Moody's Corp Q1 2025 Earnings Call Transcript

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

Question: Ashish Sabadra - RBC Capital Markets, LLC - Analyst : Maybe just a question on the issuance guidance. I just wanted to better understand when you reduce that guidance, just given some of the uncertainty, what were the key assumptions that were made in terms of M&A volume? I believe original guidance was expecting M&A volumes to be up 50%. So what were the new assumptions? And have you also made any changes in any terms of assumptions for the refinancing volume? Maybe just a follow-up there would be just how much visibility do you have for the issuance guidance for the rest of the year?

Question: George Tong - Goldman Sachs Group - Analyst : In your MA business, you saw Research & Insights growth of 7%, Data & Information, up 6%. Can you -- for these two subsegments of MA, can you talk about how sensitive they are to banking and asset manager trends that you're seeing in the current macro environment? And what would be the catalyst for accelerated growth for these two subsegments?

Question: Russell Quelch - Redburn Atlantic - Analyst : Just wanted to ask around the guidance. Remind us again, could you square the guidance for a decrease in issuance versus flat to increase revenue growth for 2025? Is there a positive mix effect here coming from somewhere? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 22, 2025 / 1:00PM, MCO.N - Q1 2025 Moody's Corp Earnings Call

Question: Craig Huber - Huber Research Partners - Analyst : Great. Can you just talk a little bit further about the costs? I was pretty pleased with your cost containment this last quarter. Obviously, your restructuring charges in the last two quarters were higher than normal. But just talk about -- in a little more depth about where you're putting the cost out here between the two different divisions. Maybe also touch on your outlook for incentive comp for the year and stuff. Just some more color, please.

Question: David Motemaden - Evercore ISI. - Analyst : Just a another question just on the MIS outlook. Wondering if you could talk about some of the sensitivities, if we got more Fed rate cuts, how you think about that potentially impacting your issuance outlook as well as on the M&A side, if we had flat M&A this year versus the up 15%, how we should think about that impacting your outlook?

Question: Manav Patnaik - Barclays Capital - Analyst : Rob, just on Private Credit, just hoping maybe, it's a little bit of a broader question. But obviously, you said a lot of the growth showed up in structured finance. I was just curious which other lines within your Moody's reporting segments do you think you have initiatives where you think that could pop up? And obviously, that's all good news. I was hoping you just help us balance that with all the headlines in the near term, I guess, around how the banks have obviously frozen and Private Credit is in the headlines taking deals here and there. So just a balance with some of the negatives out there, too, if you could.

Question: Jeff Silber - BMO Capital Markets - Analyst : I wanted to circle back to MA. I know you slightly reduced your ARR guidance. You talked about the federal government exposure, I understand that. But beyond that, are you seeing any other kind of slowdown or uncertainty in those businesses? Because some of the metrics kind of look like they are slowing down a bit.

Question: Alex Kramm - UBS Investment Bank - Analyst : Just coming back to MIS for a second. I didn't fully understand the commentary you made from a seasonal pattern perspective. So maybe you can just give a little bit more detail there, what you said about the second and the third quarter. I think you said second to third is stable. But I think from a second quarter perspective, you didn't really say much in terms of what you expect pulling this towards April. Are you expecting May, June to get better? Or what exactly should we be thinking about it from a seasonal perspective? Sorry, what the short-term focus, but clearly a lot in flux.

Question: Faiza Alwy - Deutsche Bank - Analyst : I wanted to ask about MIS margins and expenses more broadly. I think, Rob, you had talked about some Gen-AI related efficiencies more broadly in the business. So I think you might be talking about MA. But I'm curious, to the extent the environment worsened from an issuance perspective relative to how you're thinking about it at the moment, how much flexibility do you have in terms of whether it's pulling back on investments or just some of these efficiencies that are coming through?

Question: Owen Lau - Oppenheimer & Co. Inc. - Analyst : So going back to your partnership with MSCI, could you please add more color on the revenue model of the independent reassessments? What are the use cases? What are your clients looking for? And also how big deals in it can become longer term?

Question: Pete Christiansen - Citigroup, Inc - Analyst : I was just curious if we could just drill down into the assumption on first-time mandates, I guess there's a lot of confidence there that's going to continue throughout the year. Just curious if you could just walk us through your confidence in that number throughout the year.

Question: Sean Kennedy - Mizuho Securities - Analyst : It was nice to see strong growth in KYC this quarter. And you touched on this on the prepared remarks, but I was wondering if tariffs and heightened macro uncertainties are acting as a catalyst for helping penetrate the corporate market. And could you also touch on the total opportunity and

Question: Joshua Dennerlein - BofA Securities, Inc. - Analyst : Rob, just trying to tie some of your comments today on expense management and margin versus maybe what we've seen in your history. If I look back to 2022, we saw like a fairly significant slowing in MIS revenues and margins really compressed. Is that not a good analogy to what might happen if MIS revenue slow a lot more than you expect this year?