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July 29, 2025 • 4 min read
Moody's Corporation, a titan in the world of financial risk assessment, recently released its financial results for the second quarter of 2025. For anyone interested in the health of the global economy and financial markets, digging into the company's 10-Q filing offers a unique perspective. Let's break down the numbers to see how Moody's is performing and what it signals about the broader landscape.
Moody's operates through two primary segments: Moody's Investors Service (MIS), the well-known credit rating agency, and Moody's Analytics (MA), which provides financial intelligence and analytical tools. This quarter, the story is one of impressive growth in analytics complementing the steady, formidable presence of the ratings business.
Moody's Analytics (MA) was the star performer, with revenue climbing 11% to $888 million compared to the same quarter last year. This growth was fueled by strong demand across its divisions. The Decision Solutions unit, which helps clients with risk management, saw revenue jump 13% to $413 million. Within that, the Know-Your-Customer (KYC) business posted a remarkable 22% increase in revenue to $107 million, highlighting the increasing importance of compliance and risk verification for businesses worldwide. The segment’s Annualized Recurring Revenue (ARR), a key metric for subscription-based businesses, grew a healthy 8%, signaling a strong and predictable future revenue stream.
Moody's Investors Service (MIS), the traditional ratings powerhouse, held its ground with revenues of $1.01 billion, nearly flat compared to a very strong second quarter in 2024. This stability masks some underlying shifts. Revenue from rating bank loans declined, reflecting what the company described as "heightened market volatility" and "subdued M&A activity." However, this was offset by an uptick in revenue from rating investment-grade corporate bonds and from monitoring fees. This shows that while some parts of the debt market are quiet, others remain active.
To get a clearer picture of how Moody's generates its income, the following chart breaks down the revenue and expenses for the first six months of 2025, from top-line revenue to bottom-line profit.
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As the diagram illustrates, both MA and MIS are substantial contributors to the top line. After accounting for operating expenses and other costs, the company maintains strong profitability.
Overall, Moody's posted a solid quarter. Total company revenue grew 4% to $1.9 billion. More impressively, the company is managing its costs effectively. While it incurred $27 million in restructuring charges this quarter as part of its "Strategic and Operational Efficiency Restructuring Program," its underlying profitability improved.
The company's Adjusted Operating Margin, a non-standard metric that excludes items like depreciation and restructuring costs, expanded by 130 basis points (or 1.3 percentage points) to 50.9%. This indicates that for every dollar of revenue, more is being converted into profit before these specific expenses, a sign of increasing operational efficiency.
This strong performance translated directly to the bottom line and shareholder returns:
Moody's Q2 2025 results paint a picture of a company successfully navigating a complex market. The rapid growth of its subscription-heavy Moody's Analytics segment provides a powerful, steady engine that counterbalances the inherent cyclicality of the debt issuance markets that drive its Moody's Investors Service business.
The company's focus on cost control through its restructuring program, coupled with its consistent share buybacks, demonstrates a disciplined approach to capital management. As a bellwether for financial markets, Moody's performance suggests that while some areas of the economy face headwinds, the demand for data, analytics, and risk assessment remains as critical as ever.
Last updated: July 29, 2025