Moody’s Shares Drop on Mixed Q1 Results, FY22 Guidance Cut

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Moody’s Corp. reported a first-quarter FY22 revenue decline of 5 percent year-on-year to $1.52 billion, beating the consensus of $1.51 billion.

Revenue for MIS was $827 million, down 20 percent Y/Y as geopolitical concerns, rising yields, and elevated market uncertainty affected issuance in all asset classes. Foreign currency translation unfavorably impacted MIS revenue by 1 percent.

Moody’s Analytics revenue grew 23 percent Y/Y to $695 million.

Corporate finance revenue was $417 million, down 31 percent Y/Y, mainly due to the decline in leveraged finance issuance.

The operating expenses shot up 16 percent Y/Y to $866 million. The adjusted operating margin contracted 890 bps to 48.2 percent.

Adjusted EPS of $2.89 missed the consensus of $2.90.

Moody’s held $1.9 billion in cash and equivalents and generated $470 million in operating cash flow.

CEO Rob Fauber said, “Growth in our KYC solutions and credit research led to another impressive quarter in Moody’s Analytics. This increased demand demonstrates the benefit of MA’s highly recurring revenue business model, which balances the more cyclical nature of Moody’s Investors Service.”

Dividend

The board declared a regular quarterly dividend of $0.70 per share, payable on June 10, 2022, to stockholders of record on May 20, 2022.

Outlook

Moody’s lowered the FY22 adjusted EPS outlook from $12.40 – $12.90 to $10.75 – $11.25, below the consensus of $11.91.

By Anusuya Lahiri 

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