Earnings call transcript Q4 2022

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Operator

Good day, everyone, and welcome to the Moody's Corporation Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the Company, we will open the conference up for questions and answers following the presentation.

I would now turn the call over to Shivani Kak, Head of Investor Relations. Please go ahead.

Shivani Kak

afternoon, you good today. joining and you, and for thank us Thank Shivani Relations. Investor Head I'm of Kak, This released for full targets. year and morning, quarter update of fourth Moody's an XXXX, its results our our outlook on full XXXX the year medium-term for and earnings presentation accompany are and this at ir.moodys.com. the our available on website release press teleconference The to both

press forward-looking Management's direct morning report at with Analysis on GAAP. the the During factors Please I refer actual end on figures. the a also on available which website which annual other this SEC's statements. differ or materially of ended forth the the to Securities of our to all with in for the act, referenced Form of our Act results by section Private within non-GAAP may December accordance I company, These, Safe end to XX-K your made and the Discussion such factors the adjusted adjusted call, in can website. release. that SEC contained in earnings this together Safe and any XXXX, and set we year and during are Harbor presenting will statement, release statements our cause between Harbor the important and could risk Today's reconciliation discussed remarks this those earnings Litigation Reform XX, the from filings attention the call language for your U.S. also In attention our contain tables filed XXXX. be towards of be meaning measures found to forward-looking call the the

the may morning that to media the call mode. a would out listen-only point be like members I this of in also on

Mark our Rob Fauber, by Executive outlook; he'll Officer, your after overview Chief which, and will key be of Officer, joined Moody's to Moody's answer Kaye, Chief questions. highlights an business results, and Financial provide President

to Rob. turn call the now I'll over

Rob Fauber

and results, to key today's expecting call. questions. afternoon, XXXX going with ahead thanks Good to then we XXXX for everybody to your we're joining take and look I'm Thanks, Shivani. our some start I'll from before for takeaways what

Our time, quarter financial the of reflecting growth. positive of on MA; consecutive XXth exceeded operating Revenue time, XXXX the of year the to challenging had It year; and the margin and fourth finish adjusted results resilience MIS. and at achieve same market the year are momentum a impact while its MA ARR quarter of the that and And for very XX%, strong full delivered XX year. conditions first distinction. grew results XX% MA's growth and Rule for XX% full the those demonstrate

to executed billion expanded challenging that's flexibility to in continue as financial October over the in we XXXX. deliver And in really our on the expense year. $XXX for future and positioned announced position And year ensure advance in coming it expected management during issuance, that and capture savings million to we're that generated strengthens revenue the MIS and it annualized significantly well our growth. program for to issuance we quarter, fourth weathered we franchise ratings $X.X a

and growth year full to our revenue year the Moody's base percent landscape, on ever-evolving of in addition, and And in single-digit best-in-class the that risk. XXXX, the for to a Now our to what with and deliver communicated on clearly expand to perspectives our we're And we're mid- XXXX. is we scale to integrated capabilities high grow previously grow investing is in intent range. medium-term reset mission, providing to with fast-paced and expect maintaining a targets

XX.X% exchange, the XX%. MA overall, margin constant of $X.XX. And MA and excluding approximately was achieved time $X.X the would growth XX%. diluted Moody's impact half history. dollar mentioned, in a an as year EPS MA been total billion. financials. of grew full And operating our first negative ARR And Moody's So growth by our was revenue both I foreign turning to of revenue revenue XX%. contributed our total adjusted Organic for revenue for with have adjusted

and possible improve Now helped customers. moving the of strategy important been it's XXXX. to outlined incredibly remain our priorities us see on. of the for on global order of products, We our industry into new by They've and committed realize four laser launch potential employees. And In strategic really assessment the a strategy, work talented February of and our awards. made our in wonderful success focused new expand has number experience I collective achieve that to risk the this integrated markets

for RiskTechXXX. the addition, that For in XXth to year, earlier-stage of Agency innovators. of the was investors. And portfolio hundreds Rating and Chartis And Investor first of our demonstrates and we in compliance the Institutional space the earned quality from Credit momentum in the that really of in solutions. our and top placed household remain agency really ranges the assessment sector the clear ahead the companies MIS with testament technology ranking of our names to time, a risk choice strategy the Best voted by we Moody's it's consecutive risk And of

rating in majority in presence to largest that stake Local XXXX, made emerging our ratings investments Moody's the in enhance expansion and the And Latin our acquisition includes of America. in MIS, we the of agency further domestic in Africa In markets. important several

they MIS. for credit met as greater scores out also ESG in than rolling to specifically transparency by We ESG risks, need more across new the impact XX,XXX relate credit

to number a customer and we needs. and data offerings Now products analytics, across MA, meet of workflow new created enhanced evolving through integration of our the we

growth several contributed a in organic significant portion of going touch products XXXX. in sales In MA newly a minutes. fact, few these developed on I'm to of

outlook the MIS. Turning for to

rate in of debt economic pace mentioned and in are we factors XXXX through and environment, I interest increases of the issuance remains last causing inflationary that the persist major trajectory of As half volatility growth really the economies impacted quarter, The markets, uncertain. to in that expect still first XXXX. the equity

needs activity half So they fully resume in take recovery a to point some issues but we to issuance year. the to all growth, to debt going issuance, up for pick and in the resolve for expect and second economic refunding market which demand it's pent-up baseline these of to time and

the expense decisive that XXXX. actions the And MIS' research issuers managing the same in this prudently and quarter quality at in with environment, we operating the to and balancing insights; that are proactively investors commitment the expect ratings while percent range will adjusted And time, and cost. to our we swift fourth in serve return took we mid-XXs to margin highest and enable management

last years, improving as has currency to growth to investments delivered on an $XXX for year businesses in the revenue these development basis, XXXX moving of and have to want the excess organic of three with XXXX. and helped steadily XX%. acquisitions. been of we're $X XXXX well billion over highlight three recurring product in made revenue each I future deliver So X.X% positioned in each ARR million X.X% of in in impact And than and revenue. significant MA. our that the us growth investments growth in constant we've additional from And XX.X% And more sales recurring

CreditView, our our which ARR some as business, and more KYC Orbis had products and high greater year. compliance growth XX%. delivered such And growth ARR fastest-growing established than last is business, In single-digit our of fact, even

give news into And data little engine. solution which of contributing solution, enables me this products our risk let going start our and fourth customer it that checks combined built nonfinancial several offering MA Lifecycle growth. how and portal configurable the both and bit it our the KYC of And user-friendly quarter, sets. for completed door one a acquired with So a this resonating customer to a leverage are that customers and capabilities. third-party new people to accurate company, years, the vetting in offers integrates so segments and it's and several over I'm capabilities fast with we've you markets crime customer vast and financial due diligence. of our to corporate to newly-launched customers. And supporting insight And new supplier largest-ever and tool past is In a powerful our a workflow the sales opening with compliance screening with we

which enhanced with recently our Climate our risk our are is analytics which beyond. in the capabilities and We and RMS traction part very and MA And Demand from launched version of of integrates rich and on banking offerings, scope growing customers. sectors of suite gaining of transition Demand product, and physical insurance climate our an also the on our Climate broadens

on late For them an better financial risks awarded financial the to example, impact important the year broader in selected economy. of and measure understand a last we institutions sales climate help us U.S. were mandate regulator facing major as

lenders. sheets. balance this and ability of risk we're by ability the of this real we in across the our product of one and capabilities And product because positive solution that's feedback encouraged operations partner estate, integrates States, specific financial quantify with to the analytics Moody's, some impact well the date. our bank lenders commercial excited And into assessment includes to real of and selected bank's customer proprietary market that data, extended as on needs property real of bring progress United the estate were we forecast in credit physical risk, And classes asset commercial CreditLens meet largest unique banking, emissions. And as exposures on to estate our finance our sales and and to origination we're from together one to climate and the of largest

are leveraging robust sales for strong a demonstrate very integrating and together, examples, product foundation So our continued we're build we these think, distribution driving how pipeline innovation as to I capabilities, growth. a

our turn margin project a XXXX, be to revenue guidance percent single-digit will We want in the mid- to to the for few range of I operating and to adjusted for the to grow of highlight So let and a is base in the just high Moody's metrics. outlook our in targets year that to range the forecast with communicated diluted range be XX% $X of And to EPS term, to previously growth XX%. maintaining $X.XX. reset we're XXXX. the Adjusted medium of me

strong once we quarter summary, closing indeed, to macroeconomic the potential both reinforced year. immense in in levels as growing opportunity we'd we of and the MA to a productive success, the continued And position characterize against made see what unlock we've the the to headwinds, issuance a MIS the fourth of backdrop business foundation recover. for out And progress for challenging capture and

XXXX in of the to the the growth on of I confidence and So as have in strength, in continue and Moody's perspectives provider we leading potential invest of integrated business as we've risk. building tremendous position entered a execute

questions. to Mark with Operator? and I be And that, pleased take would your

Operator

Patnaik your Manav Instructions] Barclays. line [Operator of from from And the first question comes

Manav Patnaik

to to low try plus mid-single on I your the little optimistic and always base, business, even for and was in And outlook X wanted to that a type a flush it wanted more ratings I down X though guidance Rob, business, to the digits come assumptions. just at GDP bit has pricing through more medium-term too. lot. competitor the a you’ve which guess, touch had your there, obviously -- thought a I just maintained I

just to through are guys how you So thinking understand trying that.

Rob Fauber

Yes. 'XX. from gotten and the XXXX XXXX questions 'XX to than things you Manav, 'XX and to XXXX put average around years. to the of are quickly exclude how than effectively if more we've in higher total issuance kind some And perspective, going was XXXX just that to snap XX% back

in pandemic years. So were, fact, unusual and those extraordinary years two

of believe we And more what so re-baselining obviously, are are, kind normalized in levels of of we issuance. fact, off

something if X% that talking you at fact, was average historical I was down average. total like XXXX In issuance, it that from look about,

average two and upside of while some Manav, is this, XXXX in issuance to another X% But extraordinary kind we're years. way at, the there to you're at I those was thinking that term? kind historical below So getting about about also think, the of, medium way overall look ex

good issuance, you issuance, of at actually something percent as the a like XXXX XX%. it at of was you corporate look corporate we in kind bit down forward. If we're And look mix total look of and issuance if down a as

been us there's here. way, a shift in a think mix against I So

medium for a as issuance the so term. there's think And might there more of some upside if to the opportunity total, way be the corporate about we you that percent think

Mark Kaye

target being And guidance see once remain just remarks, to add open we of to nature. specific now revisiting the as macroeconomic do insight do in the possibility unfolds. on looking at conservative some and may and better that that Rob's into as Yes. issuance environment have this We the investors year slightly the recognize we this

Manav Patnaik

stuff to does was question is an it. that perhaps looking segments? the expense you've that split ramp And got between that Mark, what about, the Okay, talked I and sense. expense open-ended Makes you like typically just how two talk But savings maybe the for then about even do.

Mark Kaye

Manav, thank you.

with So firstly expense maybe me let start the ramp.

inclusive And And increases, organic efficiency So our XXXX million quarter investments first merit the our and XXXX we XXXX of the that then and our and to the of annual geolocation expenses million relatively then of realize the as to incremental and primarily of quarter we restructuring the fourth $XX stable between actions. of that's XXXX an benefits of between we operating exclude and fourth and remain first additional expect ramp from to XXXX, $XX $XX million. items. between only XXXX, to cost the any compensation million of $XX contribute growth, both anticipate the program restructuring-related incentive of expense reset any quarter quarter ramp

restructuring. second your sub-question, On

through aggregate locations. to and personnel that $XX split real rationalization into related expect to we as to and be we still to XXXX, and million and alternative of MA, million $XX utilize for charges, for So reduction million million $XX downsize both estate lower-cost incur selectively the up year-end and will in the to that's million MIS $XXX $XX

full year some were we accelerate XXXX, actions. the our able to For of

and million splits accrued to $XX we in for we'll then million so into million $XX pre-tax $XX forward, is charges the that million indeed restructuring incremental XXXX. charges And estate million in from in the And looking approximately incur we and to October. $XXX $XX MIS. and personnel-related up for total real we MA million million for that in up finally, estimate And back to guided charges in $XX year, $XX

Operator

Lau Your from next Owen question Oppenheimer. comes from of the line

Owen Lau

on terms to have sense I also previous a question it's in quarterly of one and revenue margin but of the to seasonality basis maybe the the please related in a expectation related you give seasonality. a XXXX? Could

Mark Kaye

Owen, good afternoon.

market for the MIS, So we to our first case central result, really assumption XXXX. disruption during as that the the through is And persist XXXX cyclical of experienced of for half a majority become we first when and the to half of expect vis-à-vis capital prior be conditions period comparables, spreads the more transaction market weaker revenue the year the constructive. the in second half significantly

and grow our that And midpoint half of margins percent first year half second in the the for percent revenue full in half XXXX the mid-XXs of versus implies the specifically, revenue then So our second the decline MIS of revenue MIS to half to guidance low in teens year. underscores the expectation range. higher year range first also the

increases as XXXX as be and as year, such, quarter we revenue of absolute is margin quarter our XX%, our first over forecasted XXXX. all If dollar savings. expect broad-based margin similar operating And by before across strength to of expect the I benefits MA, revenue increase the cost through And of actual obviously, approximately of revenue recurring, given total fourth MA look remainder realize the full business. course increase highly we year by MA's we to the underpinned will lines adjusted revenue improving that progressively that's at to we MA XXXX and

the On grow XXXX. In ultimately to going growth growth continue typically given of in majority segment, we support addition, as expand of also year. as meet strategic increase our percent be what investments ARR And by we sales size the percent steadily anticipate expenses, our achieving full our MIS suite, high low we percent lines end mid-single-digit single-digit we the we of demand, is XXXX the we year don't guidance range. MA operating to would increase percent a MA. by the force throughout opportunities, Moody's low similar the And saw XXXX, and capability provide expense product operating to in expense be in here single-digit to in anticipate an low of forecast our growth decline growth customer along to segment revenue for while guidance double-digit it's to total to the

that's finally, lower full our remind rate to for the due the effective to tends simply benefits EPS you compared be like results, I'd first quarter tax around and stock-based excess And purposes, compensation. to employee year just then to tax modeling

Operator

Your Suisse. line Credit Kevin comes of McVeigh from the next question from

Kevin McVeigh

you downturn overperforming about for shift takes? so reset MIS? If who, targets. has to bit analytics of were. but been pretty would the 'XX any Obviously, back, we don't Thanks it to relative takes relative a that what as went base nice a to reaffirm much you thoughts results. just the were think and in the on medium-term any puts expectations. Just puts this kind initial I and here Is but and targets you really if the in little able dramatic be initial know

Mark Kaye

Kevin, it's Mark.

I'll And assumptions a time So incorporates talk year. period base our just January. fluctuating U.S. as because refers followed five years, of in for stabilize, thematically, with as those yield of know, various GDP within XX-year maybe euro base with maturing near area our medium-term continuing and I'll modestly start the example, end XXXX that refinance recovery, debt. issuers to you as levels, stagnate treasury the to to by term, assumptions current case guidance, U.S. include, the around And to

If remain pricing enhancements align side, in initiatives on practices with levels, then and to examples, rates prior your of maybe question, two the course, to headwinds. to specific MA line with I retention And customer two and maybe to to historic customer tailwinds pick, value. our

And to growth forward. X% what XXXX level to sort GDP between the real the and of what that's used medium expect And pandemic. forecast, shows average going central growth GDP predictions and Analytics over from X%, GDP interest activity was and we XXXX we've prior rate track that which a side, our with models expansion term. Moody's annual to prevailed the issuance long COVID-XX our GDP consistent the On tailwinds case tends to at

maybe second wall spoke The The we European something on $X.X project the impact prior remain about project is financing. we may majority, trillion. do first increases expect maturity that's trillion the needs to corporates calls, one maturing potentially $X.X in side, around our then headwinds sorry, studies. rates noting and refinanced. that elevated going U.S. on tailwind extensively interest debt. worth we is Similarly, be do on have interest corporates have based are And refunding is opportunistic -- to rate we

have the then And in finally, XXXX. assumed X.XX. through specifically And constant the near-term that example, five-year resetting X.XX versus we we at yield. roughly the and expect treasury our shows at U.S., that dollar the were then in stable X.XX. remain X.XX currency year, that period, gave base For at the in X% medium-term and increase a foreign model XXXX, XX-year in to to exchange appreciation target rates original rates we over last which And February the euro pound we

Operator

next Your of Alex Kramm UBS. the from question comes from line

Alex Kramm

allocation capital just a cash also you it, the to gears $XXX past to and the what fairly Can guidance. for been in repurchases flow obviously share Maybe you've in million doing second? missed shift free but seems I relative the low

thinking So of from M&A buyer you've look, what a seller harder and is maybe And taken again, side, different perspective? cash? then in the that maybe that uses of on also shift are the a there on suggest environment does obviously, a a

Mark Kaye

balance me anchoring which around between ongoing provides, cost is our unchanged. to to best BBB+ committed the and ensuring in lowering Alex, We allocation for remain a start flexibility financial is our leverage capital. financial reaffirm our appropriate that capital view, planning rating, of to the and strategy place

by experienced. we that, sheet and XXXX, gross X.Xx, flexibility conditions outstanding we cyclical financial we to is of just our know, into gross and the the position as deliver market driven balance improve retain we want to needed. our our marginally was as that And as however, year-end if debt above Given, leverage head

the our our to million dividends flow, our a in about is conditions, to that approximately about through that And through $X.XX And and free it's that's share opportunities, XX% in return approximately quarterly actions available includes, course, it's the the million And up to global cash the per similar midpoint, at dividend. of stockholders, to is of we $XXX et prior of the cetera. our our goes $XXX $XXX tender And that repurchase opportunities is to creating offer. took what to subject, fourth evaluate question, your which that from for quarter year dividend all as on. cash, million flexibility quarterly M&A market of XXXX share, means plan guidance XX%

Operator

next Your question of Kaplan Toni from line Morgan from the comes Stanley.

Toni Kaplan

flow cash maybe reason Wanted roughly, revenue. the the guide. of staying CapEx guess, continue? was the in to was at because it? the lower Are Or why million what's we thought call X% to ask than CapEx like about the years $XXX little number about sort expect of of it a thinking of what it just a I let's future driving free different bit range, at you that change of be Should as sort right to level percentage-wise for well? Is I X% the model? Part

Mark Kaye

for Toni, question. your thank you

net maybe of midpoint low of the saying last start midpoint, to XXX%. had And to in conversion off And is the four conversion by XXXX what above equal to flow XX% projected U.S. approximately specifically free XXXX. that's well flow that flow income. net years, approximately the from me which And GAAP of XXXX result. the free cash effectively ratio addition, the income our the is ratio Let implies that is guidance reported double-digits range average cash really that's midpoint, our meaning for means over cash flow U.S. at cash our GAAP growth we've free

that we result. comfortable with So pretty feel as a

into example, continued XXXX activity, or real There's example, But shift in within PassFort i.e., related our customers. to was that that XXXX enhancements infrastructure our business work directly related CapEx, with kompany or one workplace platform program. to $XXX and factors with the estate ties similar a million. is And SaaS-based million, level. IT more will We're for to amount M&A the RMS. solutions actual under result future our revenue guiding strategic a guidance, for there are carry underlying integration to underpinning capitalizable for $XXX effectively number of MA. specifically, approximately of ongoing higher of associated And to big terms more the the GAAP provide recurring solutions SaaS-based, of forward of drivers the that In

think in the what's years, but XXXX. numbers. really future think driving a separate I so don't it's step-up that's And underlying see in we'll I a step-up

Toni Kaplan

in Terrific. And really a should thought just improve is issuance that quarter? of as you I you is consistency recovery? like, to Or to I some would last second fourth But the half. be it that going the it the trough was expectation you follow-up. where and half first quick quarter, than I you quarter the delayed particular, last still third it better messaging thinking have be that saying were second like similar know for going to for declines, issuance quarter there's and sort were be throughout half. XXXX, in feel guess, your

Rob Fauber

last how Not thought about really. it pretty quarter. It's a with Toni, change. really consistent it's Rob. we Not

a robust is thing I the us hearing here. you're relatively XXXX from has think first one issuance just of quarter

there were So is the of recovery issuance. the but any change we how I of comps, there's kind don't in thinking think about troughing from and fundamental matter

Operator

question Sabadra Capital RBC from the next of Ashish from Your line comes Markets.

Ashish Sabadra

based your focus acceleration. implies good Moody's to the some strength the We on further a also talked growth in you that profile units the that chart Solutions. Decision But Analytics MA. all seasonality growth in similar three within across saw Mark, businesses Slide question, X like you about robust to I response there have bubble within prior seems may business. also some on talked like on wanted faster but it and pretty -- a about guidance

the understand the just we better within how to some segments businesses of growth within about all think MA? So should I wanted three

Rob Fauber

Yes.

Rob. it's Ashish,

MA -- growth. with RMS can got a we've the me the on I zero to ARR in we've we start of last quite to really figure. that And order think do. me ARR, believe the now about growth. maybe about talked in just that kind RMS on But executing kind rate what's that Let MA same also We on the at overall. still talked is of still MA the in work I we're about contributing and little fact that. yet opportunities call question is on the there's We're then as let let bit me the to since synergy growing not Maybe but start track accelerate

XX% drag from a So RMS. figure the X.X% reported of had about

ARR excluding we back remember -- have XX.X%. had So you about in would that third And talking we at been that, about the quarter, might XX%. were

area relationships our as sales expand our investment real was teams with some that by of us customers great seeing fourth we're ARR to on attract expanded acceleration a that Frankly, And some goes execution for both existing now very a got capabilities had that think we've we And serve to nice the customers. in heard basis. quarter. I So the to of like-for-like and us better about. new you've and talk

a But it's pony one-trick either. not

have that business. the other It our insurance also interesting KYC frequently and can We with life as But is. flyer, very that's thing. about chart. to it kind that message you trying think of see our I bubble high momentum. We're to strong get across talk continues

our as of think, of banking lines, kind offering. we two show more interestingly, And I and our which are of see, think also to I wanted what see can you the mature Orbis You product CreditView business. Research our

the is there data KYC. So that's in

excluding of Orbis for ARR rate. everything So those use And cases this KYC growth you kind for a both there single-digit is high growing at of data. are result see the

decision-making. help about of capabilities a identifying then and use it's strategy, to cases our with you range the again, think And about threading customers if risk about So of been kind we kinds and good of very portfolio. assessment risk of the kind feel through these

very some So good in momentum portfolio. the

Operator

from comes question Markets. BMO of the next from Capital Your Jeff Silber line

Jeff Silber

debt of half In remarks, global the looking some seeing little second the to we we for, indicators should the year. rebound for? you what you about some be your of a you're bit get about give issuance a of Can prepared confidence talked looking in what you're examples

Rob Fauber

Yes. Rob. It's

could what upside what talk let our me outlook. maybe some provide also some both could as provide I So think as about headwind to well

the We near to whether last peak inflation the fourth And then and getting see we're market's issuance I'll and call, around actions So confidence can lot was to get wanting just of the some cycle. the we that talked with the that see, a market January, and starting certainty of went year on started. you the you end as of the end the the market quarter start that more inflation and need certainty because about, into Reserve understand the Federal through to upside. getting the the tightening informs trajectory then

about also going you're where We see that. talked to

I so And that's to interesting understand. think

names opportunistic to first have best to to up, see, the grid the Then see, going and the B, names. the market market. you're as market, single eventually, access started we so to A the you folks we see the And start to then have with to There's and the to coming those. seen the few a You're B the coming investment-grade of issuance. higher-rated going spec names markets see, open

it's seen opening dividend months. you up. the And of that confidence that activity that in our recaps fact, In starts kind couple give we've of to is first market

event still word recovery the say to plenty of would Now to starting But of fragile a and kind that. risk. because we use it's I'm are see headline I there's -- going

in month robust investment very a saw for grade. You January

where I LBO muted upside up slowly, M&A a a if to provide but a have activity That saw leverage activity pick would well. put for loan pick activity into to of You we're sponsor-backed outlook. and we as have work. in quite look forecast M&A, our flattish could lot built see see to some a started of loans, the dry And starting high up. place sponsors fairly as assumption M&A, M&A to start to kind we yield leverage the powder some

be for. would that so And something look to

Just quickly headwinds or what in the be terms sure. could of derailers the -- yes,

Jeff Silber

Sorry. No.

You broke there. up

Sorry about that.

Rob Fauber

No, sorry.

headline terms of have any inflation could a said, a both even unanticipated pretty the that Fed and There in banks. provide Just landing. by what do. The just soft a actions as year. engineer what tough in that's very for and prints going -- hands what to talked both on with banks headwinds? about assignment few But inflation is general, just quickly, their -- risk, to something Jeff, policy terms last of And I'd deal central a in means I and central is,

think going I on a eye all that. close be So to we're keeping

Operator

comes of Goldman from George line Sachs. question from next Your Tong the

George Tong

MIS You and to expect growth that's low single-digit digits, assumption issuance volumes. an increase based low XXXX mid-single to on revenue in global of debt

of the the you're from a structured categories high said, you X% issuance. X% mix to perhaps are favorable implies negative to generally and XXXX. assume be like growth inflation, higher That degree it fastest-growing expecting pricing pricing the If issuance And from in to of looks perspective. guide these yield given mix

in So can you revenue bridge help for debt growth and MIS growth your volume XXXX? issuance global assumptions

Rob Fauber

than are you've think zero-in And for outlook. to included I about recent that leverage our just And might for we've got think, I in issuance. folks' range maybe on for a I XXXX with is probably a it it on, to range going a why thinking how happen wide think, of -- accounting the there got what's right. a wider George, outlook. I range outlook. just to finance you there it expectation we're start And around about issuance what's George, as I that's around touch really, difference, be memory can around mean, we've remember largely views, me moment, helpful, let

for kind some year folks that with what general, the to at Last outlook. a market. I'll bit Leveraged that finance, mean, like expect modestly slowest something growth year. investment-grade. with acknowledge seen I more of got we of But is a is we're our think flattish I for And is when a got expecting and on record. we've bullish higher we've issuance. XX%. than much the for high-yield view we one forecasts the an informing in yield, would little got the view more of funding in I've got costs. grow X% look high we've some We've years potential And cautious M&A I recession, start environment

what's to And so that's view. contributing our

I not the demand. got Almost market of those we year. some finance that so loans, pretty definite go there's that all last a going of it's would did George, And healthy mandates acknowledge, then think to leveraged are first-time space, we've leveraged to backlog pent-up but of me. the halves. that again, expect flattish. back two a for so of of a excuse half Mark's will -- to of XXXX we in pick kind very Loans that, And be kind -- tale the commentary, XXXX, in to had up start back strong year

Operator

next comes the from question Your line Meuler of Jeff Baird. from

Jeff Meuler

some specifically. noted to I'm there, heritage I And pretty Solutions more organically than, growing on M&A but hit -- focus want accelerated. in significantly thought or on this your in and QX about currently of correct Decision I wrong, I talking was solutions. It broadly, me you if RMS that's slowly you guess, MA when Rob, but more

what So say just or acceleration in or usage you QX is there Decision the true-ups underlying year And in is it on like one-timers like full rev Solutions organic like rec anything unusual specifically? that? anything anything can drove further for

Rob Fauber

was constant good a in the Yes. XX% basis question. for Great dollar Solutions growth quarter, indeed. organic the story on Decision an quarter.

Solutions, lower last bit about You Decision talked That's we of looking talking case. that of rate ARR. kind will a kind through print, remember reported still actually, growth the importance quarter, little to we're of the so about

And of ARR. XX% full growth kind so year, about at Decision Solutions you had look in if we

a in also not the areas. really this we've have we've package that's up us just mid-XXs with got that a to business, banking that allows only And insurance to one-trick I of very used think a of demand business number a and got strength low of for data, And But mentioned, opportunity I which I KYC, it's very mid life nice business. -- In range. but workflow us a product life the And cycle kind we've our phrase, we to that now pony. we're engagements nice lots bigger KYC true. even in customers. the solution, data got with gives The not got

of very So in And last that second launched that's helpful. half year. the we very,

just it. less with probably businesses. more familiar two on People are to But little the focus other a maybe just bit in

able We have platform a insurers. have nice business. powerful had, life serving Obviously, -- a actuarial RMS we've and a modeling serves And business is the that got property and really casualty years, and been insurance we've we reinsurance life for market. But solutions and world's of what management around build do used we've balance just to is with insurers. by and of been reporting. to done many which largest and able management And planning sheet capital we've a portfolio risk and banking, the frankly, suite

we've really one risk integrity is the IFRS some of And where nice had around our XX growth solution. areas

IFRS may you be to implement As are having insurers familiar, XX.

banking. seen customers then And other of a in just some our to been origination, there's of very growth there. with across and solutions is planning. and the lot nice of So demand capital We've kind help the risk banking management suite portfolio

Operator

of comes Andrew question Steinerman next from the JPMorgan. line from Your

Andrew Steinerman

it kind digit in there 'XX, I the guide I felt for to coming the into revenues above organic at XX%. backlog, kind with When non-subscription about is MA headwinds, of fourth guide of quarter about of to XX% ARR for maybe the MA's any jump just in wanted accelerate just keep of just bias growth growth it revenue organic to note kind that I revenue that to in be really and at look double XX%. MA accelerating would Are low to then XX%?

Rob Fauber

the as revenue. Andrew, portfolio we've headwind, recurring to most of One transitioned you know, Yes.

do entirely like we I you've about We've license banking away. from think of where it's -- us kind moved revenue. heard some onetime XX%. the And onetime. moving away have in But some business is talk still something almost

really and and then We kind of we've where translating see have you small a also focusing been might overall work, revenue. delta to ARR services that some between deemphasizing and

Mark Kaye

for Andrew, declining think low you percent could on guide to about when range you about that to recurring you of XX% if decomposing think high MA, growth currency teens as organic in in Yes. growing just add onetime think that, And about range. our constant double-digit that transactional

Operator

comes of from Your from Deutsche Bank. the Alwy Faiza next question line

Faiza Alwy

questions the on midterm targets. two have I MIS

I a conservatism on I'm despite is that the implied First, line. left line. you curious top appreciate of target your margin sort as top the lower

just restructuring So that. to on the it related perspective wanted actions? some Is recent more

is, the as market that in question credit in private related a market second We've then as about expansion you think issuance. And factors significant obviously you one seen mentioned 'XX. of

your as medium-term what thoughts your So product about 'XX around thought you private targets. and curious both are for

Mark Kaye

the your XXXX XXXX MIS margin be medium-term expectation guidance. results I adjusted that's around base On acknowledge compared for that, XXs to year MIS' margin, the low range. meaningful new And and our a full operating we percent step-up are question to certainly in maintaining our year

in point think be influenced will naturally that of we reflective within the and the key, is beyond. target and this you XXXX flushing performance years, were X achieving it While recovery the key I issuance is out, the this experienced by pattern to

points fundamentals that continue we capital It in debt wasn't disruption by remain firmly to is we experienced said, markets cyclical. business observations. And 'XX That long-term to MIS' nature. medium- intact. informed was several the that in the that believe structural view really data And and in

steadily remain decades. of credit For help strong debt are around has value that several transactional The revenue for refinancing grown our compelling needs price example, the is stock There future that buttress spreads over average. base, can customers. the to last the historical

before relatively will management proactive obviously burden base and And last to in 'XX actions still us addition And corporates. the in these quarter, like is overall, factors, and mid-XXs took that should good expanding set the decisive help term. interest low the low over margin for the I'd we a say expense XXs percent that to medium help stabilize that range, to that

Rob Fauber

other sure to the us and resources from not thing And that to the new able to issuance. these we you want One about to absolutely we're thoughtfully. just is months approached in to MIS very assure debt make but talking we've critical expenses. and is the we monitor it sure of expertise We the margin And very, be Yes. gotten only resources. over making right stock monitor just $XX also exercise the emphasize restructuring that over last I we've debt few to got want why flow I've trillion got around folks that I of around rated that questions service

that and business, get very in just we medium-term to committed that what a thoughtfully, layer like we that's and -- the and we're that so you And and efficient approached getting more to initiatives could about ways see typical with more And efficient. exercise things thinking target. be span deprioritized

us that few I we've And on over the market is credit to the that and market? Let we a the the think do space. opportunity investors play Because in role have asset We market private guess of managers has private experienced tried strong is, needs me the growth stepped just touch briefly last for address way about last the years. on to to call. it what some that and credit The that and borrowers. about back we both really and helping talked think

ratings providing the company some with largest use do can relationships includes think to our private about large we benchmarking also assessments managers We've understand in credit as very with in asset managers lenders portfolio relationships to the companies serve range you cases. asset many around products discussions some the help we these and investors credit asset the got that the their And with managers. invested And on them ESG management, space. And another of of that is also got more world. credit MAs. very a And we've a in players BDCs. across themselves to well And range the data, them think themselves got portfolio we but as important support CLOs some been active of they're of to scoring, this area. in and we've quality we've with portfolios independent That credit around that help

got us there's support across think we the we've the to us. do in more. things company number for cases opportunity around use an And be to here a So to of able the works

Operator

Stifel. line next Your from comes of question from Shlomo Rosenbaum the

Shlomo Rosenbaum

is year. assuming come better the outlook, course can much guidance improving you that want you When particularly of is support? in walls support or And in MIS Is what much talk sort XXXX. the of dependent on pieces for year that change? how of do about at vis-à-vis And maybe of the terms on or tend bit actually focuses this the the normally inherent there it are that year just I that you second kind more your put and little versus how things -- composite your a get of conditions of half the can refi market any that on the over the to and a of you you to that bit just things see? dependent in guidance ask about just look little

Rob Fauber

Maybe that one confidence a the It's I'll several around talk a happen there's with And Shlomo. Rob. that. certainty that less range I different Hi, to what's we of a about issuance things a range of mix, about Street kind what fact and little guide. wide bit you to we have how bit leveraged confidence Again, we've just wide mean, little across me little into and the about say of would why of a that there's level contributes what's that bit, little think less obviously refi range to a got of overall happen, our going in finance. Wall just going I have and we've a to means also just think drivers them. go that do, kind and let is -- is thing what around our around also kind the those. about talked of Refi we visibility And I is first views

walls of financial in question. revenue, of because think visibility it is issuance themselves. pull That's the great more refi, the with When in extent right, -- coming a relationships that got obviously, from of Around banks. you we there, much always have we've about the confidence the the as There forward. kind space, about the question translates got institution a refi to we've commercial

rates think by what is into And very at to of looked and spreads. really kind walls. little we a really, look have then correlated this any and kind we've that to a revenue being conditions, kind year over supported of in tend of but well to look, rough of you number, with transaction market are refi rates. of kind given kind about say, of default before. happen think It's we would I Spreads those at And X/X do to going gets

volatility rates. given make move any great around the have obviously, visibility at in around We time. But spreads there's default market can that

risk issue. exists They of That capture market. to kinds that I is not great or the debt talked some they that's forecast. able events we're the the headline are risk don't. a And some either XXXX. -- something happen example ceiling binary. in creates that the Those kind event for about a of of in And

predict we -- the that of comfortable but about kind are can't feel that future, there outlook. to insight us into So that give that fairly help some us things build

that hopefully, gives for you it. feel So a

Shlomo Rosenbaum

AR that little of just sequentially. And end I a if it the of one particularly deals DSO very that closed any The could towards bit up pushed housekeeping. the there Okay. Were sneak up? was kind quarter in

Mark Kaye

reported full you're record This three call DSOs. guessing Shlomo, an for the a over, precise XXX fourth this I quarter around use can revenue call, because And we looking XXX a accounts question seeing annualized. we're around calculation bit I earnings number around, of a is Mark in here. be think, a might I'm anticipate able externally receivable at year. you're a let’s on our months of Internally, at sales. to do little more for

sort is rigor think year. three-month of the that we year. bring as full And into of ending much integration receivable driver in of a divided companies I for the about days the around by corporate of That saw little our get bit the I just if the so and we -- discipline what DSO is around last sales ending processes to of we've sort processes off the the XX annualized, acquired. from here accounts acquisitions lower a same And up XX number of

Operator

of the comes from line question Redburn. next Russell Your Quelch from

Russell Quelch

If to without shows starting go refi the that percent we've pose be historically a a we've of over I start. X% MIS would been 'XX to to want way, data with this the perhaps wall me defaults growth. which to in couple of X% mix, haircut to as potential there pricing that XX% And conservative, is by pointed to think guidance, positive for is which would point, be 'XX. I point the therefore, around got pricing this If I back X% get may, Just with X% if George I a that it sort assuming that's historical And recovery, presented new out, issuance to digits. issuance X% is low for sort of you new sort single of for year. recovery and next for growth baseline anything a said as

guidance low seem way I suggests. does this gap sort what I'm with between So like there just to big of guidance square there's because it that the it and your a trying mid-single-digit built

Mark Kaye

incorporation is reporting you is call. to the nice some really MIS revenue issuance down driving we difference outlook of of Mark the other the sort outlook primarily provided the other on Russell, have what's the element model One of $XX This our set. here. and million into morning. MA products add million in to revenues and Those $XX between That's capabilities to of your vis-à-vis revenue XXXX the of ESG to reflect for are to our the range this XXXX.

Russell Quelch

a upside to be the And risk between But on been few was recovers follow question, how to you Decision you a M&A pricing. investing on if the this Okay. just much up over in much with wondered the to of I appreciate I guidance been QX for that's activity guidance now. there corporate increasing cross-sells you Mark, might if MA. flipping you've was And to And where I'm might that there's related how growth? one. argue, another related would that sorry, maybe in growth then Solutions. -- products XX%

Rob Fauber

the was that bit last question? Russell. of I'm What sorry,

Russell Quelch

or if Wondering guidance see a in apologies. M&A whether there is corporate growth we XX% year? MA recovery Yes, next activity sorry, risk to this -- the upside year

Rob Fauber

MA the To guidance?

Russell Quelch

Yes, XX% MA guidance.

Rob Fauber

Decision question Solutions sense, Decision number XXXX. increase doubled a KYC engine Let is than with of not greater XX% a And the had And customers, new the growth increase just we give me you we meaningful to just in just price. a pricing. and about That's start almost in and in in with pricing. new biggest had business. the And sale sales Solutions the our average

What have of larger to capabilities that size. really is does products that's a us and bundling ticket the allowing

our customers you're a coming of of certainly the to at be job those capabilities provide you KYC nice to market market. Moody's what relative really services. bringing using when continuing look obviously in folks overall very to into doing who the seeing but the We're able also then growth new into is family products to and additional the already think are lot rates I a So

to story a extent increase allows build probably size with a continue banking. those solutions got lesser solutions So of to customers. that the We've doing and of similar I'd relationship got for we a what actually out to and together around say that's the the to that of suite bundle we're our sizes ticket cloud-based kind just we've us that

So about price it's increases not there. just

Of products. But new the there's an cross-sell, that our course, we of case really think I to of element continue and the of more as enhance all proposition in value just acquisition. of around especially customer KYC, it's

Russell Quelch

XX%. corporate the And there recovery revenue rephrase that better it in I'll activity? to MA we if of in Okay. growth point, terms see then second M&A risk the upside of a guidance Is

Rob Fauber

don't don't see MA I to obviously, the There'll so think be I but necessarily tightly from really upside things those an together. standpoint. guidance, two MIS tied

Operator

line Research from comes next the Your of question Huber Huber Craig from Partners.

Craig Huber

let's talked I about Rob, deeper here. you've little go a this, guess,

seemed for taken talking term, low was macro that about low. the stuff. low was buybacks that's bloody quite five growth the same very a years, obviously for was rough low the MIS you're year long giving few marketplace Your of outlook, on Debt it should versus medium-term share was here, agree year. last quite year year. mid-single-digit and be that you for that revenue years for what you're know this last M&A like XXXX most next that range to all on Refinancings year the We said you is which

on to Is the think X%. X% you a than How done a but little next get you've just X% base it's historically, price, I so get the all to least conservative square pricing, this. of when years only that year to, about trying questions do X% bit higher say, I'm that, X% being you of it better a five X% just with at And being up on seemingly average overly low? to with lot for this. here? sense maybe

Rob Fauber

XXXX terms earlier and line targets. tell, our view of a in at overall medium-term where Yes. obviously, we think, correct, I longer-term hope time look for And I what will we implies in XXXX, back in see, average and conservative. least up as front of at understand kind we we, it as ended us of what us kind Craig. with comes when I that's I issuance for and talked about will to just we think guess some I that

that's think what back I comes to. So it

lower, as this said, earlier But I pandemic, in the in relatively conservative, one the call a is, we're of mix lower we issuance is hand, similar thing terms bit pre the mean, to at bit maybe I I one little a but think on while being about are of that from little not touched levels different. on significantly

issuance So last year, as we financial of had than percent coming from much more institutions a the corporates. total

think then we'd that over in it, the we targets. pre-pandemic, six, way see -- growth case, if seven corporate upside call back to might some the seen medium-term years I that mix provide that the shift yes, last, we've And that what think as to faster about changes so

Craig Huber

the can you Then to also expecting what a on for similar for MIS this year guys be us you're tell just MA? pricing, question pricing

Rob Fauber

Yes.

Craig, higher So what kind we review of target think But been last increase, bit little increase. for across higher going do X% year, kind pricing price company every the about based out from. detailed on little call, the following and to of a regions. come X% our that, on are of And mix, And for across realization we with the than than of I little a rate year. bit we in has be can that very comes issuance on bit prices a will we list a the you annual always sectors talked prices of but historically. our kind MIS, we actually it the maybe I XXXX right, the list a expect of depend do And to think where

Craig Huber

on the what's there, year? side, pricing for MA average you the think, And this

Rob Fauber

it's say that range. I'd within

Operator

have of McVeigh Kevin from line from Credit Suisse. follow-up question the And a we

Kevin McVeigh

remixing Hey, job nice has a and business done Rob, the XX% the crossed really you've of MA kind threshold.

I and look give there's versus parse to years, of three kind think about deals looks And business know what like? the way you that business to but maybe five don't a organic view If of three where start I from organically to years we frame inorganic? if out how now? should five the mean, things, an to maybe us sits of kind

Rob Fauber

also start I beneficiary an Moody's. I is when important Yes. have. of, And risk not contributor by might guess Kevin, to, we all of strategy just we assessment about think assessment, it's MA. interesting but really The integrated integrated agency risk that's rating this question. that saying a It's

a few Kevin. maybe But things,

insurance Solutions, And mean, think supporting portfolio origination, heard obviously planning about Digital areas risk beyond world-class really you're scale banking reporting. I income you've critical I capital got, Decision business in seeing that Insights underwriting, talk ratings me a We've few a and in and a that and different in business. fixed meaningful our we workflows, develop research bit serves management have are investors. businesses First, risk both and us little

really some a And we well there. we've industry-leading growing positioned then, of rapidly really course, business capabilities. We're got think that KYC has

I those important And Moody's. about driving range ARR. drive of growth content really of what's because all kind are across think you a heard continue us to see very and for going you're of invest that's delivery me to where talk platforms

And so all this fits together.

property our our scaled content, scores threading content, are that we've data that for scores about and think ESG integrations of we and rated through of that takes think a it, mean, module MIS. and And on debt content massive ownership us and real platforms. and I physical $XX about talk estate trillion our system, that solutions. sets you've heard locations. as It's data economic of and think commercial about hundreds are credit that XXX lot of into operating I got companies And of KYC companies. we climate lending those kind the on millions from risk way economic by increasingly but risk When of and million That it banking. and It's banking

climate research and insurance You've on. and integration so and got banking, ESG ratings, into

data So proprietary platforms I have business, able key sets. That's they need going manage and three that be think we're serve that by complementing we're solutions differentiated so years to suite got, ratings where can when better to customer it, all draw a from And they're this I ultimately, customers risk. of to with that and identify, where our scaled now. and think five going cloud-based to on analytics measure being we've

Operator

this And for you call I'd remarks. Mr. the questions at closing turn to there no back some are over Fauber, further time. Rob

Rob Fauber

with next day. and to the for questions, Appreciate on everybody, Thanks, joining. you we call. good look Have forward Okay. the speaking a

Operator

Moody's concludes Quarter This Year Full Fourth Call. and Earnings XXXX

call, immediately IR As will under following the revenue Resources breakdown the the a homepage. company section reminder, this Investor MIS Moody's of post the

replay will made immediately website. Thank IR a the Additionally, be Moody's the on you. after call available

Moody's (MCO) 31 Jan 232022 Q4 Earnings call transcript