Follow Moody's to never miss an important update.
Moody's was named the top risk technology provider in the annual Chartis RiskTech100 report. This is the fifth year in a row the company has held the top spot, winning categories across risk management, banking, and data analytics. While the credit rating business is the most famous part of Moody's, this award highlights the strength of its analytics arm. This division sells software and data to help banks and insurers manage their own risks. For a long-term owner, this is a reminder that Moody's is successfully turning into a subscription software business, which provides more predictable cash flow than the one-off fees it earns from rating debt.
Source: Business Wire
The Federal Reserve, the central bank of the United States, raised interest rates by 0.25 percent this week. This move makes it more expensive for companies to borrow money, which often leads them to issue less new debt.
Since Moody's earns a fee every time a company issues a bond to be rated, a slowdown in the debt markets can directly impact its profits. While the company's analytics software business provides a steady stream of subscription income, the ratings side of the house remains sensitive to these shifts in borrowing costs.
Moody's is buying a minority stake in Philippine Rating Services Corporation, the leading firm that grades local debt in the Philippines. This move helps the company grow its presence in emerging markets where more businesses are starting to borrow money through formal debt markets. While this is a small deal for a company of this size, it fits the strategy of owning the infrastructure used to grade risk around the world. As more Philippine companies look to borrow, Moody's will now have a direct hand in the local system used to approve those loans.
Source: Business Wire
U.S. core inflation, which measures price changes for goods and services excluding food and energy, came in higher than expected this week. This makes it more likely that the Federal Reserve will raise interest rates to cool the economy.
For Moody's, higher interest rates are a headwind because they make it more expensive for companies to borrow money. When borrowing costs go up, companies often issue less new debt, which reduces the number of credit ratings Moody's is paid to provide. While much of the company's revenue now comes from its data and analytics software, its ratings business still depends on active debt markets to drive growth.
Source: Bloomberg Markets and Finance
Moody's is making its credit ratings and research available through Google Cloud's Gemini Enterprise for Financial Services. This means bankers and analysts can pull Moody's data directly into their AI-powered workflows without switching between different software tools.
This is a smart move for the company's analytics arm, which aims to be the primary source of data for financial decisions. By embedding its proprietary intelligence into the platforms where professionals already work, Moody's makes its subscription services harder to replace and more valuable as AI becomes a standard part of financial research.
Source: Business Wire
Management has a perfect record of beating their own targets for two years straight. The business is consistently outrunning expectations, which shows they have a firm handle on their costs and growth.
| Expectation | |
|---|---|
| EPS | $4.25 |
| Revenue | $2.07B |