Moody's boosts guidance after Q3 earnings benefit from debt issuance rebound

[Moody`s]
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Moody's (NYSE:MCO [https://seekingalpha.com/symbol/MCO]) Q3 earnings easily beat the Wall Street consensus on Wednesday as increased issuance of debt in financial markets, especially in leveraged loans and high yield bonds, boosted revenue in its Investors Service business.

With the quarter's strong showing, the ratings and market analytics company raised its guidance [https://seekingalpha.com/pr/20274899-moodys-corporation-reports-results-for-third-quarter-2025] for full-year adjusted EPS to $14.50-$14.75 (midpoint $14.63), higher than the consensus of $14.12, from its prior range of $13.50-$14.00.

Revenue for the year is expected to increase in the high-single-digit percent range, up from its prior view of in the mid-single-digit range. Moody's now sees free cash flow at ~$2.5B, compared with its previous guidance of $2.30B-$2.50B and roughly in line with the Visible Alpha consensus of $2.51B.

Q3 adjusted EPS of $3.92, topping the average analyst estimate of $3.68, rose from $3.56 in Q2 and $3.21 in last year's Q3.

Q3 revenue of $2.01B, beating the $1.95B consensus, increased from $1.90B in the previous quarter and $1.81B in the year-ago period.

"Our results, once again, speak for themselves: significant margin expansion, strong top-line growth, and clear momentum," said President and CEO Rob Fauber.

Analytics revenue of $909M increased from $891M in Q2 and $831M in Q3 2024. The division's revenue grew 9% Y/Y, including 11% growth in Decision Solutions, 7% in Research & Insights, and 9% in Data & Information.

Moody's (NYSE:MCO [https://seekingalpha.com/symbol/MCO]) Investors Service revenue of $1.10B rose from $1.06B in the previous quarter and $982M a year ago. That's 12% growth Y/Y as total issuance volumes increased 15% Y/Y. The issuance of leveraged loans jumped 29% Y/Y, while Moody's revenue from leveraged loans soared 58%. High-yield bonds revenue surged 57% as issuance grew 43%.

Expenses of $1.09B, vs. the Visible Alpha consensus of $1.11B, edged up from $1.08B in Q2 and $1.08B in last year's Q3.

Adjusted operating margin of 52.9% vs. 50.9% in the prior quarter and 47.8% a year ago.

Conference call [https://ir.moodys.com/investor-relations/default.aspx]at 9:00 AM ET.

MORE ON MOODY'S

* Moody's Earnings Preview: Q3 Set To Exceed Expectations [https://seekingalpha.com/article/4829481-moodys-earnings-preview-q3-set-to-exceed-expectations]
* Moody's: The Perpetual Cash Flow Machine [https://seekingalpha.com/article/4820047-moodys-the-perpetual-cash-flow-machine]
* Moody’s plans to raise ownership in MERIS Ratings [https://seekingalpha.com/news/4488704-moodys-plans-to-raise-ownership-in-meris-ratings]
* Moody's Non-GAAP EPS of $3.92 beats by $0.24, revenue of $2B beats by $50M [https://seekingalpha.com/news/4506551-moodys-non-gaap-eps-of-3_92-beats-by-0_24-revenue-of-2b-beats-by-50m]