Moody's Corporation

Good day, everyone, and welcome to the Moody's Corporation fourth quarter and full year 2025 earnings call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for question and answers following the presentation. The call is scheduled to last approximately one hour. I will now turn the call over to Shivani Kak, Head of Investor Relations. Please go ahead.

Thank you. Good morning and thank you for joining us today. I'm Shivani Kak, Head of Investor Relations. This morning, Moody's released its results for the fourth quarter and full year of 2025, as well as our guidance for 2026. The earnings press release and the presentation to accompany this teleconference are both available on our website at ir.moody's.com. During this call, we will also be presenting non-GAAP or adjusted figures. Please refer to the tables at the end of our earnings press release filed this morning for reconciliations between all adjusted measures referenced during this call in U.S. GAAP. I call your attention to the Safe Harbor language, which can be found towards the end of our earnings release. Today's remarks may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995. In accordance with the Act, I also direct your attention to the management's discussion and analysis section and the risk factors discussed in our annual report on Form 10-K for the year ended December 31st, 2024, and in other SEC filings made by the company, which are available on our website and on the SEC website. These, together with the safe harbor statement, set forth important factors that could cause actual results to differ materially from those contained in any such forward-looking statements. I'd also like to point out that members of the media may be on the call this morning in a listen-only mode. Over to you, Rob.

Thanks, Shivani, and thanks, everybody, for joining today's call. I'm going to start with the highlights. And 2025 was a record year for Moody's. It was driven by consistent execution against the long-term demand trends that we've discussed over the last several years. And we finished the year with strong fourth-quarter performance across both ratings and analytics, and delivered robust growth and meaningful capital returns to shareholders. We're scaling decision-grade contextual intelligence embedded directly into customer workflows across our platforms, third-party systems, and AI-enabled interfaces so that we're present where critical decisions get made. And as technology and the ways of working continue to evolve, we enter 2026 well-positioned and confident in the opportunities ahead. Now, we had strong top-line performance across the company in 2025. Total revenue exceeded $7.7 billion. That was up 9% year-over-year and 9% in both ratings and analytics. We expanded adjusted operating margin to 51.1%. That was up 300 basis points as we drive further operating leverage into the business. And these results are being driven by sustained customer demand for our decision grade data, analytics, and insights amidst very large funding needs, greater market complexity, heightened risk and resilience needs, and compliance requirements. Now, adjusted EPS, sorry, adjusted diluted EPS reached a record $14.94. That was up 20% year over year. And that represents a 70% earnings growth over the past three years. So it's something like a 20% CAGR since 2022. Now, let me turn to ratings. And issuance and investment cycles came together very powerfully in the fourth quarter. It resulted in the busiest fourth quarter in our history. And the investments that we've made over several years have really positioned us to capitalize on this activity and And that drove record revenue this past year. In 2025, we rated $6.6 trillion of debt. That was an all-time high, supporting investment across infrastructure, AI-driven data centers, energy finance, energy transition finance, and private credit. And in the fourth quarter alone, we rated more than $70 billion of issuance for companies including Alphabet, Amazon, and Meta, in part related to their AI investment programs. Moody's was named best credit rating agency in the U.S. by Extel, again. That's for the 14th consecutive year. And that really reflects our role at the forefront of global debt markets. In December, we issued a request for comment on a cross-sector stablecoin rating methodology. And as the use of tokenized cash continues to accelerate, The total value of issued stable coins is forecasted to reach $400 billion by the end of 2026 and $2 trillion by 2028. And our methodology, which is the first such framework from a credit rating agency, will position Moody's to play an important role in the digital finance ecosystem. Now, in private credit, demand for ratings continues to accelerate. Private credit revenue in MIS grew by nearly 60% in 2025. reflecting both market growth and our expanding role in the sector. And we developed new methodologies and deepened our analytical and commercial engagement to capture rising demand for transparent, independent credit assessment. And that momentum is translating into tangible wins. Last year, we were the sole rating agency on the largest private credit CLO of the year, a $1.5 billion issuance by Blackstone. Now, pivoting to Moody's Analytics, we finished 2025 on a strong note there as well. We delivered net growth that outpaced the fourth quarter of 2024, and this performance included meaningful contributions from our highest priority growth areas. That includes our lending and credit decisioning solutions, as well as decision-grade KYC data. We also closed the year with strong momentum in AI-related sales and ranging from specialized workflow agents to AI-ready data sets, and I'm going to talk about that in just a few minutes. Importantly, our strongest growth came from our largest strategic customers. These customers contributed over 30% of the total MA net growth in the fourth quarter, and for the full year, grew at twice the rate of the rest of the MA customer base. So this is Durable high-quality growth with clear evidence of customer adoption. And I want to emphasize durable because the nature of MA's revenue growth is increasingly recurring and scalable. So recurring revenue grew 11% and represented 97% of fourth quarter revenue. So this combined with some real execution discipline enabled us to deliver 190 basis points of margin expansion and and an adjusted margin of almost 36% in the fourth quarter. We set our focus on scaling MA's recurring revenue base a few years ago, and now we're making further proactive adjustments to our portfolio to reinforce that strategy. So in December, we closed on the sale of our learning solutions business. That was primarily reported as transactional revenue, and it really was no longer core to our strategy. We also announced the sale of our regulatory reporting business, which served customers with relatively limited cross-sell opportunities across other banking offerings. And underpinning all of this is our commitment to delivering best-in-class solutions, and that commitment was reinforced by our recognition as the number one provider in the Chartist RiskTech 100 for the fourth consecutive year, and that reflects the trust that customers place in Moody's to support workflows and decisions that matter most. And we see that market recognition reflecting a broader truth, that as AI becomes a new interface for decision-making, the need for trusted context increases, not decreases. AI systems require verifiable permission, domain-specific data and analytics to produce outputs that are accurate, explainable, and defensible. And that's exactly what Moody's provides. And it gives us the opportunity to become even more deeply embedded in customer workflows. So we see this clearly in recent customer behavior. Customers who have purchased or upgraded into at least one standalone Gen AI or agentic solution are are retained at a rate of 97% and are growing at roughly twice the rate of the rest of the customer base. So this isn't experimental usage. AI adoption is driving greater consumption of our proprietary data, expanding our share of wallet, and reinforcing long-term customer economics, particularly amongst our largest strategic accounts. And a key reason for adoption that it's accelerating is how customers consume our intelligence. So Moody's solutions are delivered through our own applications, and increasingly, they're embedded directly into customers' existing technology stacks and third-party workflow platforms. That includes systems like Salesforce, ServiceNow, Coupa, Intap, Databricks. And we've made our content available through smart APIs and MCPs and specialized agents for consumption through our customers' own AI platforms, and going forward through AI portals like Claude and OpenAI. And this is enabling us to serve our customers on a different level and in different ways than ever before. So for our banking customers, AI-enabled workflows such as automated credit memos and early warning systems are delivering some material efficiency gains, reducing cycle times while improving consistency and regulatory compliance. And our flagship lending solution that we call credit lens remains the fastest growing product in the banking portfolio with growth approaching 20% in 2025. And I have to tell you, our new packaging is working. Roughly two thirds of eligible renewals converted to our AI enabled lending suite in 2025 with an average uplift of about 67%. In the fourth quarter, we also sold a large globally systemic important bank our GenAI-ready data and smart APIs to embed into their digital credit platform in order to automate financial analysis and accelerate wholesale lending decisions. A Tier 1 U.S. bank has deployed Moody's agentic solutions to automate credit memo creation. They've told us that it can generate roughly 35% to 40% of each memo and saves analysts hundreds and hundreds and thousands of hours of time equating in some cases to millions of dollars saved. And that work is expanding into enabling real-time commercial real estate risk monitoring, API-based screening, and KYC, where we displaced a competitor in the fourth quarter. And the same holds true around the world. In the fourth quarter, we signed banks in APAC in the Middle East to embed our AI-enabled spreading and memo generation solutions into their loan origination platforms, And we heard back from them, they're reducing decision times in some cases by as much as 80% and cutting loan processing cycles in some cases by as much as 15 times. So some real efficiency. And KYC continues to deliver mid-teens growth driven by customers' trust in the quality, the governance, and the global coverage of our data. So a great example is our partnership with one of the world's largest e-commerce and technology companies. where we've grown that relationship more than 20-fold over the last three years. And today, our data is integrated across KYC, supplier risk, credit risk, transfer pricing, and sales workflows, and covers more than 15,000 suppliers across automated entity resolution, screening, and early warning signals. Similarly, in the fourth quarter, and there's a pattern here, one of the world's largest global payment platforms signed a multi-year, multi-million dollar agreement to embed Orbis via API into their new customer onboarding processes. And they're threading two critical requirements. They're creating a smooth customer experience through pre-populated applications while addressing enhanced KYC due diligence requirements from their regulators. And just to bring it up another notch, Moody's data is being used at the highest levels of the intelligence spectrum. In the fourth quarter, Interpol announced they're leveraging our ownership and firmographic data to support their operations targeting illicit finance, with a recent operation resulting in 83 arrests across six countries. And it's in environments like this where accuracy, provenance, and the auditability are non-negotiable. Now, our data can't be synthesized from public sources. It reflects how ownership and control actually work in the real world, cutting through complex multi-layered structures across jurisdictions, and reflecting years of proprietary data curation, entity resolution, and relationship mapping. And it's that breadth and depth that makes our data both AI enabling and AI resilient. And we see some similar dynamics in insurance as well, where rising climate-related losses are driving demand for more data-intensive, model-driven solutions. In December, we launched our high-definition severe convective storm model that was calibrated on more than $55 billion of granular claims data. And that was contributed by the industry and available nowhere else. And then we deliver that SCS model through our cloud-based intelligent risk platform. And early adoption has been strong, reflecting the demand for more precise underwriting as these secondary perils, as they're called, increasingly behave like primary risks. So we believe the common thread here is clear. As AI proliferates, value accrues to providers of trusted context. Decision-grade data is one difficult to replicate, and that is exactly where Moody's sits. So stepping back, Our confidence heading into 2026 is grounded in the durability of the business model that we've built and the discipline with which we allocate capital. And we operate businesses with structurally attractive economics, complementary revenue streams, and deeply embedded customer relationships. And it's these powerful business dynamics that allow us to generate strong cash flow and invest confidently in the areas with the highest long-term returns while continuing to expand margins. So in ratings... We've continued to broaden our methodologies and deepen expertise in areas aligned with the huge global funding needs and market innovation. And that includes infrastructure and AI investment, public and private market dynamics, energy transition, and digital finance. At the same time, we're further investing in our global footprint to ensure that we are supporting the markets and issuers that will define the next phase of growth. In analytics, We're advancing a very deliberate strategy to position Moody's data as a trusted context layer for AI. We're accelerating efforts to link our massive data estate, expand network-based insights, and make our content more actionable within customer workflows. And given the traction we're seeing, we've established a dedicated sales team focused on agent-ready data in 2026, and that reflects both customer demand and our conviction in this opportunity. Now, from a product standpoint, our innovation engine is highly active, with the majority of 2026 growth expected to come from three primary areas. First, in lending and credit decisioning, we're upgrading customers onto more integrated AI-enabled platforms. This includes moving credit view users to what we call Moody's View, expanding credit lens into a broader lending suite, and delivering agentic capabilities such as automated credit memos and early warning tools. And we're also expanding and packaging our credit tools specifically for private credit origination and underwriting, where demand continues to grow. Second, in KYC and compliance, we're focused on driving efficiency and scale. For financial institutions, we're delivering productivity gains through workflow partnerships and piloting screening and diligence agents. For corporates, we're rolling out a simplified modular compliance suite that scales in data and functionality based on a company's size, exposure, and sophistication. All of that will be delivered through the Moody's for Compliance platform. And third, in insurance, we continue to invest across catastrophe modeling, underwriting, and risk transfer. This includes ongoing migrations to our cloud-based intelligent risk platform, new high-definition model offerings, and enhance data management capabilities with our new risk data lake. We're leveraging our geospatial artificial intelligence alongside Moody's hazard and risk scores to deliver a holistic property intelligence solution that supports underwriting decisions. We're also expanding into casualty and financial lines by combining Predicat's capabilities with Moody's data, where we've demonstrated strong signal value and customer interest. And in the capital markets, We see an opportunity in catastrophe bonds as climate risk increasingly migrates into structured finance, an area where Moody's is uniquely positioned at the intersection of models, ratings, and market infrastructure with the recent launch of our cap bond rating methodology and revamped cap bond modeling platform. Across both analytics and ratings, a critical enabler of this growth is the continued build-out of our AI context layer and knowledge graph. And we're capturing large new structured and unstructured data sets and leveraging our global connectivity to enrich how our AI systems and our analysts understand risk, relationships, and exposure. That's not a point solution. It is a foundational capability that compounds the value of everything that we do. And taken together, this is a portfolio designed to perform across market environments. It strengthens our competitive advantages and extends our growth runway where we have a clear right to win, and supports durable value creation for shareholders. And before I hand it over to Noemi, I want to thank our teams for their exceptional work in 2025. Noemi, over to you.