Moody's Corp at Barclays Global Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manav Patnaik - Barclays - Analyst : So this is your first public conference, I believe. It's been about six months, I think, since you've joined. So maybe I think a good place to start with is just to get a quick background of yourself and where you came from.

Question: Manav Patnaik - Barclays - Analyst : Got it. And then perhaps, I mean, given your tech background and your software background, why Moody's? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 2:30PM, MCO.N - Moody's Corp at Barclays Global Financial Services Conference

Question: Manav Patnaik - Barclays - Analyst : Got it. Before we talk about some of the business trends and dynamics, maybe just from, again your seat, your perspective, if you go by division, maybe from what you've -- I know it's been only under six months but just some sneak peek into your plans and what you plan to bring to the table. Maybe on ratings, it feels like it's already a nicely humming engine. What can we expect there from your end?

Question: Manav Patnaik - Barclays - Analyst : Got it. And just on MA, I think the impression most of us have is given your background, I think maybe not a vast majority but a majority of your time will be focused on MA. Is that a fair assumption?

Question: Manav Patnaik - Barclays - Analyst : Okay, fair enough. And then since you brought it up, maybe we just touch on it now. You mentioned capital allocation. Your philosophy compared to what Moody's has been doing or anything different you bring to the table.

Question: Manav Patnaik - Barclays - Analyst : Got it. And just one follow-up on the M&A side. Your appetite or maybe just your personal views towards larger deals?

Question: Manav Patnaik - Barclays - Analyst : Okay, fair enough. All right. Let's move to some of the business trends then. You mentioned you guys have the capability to capture the surge of the share. There has been a nice surge in issuance this year. S&P put out some of the numbers in July, it was a crazy number. And August, September seemed good. So just your thoughts on the current environment? Like how you would characterize that and whether that was also contemplated in your guidance?

Question: Manav Patnaik - Barclays - Analyst : Got it. And just on the Q4, I think your peers have taken the same approach to be conservative. I'm guessing some of that is election volatility that they're advising against. But barring that, there's no -- there are no macro reasons to believe issuance will suddenly slow.

Question: Manav Patnaik - Barclays - Analyst : Got it. And then before we get into the more medium-term view, you mentioned 43% issuance with 56% kind of revenue growth or whatever. What is that 13-point delta? Is it a combination of pricing and other things or how should we think of that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 2:30PM, MCO.N - Moody's Corp at Barclays Global Financial Services Conference

Question: Manav Patnaik - Barclays - Analyst : Got it. You mentioned M&A. You're starting to see some signs that already in the second quarter. I think majority of the year has been refi. So just on the M&A front, like I know you guys have the rating evaluation service that gives you a little bit of a leading indicator. Are you seeing any signs there?

Question: Manav Patnaik - Barclays - Analyst : Got it. You mentioned pricing initiatives earlier. And I think the more complex a deal, the higher the price that makes sense. I think you referenced frequent issuers before. So just curious, was there anything new in terms of the pricing and frequent issuers, just your broader pricing

Question: Manav Patnaik - Barclays - Analyst : Got it. In terms of the -- to my earlier point on barring election volatility, there can always be more pull forward, right? So maybe just some thoughts on the maturity world looking ahead. They look pretty robust.

Question: Manav Patnaik - Barclays - Analyst : Okay, fair enough. Is there anything to call out in terms of the recent surge from a geographic perspective? I think the assumption is U.S. and Europe is most of the activity, but you mentioned GCR, you have Latin America, any of these emerging areas?

Question: Manav Patnaik - Barclays - Analyst : Okay. And then just maybe lastly on ratings margins question. It's a very healthy margin. You've mentioned a few times, efficiencies, the opportunity with GenAI to do more. So it sounds like there probably is no ceilings on the margin is and effectively strong. Just your thoughts on how we should calibrate the model. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 2:30PM, MCO.N - Moody's Corp at Barclays Global Financial Services Conference

Question: Manav Patnaik - Barclays - Analyst : Got it, okay. Maybe we can move on to Moody's Analytics. So maybe I'll start with just a very high-level question. I mean, those of us who've been following Moody's for a year, I think we have an idea of what Moody's Analytics is, right? But often when I think a new person looks, it's a lot of different things. So how would you, new to the seat, try and explain high level what Moody's Analytics is?

Question: Manav Patnaik - Barclays - Analyst : Okay. We'll break it down a little bit more. But first, I think you kind of alluded to it, GenAI seems to be a little bit more of an MA focus at the moment. So can you just help us appreciate what the GenAI initiatives there are?

Question: Manav Patnaik - Barclays - Analyst : Got it. Maybe just a few quick ones before we go broader as well. Last quarter, I think you had widened the range on the Moody's Analytics business. I think from my recollection, there were two main factors. One was market environment and then there were some nuances with the MSCI partnership. So let's just take the market environment first. Can you just remind us what you saw and perhaps any update on if things have stabilized?

Question: Manav Patnaik - Barclays - Analyst : And just one quick follow-up on the cost pressures you talked about. From your standpoint, does that seem to be more of a cyclical factor or is there something else going on out there?

Question: Manav Patnaik - Barclays - Analyst : Fair enough. Let's just touch on the MSCI partnership then. Maybe two parts. First, just if you could remind us the impact in the quarter from the partnership. And then maybe just a broad -- from the headlines, it seems like a potentially very attractive partnership longer term. I think you guys put it out in the holiday week so it didn't get much attention, but just some thoughts on your end from there.

Question: Manav Patnaik - Barclays - Analyst : Yes. We had asked Andy at MSCI as the CFO there's the same question yesterday, and he was very excited about the two. So aside from the Orbis database access, I guess that they're getting, from a distribution capability, what are you bringing to the table there for them to?

Question: Manav Patnaik - Barclays - Analyst : Got it. Maybe if you can move on to the Praedicat M&A you referred to? And maybe just -- I guess we can start there, but how does that fit in with the RMS acquisition and then (inaudible)

Question: Manav Patnaik - Barclays - Analyst : So where do you think with RMS is the property model and then Praedicat?

Question: Manav Patnaik - Barclays - Analyst : Got it. With the high growth in insurance that (inaudible) to falls into that Decision Solutions and then there's banking and KYC as well. And I believe KYC is also growing really nicely. So can you just maybe tell us why that's the case? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 2:30PM, MCO.N - Moody's Corp at Barclays Global Financial Services Conference

Question: Manav Patnaik - Barclays - Analyst : Got it. And just to round that segment off, just on banking. Can you talk about that solution set and what's proprietary or unique?

Question: Manav Patnaik - Barclays - Analyst : Got it. I failed to ask the question on private credit in the ratings section. But I think I want to ask it more from the Moody's Analytics side view because I think Rob and many others have said before that the data and analytic opportunity is much larger than what could be just a rating opportunity. So can you just talk about some of the -- that statement and what that means for Moody's Analytics?

Question: Manav Patnaik - Barclays - Analyst : Got it. And then just to wrap that up on the ratings side, I think most of the investors have gotten comfortable that it's not necessarily pure competition. So just your take there.

Question: Manav Patnaik - Barclays - Analyst : Got it. And then maybe last question. I think high single-digit ARR growth in Moody's Analytics, really strong issuance on the ratings side. I think the stock, the multiple reflects like some high expectations. So the question is more, when rates start getting cut, how do you think that impacts both sides of the business?

Question: Manav Patnaik - Barclays - Analyst : Okay, perfect. Well, I think we'll end it there. Thank you so much, NoTmie, for being here. Appreciate it, and welcome aboard. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 2:30PM, MCO.N - Moody's Corp at Barclays Global Financial Services Conference