Moody's (MCO): Q3 sales up 1% to $2.02bn as risky-debt ratings slump offsets subscription growth

Moody's, which grades the creditworthiness of borrowers and sells risk-analysis software, reported third-quarter sales of $2.02bn, up 1%, and kept its full-year forecast. Fees from rating risky corporate debt fell, while subscription sales in its analytics arm rose 8% on an underlying basis.

What happened

On 21 October 2026 Moody's Corporation published its results for the three months to 30 September 2026 in a press release filed with the US Securities and Exchange Commission (SEC) on Form 8-K. Sales were $2,023m against $2,007m a year earlier. The company has two businesses. Moody's Investors Service (MIS) gives credit ratings, opinions on how likely a borrower is to repay, and is paid fees when companies and governments issue bonds. Moody's Analytics (MA) sells data, research and software, mostly on subscription. MIS sales fell 1% to $1,087m, "primarily reflecting lower Leveraged Finance issuance", the company said, against a record quarter a year earlier. MA sales rose 3% to $936m. Moody's reaffirmed its 2026 forecast, and chief executive Rob Fauber described "another quarter of strong profitability and earnings growth". Independent coverage from Teleborsa and Newsquawk reported that sales and adjusted profit per share fell slightly short of analyst estimates.

The numbers, explained

Start with sales. $2,023m against $2,007m is a rise of $16m, or 0.8% (16 / 2,007), which Moody's rounds to 1%; adjusting for currency and acquisitions and disposals, the company says sales rose 3%. Operating income, profit from running the business before interest and tax, was $906m against $917m, down 1.2% (11 / 917). The operating margin, operating income as a share of sales, was 44.8% (906 / 2,023) against 45.7% (917 / 2,007), a fall of 0.9 percentage points. Total expenses rose from $1,090m to $1,117m, or 2.5% (27 / 1,090), faster than sales. Net income attributable to Moody's was $734m against $646m, up 13.6% (88 / 646). Profit per diluted share, which spreads profit over all shares including those that could be created from share awards, was $4.24 against $3.60, up 17.8% (0.64 / 3.60). These are GAAP figures, the standard US accounting rules, in US dollars.

The faster profit growth needs explaining. This quarter's profit included a $115m pre-tax gain from selling a business, Moody's Analytics Regulatory Solutions; after tax of $34m that is $81m, or about $0.47 a share (81 / 173.3m shares). Moody's also reports adjusted figures it defines itself, which remove that gain and costs such as restructuring ($27m), the amortisation of acquired intangibles and duplicate rent for its new New York headquarters. Adjusted net income was $717m against $704m, up only 1.8% (13 / 704), and adjusted profit per share was $4.14 against $3.92, up 5.6% (0.22 / 3.92). The gap between 1.8% and 5.6% comes from buybacks: the diluted share count fell from 179.6m to 173.3m, a drop of 3.5% (6.3 / 179.6), so each remaining share owns a bigger slice of profit. The tax rate was 24.0% against 25.4%, helped by a one-off lapse of a time limit on tax claims.

Why it matters

The two businesses behave differently. Rating fees depend on how much debt is raised, so they move with markets. Within MIS, sales from corporate finance, the largest line, fell from $576m to $530m, down 8.0% (46 / 576). The company said investment-grade revenue, from higher-quality borrowers, rose 18%, helped by large technology-sector financing including borrowing linked to artificial intelligence and data-centre investment. But its table shows transaction revenue, fees tied to individual debt deals, fell 40% for high yield (riskier, lower-rated) bonds and 27% for leveraged loans. Overall MIS transaction revenue fell 5.2% (753 to 714). By contrast MIS recurring revenue, regular fees such as annual monitoring, rose 8.1% (345 to 373). Public, project and infrastructure finance rose 11% to $179m and structured finance rose 5% to $153m.

Moody's Analytics shows the steadier side. Annualised recurring revenue (ARR), the yearly value of active subscription contracts at the period end, was $3,688m against $3,418m, up 7.9% (270 / 3,418). Decision Solutions, its software for banks, insurers and identity checks, had ARR of $1,637m, up 10.0% (149 / 1,488). Recurring revenue was 99% of MA sales (928 / 936). Reported MA sales grew only 3% because two businesses were sold; on an underlying basis they grew 8% (938 / 867 is 8.2%). MA's adjusted operating margin rose 1.0 percentage point to 35.3%. For the nine months, sales were $6,287m against $5,829m (up 7.9%), and free cash flow, cash from operations less spending on equipment, was $2,200m against $1,798m (up 22.4%), a figure Moody's defines itself.

What to watch next

Moody's declared a regular quarterly dividend of $1.03 per share on 20 October 2026, payable on 11 December 2026 to shareholders on record at the close of business on 20 November 2026. For the full year 2026 the company forecast sales to rise by a high-single-digit percentage, an operating margin of 44% to 45%, diluted profit per share of $16.00 to $16.50 and adjusted profit per share of $16.50 to $17.00, and said it plans to buy back up to $3.0bn of shares, subject to conditions. These are the company's own forecasts, not facts yet, and were unchanged from its previous forecast. It had returned about $3.1bn to shareholders so far this year, including $2.6bn of buybacks and $543m of dividends. We did not find a confirmed date for fourth-quarter results in the sources we read, so we give none, and we make no prediction about them.

• GAAP: the standard US accounting rules, as opposed to adjusted figures a company defines itself
• Credit rating: an opinion on how likely a borrower is to repay its debts
• ARR: annualised recurring revenue, the yearly value of active subscription contracts
• High yield: bonds from borrowers with lower credit ratings, which pay more interest because they are riskier

Sources

• Moody's Q3 2026 results, Form 8-K (SEC, primary)
• Moody's 3Q26 earnings release (company, primary)
• Moody's heads for lower open after results miss expectations (Teleborsa, Borsa Italiana)
• Moody's (MCO) Q3 2026: Adj. EPS 4.14 (exp. 4.24), Revenue 2.023bln (exp. 2.07bln) (Newsquawk)