Results exceed expectations as outlook disappoints investors
Moody’s Corporation (NYSE:MCO) reported stronger-than-expected second-quarter 2026 results on Wednesday, although investors focused on a slightly softer full-year earnings outlook that weighed on the stock.
The credit ratings and analytics company posted adjusted earnings per share of $4.68, comfortably ahead of the analyst consensus estimate of $4.21.
Revenue increased 15% year over year to $2.19 billion, surpassing Wall Street expectations of $2.07 billion.
Despite the earnings beat, Moody’s shares slipped 0.35% in premarket trading after the company narrowed its full-year earnings guidance.
Management now expects adjusted earnings per share for 2026 to range between $16.50 and $17.00. The midpoint of $16.75 is slightly below the analyst consensus estimate of $16.78.
Ratings business delivers strong growth
“Moody’s delivered exceptional results in the second quarter, reflecting both strong execution and the growing importance of trusted, decision-grade intelligence in an increasingly complex world,” said Rob Fauber, President and Chief Executive Officer.
Revenue from Moody’s Investors Service increased 25% from a year earlier to $1.26 billion, supported by broad-based growth across all major business lines.
Corporate Finance revenue rose 27% to $651 million, driven by robust investment-grade issuance and increased leveraged finance activity.
Public, Project and Infrastructure Finance revenue climbed 38% to $224 million, benefiting from issuance linked to data centres and technology infrastructure projects.
Analytics business maintains recurring growth
Moody’s Analytics generated revenue of $925 million during the quarter, representing 4% reported growth and 8% organic growth on a constant currency basis.
Recurring revenue, which accounted for 99% of total Analytics revenue, increased 7% year over year.
Annualised recurring revenue rose 9% to $3.66 billion, reflecting continued demand for the company’s analytics and risk management solutions.
Margins and cash flow improve
Adjusted operating margin expanded by 440 basis points to 55.3%, while operating income increased to $1.05 billion from $818 million in the prior-year period.
For the first half of 2026, operating cash flow grew 32% to $1.72 billion and free cash flow increased 34% to $1.53 billion.
Moody’s returned approximately $2.5 billion to shareholders during the first six months of the year through $2.2 billion in share repurchases and $365 million in dividends.
The company also raised its full-year share repurchase target to as much as $3.0 billion, up from its previous guidance of approximately $2.5 billion.
Moody’s stock price
