Moody’s (NYSE:MCO) executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight record results, accelerating activity in debt markets, and growing adoption of its data and analytics in customer workflows—particularly as clients build artificial intelligence-enabled processes.
Record 2025 results and margin expansion
CEO Rob Fauber said 2025 was “a record year” for Moody’s, driven by what he described as sustained customer demand for “decision-grade data, analytics and insights” amid large funding needs, compliance requirements, and heightened risk management priorities.
Adjusted diluted earnings per share reached $14.94, up 20% from the prior year, which Fauber said represented roughly 70% earnings growth over the past three years.
Ratings: record issuance, private credit growth, and stablecoin methodology
In Moody’s Investors Service (MIS), Fauber said issuance and investment cycles “came together very powerfully” in the fourth quarter, producing the busiest fourth quarter in the company’s history and contributing to record annual revenue. He said Moody’s rated $6.6 trillion of debt in 2025, an all-time high, supporting investment spanning infrastructure, AI-driven data centers, energy transition finance, and private credit.
Fauber noted that in the fourth quarter alone Moody’s rated more than $70 billion of issuance for Alphabet, Amazon, and Meta, which he linked in part to those companies’ AI investment programs. He also said Moody’s was named Best Credit Rating Agency in the U.S. by Extel for the 14th consecutive year.
Moody’s also discussed digital finance initiatives. In December, the company issued a request for comment on a cross-sector stablecoin rating methodology. Fauber said the company expects this framework to position Moody’s in a growing digital finance ecosystem, citing management’s forecast that stablecoins could reach $400 billion of total value by the end of 2026 and $2 trillion by 2028.
Private credit was another focus. Fauber said private credit revenue in MIS grew by nearly 60% in 2025 and highlighted Moody’s role as the sole rating agency on what he called the largest private credit CLO of the year: a $1.5 billion issuance by Blackstone.
Moody’s Analytics: recurring revenue, portfolio actions, and AI-enabled workflows
Moody’s Analytics (MA) also posted 9% revenue growth in 2025, and CFO Noémie Heuland said adjusted operating margin improved 240 basis points to 33.1%. She said MA’s annual recurring revenue (ARR) reached $3.5 billion, up 8%, and described retention as in the low- to mid-90s.
Fauber emphasized the increasingly recurring nature of MA’s revenue, saying recurring revenue represented 97% of fourth-quarter revenue and that the segment delivered 190 basis points of margin expansion to nearly 36% in the quarter.
Management also outlined portfolio changes meant to reinforce a recurring-revenue strategy. Fauber said Moody’s closed the sale of its learning solutions business in December, describing it as primarily transactional and no longer core. Moody’s also announced the sale of its regulatory reporting business, which Heuland said is expected to close around mid-year 2026 and will be reflected in guidance after closing.
Heuland walked through MA’s growth drivers, emphasizing Decision Solutions (KYC, insurance, and banking), which she said delivered double-digit ARR growth and represents about 45% of total MA ARR. KYC was described as the fastest-growing component, with 15% ARR growth at the end of 2025 and demand expanding beyond financial services to corporates and other customers with complex compliance needs.
AI positioning: “trusted context,” embedded delivery, and pricing experiments
Across the call, management repeatedly tied product strategy to AI adoption. Fauber said Moody’s is scaling “decision-grade contextual intelligence” directly into customer workflows through Moody’s platforms, third-party systems, smart APIs, MCPs, and specialized agents. He cited integrations and embedding into systems including Salesforce, ServiceNow, Coupa, Intapp, and Databricks, as well as future consumption through AI portals such as Claude and OpenAI.
Fauber argued that as AI becomes an interface for decision-making, demand increases for verifiable, domain-specific, governed data and analytics that are “accurate, explainable and defensible.” He said customers that purchased or upgraded into at least one standalone GenAI or agentic solution are retained at a 97% rate and are growing at roughly twice the rate of the rest of the customer base.
Executives provided examples of AI-enabled workflow outcomes cited by customers, including automated credit memo creation and early warning systems. Fauber said a Tier 1 U.S. bank using Moody’s agentic solutions reported the tools can generate about 35% to 40% of each credit memo and save analysts “hundreds and hundreds and thousands of hours,” in some cases equating to millions of dollars saved. He also cited feedback from banks in APAC and the Middle East that AI-enabled spreading and memo generation reduced decision times by as much as 80% and cut loan processing cycles by as much as 15x in certain cases.
On product momentum, Fauber said the company’s flagship lending solution, CreditLens, approached 20% growth in 2025. He added that about two-thirds of eligible renewals converted to the AI-enabled Lending Suite in 2025, with an average uplift of about 67%.
Investors also asked about competitive risks from AI-native tools and verticalized large language models. Fauber said Moody’s software acts as a “delivery chassis for the content,” and that customers may choose to consume Moody’s content through software, APIs, or specialized agents integrated into their own workflows. He also argued the company’s proprietary datasets, legal and regulatory constraints, semantic complexity across jurisdictions, entity resolution requirements, historical depth, and governance standards create barriers to replication.
Fauber said Moody’s has not historically used seat-based licensing, and noted the company is trialing new pricing approaches in parts of the business, including elements of consumption-based pricing aligned to outcomes, as AI-driven efficiencies spread through customers’ workflows.
2026 guidance: high single-digit growth, margin expansion, and shareholder returns
For 2026, Heuland guided to high single-digit percent revenue growth for the company and adjusted operating margin expanding by 150 basis points to a range of 50% to 53%. Moody’s guided adjusted diluted EPS of $16.40 to $17.00, which implies about 12% growth at the midpoint, and an effective tax rate of 23% to 25% following what she described as a sizable M&A-related one-time tax benefit in 2025.
In MIS, management expects total issuance to increase at a low single-digit percent pace in 2026, with refinancing needs continuing and debt-funded M&A issuance rising 40% to 45%. Based on that outlook, Moody’s expects MIS revenue to grow at a high single-digit percent pace and guided to a full-year operating margin of about 65%.
For MA, Heuland guided to reported revenue growth at the high end of mid-single digits, including a 180 basis point headwind from the learning solutions divestiture. She said organic constant currency recurring revenue growth is expected to align with ARR in the high single-digit percent range, and guided to adjusted operating margin of 34% to 35%.
On capital allocation, Heuland said Moody’s expects free cash flow of $2.8 billion to $3.0 billion in 2026, with an added $100 million increase in CapEx tied to build-out of the company’s New York headquarters and London office space. Moody’s plans to repurchase about $2 billion of shares and to announce a 10% increase to its quarterly dividend. Heuland said the company’s capital plan calls for returning at least 90% of free cash flow to shareholders in 2026, adding that Moody’s expects to be “aggressively buying back shares” at current levels.
About Moody’s (NYSE:MCO)
Moody’s Corporation is a global provider of credit ratings, research, data and analytics that support financial decision-making and transparency in capital markets. The company traces its origins to the early 20th century when financial analyst John Moody began publishing credit information; today Moody’s is headquartered in New York and serves a broad set of market participants including investors, issuers, financial institutions, corporations, governments and regulators.
Moody’s operates primarily through two complementary businesses.
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