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Moody's Q1 2025 · Earnings

Moody’s Corporation (MCO) delivered a strong start to 2025, building on the momentum of its record-setting 2024. For the first quarter, total revenue reached $1.924 billion, marking an 8% year-over-year increase, despite a 1% drag from foreign currency translation. Bottom-line performance was equally solid, with diluted EPS rising 10% to $3.46, and adjusted diluted EPS climbing 14% to $3.83. Profitability remained robust, as the adjusted operating margin improved by 100 basis points to 51.7%, while net income grew to $625 million, up from $577 million a year earlier.

Both of Moody’s core segments contributed meaningfully to the quarter’s gains. Moody’s Investors Service (MIS) posted record quarterly revenue of $1.1 billion, up 8% year-over-year, fueled by heightened activity among Investment Grade issuers and strong demand in structured finance markets such as CLOs and CMBS. The segment’s adjusted operating margin expanded to 66.0%, a 140-basis-point improvement. Transactional revenue also advanced 8%, supported by increased issuance volume, although financial institutions revenue dipped due to lower insurance activity.

Moody’s Analytics (MA) matched that momentum with 8% revenue growth, totaling $859 million. The business continues to pivot toward subscription-based offerings, with recurring revenue now accounting for 96% of MA’s total. Annualized Recurring Revenue (ARR) rose to $3.3 billion, up 9% compared to a year ago. Growth was led by Decision Solutions (+11%), followed by Research and Insights (+6%) and Data & Information (+3%). Although transaction revenue declined 21%, this reflects the company’s deliberate transition to more predictable revenue streams. MA’s adjusted operating margin edged up to 30.0%.

On the capital front, Moody’s reported operating cash flow of $757 million and free cash flow of $672 million, both lower than last year due to higher incentive payouts. The company raised its quarterly dividend to $0.94 per share, an 11% increase, and repurchased 0.8 million shares at an average price of $481.77. Moody’s maintains a strong balance sheet, with $6.8 billion in debt and a fully available $1.25 billion revolving credit facility.

Despite the strong quarter, Moody’s revised its full-year 2025 guidance downward, citing market uncertainty. Revenue growth is now expected in the mid-single-digit range, while diluted EPS is forecast between $12.00 and $12.75, and adjusted EPS between $13.25 and $14.00. Margin expectations remain healthy, with adjusted operating margins projected at 49% to 50%. The company anticipates free cash flow between $2.30 and $2.50 billion, and plans to deploy at least $1.3 billion in share repurchases.

Segment guidance reflects continued strength in MA, with high-single-digit revenue and ARR growth expected, and adjusted margins between 32% and 33%. MIS is forecast to deliver flat to mid-single-digit revenue growth, with adjusted margins in the 61% to 62% range.

CEO Rob Fauber highlighted MIS’s record-breaking quarter as a testament to the firm’s resilience and ability to support capital markets amid volatility. CFO Noemie Heuland acknowledged the tempered guidance but underscored confidence in Moody’s long-term strategy and investment capacity.

In sum, Moody’s delivered an impressive Q1 performance, demonstrating strong revenue and earnings momentum across both business segments. While the updated outlook reflects a more cautious stance, the company remains well-positioned for sustained growth, backed by recurring revenues, disciplined capital allocation, and a robust financial foundation.

April 22, 2025
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