📌 What the Company Does
Moody’s Corporation (MCO) is a global credit rating agency and financial analytics provider. It operates through two main segments:
- Moody’s Investors Service (MIS) – Provides credit ratings on corporate, government, and structured debt.
- Moody’s Analytics (MA) – Offers subscription-based data, risk management software, and financial research tools.
The ratings business is linked to global bond issuance activity, while the analytics segment generates more recurring subscription revenue. Together, these businesses position Moody’s at the center of global capital markets.
📊 Financial Highlights – Moody’s 10-K Analysis
From FY2023 to FY2025, Moody’s reported steady revenue growth and expanding profitability.
- Revenue increased consistently over the three-year period.
- Operating income grew faster than revenue, indicating improved operating efficiency.
- Net income and diluted EPS rose meaningfully, reflecting stronger earnings performance.
Cash flow from operations remained solid, supporting dividends and share repurchases while maintaining overall financial stability.
⚠️ Key Risks
- Regulatory Risk: Credit rating agencies operate under significant regulatory oversight globally.
- Debt Market Cyclicality: Ratings revenue depends on global bond issuance volumes.
- Reputation Risk: The business relies heavily on credibility and perceived analytical independence.
- Competitive and Technology Risk: The analytics segment faces ongoing technological and competitive pressures.
Because Moody’s plays a critical role in financial markets, regulatory scrutiny and reputational integrity are especially important.
📈 MD&A Overview
Management emphasized several key themes:
- Debt issuance trends continue to influence ratings revenue.
- Recurring analytics subscriptions provide stability and diversification.
- Capital allocation discipline includes dividends, share repurchases, and investment in technology.
Management highlighted the balance between cyclical ratings revenue and more stable subscription-based analytics income.
🧭 Takeaway
Moody’s demonstrated consistent revenue growth, expanding margins, and improving capital efficiency over the period. The company benefits from a strong competitive position in credit ratings and a growing analytics platform with recurring revenue characteristics. However, performance remains tied to global debt market activity and regulatory oversight.
Income Statement Summary
| (Unit: $m, EPS in $) | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue | 5,916 | 7,088 | 7,718 |
| Operating Expenses | 3,779 | 4,213 | 4,367 |
| Operating Income | 2,137 | 2,875 | 3,351 |
| Income Before Tax | 1,935 | 2,699 | 3,130 |
| Net Income | 1,608 | 2,059 | 2,462 |
| EPS (Diluted) | 8.7 | 11.3 | 13.7 |
Plain English: Revenue increased steadily from FY2023 to FY2025, and operating income grew at a faster pace than revenue. This indicates improving operating efficiency over time. Net income also expanded meaningfully, showing that the company converted a larger share of its revenue into profit. Diluted EPS rose consistently across the three years, reflecting both earnings growth and disciplined capital management.
Key Financial Ratios
| (Unit: %) | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| ROE (%) | 46.3% | 57.2% | 62.1% |
| ROA (%) | 11.0% | 13.7% | 15.7% |
| ROIC (%) | 21.3% | 25.1% | 29.9% |
| ROTC (%) | 20.4% | 25.8% | 29.9% |
| Debt-to-Equity Ratio (%) | 201.4% | 199.3% | 166.3% |
| Net Debt / EBITDA (x) | 1.9 | 1.5 | 1.2 |
| Interest Coverage (x) | 8.5 | 12.1 | 15.7 |
| Current Ratio (%) | 173.6% | 147.4% | 174.0% |
| Quick Ratio (%) | 154.1% | 132.8% | 150.0% |
| Fixed Assets to Long-term Capital Ratio (%) | 5.8% | 6.3% | 6.5% |
Plain English: Profitability and capital efficiency strengthened over time: ROIC and ROTC increased, indicating the business generated more operating profit for each dollar of capital it used (with ROIC excluding cash from invested capital, per the required definition). Leverage improved as well: Debt-to-Equity fell and Net Debt / EBITDA declined from 1.9x to 1.2x, while interest coverage rose sharply, meaning operating income covered interest expense more comfortably. Liquidity remained solid, with current and quick ratios staying above 1.0x equivalents (shown here as percentages).
📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.
👉 Moody’s Corporation (MCO) FY 2025 10-K Analysis (Filed 2026) | Explained for Beginners