Moody's Revenue Accelerates as Transactional Volume Gains Momentum
The financial services provider reported second-quarter revenue of $2.2 billion, a 15% increase from the prior year.
Moody's (MCO), the financial services provider, reported second-quarter revenue that rose 15% year-over-year to $2.2 billion.
The results marked a notable acceleration in growth for the company, which had seen revenue increase 8% in the first quarter. This trajectory was supported by a significant rebound in transactional activity and expanding margins across its primary business segments.
Adjusted operating margin expanded 440 basis points year-over-year to 55.3%. This followed a more modest 150 basis point expansion to 53.2% in the previous quarter.
Growth was led by Moody's Investors Service, where revenue grew 25% year-over-year to $1.3 billion. The segment's transactional revenue rose 34% to $891 million, a sharp increase from the 8% growth recorded in the first quarter. Consequently, the segment's adjusted operating margin expanded 410 basis points to 68.3%.
Moody's Analytics also saw growth, with organic constant currency revenue increasing 8% year-over-year, up from 6% in the first quarter. Annual recurring revenue for the segment rose 9% to $3.7 billion, while its adjusted operating margin expanded 150 basis points to 33.6%.
The company reported a $181 million gain on business divestitures during the quarter, which primarily related to the sale of the Learning and Regulatory Solutions businesses within Moody's Analytics.
For the full year 2026, Moody's narrowed its adjusted diluted EPS guidance to a range of $16.50 - $17.00 a share. However, the company lowered its full-year operating margin guidance to 44% - 45% from approximately 45%.
Cash flow projections were also revised downward. Full-year free cash flow guidance was lowered to $2.7 billion - $2.9 billion from $2.8 billion - $3.0 billion, and operating cash flow guidance was reduced to $3.15 billion - $3.35 billion from $3.25 billion - $3.45 billion.
Despite the lowered cash flow outlook, Moody's raised its full-year share repurchase guidance to up to $3.0 billion from the approximately $2.5 billion disclosed in the first quarter.