Third Quarter 2026
Filed Oct 21, 2026Moody’s Corporation reports third-quarter 2026 revenue of $2,023 million, up 1%, and reaffirms full-year 2026 guidance.
MCO delivered 1% revenue growth, 18% GAAP diluted EPS growth, strong year-to-date cash generation and reaffirmed guidance, but MIS revenue declined 1%, transactional revenue declined 5%, and operating margin declined 90 basis points.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| MCO Revenue, three months ended September 30, 2026GAAP | $2.02B | – | 1% |
| MCO Revenue, nine months ended September 30, 2026GAAP | $6.29B | – | 8% |
| MCO organic constant currency revenue, three months ended September 30, 2026non-GAAP | $2.02B | – | 3% |
| MCO organic constant currency revenue, nine months ended September 30, 2026non-GAAP | $6.22B | – | 8% |
| Operating expenses, three months ended September 30, 2026GAAP | $1.12B | – | 2% |
| Operating expenses, nine months ended September 30, 2026GAAP | $3.41B | – | – |
| Operating income, three months ended September 30, 2026GAAP | $906M | – | – |
| Operating income, nine months ended September 30, 2026GAAP | $2.87B | – | – |
| MCO Operating Margin, three months ended September 30, 2026GAAP | 44.8% | – | (90) bps |
| MCO Operating Margin, nine months ended September 30, 2026GAAP | 45.7% | – | – |
| Adjusted Operating Income, three months ended September 30, 2026non-GAAP | $1.06B | – | – |
| Adjusted Operating Income, nine months ended September 30, 2026non-GAAP | $3.38B | – | – |
| MCO Adjusted Operating Margin, three months ended September 30, 2026non-GAAP | 52.6% | – | (30) bps |
| MCO Adjusted Operating Margin, nine months ended September 30, 2026non-GAAP | 53.7% | – | – |
| Net income attributable to Moody's, three months ended September 30, 2026GAAP | $734M | – | – |
| Net income attributable to Moody's, nine months ended September 30, 2026GAAP | $2.27B | – | – |
| Adjusted Net Income, three months ended September 30, 2026non-GAAP | $717M | – | – |
| Adjusted Net Income, nine months ended September 30, 2026non-GAAP | $2.3B | – | – |
| Diluted EPS, three months ended September 30, 2026GAAP | $4.24 | – | 18% |
| Diluted EPS, nine months ended September 30, 2026GAAP | $12.98 | – | – |
| Adjusted Diluted EPS, three months ended September 30, 2026non-GAAP | $4.14 | – | 6% |
| Adjusted Diluted EPS, nine months ended September 30, 2026non-GAAP | $13.14 | – | – |
| Effective Tax Rate, three months ended September 30, 2026GAAP | 24.0% | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026GAAP | $2.47B | – | 21% |
| Free Cash Flow, nine months ended September 30, 2026non-GAAP | $2.2B | – | 22% |
| Capital additions, nine months ended September 30, 2026GAAP | −$271M | – | – |
| Cash and cash equivalents, September 30, 2026GAAP | $1.51B | – | – |
| Short-term investments, September 30, 2026GAAP | $108M | – | – |
| Current portion of long-term debt, September 30, 2026GAAP | $568M | – | – |
| Long-term debt, September 30, 2026GAAP | $6.34B | – | – |
| MA ARR, September 30, 2026other | $3.69B | – | 8% |
| MA recurring revenue, three months ended September 30, 2026other | $928M | – | 6% |
| MIS recurring revenue, three months ended September 30, 2026other | $373M | – | 8% |
| MIS transactional revenue, three months ended September 30, 2026other | $714M | – | (5)% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Moody's Analytics (MA)Organic constant currency revenue increased 8%. Recurring revenue increased 6% to $928 million and represented 99% of total MA revenue. ARR increased 8% to $3,688 million, led by Decision Solutions ARR growth of 10%. | $936M | – | 3% |
| Decision SolutionsOrganic constant currency revenue increased 12%. Banking revenue was $118 million, down 16%; Insurance revenue was $186 million, up 9%; and KYC revenue was $122 million, up 8%. | $426M | – | — % |
| Research and InsightsOrganic constant currency revenue growth was 3%. | $260M | – | 3% |
| Data and InformationOrganic constant currency revenue growth was 8%. | $250M | – | 7% |
| Moody's Investors Service (MIS)Revenue declined against a record prior-year comparison, primarily reflecting lower Leveraged Finance issuance. Transactional revenue declined 5% to $714 million, while recurring revenue increased 8% to $373 million. | $1.09B | – | (1)% |
| Corporate FinanceInvestment Grade revenue grew 18%, supported by strong large corporate financing activity, particularly in technology-sector issuance associated with AI-related financing and hyperscaler investments. High Yield revenue declined 40% and Leveraged Loans revenue declined 27%. | $530M | – | (8)% |
| Structured FinanceGrowth was primarily supported by higher issuance in ABS, RMBS and Covered Bonds. | $153M | – | 5% |
| Financial InstitutionsRecurring revenue growth in banking and higher funds and asset management activity were partially offset by lower transactional revenue in banking and insurance. | $213M | – | 2% |
| Public, Project and Infrastructure FinanceGrowth was driven by U.S. Public Finance, Sovereign and data center-related financing. | $179M | – | 11% |
| MIS OtherThe filing reports MIS Other revenue of $12 million. | $12M | – | 71% |
Full Year 2026, as of October 21, 2026 outlook
- RevenueIncrease in the high-single-digit percent range
- Operating expensesIncrease in the mid-single-digit percent range
- Tax rate23% to 25%
- NoteOperating Margin: 44% to 45%
- NoteAdjusted Operating Margin: 52% to 53%
- NoteInterest Expense, Net: $220 to $240 million
- NoteNon-operating (Expense)/Income: $70 to $90 million
- NoteDiluted EPS: $16.00 to $16.50
- NoteAdjusted Diluted EPS: $16.50 to $17.00
- NoteOperating Cash Flow: $3.15 to $3.35 billion
- NoteFree Cash Flow: $2.7 to $2.9 billion
- NoteShare Repurchases: Up to $3.0 billion (subject to available cash, market conditions, M&A opportunities and other ongoing capital allocation decisions)
- NoteMA Revenue: Increase in the mid-single-digit percent range
- NoteMA Organic Constant Currency Revenue: Increase in the high-single-digit percent range
- NoteARR: Increase in the high-single-digit percent range
- NoteMA Adjusted Operating Margin: 34% to 35%
- NoteMIS Revenue: Increase in the high-single-digit percent range
- NoteMIS Adjusted Operating Margin: Approximately 65%
Capital returns
- Returned approximately $3.1 billion to shareholders year-to-date.
- Approximately $2.6 billion of shares were repurchased year-to-date.
- Dividends were $543 million for the nine months ended September 30, 2026.
- The Board declared a regular quarterly dividend of $1.03 per share on October 20, 2026, payable on December 11, 2026, to shareholders of record at the close of business on November 20, 2026.
- Treasury shares were $(2,553) million for the nine months ended September 30, 2026.
What drove it
- MA organic constant currency revenue increased 8%, while recurring revenue represented 99% of MA revenue.
- MA ARR increased 8% to $3,688 million, led by 10% growth in Decision Solutions ARR.
- MIS Investment Grade revenue grew 18%, supported by large corporate financing activity in technology, including AI-related financing and hyperscaler investments.
- Public, Project and Infrastructure Finance revenue increased 11%, supported by U.S. Public Finance, Sovereign and data center-related financing.
- Structured Finance revenue increased 5%, primarily supported by higher ABS, RMBS and Covered Bonds issuance.
- Operating cash flow and Free Cash Flow increased primarily due to higher operating income in both segments.
Concerns
- MCO revenue increased 1%, while reported MIS revenue declined 1% against a record prior-year comparison.
- MIS transactional revenue declined 5%, with High Yield revenue down 40% and Leveraged Loans revenue down 27%.
- MCO operating margin declined 90 basis points to 44.8%, and adjusted operating margin declined 30 basis points to 52.6%.
- MA Banking revenue declined 16%, primarily reflecting the Learning Solutions divestiture.
- Operating expenses increased 2%, reflecting investments to support growth and higher incentive compensation, partially offset by divestitures and cost discipline.
- The outlook cites uncertainties related to economic conditions, tariff and trade policies, interest rates, inflation, foreign currency exchange rates, capital-markets liquidity, global GDP growth and geopolitical events.
What to watch
- Whether MIS revenue returns to the guided increase in the high-single-digit percent range for full-year 2026.
- The trajectory of High Yield and Leveraged Loans issuance, which drove the decline in Corporate Finance revenue.
- Whether MA organic constant currency revenue and ARR sustain the guided increase in the high-single-digit percent range.
- MCO operating margin performance against the 44% to 45% full-year guidance range and MA adjusted operating margin performance against the 34% to 35% range.
- Operating cash flow and Free Cash Flow delivery against guidance of $3.15 to $3.35 billion and $2.7 to $2.9 billion, respectively.
- Share repurchases against guidance of up to $3.0 billion.
Balance sheet and cash flow
- Cash and cash equivalents were $1,513 million at September 30, 2026, versus $2,384 million at December 31, 2025.
- Short-term investments were $108 million at September 30, 2026, versus $64 million at December 31, 2025.
- Current portion of long-term debt was $568 million and long-term debt was $6,343 million at September 30, 2026.
- Net cash provided by operating activities was $2,471 million for the nine months ended September 30, 2026, versus $2,043 million in the prior-year period.
- Free Cash Flow was $2,200 million for the nine months ended September 30, 2026, versus $1,798 million in the prior-year period.
- Net cash used in financing activities was $(3,190) million, including $(2,553) million of treasury shares and $(543) million of dividends, for the nine months ended September 30, 2026.
- Cash and cash equivalents decreased $(871) million during the nine months ended September 30, 2026.
Analysis
Moody’s reported third-quarter revenue of $2,023 million, up 1% from $2,007 million, while organic constant currency revenue was $2,022 million, up 3% from $1,965 million. GAAP diluted EPS increased 18% to $4.24 from $3.60, but adjusted diluted EPS increased 6% to $4.14 from $3.92. The difference reflected, among other items, a $115 million pre-tax gain on the divestiture of MA Regulatory Solutions, which was excluded from adjusted results.
MA supplied the stronger underlying growth. Reported revenue increased 3% to $936 million and organic constant currency revenue increased 8% to $938 million. Recurring revenue increased 6% to $928 million and represented 99% of MA revenue. MA ARR increased 8% to $3,688 million, with Decision Solutions ARR up 10%. The reported MA revenue result was affected by the Learning Solutions divestiture, while Banking revenue declined 16% to $118 million.
MIS revenue declined 1% to $1,087 million, as a record prior-year comparison and lower Leveraged Finance issuance offset growth elsewhere. Corporate Finance revenue declined 8% to $530 million, with High Yield revenue down 40% and Leveraged Loans revenue down 27%. Investment Grade revenue increased 18%, while Structured Finance, Financial Institutions and Public, Project and Infrastructure Finance grew 5%, 2% and 11%, respectively. MIS recurring revenue rose 8% to $373 million, but transactional revenue declined 5% to $714 million.
Profitability was mixed. GAAP operating income was $906 million versus $917 million, and operating margin declined 90 basis points to 44.8%. Adjusted operating income was $1,064 million versus $1,062 million, while adjusted operating margin declined 30 basis points to 52.6%. MA adjusted operating margin improved 100 basis points to 35.3%, whereas MIS adjusted operating margin declined 80 basis points to 64.4%. Operating expenses increased 2% as growth investments and higher incentive compensation were partially offset by divestitures and cost discipline.
Cash generation and capital returns remained substantial. Nine-month operating cash flow increased 21% to $2,471 million and Free Cash Flow increased 22% to $2,200 million. Moody’s returned approximately $3.1 billion to shareholders year-to-date, including approximately $2.6 billion in share repurchases and $543 million in dividends. The company reaffirmed all full-year 2026 guidance, including $16.00 to $16.50 of diluted EPS, $16.50 to $17.00 of adjusted diluted EPS, $3.15 to $3.35 billion of operating cash flow and $2.7 to $2.9 billion of Free Cash Flow.
Management, verbatim
Moody’s delivered another quarter of strong profitability and earnings growth, with disciplined execution and healthy cash generation amidst an increasingly complex operating environment. It’s in markets like these that our customers truly value our independent insights and connected intelligence.
Rob Fauber, President and Chief Executive Officer, Moody’s Corporation
Not in the filing
stated, not guessed- Gross profit and gross margin were not reported.
- Prior-quarter financial comparisons were not reported for the presented third-quarter operating metrics.
- A separate previous-release outlook was not provided; therefore, no actual-versus-prior-guidance comparison is included.
- Net debt was not reported.
- Quarterly operating cash flow and quarterly Free Cash Flow were not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.