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Moody’s reported third-quarter revenue of $2.0 billion, below the $2.1 billion consensus. Adjusted earnings per share were $4.14, also below the $4.25 consensus.
Revenue increased 0.80% from a year earlier, while diluted earnings per share rose to $4.24 from $3.60. Moody’s filing attributed the earnings increase primarily to a gain on the sale of its Regulatory Solutions business and a lower share count following repurchases.
The filing said Moody’s Analytics revenue grew 3%, as demand for insurance offerings, cloud-based banking and know-your-customer solutions helped offset the effects of divestitures. Moody’s Investors Service revenue fell 1% as lower leveraged-finance issuance was partly offset by investment-grade and public finance activity.
Operating margin declined to 44.8% from 45.7%, which the filing attributed to expense growth outpacing revenue growth. Quarterly free cash flow rose to $668.0 million from $658.0 million a year earlier.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $2.0 billion | $2.0 billion | 0.80% |
| Diluted EPS | $4.24 | $3.60 | 17.8% |
| Gross margin | 74.1% | 75.5% | −1.4 percentage points |
| Operating margin | 44.8% | 45.7% | −0.9 percentage points |
| Free cash flow | $668.0 million | $658.0 million | 1.52% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $4.14 | $4.25 | Missed by 2.59% |
| Revenue | $2.0 billion | $2.1 billion | Missed by 2.02% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Robert Fauber said financing tied to AI infrastructure remained active during the quarter, while leveraged-finance activity moderated against the prior-year comparison. CFO Noémie Heuland said the mix affected ratings revenue: more issuance came from lower-yielding large transactions and frequent issuers, while higher-yielding leveraged-finance issuers pulled back. She said transaction revenue fell 5% even though rated issuance declined 2%.
Heuland said Moody’s Analytics’ recurring organic constant-currency revenue grew 9% and represented about 99% of segment revenue. The unit ended the quarter with $3.7 billion in annualized recurring revenue, up approximately 8% year over year. Heuland said customers were embedding Moody’s data and analytics into their workflows, and that a new supplier-intelligence deal with SAP displaced a competitor.
On margins and investment, Heuland said the analytics unit’s adjusted operating margin rose to 35.3%, helped by portfolio simplification, technology-platform consolidation and early AI efficiencies. She said those measures helped Moody’s manage headcount growth while investing in data and technology.
Asked how Moody’s monetizes AI, Fauber said it was embedded across products rather than appearing in one line item. He said customers paying for access through model context protocols had more than doubled during the quarter, albeit from a small base. Asked about the banking portfolio, he said Moody’s was focusing on lending and risk and finance after divesting businesses, and was discussing co-development of agentic solutions with early-adopter customers.
For the quarter ahead, Heuland said the issuance pipeline was supported by refinancing, mergers and acquisitions, and infrastructure financing. She said sustained volatility or more constrained access for lower-rated issuers could move results toward the lower end of guidance, while stronger deal execution or leveraged-finance activity could improve the outcome.
Guidance
Moody’s guidance lists FY2026 diluted EPS of $16.00 to $16.50, compared with a previous range of $16.50 to $17.00. Heuland also said Moody’s raised its full-year outlook for first-time ratings mandates to 900 to 950.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| EPS, non-GAAP | FY2026 | $16.50–$17.00 | — | New |
| EPS, GAAP | FY2026 | $16.00–$16.50 | $16.50–$17.00 | Cut |
| Share repurchases | FY2026 | $3.0 billion | $3.0 billion | Held |
| Operating expenses | FY2026 | Moody’s expects operating expenses to grow at a mid-single-digit percentage rate in FY2026. | — | — |
| Revenue | FY2026 | Moody’s expects company revenue growth in the high-single-digit percentage range in FY2026. | — | — |
| Operating margin, Ma, non Gaap | FY2026 | 34.0%–35.0% | — | New |
| Revenue, Ma Arr | FY2026 | Moody’s expects Moody’s Analytics annualized recurring revenue growth in the high-single-digit percentage range in FY2026. | — | — |
| Revenue, Mis | Q4 FY2026 | Moody’s expects MIS revenue to grow at a low-single-digit percentage rate year over year in Q4 FY2026. | — | — |
| Units, Mis Rated Issuance | Q4 FY2026 | Moody’s expects MIS rated issuance to decline by a mid-teens percentage rate year over year in Q4 FY2026. | — | — |
| Revenue, Mis | FY2026 | Moody’s expects MIS revenue to grow at a high-single-digit percentage rate in FY2026. | — | — |
| Units, Mis Rated Issuance | FY2026 | Moody’s expects overall rated issuance to grow at a mid-single-digit percentage rate in FY2026. | — | — |
| Customers, Mis First Time Mandates | FY2026 | 900–950 | — | — |
| Tax rate | FY2026 | 23.0%–25.0% | — | New |
| Free cash flow | FY2026 | $2.7 billion–$2.9 billion | — | New |
| Operating margin, Moodys Analytics | FY2026 | 34.0%–35.0% | 34.0%–35.0% | Held |
| Free cash flow growth | FY2026 | 110.0% | — | New |