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Index:
Introduction
Headline KPIs
Moody’s Investors Service (MIS)
Moody’s Analytics (MA)
Full-year 2026 guidance
Analyst Q&A
Capital structure and cash flow
Recent news
Conclusions
I. Introduction
Moody’s Corporation reported third-quarter 2026 results on October 21st, before the market open, followed by the earnings call the same morning.
After two blowout quarters, this was the deceleration management itself had telegraphed in July.
“For MIS, we expect low single-digit revenue growth in Q3 as market activity slows through the summer, with Q4 revenue roughly flat versus prior year, consistent with normal seasonality.”
Revenue of $2.02 billion (+1%) and adjusted diluted EPS of $4.14 (+6%) came in below consensus of roughly $2.08 billion and $4.25 — the issuance pull-forward into the first half that the company flagged on the Q2 call materialized as expected.
Three things summarize the quarter:
Rated issuance declined 2% against a very strong prior-year comp, but total revenue fell by 1%, signaling some pricing compensation. There was as a significant decline in leveraged finance (high yield issuance -21%, leveraged loans -35%) offset record investment-grade activity (+16%) powered by AI and hyperscaler financing. Even so, at roughly $1.7 trillion this was the second-highest third quarter of issuance on record.
Moody’s Analytics kept its cadence: ARR up 8% to $3.69 billion, retention at 95%, recurring revenue at 99% of the segment, and the adjusted operating margin up 100 bps to 35.3%.
Full-year guidance was reaffirmed across the board — revenue, margins, EPS, cash flow and the $3.0 billion buyback — with management noting this is precisely why it did not raise revenue guidance in July despite the Q2 beat.
Rob Fauber described it as “another quarter of strong profitability and earnings growth” in a complex operating environment, crediting disciplined execution and healthy cash generation. GAAP diluted EPS of $4.24 grew 18%, helped by a $115 million divestiture gain.
The market reaction was neutral, with the stock declining less than 1% in early trading around $472, versus a prior close of $475.35 — about 14% below the 52-week high.
II. Headline KPIs
The quarter marks the transition from the exceptional first half to a normalizing second half:
Revenue $2,023m +1% (+3% organic constant currency); third consecutive quarter above $2 billion
MIS revenue $1,087m -1%, with transaction revenue -5% and recurring revenue +8%. Key data point.
Rated issuance ~$1.7T, -2% — second-highest Q3 on record despite the decline
MA revenue $936m +3% reported (+8% organic constant currency)
MA ARR $3,688m +8%, retention 95%
Operating margin 44.8% (-90 bps)
Adjusted operating margin 52.6% (-30 bps)
Diluted EPS $4.24 +18% (GAAP, flattered by a $115m divestiture gain)
Adjusted diluted EPS $4.14 +6%
First-time mandates +40% — the highest quarterly total in five years
Year-to-date, revenue stands at $6.29 billion (+8%), adjusted diluted EPS at $13.14 (+16%), and free cash flow at $2.2 billion (+22%) — so the full-year algorithm remains intact even with a soft Q3.
