MCO earnings analysis
What we found in MCO's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Moody’s reported a strong Q1: total revenue rose 8% YoY to $2,079 million and adjusted diluted EPS increased to $4.33 (up 13% YoY), driven by 8% growth in both Moody’s Analytics (MA) and Moody’s Investors Service (MIS). Operating leverage lifted adjusted operating margin to 53.2% (up 150 bps) and the company generated $844 million of free cash flow while repurchasing shares. Key near-term items include a $34 million reserve for an international non-income tax obligation and increased financing outflows from share repurchases.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth — companywide
- Total revenue increased 8% YoY to $2,079 million in Q1 2026 (from $1,924 million in Q1 2025).
- Both segments grew 8%
- Moody’s Analytics external revenue was $926 million (+8% YoY) and Moody’s Investors Service external revenue was $1,153 million (+8% YoY).
- Adjusted EPS and margin expansion
- Adjusted diluted EPS rose 13% YoY to $4.33 and Adjusted Operating Margin expanded 150 basis points to 53.2% (from 51.7%).
- Strong cash generation
- Net cash provided by operating activities was $939 million and Free Cash Flow was $844 million (up $172 million vs prior year quarter).
- Active buybacks returning capital
- The company repurchased 3,488,525 shares in Q1 2026 at an average price of $451.22 and reported approximately $2,489 million of remaining repurchase capacity at March 31, 2026 (approx $2.5 billion).
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- International tax reserve and related charges
- Moody’s recorded a reserve for an international non-income tax obligation of $34 million in MA and recognized related interest of approximately $12 million and accrued penalties of $7 million affecting non‑operating expense.
- Large FX hedge sensitivities
- If the euro strengthens 10% vs the dollar, the fair value of cross‑currency swaps would have an approximate $450 million unfavorable impact to OCI (offset by translation gains on hedged net investments).
- Higher cash used in financing (buybacks)
- Net cash used in financing activities was $(1,719) million in Q1 2026 versus $(1,298) million in Q1 2025 (increase of $421 million), driven primarily by $1,098 million higher share repurchases, which reduced near‑term liquidity.
- Effective tax rate headwind
- The effective tax rate increased to 24.0% in Q1 2026 from 22.3% a year earlier (up 170 bps), primarily due to a decrease in Excess Tax Benefits from stock‑based compensation.
- Rising non‑operating expense items
- Total non-operating (expense) income widened to $(52) million in Q1 2026 from $(42) million in Q1 2025 (a 24% deterioration), reflecting interest and penalty impacts tied to the tax reserve and lower interest income.
- No material change in Risk Factors (10-K carryforward)
- The filing states there have been no material changes to the risk factors disclosed in the 2025 Form 10‑K.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $3.73
- Operating margin
- 44.3%
- Segment
- Moody's Analytics: $926 million external revenue (Q1 2026, +8% YoY)
- Segment
- Moody's Investors Service: $1,153 million external revenue (Q1 2026, +8% YoY)
What they said about what is next.
The Form 10‑Q contains no explicit numeric FY or quarterly revenue or EPS guidance. MD&A discusses outlook drivers (e.g., sustained demand for MA subscriptions, issuance activity supporting MIS) but defers numeric guidance to the company’s earnings press release and call.
The filing reads better than the one before it.
What came before.
- 10-K · February 18, 2026
- Moody’s 2025 10-K reiterates a two-segment strategy (Moody’s Analytics and Moody’s Investors Service) focused on embedding decision-grade data and analytics into customer workflows and scaling recurring MA offerings…
- 10-Q · July 24, 2025
- Moody’s reported quarter (Q2 ended June 30, 2025) revenue of $1,898.0M, up $81M (+4.5%) versus Q2 2024 ($1,817.0M) but modestly below Q1 2025 ($1,920.0M). Operating income rose to $818M (operating margin 43.1% vs 42.7%…
- 10-Q · July 24, 2024
- Moody’s reported Q2 revenue of $1,817 million and GAAP diluted EPS of $3.02. Revenue rose $323 million (+21.6%) versus Q2 2023 and operating income expanded to $775 million (+40.9% y/y), while cash and cash equivalents…
- 10-Q · July 26, 2023
- Moody’s reported Q2 revenue of $1,494 million (+$113M YoY, +$24M vs prior quarter) and diluted EPS of $2.05 (up $0.28 YoY, down $0.67 vs prior quarter). Both reportable segments (MA and MIS) contributed equally with…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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