Moody's Corporation (MCO) reported third-quarter revenue of $2.02 billion, up 1% from a year earlier and 3% on an organic constant-currency basis, after 15% reported and 16% organic constant-currency growth in the second quarter.

The ratings agency said the slowdown was concentrated in Moody's Investors Service, which delivered $1.09 billion in revenue, down 1% year-over-year against a record prior-year comparison, primarily reflecting lower Leveraged Finance issuance. MIS transactional revenue was $714 million, down 5% from a year earlier, after 34% year-over-year growth in the second quarter. MIS adjusted operating margin was 64.4%.

Corporate Finance revenue was $530 million, down 8% year-over-year, with transaction revenue down 14% and rated issuance volume down 16%. High Yield revenue fell 40% and Leveraged Loans revenue fell 27%. Investment Grade revenue grew 18% year-over-year, with transaction revenue up 16%, which the company said was supported by large corporate financing activity, particularly in technology, including issuance associated with AI-related financing and hyperscaler investments. Public, Project and Infrastructure Finance revenue grew 11%, and Structured Finance revenue grew 5%.

Moody's Analytics revenue was $936 million, up 3% year-over-year and 8% on an organic constant-currency basis. Recurring revenue increased 6% year-over-year and represented 99% of total MA revenue. Transaction revenue declined 76% year-over-year, primarily reflecting the Learning Solutions divestiture and a continued shift toward recurring revenue. Annualized recurring revenue was $3.69 billion, up 8% year-over-year, led by Decision Solutions, which increased 10%.

Decision Solutions revenue was $426 million, unchanged year-over-year and up 12% organic constant currency. Banking revenue was $118 million, down 16% year-over-year and up 19% organic constant currency. Insurance revenue was $186 million and KYC revenue was $122 million. Research and Insights revenue was $260 million and Data and Information revenue was $250 million. MA adjusted operating margin was 35.3%, up 100 bps from the prior-year period.

MCO operating margin was 44.8% and adjusted operating margin was 52.6%. Diluted EPS was $4.24, up 18% year-over-year, and adjusted diluted EPS was $4.14, up 6%. Operating expenses increased 2% versus the prior-year period, as investments to support growth and higher incentive compensation were partially offset by recent business divestitures and continued cost discipline, the company said. Net income attributable to Moody's was $734 million, including a $115 million gain on business divestitures in the quarter.

Year-to-date operating cash flow was $2.47 billion, up 21%, and free cash flow was $2.20 billion, up 22%. The company returned approximately $3.1 billion to shareholders year-to-date, including $2.6 billion of shares repurchased and $543 million in dividends. On October 20, the board declared a regular quarterly dividend of $1.03 a share, payable December 11 to shareholders of record on November 20.

Moody's reaffirmed full-year 2026 guidance, including diluted EPS of $16.00 to $16.50 and adjusted diluted EPS of $16.50 to $17.00, with no change from last publicly disclosed guidance. Assumptions now include a global speculative grade default rate expected to finish around 3.8% by year-end, versus around 3% previously, and U.S. high yield spreads expected to widen to around 300 bps in the coming quarter, versus around 330 bps in the coming two quarters.