Moody's (MCO) Q4 2025 Earnings Call Transcript

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Date

Wednesday, February 18, 2026 at 9:00 a.m. ET

Call participants

• President & Chief Executive Officer — Robert Scott Fauber
• Chief Financial Officer — Noémie Heuland
• Head of Investor Relations — Shivani Kak

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Takeaways

• Total revenue -- exceeded $7.7 billion, 9% year-over-year growth, with equal 9% growth in Moody's Investors Service (MIS) and Moody's Analytics (MA).
• Adjusted operating margin -- 51.1%, up 300 basis points year over year.
• Adjusted diluted EPS -- $14.94, increasing 20%, and reflecting 70% cumulative EPS growth over three years (roughly 20% CAGR since 2022).
• Debt rated -- $6.6 trillion in 2025, an all-time high, supporting sectors such as infrastructure and AI-driven data centers.
• Private credit revenue -- Increased 60% year over year, with Moody's as sole rating agency on Blackstone's $1.5 billion private credit CLO.
• Moody's Analytics annual recurring revenue (ARR) -- $3.5 billion, up 8% year over year, fully aligned with reported organic recurring revenue growth in constant currency.
• MA recurring revenue -- Represented 97% of segment revenue during the fourth quarter, growing 11% year over year.
• MA adjusted operating margin -- 33.1%, up 240 basis points year over year; reached almost 36% in the fourth quarter (up 190 basis points sequentially).
• Decision Solutions ARR -- Double-digit growth, now accounting for approximately 45% of total MA ARR, led by 15% KYC ARR growth in 2025.
• Banking ARR growth -- 8% for 2025, accelerating from 7% the prior quarter.
• Insurance ARR growth -- 7% for 2025, up 21% over the last two years.
• Research and Insights ARR -- 8% annual growth in 2025.
• Data and Information ARR -- 7% growth, driven by ratings data feeds (above segment average), though partially offset by U.S. government DOS-related cancellations.
• MA largest strategic customers -- Accounted for over 30% of net MA growth; these customers' spending grew at twice the rate of the rest of the base.
• AI adoption -- Customers adopting at least one GenAI or AgenTix solution had 97% retention and grew at roughly twice the rate of the broader customer base.
• CreditLens growth -- Nearly 20% annual growth; around two-thirds of eligible renewals upgraded to the AI-enabled lending suite, realizing an average uplift of about 67%.
• RMS acquisition target -- Achieved $150 million run-rate revenue contribution by 2025, surpassing targets, with a transition from flat to high single-digit CAGR.
• MIS fourth quarter revenue -- Increased 17% year over year, with transactional revenue up 22% on 10% issuance growth and favorable deal mix.
• Private credit in MIS Q4 -- Revenue across all asset classes grew 40% year over year, led by fund finance and securitization.
• MIS full-year adjusted operating margin -- 63.6%, up 350 basis points year over year.
• 2026 total company revenue guidance -- High single-digit percent growth, with adjusted operating margin forecasted in the 50%-53% range (up 150 basis points midpoint).
• 2026 adjusted diluted EPS guidance -- $16.40-$17.00, implying approximately 12% growth at the midpoint.
• 2026 free cash flow guidance -- $2.8-$3.0 billion (13% midpoint increase), with $100 million incremental CapEx for HQ and London office buildouts.
• 2026 shareholder returns -- Plan to return at least 90% of free cash flow, including $2.0 billion in repurchases and a 10% quarterly dividend increase.

Summary

Management emphasized Moody's (NYSE:MCO) record financial performance and investments in proprietary data and AI integration, highlighting significant recurring revenue scalability and deepening relationships with strategic customers. They outlined a clear commitment to scaling product innovation in lending, KYC/compliance, and insurance, supported by continued margin expansion. Executives detailed capital allocation plans focused on increased share buybacks and growing the dividend, enabled by projected double-digit adjusted EPS and cash flow growth in 2026.

• The company described enhanced platform integration, with expanded delivery through third-party systems and AI interfaces, aiming for deeper workflow embedment.
• Officials noted ongoing portfolio streamlining via recent divestitures in Learning Solutions and Regulatory Reporting, each referenced as aligning with the strategic concentration on scalable growth areas.
• Guidance anticipated front-loaded 2026 issuance and revenue, with “mid-50s percent” of total projected in the first half, and revenue growth strongest in that period.
• Leadership explained that divestitures are excluded from organic recurring revenue and ARR growth metrics, clarifying the basis for performance and guidance figures.
• Executives highlighted ongoing investments in their AI “trusted context layer” and network graph, underpinning new product launches and margin improvement initiatives.

Industry glossary

• AgenTix: Moody’s proprietary AI-enabled agentic workflow solution for automated credit processes within customer platforms.
• ARR (Annual Recurring Revenue): Forward-looking, normalized measure of recurring contracted MA revenue, excluding effects of FX and M&A, indicating the future revenue base.
• CreditLens: AI-enabled end-to-end digital lending suite offered by Moody’s Analytics, integration-ready for automated credit decisioning.
• Decision Solutions: Moody’s Analytics segment offering focusing on KYC, insurance, and banking workflow and compliance solutions.
• IRP (Intelligent Risk Platform): Cloud-based risk modeling and data delivery solution for insurance and reinsurance customers.
• KYC (Know Your Customer): Compliance-oriented data and workflow solution to verify customer identities and screen for regulatory risk, a key MA growth vertical.
• Orbis: Moody’s proprietary global company database, comprising curated ownership, entity, and relationship data, recognized for AI enablement and regulatory-grade provenance.
• Stablecoin rating methodology: Moody’s newly launched cross-sector framework for credit assessment of tokenized, blockchain-based stablecoins.
• SCS model (Severe Convective Storm Model): High-definition catastrophe modeling tool calibrated on industry-contributed claims data, supporting insurance underwriting decisions.

Full Conference Call Transcript

Shivani Kak: This morning, Moody's Corporation 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.moodys.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 and 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 of 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 12/31/2024, 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, Robert Scott Fauber.

Robert Scott Fauber: 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 Corporation. It was driven by consistent execution against the long-term demand trends that we have 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. Now we are scaling decision-grade contextual intelligence embedded directly into customer workflows. Across our platforms, third-party systems, AI-enabled interfaces. So that we are present where critical decisions get made. 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 $7,700,000,000. 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.

It is 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 have made over several years have really positioned us to capitalize on this activity and that drove record revenue this past year. In 2025, we rated $6,600,000,000,000 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 $70,000,000,000 of issuance for companies including Alphabet, Amazon, and Meta, in part related to their AI investment programs.

Moody's Corporation was named Best Credit Rating Agency in the U.S. by Xcel again. That is for the fourteenth 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 stablecoins is forecasted to reach $400,000,000,000 by 2026, and $2,000,000,000,000 by 2028. And our methodology, which is the first such framework from a credit rating agency, will position Moody's Corporation to play an important role in the digital finance ecosystem. Now in private credit, demand for ratings continues to accelerate. Private credit revenue increased 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 $1,500,000,000 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 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, ranging from specialized workflow agents to AI-ready datasets I am going to talk about that in just a few minutes.

Operator: Importantly,

Robert Scott Fauber: 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 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 are 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 Chartis RiskTech100 for the fourth consecutive year, and that reflects the trust that customers place in Moody's Corporation 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, permissioned, domain-specific data and analytics to produce outputs that are accurate, explainable, and defensible. That is exactly what Moody's Corporation 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 GenAI or AgenTix solution are retained at a rate of 97% and are growing at roughly twice the rate of the rest of the customer base. So this is not 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 is that it is accelerating as customers consume our intelligence. So Moody's Corporation’s solutions are delivered through our own applications. And increasingly, they are embedded directly into customers' existing technology stack and third-party workflow platforms. That includes systems like Salesforce, ServiceNow, Coupa, Intapp,

Shivani Kak: Databricks,

Robert Scott Fauber: and we have made our content available through smart APIs and MCPs and spec agents for consumption through our customers' own AI platforms and going forward through AI portals like Claude and OpenAI.

Operator: And

Robert Scott Fauber: 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 CreditLens 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 one U.S. bank has deployed Moody's AgenTix solutions to automate credit memo creation. They have 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 and 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 are 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 have 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 is a pattern here, one of the world's largest global payment platforms signed a multiyear, multimillion-dollar agreement to embed Orbis via API into their new customer onboarding processes. And they are threading two critical requirements.

They are 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 Corporation’s data is being used at the highest levels of the intelligence spectrum. In the fourth quarter, Interpol announced they are 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 is in environments like this where accuracy, provenance, and auditability are nonnegotiable. Now our data cannot be synthesized from public sources.

It reflects how ownership and control actually work in the real world, cutting through complex multilayered structures across jurisdictions, and reflecting years of proprietary data curation, entity resolution, and relationship mapping. And it is 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 $55,000,000,000 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 are 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 and analytics that are embedded, auditable, and difficult to replicate and that is exactly where Moody's Corporation sits. So stepping back, our confidence heading into 2026 is grounded in the durability of the business model that we have 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 is 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 have 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, at the same time, public and private market dynamics, energy transition, and digital finance. We are further investing in our global footprint to ensure we are supporting the markets and issuers that will define the next phase of growth.

In analytics, we are advancing a very deliberate strategy to position Moody's Corporation’s data as a trusted context layer for AI. We are accelerating efforts to link our massive data estate, expand network-based insights, and make our content more within customer workflows. And given the traction we are seeing, we have 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 aligned, with the majority of 2026 growth expected to come from three primary areas. First, in lending and credit decisioning, we are upgrading customers onto more integrated AI-enabled platforms.

This includes moving CreditView users to what we call Moody's View, expanding CreditLens into a broader lending suite, and delivering agentic capabilities such as automated credit memos and early warning tools. And we are 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 are focused on driving efficiency and scale. For financial institutions, we are delivering productivity gains through workflow partnerships, and piloting screening and diligence agents. For corporates, we are 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 modeling, underwriting, and risk transfer. This includes ongoing migrations to our cloud-based Intelligent Risk Platform, new high-definition model offerings, and enhanced data management capabilities with our new risk data lake. We are leveraging our geospatial artificial intelligence alongside Moody's hazard and risk scores to deliver a holistic property intelligence solution that supports underwriting decisions. We are also expanding into casualty and financial lines by combining Praedicat’s capabilities with Moody's data where we have 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 Corporation is uniquely positioned at the intersection of models, ratings, and market infrastructure with the recent launch of our cat bond rating methodology and revamped cat 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 are 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 is 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, 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 Noémie Heuland, I want to thank our teams for their exceptional work in 2025. Noémie, over to you.

Noémie Heuland: Thanks, Rob, and hello, everyone. The fourth quarter capped off an outstanding year across the board. While we experienced tariff-driven uncertainty that resulted in a market-driven air pocket early in 2025, conditions recovered as the year progressed,

Shivani Kak: we finished very close to our initial internal expectations. Let me start with Moody's Analytics.

Noémie Heuland: In 2025, we sharpened our focus on our highest conviction growth opportunities while continuing to actively optimize our product portfolio and manage costs with discipline.

Shivani Kak: For the full year, MA revenue grew 9%,

Noémie Heuland: and adjusted operating margin improved by 240 basis points to 33.1%. This performance builds on our already strong financial profile, delivering consistent growth at scale,

Shivani Kak: with a very high concentration in recurring revenue, and retention in the low to mid-90s.

Noémie Heuland: ARR reached $3,500,000,000, up 8%, which is in line with organic constant currency recurring revenue growth also at 8%. Now before turning to the drivers of ARR growth, I want to do a quick reminder on the MA revenue disclosures. Reported revenue reflects period results, and that includes FX and M&A. Organic constant currency recurring revenue measures renewable software licenses, decision-grade data, and world-class content and analytics, which collectively represents an incredibly durable core business, and that removes FX and M&A. However, the growth rate can still vary quarter to quarter, due to upfront revenue recognition timing, especially for on-premise licenses. Now ARR is forward-looking, it is normalized for FX and M&A.

And it reflects the current position of recurring contracts. As a result, this gives, in our view, the clearest perspective of customer demand and the future revenue base. Using that lens, let me walk through a few highlights. Starting with Decision Solutions, which includes KYC, insurance, and banking,

Shivani Kak: and continues to be a key growth engine for MA. These businesses delivered double-digit ARR growth,

Noémie Heuland: and represent approximately 45% of total MA ARR, underscoring both their scale and strategic importance. KYC remains the fastest growing component

Shivani Kak: with growth consistently in the mid to high teens over the past

Noémie Heuland: two years, and 15% ARR growth in 2025. Growth in KYC continues to be driven by both deeper penetration with existing banking customers, especially tier one institutions, as well as expansion beyond our traditional financial services customer profile.

Shivani Kak: We are increasingly seeing demand from non-financial customers,

Noémie Heuland: for unique solutions to address complex, high-stakes compliance challenges, as you heard Rob talk about.

Shivani Kak: With the Interpol example.

Noémie Heuland: We delivered very strong net growth in the quarter, supported by both new customer wins and continued cross-selling and expansion with existing relationships. A few recent deals illustrate the power of our solutions here and our ability to deliver trusted outcomes for customers. As Rob referenced earlier, we secured a competitive KYC displacement win at a tier one bank that also leverages a broader set of Moody's solutions. And what this example illustrates is our ability to build and more broadly scale relationships over time. In fact, the relationship grew by more than 20% in 2025, and continues to present meaningful expansion opportunities in 2026.

Beyond the payments company customer example Rob mentioned earlier, we won new business with two manufacturing corporates, including a leading global aerospace and defense company,

Shivani Kak: facing new U.S. export control requirements. In this case,

Noémie Heuland: the customer needed a solution capable of identifying ownership and control structures across complex global entities to comply with the BIS 50% rule and the evolving export restrictions.

Shivani Kak: We are uniquely positioned to address this kind of customer challenge,

Noémie Heuland: because of our ability to link together billions of ownership structures

Robert Scott Fauber: through our extensive network of local registry relationships.

Noémie Heuland: Turning to banking, our focus and customer mix here differ quite a bit from KYC. While KYC is anchored in deep relationships with tier one banks and corporate customers, our banking offerings in Decision Solutions are much more significantly

Shivani Kak: with tier two and tier three institutions.

Noémie Heuland: Where demand is centered on scalable, configurable,

Shivani Kak: end-to-end workflow solutions that are ready to deploy.

Noémie Heuland: Banking delivered ARR growth of 8%, that is up from 7% in the third quarter.

Shivani Kak: And this business includes our lending suite as well as risk, regulatory, and finance solutions.

Noémie Heuland: We are actively investing in expanding our end-to-end offerings for lending, including with AI capabilities from the Numerated and Eble AI acquisitions, strengthening decisioning, automation, and customer experience. In this line of business, we have been deliberately reducing transactional revenue over the last several years.

Shivani Kak: Primarily by expanding our partner network to serve the lower margin implementation services for our solutions.

Noémie Heuland: And you will see in 2025, this trend continued, and was compounded by the recently completed divestiture of the Learning Solutions business which is a further sharpening of our focus within the banking portfolio towards the highest demand and quality revenue. Now turning to insurance, demand for our most sophisticated high-definition models and cloud-based Intelligent Risk Platform drove 7% ARR growth for the year-end 2025, and that is an increase of 21% over the last two years, and looking at this two-year view is important because 2024 was particularly strong, reflecting record levels of customer migrations onto the IRP, combined with large model upgrades,

Shivani Kak: and new product adoption. Stepping back,

Noémie Heuland: our recent performance underscores the successful integration and execution of growth strategies we laid out for the RMS business,

Shivani Kak: following the acquisition. In fact, we completed and slightly exceeded the financial

Noémie Heuland: target associated with that transaction, adding $150,000,000 run-rate revenue by 2025. Now achieving that milestone required shifting RMS from flattish growth in 2021 to a high single-digit CAGR, including synergies, over a four-year period. That is a transition that was supported by sustained customer demand

Shivani Kak: and meaningful platform-led upsell activity.

Noémie Heuland: Next, turning to Research and Insights. We achieved 8% ARR growth in this more mature business, underscoring the durability of demand, continued innovation, and improved customer retention. As Rob shared,

Shivani Kak: we are enhancing CreditView with an expanding set of Moody's content,

Noémie Heuland: and agentic solutions that improve productivity,

Shivani Kak: insight generation, and workflow integration.

Noémie Heuland: This reinforces its role as a core decision support platform and is driving continued adoption. Finally, Data and Information delivered 7% ARR growth, supported by strong pricing power and sustained customer demand across two distinct but complementary areas. Ratings data feeds are the primary growth driver within the segment, with ARR growth well above the overall line of business. And that underscores their decision-grade nature, and central role in customers' credit, risk, and investment workflows. In parallel, our decision-grade data estate, which includes company, ownership, people, and news, is increasingly embedded in customer workflows across a wide range of third-party risk use cases.

Now growth in this area can vary year to year based on deal mix, including the timing of closure or renewals of large enterprise-wide data agreements, versus sales to smaller institutions.

Shivani Kak: And as we have shared, 2025 was

Noémie Heuland: impacted by DOS-related cancellations across several U.S. government agencies.

Shivani Kak: Excluding these items, underlying demand and customer engagement remained solid.

Noémie Heuland: We have had several notable Orbis wins in the fourth quarter, including one with a large global bank for enterprise-wide access and a new partnership with one of the world's largest asset managers, underscoring the breadth

Shivani Kak: relevance, and durability of our data estate.

Noémie Heuland: Turning to margin, as I mentioned earlier, Moody's Analytics delivered ahead of the target we originally set for 2025. And that is even as we absorbed acquisition-related headwinds, and continued to invest

Shivani Kak: in future growth.

Noémie Heuland: What differentiates Moody's Analytics is our ability to invest in growth while expanding margin. We expect to be able to sustain this balance for the years to come. Because beyond near-term cost actions, we are making structural changes to how roles are set up and our core processes.

Shivani Kak: Let me give you an example.

Noémie Heuland: We are building out a single standard GenAI-led product development lifecycle process across MA, which we expect will drive higher productivity, improved quality, and faster delivery for customers. In parallel, we are embedding advanced analytics and GenAI into other core workflows, such as sales account planning, which allows us to scale impact and customer value without

Shivani Kak: proportional increases in headcount. Turning to MIS.

Noémie Heuland: Fourth quarter revenue was up 17% year over year, and the performance here was driven by activity that was very strong,

Shivani Kak: particularly in the investment grade asset class within Corporate Finance,

Noémie Heuland: where tight spreads, strong investor demand, and several large jumbo deals from hyperscalers supported record issuance. Project and infrastructure finance also had near-record issuance in the quarter. Private credit across all asset classes grew 40% in Q4, from particularly strong activity in fund finance and securitization. Transactional revenue increased 22% in Q4, supported by 10% issuance growth and a more favorable deal mix, as lower-yield bank loan repricing activity declined versus the prior-year quarter. MIS recurring revenue was particularly strong, up 9% year over year in Q4. Turning to margins, MIS delivered a full-year adjusted operating margin of 63.6%, representing 350 basis points of year-over-year expansion.

And that reflects strong operating leverage in the ratings business, driven by continued technology investments,

Shivani Kak: and disciplined capital allocation. Looking forward, we expect investment needs will continue to increase, and debt remains an attractive funding source. Accommodative monetary conditions, declining default rates, and healthy investor demand for yield should support access to capital across sectors. For the full year 2026, we expect total issuance to increase at a low single-digit percent pace, followed by ongoing refinancing needs, and 40% to 45% increase in debt-funded M&A issuance.

Noémie Heuland: We also expect ongoing growth from private credit, as well as issuance from hyperscalers and AI-driven data centers. Based on our issuance outlook, we expect MIS revenue for 2026 to grow at a high single-digit percent pace. Our forecasts project year-over-year growth across all four quarters, strongest in the first half, and moderating in the second. We are projecting a full-year operating margin of approximately 65%, that is up 150 basis points versus 2025. For Moody's Analytics, reported revenue guidance is at the high end of mid-single-digit growth,

Shivani Kak: including a 180 basis point headwind

Noémie Heuland: to year-to-year growth from the divestiture of our Learning Solutions business. Adjusting for the effect of this divestiture,

Shivani Kak: and uneven foreign exchange rates across the two years,

Noémie Heuland: we expect organic constant currency recurring revenue growth to be aligned with ARR, in the high single-digit percent range. From a margin perspective, our 34% to 35% adjusted operating margin outlook reflects approximately 150 basis points

Shivani Kak: of improvement at the midpoint.

Noémie Heuland: Putting this all together, we expect MCO revenue growth in the high single-digit percent range, and MCO adjusted operating margin likewise expanding by 150 bps to the 50% to 53% range for 2026. Our 2026 adjusted diluted EPS guidance is $16.40 to $17.00, implying approximately 12% growth at the midpoint. We expect the effective tax rate to be in the range of 23% to 25% in 2026,

Shivani Kak: a more normalized overall rate, after we realized a sizable M&A-related one-time benefit in 2025. We have also added a new appendix slide with additional detail to provide further insights into the key drivers of our results,

Noémie Heuland: and 2026 outlook assumptions. Lastly, we are expecting free cash flow to be in the range of $2,800,000,000 to $3,000,000,000, 13% growth at the midpoint. Now this guide is impacted by a notable $100,000,000 increase in CapEx, for the build-out of our New York headquarters and London office space. We expect to repurchase approximately $2,000,000,000 in shares during the year and announced a 10% increase to our quarterly dividend. Overall, our capital plan calls for a return of at least 90% of our free cash flow to shareholders in 2026. Given the recent market activity in our sector, our strong fundamentals and durable growth outlook, you can expect us to be aggressively buying back shares at these levels.

Shivani Kak: In short,

Noémie Heuland: both our 2025 results and our outlook for 2026 demonstrate the strength and differentiation of our financial profile and confidence in our ability to continue to deliver long-term value for shareholders. I will now turn the call over to the operator so we can begin the Q&A. We will now open for questions.

Operator: Thank you. If you would like to ask a question, please dial 1 on your telephone keypad. If you are on a speakerphone, please pick up your handset and make sure your mute function is turned off so that your signal reaches our equipment. We will ask that you limit yourself to one question. The option to rejoin the queue will be unavailable. Again, that is 1 to ask a question. Our first question comes from Curtis Nagle with Bank of America. Please go ahead.

Robert Scott Fauber: Terrific. Thanks so much for taking the question. Maybe Rob, just a quick one from you. Just from a portfolio perspective,

Alex Kramm: for MA, it seems like it is in a pretty good place. But I guess, do you feel like at this point, you have the right assets, the highest growth, you know, the ones you are most confident in terms of investment, or, you know, should we expect more paring, you know, this year?

Robert Scott Fauber: Curtis, first of all, welcome to the call. It is great to have you on today. I would say we feel very good about the assets and the capabilities that we have. And you heard me talking about this, Curtis, a bit in my prepared remarks. I mean, I think we all understand that data and trusted data is going to be the fuel for AI. And especially for the big regulated institutions that are, you know, big customers of ours. And so we feel very good about having built out this massive data estate and then as you heard me talk about it, it is about linking that, and it is about the ability to draw insights

Shivani Kak: across

Robert Scott Fauber: that network of data. So, you know, I think and, again, I think we also understand that proprietary datasets will be at a premium going forward. And wherever we have an opportunity to add, you know, uniquely valuable data into this giant data estate, putting it into our context layer, helping to build out our network graph, I think you are going to see us do that. In terms of the trimming, you know, I think this just, you know, you hear us talking about, you know, where we are making the more concentrated bets. And I talked about lending and credit decisioning, KYC and compliance, and insurance.

And those are the places where we think we bring, you know, the strongest set of capabilities, the deepest customer relationships, that give us the strongest right to win. And so we felt there was just an opportunity to look across the portfolio at things that were not as central to that and had an opportunity to, as you said, kind of, you know, prune the portfolio and allow us to focus even more on the areas of the greatest scalable growth opportunities.

Alex Kramm: Okay. Thank you. Appreciate it.

Operator: Our next question comes from Alex Kramm with UBS Financial. Please go ahead.

Alex Kramm: Yes. Good morning, everyone. I want to stay on MA. Thanks

Toni Michele Kaplan: to both of you for all the AI detail. A lot of impressive stats. On the flip side, though, it does not sound like it is really translating into ARR revenue yet. Maybe it is. But, obviously, if we look at the guidance and the results, relative to your medium-term outlook, those have, you know, kind of softened a bit. So I guess the question is, when is AI really going to contribute? And if it is already contributing, are there some other issues elsewhere in the business? So maybe an open question there. Thanks.

Robert Scott Fauber: Hey, Alex. Thanks. And I think in a way, there is kind of two parts that I want to unpack in that question. The first is kind of your observation around the trajectory of MA. And I would say that our fourth quarter ARR was in line with the third quarter. And, you know, as you would expect, when you have got, I am going to say, kind of a portfolio, you know, we are selling into very different customer bases. There are some puts and takes in terms of what is growing faster and what is growing not as fast.

If you look at, you know, kind of the ARR trend across the portfolio in 2025, I think you would see that actually banking, research, and data actually picked up a little bit. And we had some headwinds with insurance and KYC. And as you heard, you know, Noémie mentioned, we have talked about before on the call, some of that with KYC was impacted by DOS. And, you know, you see our guide that is consistent with these growth rates. I talked about the new products and the cross-sell and upgrade pathways that are going to drive that growth.

But I think maybe one other point I want to just double click on: everybody wants to understand how much revenue is being generated by AI. And there were two stats that I, again, I want to come back to because I do think they are leading indicators for us. One is the fact that those largest accounts for us are growing at about twice as fast as the rest of the portfolio. That is really important because that is where we have the deepest engagement with the most sophisticated institutions on the planet.

And that is where they all want to be able to consume our content and bring it into their own AI workflow orchestration platforms and consume it through AI portals. So there is a lot of AI-oriented engagement with those big institutions. That is what is driving and importantly driving that growth. And then second, you know, we have that stat about the cohort of customers who have bought at least one standalone or packaged or upgraded into an AI solution, that is growing twice as fast. Again, because of the level of engagement.

So I think, Alex, you know, I feel good that the most sophisticated institutions are where we have got the most growth and the most engagement around AI. And, you know, our view is that is going to then trickle through the rest of the customer base over time.

Toni Michele Kaplan: Very helpful. Thank you.

Operator: Our next question comes from Manav Patnaik with Barclays. Please go ahead.

Toni Michele Kaplan: Thank you. Good morning. I was just hoping on the ratings side, you could just

Scott Darren Wurtzel: help us with the cadence for the year in terms of how you, you know, assume the issuance trajectory there?

Robert Scott Fauber: Yeah. Manav, hey. Great to have you on the call. So I am going to start with issuance, then maybe I will just go into revenue real quickly for you. Because I know that will be helpful. So we are expecting issuance activity, like we typically do, to be more heavily weighted towards the first half of the year. We have very attractive market conditions and, you know, there is a, I would say, relatively strong start to the year as well.

Alex Kramm: And

Robert Scott Fauber: that is also in line with what we have been hearing from the banks who we have been talking to, who think that the issuance, again, will be a little bit front loaded in the first half of the year. To give you a sense, that is probably mid-50s percent of total issuance is going to be in the first half of the year. At least that is what we are modeling. That was pretty consistent with 2023–2024. 2025 was a little more back-end loaded, I think, as you know. And that is also a pretty consistent pattern that we see with frequent issuers.

So to put a finer point on it, Manav, we are expecting issuance to grow in 2026 in the kind of high single-digit range versus the first half of last year and to decline mid-single digit in the second half. And in the first quarter in particular, we think we are going to see kind of high-20s percent of issuance in terms of as a percent of the full year. Now when we go to revenue, it is a little less pronounced in terms of being front-end loaded. So I would say from a revenue perspective, we expect it to be, you know, somewhere in the low to mid-50s percent of revenue in the first half of the year.

I think importantly, we do expect revenue growth in each quarter of the year. We think that we are going to be somewhere in the mid-teens for revenue growth in the first half of the year. And somewhere in kind of the low single-digit range for the second half of the year. And for the first quarter, probably somewhere in the mid-20s percent.

Scott Darren Wurtzel: Alright. Super helpful. Thank you.

Operator: Our next question comes from Toni Michele Kaplan with Morgan Stanley. Please go ahead. Thank you so much. I have been getting an increasing number of questions recently around how much of your data is proprietary, the sources of your data, and which parts and how much of MA is based on proprietary data. I was just hoping that you could dimensionalize this in a way that you think is most helpful for investors. Thank you.

Scott Darren Wurtzel: Yeah. Toni,

Robert Scott Fauber: rather than me sitting here and trying to convince you of some statistic,

Scott Darren Wurtzel: let me

Robert Scott Fauber: help you think about it in slightly a different way. And this is about why we think we are well positioned in an AI world. And first, as you said, like, we all understand we have a massive proprietary data estate. And you heard me talk about we are in the process of unifying all of the data, the models, the ratings, the research, the risk assessments into a really a single normalized record for each entity. And that is going to be able to give us the ability to create a very, very powerful knowledge graph.

Toni Michele Kaplan: Alright? And then we are going to keep adding to that.

Robert Scott Fauber: And that is going to enable

Scott Darren Wurtzel: the agents to be able to access a

Robert Scott Fauber: comprehensive, interconnected view of any entity. And, as I said, give unique insights and allow for richer decision making. But the second thing, I think this is important, is we are assembling all of that into what we call—and you might have heard me use this term—a trusted context layer. So that context layer sits between the raw data assets and the AI reasoning engines. So it makes the data usable for reasoning. And what that is a structured, governed representation of, you know, what the data means, how it relates across entities and time and scenarios, when and why the data should be applied, and much, much more. Right? It is a deep contextual understanding of the data.

Orbis, obviously, being a very important part of this massive data estate, is a great example. It is not just company data. It is years of entity resolution, ownership mapping, expert judgment, and, of course, a complex ecosystem of licenses and IP rights. And we have built all of that context directly into our analytics, our methodologies, and our models so that then the outputs are accurate. They are explainable. And they are defensible. As you have heard me say, and I love this term,

Alex Kramm: they are

Robert Scott Fauber: decision grade. So hopefully that gives you a sense. It is all of that together that makes our data, I think, uniquely valuable.

Scott Darren Wurtzel: Thank you.

Operator: Our next question comes from Ashish Sabadra with RBC.

Scott Darren Wurtzel: I wanted to ask a follow-up question on AI. Thanks for highlighting the AI resilience and strong demand for the agentic solution. One of the investor concerns lately have focused on the adoption of white coding and multiplatform LLM offerings such as Claude for financial services, and those potentially impacting vertical software or workflow solutions. Can you talk about the moat around the software or vertical solution within MA? Thanks. Yeah. Ashish,

Robert Scott Fauber: hey. Great to have you on the call. Again, I think the way to think about this—and it is interesting if you think about, you know, you heard me talk about CreditLens and our lending solution, and that has an AI-enabled layer to all of it, from the ingestion of financials to credit decisioning and covenant monitoring and much more. You have got different adoption curves with different customer segments. So, you know, you heard me say at the high end, almost all of the banks, the big tier one sophisticated banks want to be able to consume our content in a variety of different ways and it is typically not through software.

Alex Kramm: Right? But

Robert Scott Fauber: what they want is, you know, we had a bank that is working on AgenTix—I mentioned it in my remarks. They are building an agentic workflow for lending. So while they do not need to adopt CreditLens, what they do want is they want our specialized agents around credit memo generation and early warning that are populated with all of our data. And access to our models. So they are consuming it either through smart APIs and MCPs or specialized agents that are going right into the workflow that they are building.

Scott Darren Wurtzel: So

Robert Scott Fauber: for me, again, it comes back to, you know, we talk about we are going to be wherever our customers want us to be. If you are a tier three bank, and you want a lending software platform that is enabled with AI, and has access to a lot of our content, we are going to sell that to you. If you want our content through, as I said, different ways to consume the data or specialized agents, we will do that. If you want to consume it in an enterprise software system, we will do that.

So in a way, Ashish, I am actually less worried about it because at the end of the day, and we have always talked about this, the software that we have built is simply a delivery chassis for the content. It is not just some business logic that we have sold to a customer. It is a delivery channel for the content. We will deliver it through software. We will deliver it into your AI platform. It does not matter.

Operator: Our next question comes from the line of Andrew Steinerman with JPMorgan. Please go ahead.

Scott Darren Wurtzel: Hi. I have a simple one.

Toni Michele Kaplan: I just want to know how much revenues these two MA divest—

Scott Darren Wurtzel: divestitures affect the MA revenue guide for 2026. And then let me just add on to that. I also want to understand how they affect the MA ARR figure—are divestitures included or excluded when you report MA's ARR?

Noémie Heuland: Yeah. Andrew, hi. So let me start with the first part of your question in terms of how those affect our guide. Learning Solutions was divested in December. So, obviously, for 2025, there is a very immaterial impact. In terms of our outlook, we expect about a one percentage point of headwind to the MCO revenue growth, and that is reflected in our reported—in our outlook for total revenue. We expect a little under two percentage point headwind to the

Shivani Kak: Sorry. 1%—one percentage point headwind to—

Noémie Heuland: 2% headwind to MA revenue growth, which is embedded in our guide. And most of it is one-time. That is about 90%.

Shivani Kak: Going forward, it should modestly improve the total revenue growth on a pro forma basis as the training revenue was a slower,

Noémie Heuland: flattish growth. And when it rolls off, that should improve the profile going forward. This is broadly neutral to MA, about

Shivani Kak: 30

Noémie Heuland: to 30 basis points MA margin dilution. And very minimal for the MCO adjusted operating margin guide.

Scott Darren Wurtzel: Now

Noémie Heuland: for the Regulatory Reporting business, this is not yet reflected in our guide. We expect the transaction to close around 2026,

Shivani Kak: we will update our guidance to reflect that impact at the time. Just to give you a sense of the impact when it closes,

Noémie Heuland: we expect about two percentage points of headwind to MA reported revenue growth,

Shivani Kak: and that is mostly recurring.

Noémie Heuland: We expect a 100 basis points tailwind of MCO adjusted expense growth. And about 10 basis points dilution on MCO margin. This will also have a minor $0.05 to $0.10 adjusted EPS impact. It depends on when the timing of the transaction closes.

Shivani Kak: As we anticipate to redeploy some of the sales proceeds to additional share buybacks.

Noémie Heuland: Just on your last question about ARR, ARR and constant currency organic recurring revenue—this is what ARR is—are adjusted to eliminate the effects of divestitures and acquisitions. And we expect both of those to grow high single digit in 2026.

Scott Darren Wurtzel: Thank you, Noémie.

Operator: Our next question comes from Owen Lau with Clear Street. Please go ahead.

Toni Michele Kaplan: Good morning. Thank you for taking my question. I want to go back to your MIS margin guide, which is better than expected, and I think it is even higher than your medium-term guidance which is around low 60%. Could you please talk about the driver of these strengths, and how should we think about your medium-term guide from here? Thanks a lot.

Scott Darren Wurtzel: Yeah.

Shivani Kak: So we are guiding

Noémie Heuland: adjusted operating margins for Moody's Ratings of about 65%. I think there are two components. Obviously, revenue and transaction revenue growth. But we have also made significant investments, if you recall, over the past couple years or

Shivani Kak: three, four years on technology

Toni Michele Kaplan: enablement.

Alex Kramm: And

Noémie Heuland: around our data. And Rob talked a lot about the value of the ratings data feeds and all the data that our analysts produce, all the insights. So we have done a lot of work around that. We have also equipped our ratings analysts with

Shivani Kak: pockets of automation tools to be more efficient and spend more time actually on ratings committees, spending time with issuers, and less so on more administrative tasks.

Noémie Heuland: And that is really driving increased operating leverage. We are still investing in the ratings while at the same time, you

Mike West: improving and getting those margins level. We are investing in analytical staff to support, obviously, the volume, but also areas like private credit. We are looking to also invest in our commercial efforts, as well as methodology groups, technology more broadly. So we are still investing in Moody's Ratings and at the same time expanding margin through those investments in technology.

Operator: Our next question comes from Craig Huber with Huber Research Partners. Please go ahead.

Robert Scott Fauber: Oh, great. Thank you. Rob, I thought you did a really good job talking about your

Craig Huber: AI moats that you have. But, just a little further on that. Within Moody's Analytics, there is obviously concern out there with investors. You can see it in your stock price and all in your peers as well that AI firms or firms that pop up or exist that have AI tools over time could replicate what you guys do in parts of your MA operation. Can you just talk a little bit further about the moats? Where do you think—just to talk on the other side of this—where do you think maybe you are vulnerable to a third-party AI initiative to take some share away from you there on a meaningful basis?

Then on the second way to look at this is there is a lot of concern out there, people talking about that AI is going to ravage the white-collar workforces out there in the U.S. and around the world. Talk to us, if you would, about MA, how you price your product here. It is not really on a per-seat basis. But if white-collar headcount out there goes down 25% plus, just say hypothetically, at a lot of your institutions, how will that impact how you get paid, how much you get paid when contracts come up for renewal? Not existing contracts, but when they come up for renewal, how may that impact your discussions there? Thank you.

Robert Scott Fauber: Yeah, Craig. Some good stuff there. Thanks for the questions. Let me just talk a little bit. I am going to go back to Orbis for a moment because it is one of our biggest parts of our data estate. And, you know, we get questions about this. And, you know, I would say a few things in terms of what make it very hard to replicate that I do not think are understood. First of all, a lot of the data just simply is not available to the public. We have a, you know, a complex ecosystem of commercial agreements and IP rights. I mean, that has taken us decades to build and we are constantly curating that.

Second, you know, there are legal and regulatory issues, you know, privacy laws and export controls and all sorts of things that our customers need to know that we are abiding by, right, if they are going to use the data. There is semantic complexity. This gets into, you know, things in different jurisdictions mean different things. And models have a lot of challenges with semantic drift. So that is where we have been curating all this and our local experts over decades understand what different things mean in different locations, and then they are cleansing and normalizing that data to make it valuable. There is entity resolution and ownership inference.

And, by the way, you know, the models are not simply doing entity resolution. That is a really important thing to be able to resolve against the right entity. And we have combined probabilistic models, a human-in-the-loop validation, and proprietary logic. And we have been doing this over years and years and years. Then we have got all this historical depth. Right? So we have a lot of historical depth and in some cases, the data has either been archived or it does not exist in digital forms. It is not easy to get some of that history. And then finally, governance.

I have got to tell you, Craig, you know, every bank I talk to tells me good enough is not good enough for our institution. What they want from us—they want to move in many cases to fewer trusted providers. So they want us to be able to meet their needs. And look, I will, you know, I will acknowledge, Craig, that things like, you know, automated data ingest and things like that will be done by AI. But it is those things that I talked about—it is not just Orbis. You could go across a number of other datasets that we have, and the same is true. So hopefully that gives you a sense.

Now let me talk about how do we price the product. And we have never had seat-based licenses. That is not the way we have operated. We have always tried to, you know, kind of think about value in our pricing schedules.

Scott Darren Wurtzel: But

Robert Scott Fauber: look, we are starting to trial in parts of the business different pricing models. Right? And thinking about elements, bringing in elements of consumption-based pricing that I think will be more closely aligned to outcomes. Because at the end of the day, Craig, what you are talking about—if there is a substantial labor replacement—somebody and some companies are going to capture some of that opportunity. Maybe not all of it, but they are going to capture it. Right? And that is going to be, in my opinion, a combination of the model providers and the data providers who are making that efficiency possible.

And so we are thinking as we speak and trialing different pricing models to be able to capture some of that—frankly, some of that upside.

Scott Darren Wurtzel: Great. Thank you, Rob.

Operator: That concludes our question and answer session. I will now turn the call back over to Rob for closing remarks.

Robert Scott Fauber: Hey, thanks everybody for joining today. And for my colleagues at Moody's Corporation,

Scott Darren Wurtzel: let’s go.

Robert Scott Fauber: Talk to you next time.

Scott Darren Wurtzel: Bye.

Operator: This concludes Moody's Corporation Fourth Quarter and Full Year 2025 earnings call. As a reminder, immediately following this call, the company will post the MIS revenue breakdown under the Investor Resources section of the Moody's IR homepage. Additionally, a replay will be made available after the call on the Moody's IR website. Thank you.

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