Moody's earnings increased in the third quarter of 2026 despite modest revenue growth, as its analytics business expanded while ratings revenue declined. The company reported diluted earnings per share of $4.24, up 18% from a year earlier, and reaffirmed its full-year outlook on October 21, 2026.
Key Takeaways
- Revenue rose 1% to $2.023 billion, while adjusted diluted earnings per share increased 6% to $4.14.
- Analytics revenue grew 3%, offsetting a 1% decline at Moody's Investors Service.
- Moody's maintained its 2026 guidance after returning approximately $3.1 billion to shareholders through September.
Table of Contents
- Moody's earnings grow despite narrower operating margins
- Recurring analytics revenue supports growth
- Leveraged finance weakness weighs on ratings
- Annual outlook holds as cash generation strengthens
- Conclusion
Moody's earnings grow despite narrower operating margins
The company's third-quarter 2026 results announcement showed revenue of $2.023 billion for the three months ended September 30, compared with $2.007 billion a year earlier. Revenue increased 3% on an organic constant currency basis, a non-GAAP measure that adjusts for currency movements and changes in business ownership.
Reported diluted earnings per share rose from $3.60 to $4.24. Adjusted diluted earnings per share, also a non-GAAP measure, increased from $3.92 to $4.14.
The earnings gains came despite narrower operating margins. Moody's reported operating margin fell 90 basis points to 44.8%, while its adjusted operating margin declined 30 basis points to 52.6%. Operating expenses rose 2%, reflecting growth investments and higher incentive compensation, partly offset by business divestitures and cost discipline.
| Item | Details |
|---|---|
| 2026 diluted EPS guidance | $16.00–$16.50; unchanged as of October 21, 2026 |
| 2026 adjusted diluted EPS guidance | $16.50–$17.00; non-GAAP and unchanged |
| 2026 operating cash flow guidance | $3.15 billion–$3.35 billion; unchanged |
| 2026 free cash flow guidance | $2.7 billion–$2.9 billion; non-GAAP and unchanged |
| Dividend record date | November 20, 2026, at the close of business |
| Dividend payment date | December 11, 2026 |
Recurring analytics revenue supports growth
Moody's Analytics generated $936 million in revenue, up 3% from the prior-year quarter, or 8% on an organic constant currency basis. Recurring revenue increased 6% and accounted for 99% of the segment's total revenue.
Annualized recurring revenue reached $3.688 billion, an 8% increase. Decision Solutions led that expansion with 10% growth, including increases across banking, insurance and know-your-customer services.
The segment's adjusted operating margin improved by one percentage point to 35.3%. Transaction revenue fell 76%, primarily reflecting the Learning Solutions divestiture and a continued shift toward recurring revenue. That shift helps explain why reported segment growth lagged its organic constant currency growth.
Leveraged finance weakness weighs on ratings
Moody's Investors Service revenue declined 1% to $1.087 billion against a record prior-year comparison. Transaction revenue fell 5% to $714 million, while total rated issuance volume decreased 2%.
The company attributed the revenue decline primarily to lower leveraged finance issuance. High-yield transaction revenue fell 40%, and leveraged-loan transaction revenue declined 27%. In contrast, investment-grade transaction revenue rose 18%, supported by large corporate financing activity, particularly in technology, including AI-related financing and hyperscaler investments.
Public, project and infrastructure finance revenue increased 11%, while structured finance revenue grew 5%. Those gains were insufficient to offset the decline in corporate finance revenue. The ratings segment's adjusted operating margin narrowed to 64.4% from 65.2%.
Annual outlook holds as cash generation strengthens
Moody's left its full-year financial guidance unchanged, including its expectation for high-single-digit percentage revenue growth. The outlook remains management guidance rather than a completed result.
Operating cash flow for the first nine months increased 21% to $2.471 billion. Free cash flow, a non-GAAP measure, rose 22% to $2.200 billion. Over the same period, Moody's repurchased approximately $2.6 billion of shares and paid $543 million in dividends.
On October 20, the board declared a quarterly dividend of $1.03 per share. The maintained annual outlook also includes up to $3.0 billion in share repurchases, subject to available cash, market conditions, acquisition opportunities and other capital-allocation decisions.
Conclusion
Moody's maintained its annual outlook as analytics growth balanced weaker ratings activity. The next confirmed shareholder dates are the November 20 dividend record date and December 11 payment date.
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