Reported EPS rose 18% to $4.24, helped by a $115 million divestiture gain 8-K. Operating income fell 1.2% from a year earlier and adjusted EPS rose 6% 8-K. FY guidance was reaffirmed, including diluted EPS of $16.00 to $16.50 8-K.
Moody's Corporation · Q3 2026 · Reported 21 Oct 2026 · US
Key figures
Million USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Revenue | 2,023.00 | 2,007.00 | +0.8 % |
Operating income | 906.00 | 917.00 | -1.2 % |
Net income | 734.00 | 646.00 | +13.6 % |
Diluted EPS | 4.24 USD/share | 3.60 USD/share | +17.8 % |
MCO Operating Margin | 44.8 % | 45.7 % | -0.9 pp |
Operating margin | 44.8 % | 45.7 % | -0.9 pp |
Net margin | 36.3 % | 32.2 % | +4.1 pp |
Figures in USD, as reported. Margins are computed from the reported lines. Changes in ratios are in percentage points.
The EPS increase owes much to a divestiture gain and a lower share count
Diluted EPS rose to $4.24 from $3.60 a year earlier, and net income attributable to Moody's rose 13.6% to $734 million 8-K. Non-operating income included a $115 million gain on business divestitures with no equivalent a year earlier 8-K. The company-defined Adjusted Diluted EPS, which excludes that gain and other items, was $4.14 against $3.92, up 6% 8-K. Diluted shares fell to 173.3 million from 179.6 million, which is why EPS grew faster than net income 8-K.
Operating income slipped 1.2% to $906 million, and operating margin was 44.8% against 45.7% a year earlier 8-K. Restructuring was $27 million against $21 million 8-K. Excluding restructuring in both periods ($27 million and $21 million), our calculation (not a company figure) gives a 46.1% margin against 46.7% a year earlier 8-K. Operating expenses rose 2% on growth investment and higher incentive compensation, partly offset by divestitures 8-K.
MA grew organically at 8% while MIS revenue fell on leveraged finance
Moody's Analytics revenue rose 3% reported but 8% on a company-defined organic constant currency basis 8-K. The gap reflects the divested Learning and Regulatory businesses, which contributed $42 million of year-earlier revenue 8-K. ARR rose 8% to $3,688 million, and MA adjusted operating margin rose 100 bps to 35.3% 8-K.
MIS revenue fell 1% to $1,087 million against a record prior-year quarter, mainly on lower Leveraged Finance issuance 8-K. High yield revenue fell 40% and leveraged loan revenue 27%, while Investment Grade grew 18% 8-K. MIS transaction revenue fell 5% and its adjusted margin eased to 64.4% from 65.2% 8-K.
Guidance is unchanged, but Q3 revenue growth ran well below the full-year range
Management reaffirmed full-year guidance: revenue up in the high-single-digit percent range, operating margin of 44% to 45%, diluted EPS of $16.00 to $16.50 and adjusted diluted EPS of $16.50 to $17.00 8-K. Reported revenue grew 1% in Q3 against 8% for the first nine months, so the full-year range leans on a stronger fourth quarter 8-K.
The release gives cash flow only year to date. Operating cash flow was $2,471 million, up 21%, and free cash flow was $2,200 million, up 22%, which the release attributes mainly to higher operating income in both segments 8-K. The release does not give quarterly cash flow or a conversion figure for Q3.
What to watch next
Whether MIS leveraged finance issuance recovers and lifts revenue toward the high-single-digit full-year guidance, given management's assumption of a global speculative-grade default rate near 3.8% by year-end, up from around 3% previously 8-K.
Quarterly cash flow, debt and buyback detail in the 10-Q: year-to-date buybacks were about $2.6 billion against guidance of up to $3.0 billion for the year, and cash fell to $1,513 million from $2,384 million at year-end 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.