2018 to 2025 [9] - Spec-grade bond maturities in the U.S. increased by over 20%, while EMEA spec-grade bonds and loans rose by approximately 20% [10] Company Strategy and Development Direction - Moody's is focused on investing in scalable solutions across high-growth markets while simplifying its product suite [12] - The company is expanding its presence in emerging markets, including acquiring a majority interest in Meris, a leading ratings agency in Egypt [18] - Partnerships, such as with Salesforce, are crucial for embedding data into partner ecosystems, enhancing customer integration and retention [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the issuance environment heading into 2026, citing tight spreads and potential Fed easing as positive factors [58] - The company anticipates continued growth in private credit and a robust M&A environment, with expectations for M&A issuance to increase by 15% to 20% for the full year 2025 [25][58] - Risks remain, including ongoing tariff negotiations and potential impacts from a prolonged government shutdown [26] Other Important Information - Moody's is increasing its full-year guidance across almost all metrics, reflecting strong growth and operating leverage [5][19] - The company is raising its adjusted diluted EPS guidance to a range of $14.50 to $14.75, implying roughly 17% growth at the midpoint compared to last year [34] - Free cash flow is anticipated to be approximately $2.5 billion, with share repurchase guidance increased to at least $1.5 billion [34] Q&A Session Summary Question: Thoughts on AI in the analytics business - Management indicated that AI is being embedded into various workflow solutions and that they have developed over 50 domain-specific agents leveraging proprietary data [38][40] Question: Impact of third quarter's record issuance - Management noted that pull forward activity is more prevalent in spec-grade than in investment-grade issuers, with healthy maturity walls expected [44] Question: Proprietary data sets in KYC solutions - Management highlighted the unique data sets used in KYC solutions, including Orbis and politically exposed persons data, which provide a comprehensive view of business relationships [47][49] Question: Differences in refi walls portrayal - Management clarified that the article referenced a decline in U.S. spec-grade refi walls, which is a subset of broader maturities, and emphasized the overall favorable refinancing environment [52][54] Question: Outlook for issuance in 2026 - Management expressed optimism about the issuance environment, citing more tailwinds than headwinds, including tight spreads and a robust M&A pipeline [58][60] Question: Concerns about private credit health - Management acknowledged potential credit stress in the private market but emphasized the importance of independent credit assessments and the flow back into public markets [70]

Financial Data and Key Metrics Changes - Moody's achieved record quarterly revenue exceeding $2 billion for the first time, marking an 11% increase from the same quarter last year [6] - Adjusted operating margin reached almost 53%, up over 500 basis points year-over-year, indicating significant operating leverage [6] - Adjusted diluted EPS was $3.92, reflecting a 22% increase from the previous year [6][34] Business Line Data and Key Metrics Changes - Moody's Investors Service (MIS) reported a 12% revenue growth, surpassing $1 billion in quarterly revenue for the third consecutive quarter [7][20] - Revenue from private credit grew over 60% in the third quarter, driven by strong demand in fund finance and business development companies [11] - Moody's Analytics (MA) revenue grew 9% year-over-year, with an ARR of nearly $3.4 billion, up 8% from last year [12][26] Market Data and Key Metrics Changes - The issuance pipeline remains robust, with projected refunding needs exceeding $5 trillion over the next four years, a 10% compound annual growth rate from 2018 to 2025 [9] - Spec-grade bond maturities in the U.S. increased by more than 20%, indicating a favorable backdrop for future issuance [10] - Investment-grade revenue declined by 17% year-over-year, reflecting a 6% drop in issuance, but overall activity remained solid due to large M&A transactions [22] Company Strategy and Development Direction - The company is focused on investing in scalable solutions across high-growth markets while simplifying its product suite [12][13] - Moody's is expanding its presence in emerging markets, acquiring a majority interest in Meris, a leading ratings agency in Egypt [18] - The strategy includes embedding AI into workflows and enhancing partnerships, such as with Salesforce, to drive growth [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the issuance environment heading into 2026, citing tight spreads and potential Fed easing as positive factors [56] - The company anticipates mid-single-digit issuance growth for the full year, with M&A activity expected to contribute positively [25] - Risks remain from ongoing trade negotiations and potential government shutdown impacts, but the updated guidance accounts for plausible scenarios [26] Other Important Information - The company is increasing its full-year guidance across almost all metrics, reflecting strong growth and operating leverage [5][19] - Free cash flow is anticipated to be approximately $2.5 billion, with share repurchase guidance increased to at least $1.5 billion [34] Q&A Session Summary Question: Thoughts on AI in the analytics business - Management indicated that AI is seen as an opportunity rather than a threat, with plans to embed AI into various workflow solutions and applications [37][39] Question: Impact of record issuance in Q3 - Management noted that pull forward activity is more prevalent in spec-grade than investment-grade issuers, with healthy maturity walls expected [43][44] Question: Proprietary data sets in KYC solutions - Management highlighted unique data sets such as Orbis and politically exposed persons data, which enhance the value of KYC solutions [46][48] Question: Differences in refi walls perception - Management clarified that the article referenced a decline in U.S. spec-grade refi walls, which is a subset of broader maturities that remain healthy [50][51] Question: Outlook for issuance in 2026 - Management expressed optimism about the issuance environment, citing tight spreads and a potential increase in M&A activity as tailwinds [56][60] Question: Growth expectations for Moody's Analytics - Management confirmed that the medium-term outlook for MA is high single-digit growth, with ongoing investments in strategic areas [72]