MCO 10-Q: Smart Summary

• Segment structure: Moody's reports in 2 reportable segments — MA (comprising Research & Insights, Data & Information, and Decision Solutions) and MIS (credit ratings and assessment services on corporate, financial institution, governmental, and structured finance obligations).
• Basis of presentation: Interim financial statements prepared per Form 10-Q instructions; should be read with the 2025 annual report on Form 10-K filed with the SEC on February 18, 2026; certain reclassifications were made to prior period amounts to conform to the current presentation.
• ASU 2024-03: Issued November 2024, requires disaggregated expense disclosures (employee compensation, depreciation, intangible asset amortization, selling expenses) for interim and annual periods; effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027; the Company is currently evaluating the impact.
• ASU 2025-06: Issued September 2025, eliminates prescriptive software development stages and requires capitalization when management commits to funding and completion/intended use are probable; effective for annual periods beginning after December 15, 2027; the Company is currently evaluating the impact.

• Revenue mix — transaction vs. recurring: MA revenue was 98% recurring in Q1 2026 (vs. 96% in Q1 2025), while MIS revenue was 69% transaction-based in both periods; total Moody's Corporation was 39% transaction / 61% recurring in Q1 2026 vs. 40% / 60% in Q1 2025.
• Revenue recognition timing: Of total Q1 2026 revenue of $2.1B, $816M was recognized at a point in time and $1.3B over time; in Q1 2025, $757M was at a point in time and $1.2B over time.
• Deferred revenue: The consolidated deferred revenue balance rose from $1.6B at December 31, 2025 to $1.9B at March 31, 2026 (MA: $1.5B; MIS: $368M), with the increase driven primarily by first-quarter contract renewals in both segments; a $9M reclassification to liabilities held-for-sale in MA relates to the planned divestiture of the MA Regulatory Solutions business.
• Remaining performance obligations: MA segment RPO was approximately $4.9B as of March 31, 2026, with ~55% expected to be recognized within one year, ~25% between one to two years, and the remainder thereafter; MIS segment RPO was approximately $83M, with ~25% within one year and ~55% between one to five years.

• Compensation cost and tax benefit: Stock-based compensation cost was $57M in both Q1 2026 and Q1 2025, with associated tax benefits of $13M and $12M, respectively.
• Grants in Q1 2026: The Company granted 0.1 million employee stock options at a weighted average grant date fair value of $133.17 per share, 0.5 million shares of restricted stock at $443.84 per share, and 0.1 million performance-based awards (vesting contingent on non-market-based performance metrics over three years) at $431.10 per share; both stock options and restricted stock generally vest ratably over four years. Black-Scholes assumptions for options granted in 2026 included expected dividend yield of 0.93%, expected stock volatility of 27%, risk-free interest rate of 3.74%, and expected holding period of 5.7 years.
• Unrecognized expense: Unrecognized stock-based compensation expense at March 31, 2026 was $16M for unvested stock options (to be recognized over a weighted average period of 2.1 years) and $412M for restricted stock (2.8 years); additionally, $70M of unrecognized expense relates to performance-based awards expected to be recognized over 2.2 years.
• Exercise and vesting activity: In Q1 2026, stock option exercises generated $8M in proceeds and $9M aggregate intrinsic value (approximately 34 thousand shares; $2M tax benefit realized), compared to $18M proceeds and $28M intrinsic value on 0.1 million shares in Q1 2025; restricted stock vesting had a fair value of $197M (0.4 million shares; $48M tax benefit) vs. $229M (0.5 million shares; $56M tax benefit) in Q1 2025; performance-based restricted stock vesting had a fair value of $72M (0.2 million shares; $12M tax benefit) in Q1 2026 vs. $8M (approximately 15 thousand shares; $1M tax benefit) in Q1 2025.

• Effective tax rate: Moody's ETR was 24.0% for the three months ended March 31, 2026, up from 22.3% in the prior-year period; the 1.7% increase primarily reflects lower Excess Tax Benefits from stock-based compensation, which had a $18M impact on the year-to-date provision.
• Uncertain tax positions (UTPs): UTP reserves increased by $6M ($5M, net of federal tax) during Q1 2026; interest on UTPs is classified in interest expense, net, and any penalties would be recognized in other non-operating income, net.
• Open tax examinations: U.S. federal returns for 2022–2024 remain open; New York State returns for 2022–2024 are under examination; New York City returns for 2018–2022 are under examination with 2023–2024 open; U.K. corporate income tax returns are under audit for 2017–2023 with 2024 still open.
• Cash taxes paid: Income taxes paid were $115M for the three months ended March 31, 2026, unchanged from $115M in the same period of 2025.

Anti-dilutive exclusions: Anti-dilutive options to purchase common shares and restricted stock as well as contingently issuable restricted stock excluded from the diluted share count were 0.5 million shares for the three months ended March 31, 2026, compared to 0.4 million for the same period in 2025.

• Certificates of deposit and money market instruments: At March 31, 2026, cost and fair value were $777M (no unrealized gains/losses), allocated $733M to cash and cash equivalents, $41M to short-term investments, and $3M to other assets — down from $1.5B total at December 31, 2025 ($1.4B cash equivalents, $64M short-term investments, $2M other assets). Instruments consist of time deposits, money market deposit accounts, and money market funds; time deposits with maturities under 90 days at purchase are classified as cash equivalents.
• Mutual funds: Fair value was $96M at March 31, 2026 (cost $87M, unrealized gain $9M), classified entirely in other assets, compared to fair value of $108M at December 31, 2025 (cost $95M, unrealized gain $13M).
• Maturity profile: Short-term investment certificates of deposit carry remaining contractual maturities of one month to 12 months at both period-ends; those in other assets carry 14 months to 22 months at March 31, 2026 and 13 months to 22 months at December 31, 2025.
• COLI: The contract value of company-owned life insurance (COLI) was $50M as of both March 31, 2026 and December 31, 2025.

• Fair value hedges — interest rate swaps: The Company holds interest rate swaps converting fixed-rate long-term debt to SOFR-based floating rates; total notional declined to $1.8B as of March 31, 2026 from $2.3B as of December 31, 2025, reflecting the removal of the 2017 Senior Notes due 2028 ($500M notional). Net interest settlements and accruals on these swaps recorded in interest expense, net were ($8M) in Q1 2026 vs. ($18M) in Q1 2025; fair value changes on swaps and hedged debt largely offset at ($6M) and $6M, respectively, in Q1 2026.
• Net investment hedges — debt: €500 million of the 2015 Senior Notes Due 2027 and €750 million of the 2019 Senior Notes due 2030 are designated as net investment hedges against euro/USD FX exposure; combined carrying value on the balance sheet was $1.4B as of March 31, 2026 (current portion $576M, long-term $864M) vs. $1.5B as of December 31, 2025.
• Net investment hedges — cross-currency swaps: EUR/USD Pay Fixed/Receive Fixed notional increased to €2,197 million pay / $2.4B receive as of March 31, 2026 (from €1,997 million / $2.1B at December 31, 2025); Pay Floating/Receive Floating EUR/USD remained at €1,688 million / $1.8B; HKD/USD and SGD/HKD swaps were unchanged. Total net investment hedge gains/(losses) recognized in AOCL were $95M in Q1 2026 vs. ($130M) in Q1 2025, with cumulative AOCL balance improving to ($99M) from ($194M) at year-end.
• Undesignated derivatives — FX forwards and total return swaps: FX forward notional against USD expanded materially (e.g., contracts to sell USD for GBP grew to $1.2B from $693M), with all contracts expiring through December 2026; these generated a ($29M) loss in Q1 2026 vs. $18M gain in Q1 2025 recorded in other non-operating income, net. Total return swap notional was $68M as of March 31, 2026 vs. $72M as of December 31, 2025, with fair value and related Q1 gains characterized as not material.

• Fintellix and MERIS acquired (2026): Both acquisitions closed in 2026 within the MA segment, collectively adding $26M in gross goodwill during the three months ended March 31, 2026; no further consideration detail is disclosed in this note.
• CAPE Analytics and ICR Chile acquired (2025): Acquisitions within the MA and MIS segments respectively, comprising the primary driver of $143M in consolidated goodwill additions/adjustments for the year ended December 31, 2025 ($135M in MA, $8M in MIS).
• MA Regulatory Solutions held for sale (2025/2026): The planned divestiture of the MA Regulatory Solutions business resulted in a reclassification of $89M of MA gross goodwill to assets held-for-sale in 2025, with a further $6M adjustment in Q1 2026; further detail is discussed in Note 11.
• MA Learning Solutions Business divested (2025): Divestiture of the MA Learning Solutions Business reduced MA segment gross goodwill by $9M in the year ended December 31, 2025.

Program overview: On December 19, 2024, the CEO approved the Strategic and Operational Efficiency Restructuring Program, which upon completion is expected to generate annualized savings of $250M to $300M through staff reductions, rationalization and exit of certain leased office spaces, and retirement of certain legacy software applications; the program is expected to be substantially complete by end of 2026.

• Charges incurred: Q1 2026 total restructuring expense was $27M ($25M employee termination and other related costs, $1M real estate related costs, $1M internally developed software-related charges), versus $33M in Q1 2025; cumulative expense incurred to date is $180M against an expected total of $210M–$230M in personnel-related charges, $5M in real estate non-cash charges, and $10M–$15M in software amortization charges.
• Liability rollforward: The restructuring liability rose from $41M at December 31, 2025 to $46M at March 31, 2026, reflecting $25M of costs incurred and adjustments offset by $20M of cash payments; the full $46M balance is expected to be paid out within the next twelve months.
• Cash outlays: Total program cash outlays are expected to be $210M to $230M, to be paid through 2027.

• Derivative liabilities: Derivative contracts carried at fair value totaled $481,000 (liability) and $9,000 (asset) as of March 31, 2026, versus $540,000 (liability) and $9,000 (asset) as of December 31, 2025; all classified as Level 2, valued using industry-standard models that project future cash flows discounted to present value using spot rates, forward points, currency volatilities, interest rates, and non-performance risk of the Company and its counterparties.
• Money market funds/mutual funds: Balances of $173,000 (March 31, 2026) and $113,000 (December 31, 2025), classified as Level 1 equity securities under ASC Topic 321, with changes in fair value recognized through net income.

• Assets held-for-sale: In December 2025, the Company entered into an agreement to sell the MA Regulatory Solutions business; as of December 31, 2025, related assets and liabilities were classified as held-for-sale, with assets of $101M and $98M and liabilities of $47M and $36M as of March 31, 2026 and December 31, 2025, respectively, and the transaction is expected to close in the second quarter of 2026.
• Incentive compensation decline: Incentive compensation within accounts payable and accrued liabilities fell sharply to $111M at March 31, 2026 from $390M at December 31, 2025, reflecting typical seasonal payout timing.
• Derivative hedge liabilities: Derivative instruments designated as accounting hedges within other liabilities declined to $456M at March 31, 2026 from $540M at December 31, 2025.
• Non-consolidated affiliates: Total investments in non-consolidated affiliates were $495M at March 31, 2026 ($126M equity method, $349M measurement alternative, $20M other); the most significant equity method investment is a minority interest in CCXI and the most significant measurement alternative investment is a minority interest in BitSight.

Reclassifications out of AOCL: Amounts reclassified out of accumulated other comprehensive loss (AOCL) were not material for all periods presented, with the three months ended March 31, 2026 showing $1,000 reclassified from cash flow hedges.

• AOCL ending balance: Total AOCL was ($519,000) as of March 31, 2026, compared to ($578,000) as of March 31, 2025, with the largest component being foreign currency translation adjustments at ($347,000) and ($642,000), respectively.
• Q1 2026 OCI movement: Net other comprehensive loss for the three months ended March 31, 2026 was ($19,000), driven primarily by ($116,000) in foreign currency translation losses, partially offset by $95,000 in net investment hedge gains.
• Q1 2025 OCI movement: Net other comprehensive income for the three months ended March 31, 2025 was $60,000, driven by $190,000 in foreign currency translation gains, partially offset by ($130,000) in net investment hedge losses.

• Debt structure: Total principal outstanding was $7.1B as of March 31, 2026 (versus $7.2B at December 31, 2025), with a carrying value of $7B after $90M in fair value of interest rate swap adjustments, $47M in unamortized discounts, and $40M in unamortized debt issuance costs; the current portion is $576M (the 1.75% 2015 Senior Notes due 2027), leaving long-term debt of $6.4B.
• Fair value vs. carrying value: Estimated fair value of total debt was $6.1B at March 31, 2026 versus a carrying value of $7B, compared to $6.2B estimated fair value against $7B carrying value at December 31, 2025; fair values are based on quoted prices in active markets (Level 1 inputs).
• Interest expense, net: For the three months ended March 31, 2026, net interest expense was ($66M) versus ($61M) in the prior-year period; expense on borrowings fell to ($55M) from ($72M), while expense on UTPs and other tax related liabilities rose sharply to ($16M) from ($6M) (the 2026 figure includes interest accrued on a reserve for an international non-income tax obligation); interest paid was $78M versus $91M.
• Covenant compliance: As of March 31, 2026, the Company was in compliance with all covenants across all debt agreements, and there were no cross defaults triggered under the cross-default provisions present in all debt agreements.

• Lease composition: Substantially all operating leases relate to office space; finance leases are not material. Renewal options can extend lease terms from one year to 20 years at the Company's discretion.
• Lease cost: Total lease cost was $27M for the three months ended March 31, 2026 (vs. $24M in the prior-year period), comprising $23M operating lease cost, $6M variable lease cost, and ($2M) sublease income.
• Operating lease metrics: Weighted-average remaining lease term increased to 6.7 years as of March 31, 2026 (vs. 3.7 years as of March 31, 2025); weighted-average discount rate rose to 4.7% (vs. 3.2%). Cash paid for operating lease liabilities was $26M in Q1 2026, and right-of-use assets obtained in exchange for new operating lease liabilities were $19M.
• New headquarters lease: In Q4 2025, the Company entered into an operating lease for a new headquarters in New York City for which it has not yet been granted access to the leased floors; accordingly, the ROU assets and operating lease liabilities at March 31, 2026 do not reflect this lease. Future minimum payments are approximately $600M, commencing June 2026 with a 17-year lease term.

Segment structure: The Company reports 2 reportable segments — MA and MIS — with the CEO serving as the CODM, who uses Adjusted Operating Income to assess profitability and allocate capital each quarter. Assets are not reported by segment as the CODM does not use that metric for resource allocation.

Intersegment fees: MA charges MIS for certain MA products and services used in MIS's ratings process; MIS charges MA for rights to use and distribute content, data and products developed by MIS. These fees are based on market value and appear as 'Eliminations' in the segment table.

Overhead allocation: Costs exclusively benefiting one segment are fully charged to that segment; costs benefiting both segments are generally allocated based on historical/budgeted revenue amounts.

Restructuring program: Cumulative restructuring expense through March 31, 2026 under the Strategic and Operational Efficiency Restructuring Program totals $131M for MA and $49M for MIS ($180M combined). Expected remaining costs are $160M to $175M for MA and $65M to $75M for MIS.

• Revenue growth: Moody's total revenue grew 8% to $2.1B in the three months ended March 31, 2026 from $1.9B in the prior year, with both MA external revenue ($926M, +8%) and MIS external revenue ($1.2B, +8%) contributing; MA growth was driven by sustained demand for insurance offerings, cloud-based KYC and banking solutions, and ratings data feed/credit research products, with Organic constant currency recurring revenue and ARR up 7% and 8%, respectively; MIS growth was driven by robust investment-grade issuance in CFG including AI-related financing from hyperscalers and strong Project and Infrastructure Finance issuance, with Organic constant currency revenue growth of 6%.
• Expenses: Total operating and SG&A expenses rose 8% to $1B (from $930M), driven by higher salaries and benefits including unfavorable foreign exchange impacts and a reserve for an international non-income tax obligation; depreciation and amortization increased 8% to $122M (from $113M) due to higher amortization of internally developed software related to MA cloud-based solutions; restructuring charges declined 18% to $27M (from $33M).
• Margins and non-operating: Operating margin expanded 30 BPS to 44.3% and Adjusted Operating Margin expanded 150 BPS to 53.2%, both reflecting revenue growth and disciplined cost management; total non-operating expense, net widened 24% to ($52M) (from ($42M)), reflecting interest and penalties on the international non-income tax reserve and lower interest income from reduced cash balances, partially offset by lower interest expense from debt and swap maturities.
• EPS and tax: ETR increased 170 BPS to 24.0% (from 22.3%) primarily reflecting a decrease in Excess Tax Benefits related to stock-based compensation; diluted EPS grew 8% to $3.73 (from $3.46) and Adjusted Diluted EPS grew 13% to $4.33 (from $3.83).

• Revenue growth: Total revenue rose 8% to $2.1B in 2026 from $1.9B in 2025, with U.S. revenue up 11% to $1.2B and total Non-U.S. revenue up 5% to $899M; within Non-U.S., Americas declined (13%) to $107M while EMEA grew 8% to $615M and Asia-Pacific grew 6% to $177M.
• Expense growth: Total expenses increased (7%) to $1.2B from $1.1B, with Operating expenses up (8%) to $531M, SG&A up (9%) to $477M, and D&A up (8%) to $122M; Restructuring improved 18% to $27M.
• Profitability: Operating income grew 9% to $922M (operating margin 44.3% vs. 44.0%); Adjusted Operating Income grew 11% to $1.1B (Adjusted Operating Margin 53.2% vs. 51.7%); Diluted EPS rose 8% to $3.73 and Adjusted Diluted EPS rose 13% to $4.33; ETR was 24.0% vs. 22.3%.
• Staffing: Total MCO headcount was 16,050 as of March 31, 2026 vs. 15,795 as of March 31, 2025 (up 2%), with MA down (3%) to 7,741, MIS up 7% to 6,163, and MSS up 7% to 2,146.

• Global revenue growth: The 8% increase in global revenue reflects growth of 8% in both MA and MIS, with U.S. revenue up $115M and Non-U.S. revenue up $40M.
• Organic constant currency: On an organic constant currency basis, revenue grew 6%.

• Operating margin drivers: Modest operating margin expansion (reported 44.3%, ⇑ 30 BPS; Adjusted 53.2%, ⇑ 150 BPS) was driven by revenue growth coupled with disciplined cost management, mostly offset by a reserve recorded in the first quarter of 2026 relating to an international non-income tax obligation.

• Interest expense drivers: The increase in interest expense was primarily due to $12M in interest related to a reserve for an international non-income tax obligation and lower interest expense on borrowings of $17M, primarily related to the maturity of both debt and related interest rate swaps (partially offsetting the increase).
• Other non-operating income decline: The $5M decrease in other non-operating income was primarily driven by a $12M decrease in interest income reflecting lower cash balances from higher share repurchase activity coupled with lower interest rates, and $7M in accrued penalties related to a reserve for an international non-income tax obligation.

Effective tax rate driver: The ETR was higher than the prior year primarily reflecting a decrease in Excess Tax Benefits related to stock-based compensation.

EPS growth drivers: Both diluted EPS growth of $0.27 and Adjusted Diluted EPS growth of $0.50 primarily reflect the increase in operating income/Adjusted Operating Income.

• Revenue growth: Total MA revenue grew 8% to $929M in 2026 from $862M in 2025, with all three segments contributing: Decision Solutions (DS) up 7% to $432M, Research and Insights (R&I) up 8% to $255M, and Data and Information (D&I) up 10% to $239M.
• Adjusted Operating Income: Adjusted Operating Income rose 17% to $302M from $259M, with Adjusted Operating Margin expanding to 32.5% from 30.0%.
• Expense pressures: Total operating and SG&A increased 10% to $661M from $603M; a $34M reserve for international non-income tax obligation was recorded in 2026 (no comparable charge in 2025), and depreciation and amortization rose 6% to $100M, partially offset by a 23% decline in restructuring charges to $20M.

• Global MA revenue growth: MA revenue increased 8% globally, with U.S. revenue up 6% ($24M) and non-U.S. revenue up 9% ($43M), reflecting growth across all LOBs.
• Organic constant currency: Organic constant currency revenue growth was 6%; organic constant currency recurring revenue growth was 7%.
• Recurring revenue: Recurring revenue growth was 11%, and ARR increased 8%.

• Overall DS revenue growth: Global DS revenue grew 7% year-over-year for the three months ended March 31, 2026, with U.S. up 5% (+$8M) and non-U.S. up 8% (+$19M), totaling a $27M increase; recurring revenue grew 13%, organic constant currency revenue grew 7%, organic constant currency recurring revenue grew 10%, and ARR grew 10%.
• Insurance: Revenue grew 11%, driven primarily by continued demand for subscription-based catastrophe modeling tools; recurring revenue grew 13%, organic constant currency revenue and recurring revenue grew 9% and 10%, respectively, and ARR grew 7%.
• KYC: Revenue grew 17%, reflecting strong demand and customer retention driven by expanded compliance data use cases and a favorable foreign currency translation impact; recurring revenue grew 17%, both constant currency revenue and recurring revenue grew 11%, and ARR grew 13%.
• Banking: Revenue declined 6%, primarily reflecting the impact of the MA Learning Solutions divestiture in the fourth quarter of 2025, though recurring revenue within Banking grew 10% driven by expansion of existing customer relationships to cloud hosted subscription-based banking offerings.

• Installed software subscriptions: Revenue from installed software subscriptions declined during the period.
• Transaction revenue: Transaction revenue declined 77%, reflecting the impact of the divestiture of the MA Learning Solutions business and MA's continued strategic shift to cloud hosted subscription-based solutions.
• Banking organic growth: Organic constant currency revenue growth and organic constant currency recurring revenue growth for Banking was 3% and 9%, respectively.
• ARR: ARR grew 10%, reflecting expansion of existing customer relationships to subscription-based banking offerings.

• Revenue growth: Global R&I revenue increased 8% compared to the first quarter of 2025, with U.S. revenue up $10M (8%) and non-U.S. revenue up $9M (8%).
• Growth driver: The increase was attributable to continued strong retention and demand for credit research product offerings, which contributed to R&I ARR growth of 7%.

• Revenue growth: Global D&I revenue increased 10% compared to the first quarter of 2025, with U.S. revenue up 8% ($6M) and non-U.S. revenue up 11% ($15M), driven by continued strong demand for ratings data feeds and company data applications, coupled with a favorable impact from foreign currency translation.
• Constant currency growth: Constant currency revenue growth for D&I was 5%, implying foreign currency translation contributed meaningfully to the reported 10% increase.
• ARR: ARR grew 6%, reflecting the same demand drivers — ratings data feeds and company data applications.

• Adjusted Operating Margin drivers: Margin expansion was driven by 8% growth in global MA revenue, combined with operational efficiency, disciplined cost management, and cost savings from the Strategic and Operational Efficiency Restructuring Program.
• Depreciation and amortization: The increase in D&A expense reflects higher amortization of internally developed software related to the development of cloud-based solutions.

• MIS revenue growth: Total MIS revenue grew 8% to $1.2B in 2026 from $1.1B in 2025, with total ratings revenue up 8% to $1.1B driven by CFG (+12% to $633M) and PPIF (+8% to $176M), partially offset by a (1%) decline in SFG to $137M.
• Adjusted operating margin: Adjusted Operating Income rose 9% to $803M, with Adjusted Operating Margin expanding 70 basis points to 66.7% from 66.0%, despite a (6%) increase in total operating and SG&A to $401M.
• Rated issuance volumes: Total MIS rated issuance grew 6% versus Q1 2025, with Investment Grade up 32% and High Yield Bonds up 21%, while Leveraged Loans declined (13)% and Structured Finance declined (5)%.

• Global MIS revenue: Global MIS revenue grew 8%, driven by a $91M increase in U.S. revenue, partially offset by a $3M decline in non-U.S. revenue; U.S. grew 13% while international declined 1%.
• Organic constant currency: Organic constant currency revenue growth was 6%.
• Ratings LOBs: Growth was reflected across all ratings lines of business, excluding SFG.

• Revenue growth: CFG revenue increased 12% overall, reflecting U.S. growth of 21%, partially offset by an international decline of 7%; constant currency revenue growth was 10%.
• Transaction revenue drivers: Transaction revenue increased $57M versus the prior-year period, driven by higher investment-grade revenue from robust first quarter issuance including several jumbo transactions (AI-related financing from hyperscalers in the technology sector) and strong investor demand for high-quality credits, as well as increased speculative-grade bond issuance activity primarily in the U.S., supported by elevated yields and continued tight credit spreads for a majority of the first quarter.
• Geographic split: U.S. revenue increased $81M while non-U.S. revenue declined $12M.

Bank loan revenue: Decreased due to lower issuance activity compared to a strong prior year comparative.

• Revenue change: Global SFG revenue decreased 1% for the three months ended March 31, 2026, reflecting a 6% decline in U.S. revenue, partially offset by 13% international growth; constant currency revenue declined 3%.
• Transaction revenue: Transaction revenue decreased $4M compared to the first quarter of 2025, driven by a decline in CMBS activity coupled with lower CLO refinancing activity.

ABS issuance: Strong ABS issuance was supported by constructive spread conditions and strong investor demand.

• Revenue growth: FIG revenue increased 2% to $194M for the three months ended March 31, 2026, from $191M in the prior-year period, with U.S. revenue up $7M (7%) partially offset by a $4M (4%) international decline; constant currency revenue declined 1%.
• Recurring revenue: Recurring revenue increased by $7M, primarily reflecting the impact of annual price increases and higher monitored credits.

Transaction Revenue decline: Transaction Revenue decreased $4M compared to the first quarter of 2025, primarily reflecting lower volumes from infrequent issuers, particularly in the insurance sector.

• Revenue growth: PPIF revenue increased 8% for the three months ended March 31, 2026, with both U.S. and international each growing 8%; constant currency revenue increase was 6%.
• Transaction revenue: Increased $8M compared to the first quarter of 2025, reflecting strong investment-grade issuance in U.S. infrastructure finance driven by ongoing infrastructure funding needs and AI and data center-related issuance.
• Recurring revenue: Increased $5M, driven by the impact of annual price increases and higher monitored credits.

• Compensation drivers: Compensation expenses of $307M increased $27M, driven by unfavorable foreign exchange impacts, annual salary increases, and higher headcount primarily from acquisitions.
• Non-compensation expenses: Non-compensation expenses of $91M decreased $5M, with expenses generally in line compared to the prior year.
• FX impact: Changes in foreign currency translation rates unfavorably impacted MIS Operating and SG&A expenses by 2%.

• Margin drivers: MIS Adjusted Operating Margin expansion primarily reflects an 8% increase in revenue, coupled with operating leverage of the business and disciplined cost management.

• Capital allocation philosophy: Moody's states its commitment to deploying cash flow toward investing in employees, organic growth initiatives, and inorganic acquisitions aligned with strategic priorities.
• Shareholder returns: Excess capital beyond those investments is returned to shareholders through a combination of dividends and share repurchases.

• Operating cash flow: Net cash provided by operating activities increased $182,000 favorable to $939,000 for the three months ended March 31, 2026, compared to $757,000 in the prior-year period.
• Investing activities: Net cash used in investing activities was ($91,000) in the three months ended March 31, 2026, a ($315,000) unfavorable swing versus net cash provided of $224,000 in the prior-year period.
• Financing activities: Net cash used in financing activities was ($1.7M), an unfavorable change of ($421,000) versus ($1.3M) in the prior-year period.
• Free Cash Flow (non-GAAP): Free Cash Flow, defined as net cash provided by operating activities minus cash paid for capital expenditures, increased $172,000 to $844,000 from $672,000 in the prior-year period.

• Operating cash flow increase: Net cash flows from operating activities for the three months ended March 31, 2026 increased by $182M compared to the same period in 2025.
• Key drivers: The increase was driven by growth in operating income of $76M coupled with various changes in working capital, and approximately $70M in lower incentive compensation payments in 2026 (based on full-year 2025 financial and operating results) compared to payments made in the prior year (based on full-year 2024 financial and operating results).

• Year-over-year change: Cash used in investing activities increased by $315M in the three months ended March 31, 2026 compared to the same period in 2025, primarily driven by a $485M decrease in sales and maturities of investments, largely due to the maturity of certificates of deposit in the first quarter of 2025 (proceeds of which were used to repay notes payable in the prior year).

• Acquisitions: Lower cash paid for acquisitions, net of cash acquired, of $200M, primarily due to amounts paid for the acquisition of CAPE Analytics in the first quarter of 2025.

• Treasury share repurchases: The $421M increase in cash used in financing activities in the three months ended March 31, 2026 compared to the same period in the prior year was primarily driven by higher cash paid for treasury share repurchases of $1.1B compared to the same period in the prior year.

Notes payable repayment: A $700M repayment of notes payable occurred in the prior year, which partially offset the current period comparison.

• Cash and investments balance: Aggregate cash and cash equivalents and short-term investments totaled $1.5B at March 31, 2026, of which approximately $1.1B was located outside of the U.S., and approximately 23% is denominated in euro and GBP.
• Repatriation and deferred taxes: The Company has provided deferred taxes for entities whose earnings are not considered indefinitely reinvested and continues to repatriate a portion of non-U.S. cash, with repatriated amounts potentially subject to state and local taxes or withholding taxes notwithstanding the Tax Act's general elimination of federal income tax on future cash repatriation.
• Liquidity management: The Company manages both U.S. and non-U.S. cash flow to maintain sufficient liquidity in all regions to effectively meet its operating needs, taking into account local statutory requirements, sufficient offshore working capital, and other jurisdiction-specific factors.

• Outstanding debt: At March 31, 2026, Moody's had $7.1B of outstanding principal on debt and $1B of additional capacity available under its CP Program, backstopped by the $1.3B 2024 Facility.
• Future interest: Future interest payments and fees associated with the Company's debt and credit facility are expected to be $3.5B, of which approximately $200M is expected to be paid in each of the next five years, with the remaining amount expected to be paid thereafter.
• Financing strategy: Management may consider pursuing additional long-term financing when appropriate in light of cash requirements for operations, share repurchases, and other strategic opportunities, which could result in higher financing costs.

• Definition and composition: Purchase obligations include multi-year agreements with vendors for goods or services, mainly data center/cloud hosting fees and fees for information technology licensing and maintenance.
• Total and payment schedule: As of March 31, 2026, purchase obligations totaled approximately $650M, with approximately 50% expected to be paid in the next twelve months and another approximate 50% over the two subsequent years, with the remainder to be paid thereafter.

• Operating lease obligations: Remaining payments on operating leases total $1B as of March 31, 2026, primarily related to real estate leases, with $99M expected over the next twelve months.

• Funded pension plan: The Company does not anticipate making significant contributions to its funded pension plan in the next twelve months, as the plan is overfunded at March 31, 2026 and holds sufficient investments to fund future benefit obligations.
• Unfunded plans: Payments for the Company's unfunded plans are not expected to be material in either the short or long-term.

• Quarterly dividend: The Board declared a quarterly dividend of $1.03 per share on April 20, 2026, payable June 5, 2026 to shareholders of record at the close of business on May 15, 2026; continued payment is subject to Board discretion.
• Share repurchase authority: The Board approved $4B in repurchase authority on October 21, 2025; approximately $2.5B of remaining authority was available as of March 31, 2026.
• Restructuring cash outlays: Future cash outlays under the Strategic and Operational Efficiency Restructuring Program are expected to be approximately $90M to $110M, expected to be paid out through 2027.

• Liquidity adequacy: The Company believes it has the financial resources needed to meet its cash requirements and expects positive operating cash flow over the next twelve months.
• Longer-term funding: Cash requirements beyond twelve months will depend on the Company's profitability and its ability to manage working capital requirements, with borrowing from various sources also available as described above.

• Purpose of non-GAAP measures: Management presents adjusted measures to supplement reported GAAP results for period-to-period comparisons and competitor benchmarking, explicitly noting these are not necessarily comparable to similarly defined measures of other companies and should not substitute for GAAP measures.
• Adjusted Operating Income exclusions: Adjustments to GAAP operating income include depreciation and amortization (excluded due to differing asset lives and acquisition methods across companies), restructuring charges/adjustments, charges related to asset abandonment, and a reserve for an international non-income tax obligation (excluded as not reflective of ongoing operating cost structure).
• Margin expansion: Adjusted Operating Margin improved to 53.2% for the three months ended March 31, 2026 from 51.7% in the prior-year period, while reported operating margin moved to 44.3% from 44.0%.
• Reserve for international non-income tax obligation: A $34M reserve for an international non-income tax obligation was added back in the three months ended March 31, 2026 (no comparable charge in 2025), contributing meaningfully to the year-over-year increase in Adjusted Operating Income from $994M to $1.1B.

• Non-GAAP measure: Organic constant currency revenue growth excludes inorganic revenue impacts from acquisition and divestiture activity completed within the last 12 months and the impacts of changes in foreign exchange rates; FX dollar impact is calculated as the difference between translation of current period non-USD functional currency results using prior period weighted average rates and current year reported results.
• MCO revenue reconciliation: Reported MCO revenue grew 8% ($155M) to $2.1B for the three months ended March 31, 2026 from $1.9B in the prior-year period; adjusting for a ($46M) FX impact, ($5M) of inorganic acquisition revenue, and $14M from divestitures yields the organic constant currency growth figure.

• MCO revenue: Reported MCO revenue grew 6% (approximately $118M) from $1.9B to $2B.
• MA revenue: MA revenue grew 8% ($67M) from $859M to $926M, with FX representing a ($25M) headwind and inorganic revenue from acquisitions contributing ($2M) as adjustments to arrive at organic constant currency figures.
• Divestitures: A $14M divestiture impact in the prior period resulted in a $14M positive adjustment in the organic constant currency reconciliation.

• Decision Solutions revenue: Reported $432M versus $405M in the prior period, a 7% increase, with FX creating a ($10M) headwind and inorganic revenue from acquisitions contributing ($2M) to the organic constant currency bridge.
• Top-line MA revenue: Totaled $899M versus $845M, a $54M or 6% increase, while divestitures contributed a $14M swing in the prior-period comparison.

• Organic constant currency revenue: Decision Solutions organic constant currency revenue was $420,000 in the current period versus $391,000 in the prior period, an increase of $29,000, or 7%.

• Banking revenue: Organic constant currency Banking revenue was $131M versus $127M in the prior period, an increase of $4M, or 3%.

• Research and Insights revenue: Rose $19M (8%) to $255M in the three months ended March 31, 2026 from $236M in the prior-year period; after a $4M unfavorable FX impact, constant currency growth was $15M (6%).
• Data and Information revenue: Rose $21M (10%) to $239M from $218M; after an $11M unfavorable FX impact, constant currency growth was $10M (5%).
• MA recurring revenue: Rose $87M (11%) to $909M from $822M; after a $25M unfavorable FX impact and a $2M inorganic contribution from acquisitions, constant currency organic growth was lower than the reported figure.

• Recurring revenue growth: Decision Solutions recurring revenue grew 13%, or $49, from $373 to $422, with an FX impact of $(10) and inorganic recurring revenue from acquisitions contributing $(2).

• Recurring revenue growth: Organic constant currency Decision Solutions recurring revenue was $410 compared to $373 in the prior period, an increase of $37, or 10%.

• Banking recurring revenue: Revenue was $127,000 in the current period versus $115,000 in the prior period, an increase of $12,000, or 10%.
• FX impact: Foreign exchange impact was ($2,000) in the current period and $— in the prior period, a ($2,000) effect.

• Organic constant currency Banking recurring revenue: Increased by $10M, or 9%, from $115M to $125M.

• Revenue change: Insurance recurring revenue was $177,000 versus $157,000 in the prior period, an increase of $20,000, or 13%.
• FX impact: Foreign exchange had a ($2,000) impact on the period-over-period change, with no prior-period FX impact noted.
• Inorganic contribution: Inorganic recurring revenue from acquisitions contributed ($2,000) to the period-over-period change, with no prior-period inorganic contribution noted.

• Organic constant currency Insurance recurring revenue: Revenue was $173M versus $157M in the prior period, an increase of $16M, or 10%.

• Revenue change: Recurring revenue increased $19, or 8%, period-over-period, from $233 to $252, with a foreign exchange impact of $(4).

• Revenue change: MIS revenue increased $88M, or 8%, with an FX impact of ($21M) and inorganic revenue from acquisitions of ($3M).

• Organic constant currency MIS revenue: $1,129 versus $1,065 in the prior period, an increase of $64, or 6%.

• Revenue change: Corporate Finance revenue was $633M versus $564M in the prior period, an increase of $69M or 12%.
• FX impact: Foreign exchange had a ($10M) impact on revenue for the current period, with no FX impact in the prior period.

Revenue change: Corporate Finance organic constant currency revenue increased by $59,000 (10%) from $564,000 to $623,000.

Structured Finance revenue: Revenue declined $1,000 (1%) year-over-year, from $138,000 to $137,000, with a foreign exchange impact of ($3,000).

• Structured Finance revenue: Organic constant currency Structured Finance revenue was $134M for the three months ended March 31, 2026, compared to $138M for the three months ended March 31, 2025, a decrease of $4M, or (3)%.

Revenue change: Financial Institutions organic constant currency revenue was $189M versus $191M in the prior period, a decline of $2M or (1)%.

• ARR definition: MA ARR is presented on an organic constant currency basis, calculated by annualizing total recurring contract value for active renewable contracts (subscriptions, term licenses, maintenance, and renewable services), excluding transaction sales such as one-time training, services, and perpetual licenses; FX rates are held constant at current-year budget rates across all periods, and contracts from acquisitions/divestitures completed within the last 12 months are excluded.
• Pending divestiture exclusion: Contracts associated with the MA Regulatory Solutions business were excluded from ARR to reflect the expected impact of the pending divestiture, given the close proximity of the anticipated closing date to the filing date.
• Overall ARR growth: Total MA ARR grew 8% year-over-year to $3.6B as of March 31, 2026, from $3.3B as of March 31, 2025, a $264M increase.