Moody's Corporation

Good day, everyone, and welcome to the Moody's Corporation third quarter 2026 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 questions and answers following the presentation. This 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 and thank you for joining us today. I'm Shivani Kak, Head of Investor Relations at Moody's. This morning we reported our third quarter 2026 results. The press release and today's presentation are posted at ir.moody's.com. We'll reference non-GAAP or adjusted measures. Please see the tables in our earnings release for reconciliations to U.S. GAAP. Today's remarks may include forward-looking statements under the Private Securities Litigation Reform Act of 1995. Please see the Safe Harbor language in our earnings release and the risk factors and MD&A in our most recent Form 10-K and other SEC filings available on our website and the SEC's website. These factors could cause actual results to differ materially from those expressed or implied. Members of the media may be listening in a listen-only basis. And with that, I'll turn it over to Rob.

Thanks, Shivani, and hello, everybody. Thanks for joining us today. Moody's delivered another quarter of strong profitability and earnings growth with disciplined execution and healthy cash generation amidst an increasingly complex operating environment. And I want to start with a few key takeaways. So first, Moody's topped $2 billion in revenue for the third straight quarter, and we built on a record quarter from last year. Overall rated issuance declined 2%, yet we delivered adjusted operating margin of 52.6% and adjusted diluted EPS growth of 6%. And I think this really illustrates the resilience of the Moody's franchise and our ability to perform across a range of market environments, even as market conditions became more uneven during the quarter. Now, second, the investment agenda is intact, and I acknowledge that issuance can be volatile from quarter to quarter. and amidst a mixed backdrop, MIS delivered its second strongest third quarter on record. And financing activity tied to AI infrastructure remained very strong in the quarter while on the other hand, leverage finance activity moderated against a strong prior comp and more selective issuance environment. And MIS delivered an adjusted operating margin of 64.4%. I think that's proof of our discipline cost management preserving the operating leverage in the business. In MA, ARR grew approximately 8%. That was in line with our high single-digit outlook, driven by healthy retention and strong recurring revenue growth. And we continue to see some encouraging momentum across several growth areas. That includes lending, insurance, KYC, private credit, and AI-enabled solutions. And we expanded MA's adjusted operating margin by 100 basis points versus last year to 35.3%, and we're on track to achieve are our full-year target. Finally, the quarter reinforced the measured approach that we've been taking to guidance throughout the year. And following a very strong second quarter, you'll all recall we chose not to raise guidance in July, recognizing challenging issuance comps and some question marks about the global macro environment in the second half of the year. And as the third quarter unfolded, strength in some markets was offset by softness and others. And to that end, we are reaffirming our full year guidance metrics and we'll talk about the puts and takes to that guidance later in the call. So let me move to ratings. While issuance activity moderated during the quarter, my broader view of the funding deep currents has not changed. And for several years now, we've discussed this very significant capital investment requirements across the global economy. That's across AI infrastructure and data centers, Power Generation and Transmission, Renewable Energy and Carbon Transition, Defense and Security, Transportation Infrastructure, the world continues to require substantial amounts of investment capital. And those long-term funding requirements are creating durable opportunities for debt financing and capital formation. We continue to see evidence of that in many parts of the market, particularly in sectors tied to AI infrastructure and power investment, where issuance increased approximately fourfold from the third quarter of last year. Meanwhile, certain markets, most notably leveraged finance, were softer than the very strong issuance levels of a year ago, and overall issuance reflected that dynamic, but the broader forces driving global capital needs remain in place. That said, our results reflect much more than just AI-related transaction. Now, I want to spotlight a couple examples. First, In private credit, the number of rated deals grew by more than 40% year-over-year, and market innovation continues. A good example of that is a deal called AMAP6. That's a broadly diversified, actively managed, multi-asset credit vehicle from Apollo. And that deal allocates across five evergreen strategies, and we rated billions of dollars of debt out of this vehicle, showcasing our analytical depth in complex private credit-related structures. Second, in emerging markets, we're acquiring a minority stake in Phil Ratings. That's our sixth domestic credit rating agency affiliate in Asia Pac. It gives us a leading position in the Philippines, where more than $100 billion of infrastructure investment is planned by 2030. And Southeast Asia's domestic bonds outstanding are more than twice the size of cross-border holdings and growing. And this investment enhances our very strong position in domestic debt markets around the world. Now as markets evolve, our analytical frameworks are evolving with them. And our new cross-sector digital infrastructure methodological framework integrates corporate and project finance analytical approaches to assess an asset class characterized by distinct business models, financing structures, and credit profiles. And this is critical to how Moody's ensures analytical rigor and consistency across AI infrastructure build outs. So taken together, these deep currents are translating into strong growth in new rating relationships. First time mandates increased 40% in the third quarter. That's the highest quarterly total in five years. And this is notable because it really demonstrates the continued importance, relevance, and value of a Moody's rating in a rapidly changing world. Now, this leads me to our annual refinancing study which highlights really the sheer magnitude of debt coming due over the next several years. And that outstanding debt must ultimately be refinanced and that creates substantial and highly visible foundation for future issuance activity. And while markets will inevitably experience periods of volatility, this refinancing cycle remains an important structural driver of long-term transaction volumes. Over the next four years, refinancing needs across the U.S. and Amaya top $5 trillion for the second straight year. And while there is a modest decline from last year, it reflects a combination of FX and maturity extensions, primarily in leveraged finance. However, investment grade maturities grew about 5% with the US leading the way at approximately 11% growth. And pull forward activity generally stayed within historical norms. So recent issuance also carries tenors longer than four years. The strength of the last several years will show up beyond the standard four-year window. In fact, the US five-year view provides additional useful context, and refinancing needs grew approximately 4% to about $3.5 trillion, and the former peak maturity year in 2028, that's now 2031. So reach out to our investor relations team if you're interested in a copy of these reports. And as you've likely heard me say, but I want to say it again, analytical rigor, robust methodologies, and ratings quality are and will remain our North Star. Moody's ratings are the benchmark standard for pricing credit risk, and we hold the line on ratings integrity even on marquee transactions. We've seen several recent transactions price closer to our assessment when our rating diverges from the market or isn't present, reinforcing the credibility of our methodologies and analytical approach with investors. So for Moody's ratings, I think the through line is clear. Markets will ebb and flow, but the multi-year funding needs are intact, and Moody's is the agency of choice for issuers and investors alike. All right, so now let me turn to Moody's Analytics. And we delivered another solid quarter driven by continued momentum across several of our core growth areas. That includes lending, insurance, KYC, private markets, and AI-enabled solutions. And we were pleased to be named number one in the Chartist RiskTech 100 for the fifth consecutive year. We had a record 18 category wins across credit, insurance, data, and AI. And while I get that awards are not the objective, we do view this as valuable external validation of the strength of our capabilities. And I want to spotlight a few of our fastest growing areas. I'm going to start with insurance, where ARR grew 10% this past quarter. So Christina and I recently attended Rendezvous in Europe, and our conversations increasingly centered on how Moody's can help address the industry's biggest challenges, including reducing the protection gap, bringing more alternative capital into the market, and delivering better real-time insights and productivity to the industry. And this led to some great discussions about our new offerings in casualty, and Kat Bonds and our AI-enabled intelligent risk platform and more. The fastest growth areas in insurance this past quarter were cat risk and casualty solutions. In cat modeling, we continue to drive adoption of our IRP, our high-definition model suite and our risk data lake, all of which offer the ability to deliver upsell with existing customers as well as bring in new customers to the platform. and a great example of this is with a top three US auto and property insurer. They wanted to unify their hurricane, earthquake and wildfire risk workflows into a single environment. And so they adopted our IRP, which integrates third party and in-house models along with our high definition models, including wildfire, allowing us to more than double the ARR with this customer. And perhaps more importantly, It represents further adoption by one of the leading primary insurers, paving the way for greater penetration into the primary market beyond reinsurers and brokers. Another great win in the quarter was with the top-tier global reinsurance broker who signed a new five-year agreement that included adoption of our full global model suite. That drove nearly 14% ARR growth with this customer and demonstrated the opportunities for substantial growth with existing customers through broader adoption of our platform capabilities and our models. In banking, growth was driven by the lending suite, which grew ARR by 12% and remains one of our most compelling growth opportunities. One example was a major new bank logo in Mexico, rounding out our footprint across the country's top five banks. The bank is deploying Moody's lending suite as it automates the entire end-to-end credit process with our origination to monitoring platform as the foundation and giving us a flagship reference account for further Latin American expansion. Now, turning to KYC and compliance. We continue to see good momentum, particularly in the public sector. In this past quarter, we expanded our relationship with a fast-growing supply chain analytics company signing a five-year reseller agreement that will extend Orbis penetration into multiple government agencies. Another example, a new federal agency in Germany is deploying our data and compliance solutions to power investigative and intelligence workflows. We also renewed an agreement with the European Commission to support the next generation of Arachne, its risk scoring and data mining platform designed to help protect EU funds against fraud and financial risk. and collectively these examples show how we're monetizing our data and analytics into use cases like national security, defense, fraud and beyond. And we see further opportunities across the public sector, both in the US and Europe. Now, turning to AI. Our AI enabled screening capabilities enabled us to displace an incumbent with a large and sophisticated bank. Screening is a prime space for agentic tools coupled with Moody's decision grade data. For example, a top five US commercial bank adopted our compliance solution to reduce false positives and improve screening effectiveness and efficiency. Now, zooming out, customers are adopting AI across every way they access Moody's. Through MCP-enabled interfaces and APIs into their own AI platforms, through AI built into our applications, and through partner platforms where they already work. And some of our largest and most sophisticated customers are bringing Moody's data and research directly into their own AI platforms through MCPs. And adoption is accelerating. So it is early days, but in just the last three months, users have more than quadrupled and usage is up more than tenfold. And particularly important, analysts using the MCP are reaching three times more content on a working day while still accessing it in our own platforms. Those are our research MCPs. In addition to MCPs though, we're making AI available in our own applications. So in insurance, for example, we're embedding AI into underwriting exposure management and portfolio workflows in the IRP. Our risk data refinery turns unstructured submissions into analytics ready data with around 95% first pass accuracy. Customers can cut slip interpretation time by as much as 80 to 90%. and Statement of Values Preparation by up to 75%. And that means less time wrangling data and faster underwriting decisions. And building on this, we're also investing in the demand in growing markets and deepening our bench of strategic partnerships. And I want to just give you two examples from the quarter. So first, in private credit, our AllView partnership pairs Moody's forward-looking models with AllView's loan-level private credit data. And we believe that this gives us the best view of credit risk in the private markets. And in turn, that gives lenders and investors an independent view of emerging borrower stress, helping support underwriting, portfolio monitoring, valuation, and risk oversight. And second, in casualty insurance, Moody's and Lloyd's of London are partnering to combine our data and models with Lloyd's historical market data to pinpoint which signals predict casualty and financial lines risk. where exposure is concentrated and when underwriting cycles are turning. And this is really the same playbook that we've run in other insurance lines, but now applied to a large under-penetrated casualty market and with one of the most important players in the global insurance industry. So before I turn it over to Noemie, Christina just marked her first 100 days leading MA and she's brought a real sense of urgency and ambition She spent a lot of time on the road with customers. She's challenging us to think differently and moving quickly on the foundational changes that I believe can unlock the next phase of growth. So big picture, even as the operating environment we face keeps evolving, the examples that I shared reinforce our confidence in the opportunities ahead. Substantial financing needs underpin ratings. Demand for our decision grade intelligence underpins Moody's analytics. and AI is amplifying the value of the trusted data, insights and analytical context that's at the heart of everything we do. So Noemie, over to you.