AI Takeaway
Moody's delivered a strong Q2 FY2026 with total revenue up 15% YoY to $2,185M and net income up 52% to $878M, driven by 25% growth in MIS ratings revenue (particularly strong CFG issuance) and a $181M gain on the divestiture of the MA Regulatory Solutions business, even as stockholders' equity fell 23% YoY due to aggressive share buybacks ($2,165M YTD).
Revenue
$2.19B
++15.12% YoY
EPS (Basic)
$5.04
++56.52% YoY
Operating Income
$1.05B
++27.87% YoY
Filed · Source: SEC EDGAR 10-Q filing
Moodys (MCO) reported Q2 FY2026 revenue of $2.19B, up 15.1% year over year. The company posted net income of $878M, up 51.9% from a year earlier, with diluted EPS of $5.03.
MIS external revenue grew 25% YoY to $1,260M, driven by strong leveraged finance issuance in the U.S., investment-grade issuance tied to AI-related financing by hyperscalers, and strong Project and Infrastructure Finance issuance related to data centers and technology infrastructure build-out. Within MIS, PPIF revenue grew 38%, CFG grew 27%, FIG grew 16%, and SFG grew 12%.
Source: 10-Q Item 2 MD&A
The company recorded a $181M gain on the divestiture of the MA Regulatory Solutions business, which drove non-operating income to $125M from an expense of $(46)M in the prior-year quarter, and directly contributed to the 57% increase in diluted EPS to $5.03.
Source: 10-Q Item 2 MD&A
Operating margin rose to 47.9% from 43.1% a year ago, and Adjusted Operating Margin rose to 55.3% from 50.9%, reflecting the 15% revenue increase partially offset by only a 5% growth in operating and SG&A expenses, aided by disciplined cost management.
Source: 10-Q Item 2 MD&A
MA external revenue grew 4% to $925M, with Decision Solutions Insurance revenue up 9% and KYC revenue up 13%, while Banking revenue declined 14% due to the MA Learning Solutions and MA Regulatory Solutions divestitures; organic constant currency recurring revenue and ARR both grew 9%.
Source: 10-Q Item 2 MD&A
Total global staffing decreased 2% YoY to 15,627 employees, with MA headcount down 9% primarily due to business divestitures, while MIS headcount grew 7% primarily due to business acquisitions.
Source: 10-Q Item 2 MD&A
Stockholders' equity fell 23.4% YoY to $3,025M and cash & equivalents declined 32.5% YoY to $1,467M, driven largely by aggressive share buybacks of $2,165M year-to-date (up 229.5% YoY), which has materially thinned the company's equity cushion.
Source: 10-Q Balance Sheet / Cash Flow Statement (XBRL)
Debt to Equity stands at approximately 3.80x with long-term debt of $6,946M against equity of only $3,025M, reflecting a highly leveraged capital structure that could constrain financial flexibility if market conditions deteriorate.
Source: 10-Q Balance Sheet (XBRL)
MIS revenue growth of 25% was heavily driven by leveraged finance, investment-grade, and project/infrastructure finance issuance tied to favorable credit spreads and AI-related hyperscaler financing; such transaction-based revenue is inherently cyclical and sensitive to credit market conditions.
Source: 10-Q Item 2 MD&A
MA Banking revenue declined 14% YoY, primarily due to the divestitures of the MA Learning Solutions and MA Regulatory Solutions businesses, and Transaction revenue within Decision Solutions fell 88%, indicating ongoing portfolio restructuring risk affecting reported growth comparability.
Source: 10-Q Item 2 MD&A
Current ratio stands at 1.19x with current liabilities up 26.4% YoY to $3,345M, narrowing the buffer between short-term assets and obligations compared to the prior year.
Source: 10-Q Balance Sheet (XBRL)
Reported EPS of $4.68 versus the $4.28 analyst consensus — a +9.5% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $2.19B | $1.9B | +15.12% |
Cost of Revenue | $518M | $489M | +5.93% |
Operating Income | $1.05B | $818M | +27.87% |
Net Income | $878M | $578M | +51.90% |
EPS (Basic) | $5.04 | $3.22 | +56.52% |
EPS (Diluted) | $5.03 | $3.21 | +56.70% |
SG&A Expense | $463M | $443M | +4.51% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $14.68B | $15.49B | -5.24% |
Current Assets | $3.98B | $4.64B | -14.16% |
Total Liabilities | $11.51B | $11.38B | +1.14% |
Current Liabilities | $3.35B | $2.65B | +26.37% |
Stockholders' Equity | $3.02B | $3.95B | -23.40% |
Cash & Equivalents | $1.47B | $2.17B | -32.52% |
Long-Term Debt | $6.95B | $6.97B | -0.30% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $1.72B | $1.3B | +32.15% |
Investing Cash FlowYTD | $21M | $98M | -78.57% |
Financing Cash FlowYTD | $-2.63B | $-1.78B | -47.70% |
Share BuybacksYTD | $2.17B | $657M | +229.53% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 47.9% | 43.1% | +4.77% |
Net Margin | 40.2% | — | — |
ROE | 29.0% | — | — |
ROA | 6.0% | — | — |
Current Ratio | $1.19 | — | — |
Debt to Equity | $3.805 | — | — |
Expected release date, analyst estimates & what to watch
Moody's Corporation delivered strong Q1 FY2026 results with revenue of $2.08B (+8.1% YoY), operating income of $922M (+9.0% YoY), and operating cash flow surging 24.0% to $939M, while aggressively returning capital via $1.47B in share buybacks.
Moody's Corporation delivered strong FY2025 results with revenue up 8.9% to $7.72B, operating income surging 16.6% to $3.35B, and net income rising 19.5% to $2.46B, reflecting robust margin expansion and disciplined cost management.
Other companies in Financial Exchanges & Data
The filing does not disclose analyst consensus estimates, so a direct beat/miss comparison cannot be confirmed from this data. However, Moody's reported strong YoY growth with revenue up 15.1% to $2,185M and diluted EPS up 56.7% to $5.03, partly boosted by a $181M gain on the MA Regulatory Solutions divestiture.
Revenue grew 15% YoY to $2,185M, primarily driven by a 25% increase in MIS (Moody's Investors Service) external revenue to $1,260M, fueled by strong leveraged finance, investment-grade, and project/infrastructure finance issuance. MA external revenue grew a more modest 4% to $925M, supported by Insurance and KYC demand within Decision Solutions.
Net income rose to $878M from $578M a year earlier, driven by a 27.9% increase in operating income to $1,046M plus a one-time $181M gain on the divestiture of the MA Regulatory Solutions business. This divestiture gain pushed non-operating income to $125M versus a $(46)M expense in the prior-year quarter.
Key considerations include elevated leverage with a debt-to-equity ratio around 3.80x and a 23.4% YoY decline in stockholders' equity to $3,025M, largely due to $2,165M in year-to-date share buybacks. MIS revenue growth was also tied to cyclical debt issuance activity, including leveraged finance and AI-related hyperscaler financing, which could be sensitive to changing credit market conditions.
Moody's shows strong profitability with a 47.9% operating margin (up 480 bps YoY) and $1,718M in year-to-date operating cash flow (up 32.2% YoY), but its balance sheet shows reduced cash ($1,467M, down 32.5% YoY) and lower stockholders' equity ($3,025M, down 23.4% YoY) due to aggressive share repurchases.