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What changed in Moody's Corporation's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Moody's Corporation's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+348 added−319 removedSource: 10-K (2024-02-14) vs 10-K (2023-02-15)

Top changes in Moody's Corporation's 2023 10-K

348 paragraphs added · 319 removed · 236 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

51 edited+43 added−32 removed20 unchanged
Biggest changeAs of December 31, 2022 and 2021, the number of Moody’s employees was as follows: December 31, Change 2022 2021 % MIS U.S. 1,538 1,459 5 % Non-U.S. 3,981 3,836 4 % Total 5,519 5,295 4 % MA U.S. 2,789 2,647 5 % Non-U.S. 4,333 3,882 12 % Total 7,122 6,529 9 % MSS U.S. 741 728 2 % Non-U.S. 1,044 908 15 % Total 1,785 1,636 9 % Total MCO U.S. 5,068 4,834 5 % Non-U.S. 9,358 8,626 8 % Total 14,426 13,460 7 % – The MIS employee population primarily consists of credit analysts, data and operations analysts, credit strategy and methodology professionals, software engineers, sales and sales operations, and international strategy teams. – MA’s employee population primarily consists of software engineers, data and operation analysts, advisory and implementation teams and economists, as well as sales and sales support professionals. – The MSS employee population primarily consists of information technology professionals and other professional staff such as finance, human resources and legal that support both MIS and MA.
Biggest changeAs of December 31, 2023 and 2022, the number of Moody’s employees was as follows: December 31, Change 2023 2022 % MA U.S. 2,995 2,789 7 % Non-U.S. 4,858 4,333 12 % Total 7,853 7,122 10 % MIS U.S. 1,490 1,538 (3) % Non-U.S. 3,855 3,981 (3) % Total 5,345 5,519 (3) % MSS U.S. 744 741 — % Non-U.S. 1,209 1,044 16 % Total 1,953 1,785 9 % Total MCO U.S. 5,229 5,068 3 % Non-U.S. 9,922 9,358 6 % Total 15,151 14,426 5 % – MA’s employee population primarily consists of software engineers, product managers and strategists, data and operations analysts, advisory and implementation teams and economists, as well as sales, business development, and sales support professionals. – The MIS employee population primarily consists of credit analysts, data and operations analysts, credit strategy and methodology professionals, software engineers, sales and sales operations, and international strategy teams. – The MSS employee population primarily consists of information technology professionals and other professional staff such as finance, human resources, compliance, and legal that support both MA and MIS.
Although certain financial information (particularly security identifiers, certain pricing or index data, and certain company financial data in selected geographic markets) is available from a limited number of sources, Moody’s does not believe it is dependent on any one data source for a material aspect of its business.
Although certain financial information (particularly security identifiers, certain pricing or index data, and company financial data in selected geographic markets) is available from a limited number of sources, Moody’s does not believe it is dependent on any one data source for a material aspect of its business.
Competition MIS competes with other CRAs and with investment banks and brokerage firms that offer credit opinions and research. Many users of MIS’s ratings also have in-house credit research capabilities.
MIS competes with other CRAs and with investment banks and brokerage firms that offer credit opinions and research. Many users of MIS’s ratings also have in-house credit research capabilities.
The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and other information statements that the Company files electronically with the SEC. The SEC’s internet site is https://www.sec.gov/. Information About Our Executive Officers Name, Age, Position and Biographical Data Robert Fauber, 52 President and Chief Executive Officer Mr.
The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and other information statements that the Company files electronically with the SEC. The SEC’s internet site is https://www.sec.gov/. Information About Our Executive Officers Name, Age, Position and Biographical Data Robert Fauber, 53 President and Chief Executive Officer Mr.
Moody’s Decarbonization Plan outlines tangible strategies for realizing its climate ambitions, including the procurement of 100% of renewable electricity in the Company’s office spaces and optimizing efficiencies in its operations through its hybrid work program. The costs associated with the implementation of the Decarbonization Plan are not expected to be material.
Our decarbonization plan outlines tangible strategies for realizing its climate ambitions, including the procurement of 100% of renewable electricity in the Company’s office spaces and optimizing efficiencies in its operations through its hybrid work program. The costs associated with the implementation of the decarbonization plan are not expected to be material.
In addition, certain of the Company’s subsidiaries obtain from third party information providers certain financial, credit risk, compliance, management, ownership, news and/or other data worldwide, which are distributed through certain of Moody's information products. The Company obtains such technology and intellectual property rights from generally available commercial sources.
In addition, certain of the Company’s affiliates obtain from third-party information providers certain financial, credit risk, compliance, firmographic, management, ownership, news and/or other data worldwide, which are distributed through Moody's information products. The Company obtains such technology and intellectual property rights from generally available commercial sources.
The Board also oversees Moody’s policies for assessing and managing the Company's exposure to risk, including climate-related risks such as business continuity disruption and reputational or credibility concerns stemming from incorporation of climate-related risks into the credit methodologies and credit ratings of MIS.
The Board also oversees Moody’s policies for assessing and managing the Company's exposure to risk, including climate-related risks such as business continuity disruption and reputational or credibility concerns stemming from incorporation of climate-related risks into the credit methodologies and credit ratings of MIS, or analysis of such risks within MA's products and services.
Sullivan has served as the Company’s Chief Accounting Officer and Corporate Controller since December 2018. Prior to joining the Company, Ms. Sullivan served in several roles at Bank of America from 2011 to 2018, where her last position held was Managing Director and Global Banking Controller. Prior to that role, Ms.
Sullivan has served as the Company’s Chief Accounting Officer and Corporate Controller since December 2018 and has served as the Interim Chief Financial Offer since September 2023. Prior to joining the Company, Ms. Sullivan served in several roles at Bank of America from 2011 to 2018, where her last position held was Managing Director and Global Banking Controller.
The Board oversees sustainability matters, with assistance from the Audit, Governance & Nominating and Compensation & Human Resources Committees, as part of its oversight of management and the Company’s overall strategy.
The Board oversees sustainability matters via the Audit, Governance & Nominating, and Compensation & Human Resources Committees, as part of its oversight of management and the Company’s overall strategy.
As a global integrated risk assessment firm, attracting, supporting and retaining skilled talent is essential to the Company’s success. Moody’s addresses these goals by: – championing DE&I among employees; – providing market-competitive compensation, benefits and wellness programs; and – advancing employee engagement, including supporting employee learning, development and skills enhancement.
As a global provider of integrated perspectives on risk, attracting, supporting and retaining skilled talent is essential to the Company’s success. Moody’s addresses these goals by: – championing inclusion among employees; – providing market-competitive compensation, benefits and wellness programs; and – advancing employee engagement, including supporting employee learning, development and skills enhancement.
Regulation MIS, certain of the Company's credit rating affiliates and many of the issuers and/or securities that MIS and the affiliates rate, are subject to extensive regulation in the U.S., EU and in other countries (including by state and local authorities).
MOODY'S 2023 10-K 21 Table of Contents Regulation MIS, certain of the Company's credit rating affiliates, and many of the issuers and/or securities that MIS and the affiliates rate, are subject to extensive regulation in the U.S. (including by state and local authorities), EU and in other countries.
As part of this effort, Moody’s advances sustainability by considering environmental, social, and governance (“ESG”) factors in its operations, products and services. The Company uses its expertise and assets to make a positive difference through technology tools, research and analytical services that help other organizations and the investor community better understand the links between sustainability considerations and the global markets.
As part of this effort, Moody’s advances its commitment to sustainability by considering ESG factors in its operations, value chain, products and services. It uses its expertise and assets to make a positive difference through technology tools, research and analytical services that help other organizations and the investor community better understand the links between sustainability considerations and the global markets.
Moody’s growth is influenced by a number of trends that impact financial information markets including: Health of the world’s major economies Debt capital markets activity Disintermediation of credit markets Fiscal and monetary policy of governments Expansion of market for integrated data and analytics solutions Business investment spending, including mergers and acquisitions In an environment of increasing financial complexity and heightened attention to credit analysis and risk management, Moody’s is well positioned to benefit from continued growth in global fixed-income market activity and more widespread use of credit ratings, research and related analytical products.
Moody’s growth is influenced by a number of trends that impact financial information markets including: Enablement of Gen AI Health of the world’s major economies Debt capital markets activity Disintermediation of credit markets Fiscal and monetary policy of governments Expansion of market for integrated data and analytics solutions Business investment spending, including mergers and acquisitions In an environment of increasing financial complexity and exponential risk, Moody’s expects to be well positioned to benefit from continued growth in global fixed-income market activity and more widespread use of credit ratings and integrated risk solutions.
Public Finance Issuers Structured Finance Deals 190+ 1,000+ 340+ Rating Methodologies Infrastructure & Project Finance Issuers Sub-Sovereigns 144 46 Sovereigns Supranational Institutions MIS also generates revenue from certain non-ratings-related operations, which primarily consist of financial instruments pricing services in the Asia-Pacific region, revenue from ESG research, data and assessments and revenue from ICRA's non-ratings operations.
Public Finance Issuers Structured Finance Deals 190+ 1,000+ 370+ Rating Methodologies Infrastructure & Project Finance Issuers Sub-Sovereigns 144 47 Sovereigns Supranational Institutions MIS also generates revenue from certain non-ratings-related operations, which primarily consist of financial instruments pricing services in the Asia-Pacific region, revenue from Second Party Opinions and Net Zero Assessments and revenue from ICRA's non-ratings operations.
MOODY'S 2022 10-K 13 Table of Contents HUMAN CAPITAL Moody's believes that a workforce representing an array of backgrounds and experiences helps create an environment that maximizes every employee’s contribution, widens the leadership pipeline and enhances our work, including the quality of our opinions, products and services.
Deliver trusted perspectives that inform a clear and holistic understanding of ESG risk. 14 MOODY'S 2023 10-K Table of Contents HUMAN CAPITAL Moody's believes that a workforce representing an array of backgrounds and experiences helps create an environment that maximizes every employee’s contribution, widens the leadership pipeline and enhances our work, including the quality of our opinions, products and services.
West served as Managing Director—Head of MIS Ratings and Research from June 2016 to October 2019. Previously, Mr. West served as Managing Director—Head of Global Structured Finance from February 2014 to May 2016 and Managing Director—Head of Global Corporate Finance from January 2010 to January 2014.
West served as Managing Director—Head of Global Structured Finance from February 2014 to May 2016 and Managing Director—Head of Global Corporate Finance from January 2010 to January 2014.
Intellectual Property Moody’s and its affiliates own and control a variety of intellectual property, including but not limited to: Proprietary information Publications Databases Trademarks Software tools and applications Domain names Research Models and methodologies Other proprietary materials that, in the aggregate, are of material importance to Moody’s business Management of Moody’s believes that each of the trademarks and related corporate names, marks and logos relating to its businesses, including those containing the term “Moody’s”, are of material importance to the Company.
Intellectual Property Moody’s and its affiliates own and control a variety of intellectual property, including but not limited to: Proprietary information Publications Databases Trademarks Software as a service and other software tools and applications Domain names Research Models and methodologies Other proprietary materials that, in the aggregate, are of material importance to Moody’s business Management of Moody’s believes that the trademarks and related corporate names, marks and logos relating to its businesses, including those containing the term “Moody’s”, are of material importance to the Company. 22 MOODY'S 2023 10-K Table of Contents The Company, primarily through MA and its affiliates, licenses certain of its databases, SaaS and other software applications, credit risk models, assessments, research and other publications and services that contain intellectual property to its customers.
In addition, some of the services offered by MA and its affiliates are subject to regulation in a number of countries. MA also derives a significant amount of its sales from banks and other financial services providers who are subject to regulatory oversight and who are required to pass through certain regulatory requirements to key suppliers such as MA.
MA also derives a significant amount of its sales from banks and other financial services providers who are subject to regulatory oversight and who are required to conduct due diligence and pass through certain regulatory requirements to key suppliers such as MA by contract.
Sullivan supported the Global Wealth & Investment Management business from 2015 to 2017 in a variety of positions including Controller. Ms. Sullivan, a CPA, previously held various senior positions at several banks and a major accounting firm, and is a member of the Board of Directors of Financial Executives International. Stephen Tulenko, 55 President, Moody’s Analytics Mr.
Prior to that role, Ms. Sullivan supported the Global Wealth & Investment Management business from 2015 to 2017 in a variety of positions, including Controller. Ms. Sullivan, a CPA, previously held various senior positions at several banks and a major accounting firm. Stephen Tulenko, 56 President, Moody’s Analytics Mr. Tulenko has served as President of Moody’s Analytics since November 2019.
Management monitors employee turnover rates as presented in the chart below: The increase in the Company's voluntary turnover rates in 2022 compared to 2021 is likely due to the overall strength of the global labor market for much of 2022, especially for technology-related jobs.
MOODY'S 2023 10-K 17 Table of Contents Management monitors employee turnover rates as presented in the chart below: The decrease in the Company's voluntary turnover rates in 2023 compared to 2022 is likely due to the overall strength of the global labor market for much of 2022, especially for technology-related jobs, and a decline in that trend for 2023.
The increase in the Company's involuntary turnover rates in 2022 compared to 2021 is primarily due to the 2022-2023 Geolocation Restructuring Program, which resulted in a reduction in staff, including the relocation of certain job functions.
The Company's involuntary turnover rates in 2023 remained steady when compared to 2022, with both years including the impacts of the 2022-2023 Geolocation Restructuring Program, which resulted in a reduction in staff, including the relocation of certain job functions during both years.
Earlier in his career, he was also responsible for the research strategy for the ratings businesses and before that led Corporate Finance for the EMEA Region, European Corporates and the EMEA leveraged finance business. Prior to joining Moody’s in 1998, Mr. West worked at Bank of America and HSBC in various credit roles. 22 MOODY'S 2022 10-K Table of Contents
Earlier in his career, he was also responsible for the research strategy for the ratings businesses and before that led Corporate Finance for the EMEA Region, European Corporates and the EMEA leveraged finance business. 24 MOODY'S 2023 10-K Table of Contents
MIS by the Numbers 33,900 + 5,100+ 3,400+ Rated Organizations and Structured Deals Non-Financial Corporates Financial Institutions ~$73 trillion 15,100+ 8,600+ Total Rated Debt Outstanding U.S.
MIS by the Numbers ~$74 trillion 4,800+ 3,300+ Total Rated Debt Outstanding Non-Financial Corporates Financial Institutions 33,200+ 14,700+ 8,900+ Rated Organizations and Structured Deals U.S.
Prior to the formation of Moody’s Analytics, he held various sales, product development and product strategy roles at Moody’s Investors Service, Inc. Mr. Tulenko joined Moody’s in 1990. Michael West, 54 President, Moody’s Investors Service Mr. West has served as President of Moody’s Investors Service, Inc. since November 2019. Mr.
Mr. Tulenko served as Executive Director of ERS from 2013 to October 2019 and as Executive Director of Global Sales, Customer Service and Marketing from 2008 to 2013. Prior to the formation of Moody’s Analytics, he held various sales, product development and product strategy roles at Moody’s Investors Service, Inc. Mr. Tulenko joined Moody’s in 1990.
MA’s main competitors within Decision Solutions are providers of software and analytic solutions. In Research & Insights, MA faces competition from providers of economic data, financial research and analysis. MA's main competitors within Data & Information are providers of commercial and financial data.
Competition MA competes broadly in the financial information and enterprise risk software industries against various diversified competitors. MA’s main competitors within DS are providers of software and analytic solutions. In R&I, MA faces competition from providers of economic data, financial research and analysis. MA's main competitors within D&I are providers of commercial and financial data.
Officers and Managers: Ethnicity (1) Total officers and managers by gender represents approximately 90% of employees (excludes certain non-wholly-owned subsidiaries and newly acquired companies for which this data was not available). Additionally, approximately 27% of our Board of Directors identified as female and 27% as POC.
Total Workforce: Gender U.S. Workforce: Ethnicity 16 MOODY'S 2023 10-K Table of Contents Total Officers and Managers: Gender (1) U.S. Officers and Managers: Ethnicity (1) Total officers and managers by gender represents approximately 90% of employees (excludes certain non-wholly-owned subsidiaries and newly acquired companies for which this data was not available).
None of the Company's intellectual property is subject to a specific expiration date, except to the extent that the patents and the copyright in items that the Company creates (such as credit reports, research, software, and other written opinions) expire pursuant to relevant law. 20 MOODY'S 2022 10-K Table of Contents The Company considers its intellectual property to be proprietary, and Moody’s relies on a combination of copyright, trademark, trade secret, patent, non-disclosure and other contractual and technological safeguards for protection.
None of the Company's intellectual property is subject to a specific expiration date, except to the extent that the patents and the copyright in items that the Company creates (such as credit reports, research, software, and other written opinions) expire pursuant to relevant law.
Managers are accountable for identifying opportunity areas and taking targeted actions based on survey results. The feedback received through the BES is used as a vital input into making decisions to improve employee experience and retention.
The feedback received through the BES is used as a vital input into making decisions to improve employee experience and retention.
Moody's views learning and development as an investment in its people that aligns their professional goals and interests with the success of the Company and helps to retain talent over the longer-term. A number of training programs are available, including leadership development, professional skills development, and technical skills.
Each of these areas supports the Company’s business strategy and Moody’s culture as a diverse, equitable and inclusive place to work. Moody's views learning and development as an investment in its people that aligns their professional goals and interests with the success of the Company and helps to retain talent over the longer-term.
The Dodd-Frank Act added additional provisions to Section 15E. In the EU, the CRA industry is registered and supervised through a pan-EU regulatory framework. ESMA has direct supervisory responsibility for registered CRAs throughout the EU. MIS’s EU CRA subsidiaries are registered and are subject to CRA regulation in the EU and periodic inspection by ESMA.
ESMA has direct supervisory responsibility for registered CRAs throughout the EU. MIS’s EU CRA subsidiaries are registered with and are subject to CRA regulation in the EU and periodic inspection by ESMA.
The Company measures employee engagement via multiple channels, including a Business Engagement Survey (BES) for employees to provide anonymous and candid feedback to management. This periodic survey helps Moody's management understand our employees’ level of engagement in critical areas, which include, but are not limited to: company strategy; opportunities for employee development; and work/life balance.
This periodic survey helps Moody's management understand our employees’ level of engagement in critical areas, which include, but are not limited to: company strategy; opportunities for employee development; and work/life balance. Managers are accountable for identifying opportunity areas and taking targeted actions based on survey results.
Moody’s also pursues instances of third-party infringement of its intellectual property in order to protect the Company’s rights. Available Information Moody’s investor relations internet website is https://ir.moodys.com/.
The Company considers its intellectual property to be proprietary, and Moody’s relies on a combination of copyright, trademark, trade secret, patent, non-disclosure and other contractual and technological safeguards for protection. Moody’s also pursues instances of third-party infringement of its intellectual property in order to protect the Company’s rights. Available Information Moody’s investor relations internet website is https://ir.moodys.com/.
The Company’s compensation packages include market-competitive salaries, annual bonuses and equity grants for certain employees. With respect to benefits, the Company views investments in benefits as an investment in its people. Moody’s is committed to providing competitive benefits programs designed to care for all employees and their families.
An important element of the Company’s compensation philosophy is aligning compensation to local market standards so that Moody's can attract and retain the highly-skilled talent needed to thrive. The Company’s compensation packages include market-competitive salaries, annual bonuses and equity grants for certain employees. With respect to benefits, the Company views investments in benefits as an investment in its people.
Key growth drivers include: EXPANDING GLOBAL GDP ONGOING INCREASE IN REFUNDING WALLS AGENCY OF CHOICE Debt issuance driven by global GDP growth Refunding needs support MIS growth Trusted brand recognized for in-depth insights and research GEOGRAPHIC EXPANSION ENHANCING CAPABILITIES BANK DISINTERMEDIATION Serving domestic markets via Moody’s Local and affiliates in key markets Meeting customers’ evolving risk assessment demands, including ESG & Climate and Cyber Disintermediation of credit is an ongoing trend in the global capital markets 18 MOODY'S 2022 10-K Table of Contents In addition to the factors noted above, growth in global fixed income markets in a given year is dependent on many macroeconomic and capital market factors including: Interest rates Business investment spending Corporate refinancing needs Merger and acquisition activity Issuer financial health Consumer borrowing levels Securitization activity Expansion of ratings coverage Expansion into emerging markets Rating fees paid by debt issuers account for most of the revenue of MIS.
Key growth drivers include: Long-term Growth Building Blocks Economic Expansion + Value Proposition + Developing Capital Markets • GDP growth drives demand for debt capital to fund business investments • Refinancing needs support future supply • Proven rating accuracy and deeply experienced analysts • Mix of issuers and opportunistic issuance • Deepening participation in developing markets • Meeting customers’ evolving risk assessment demands, including Climate, Cybersecurity, and ESG In addition to the factors noted above, growth in global fixed income markets in a given year is dependent on many macroeconomic and capital market factors including: Interest rates Business investment spending Corporate refinancing needs Merger and acquisition activity Issuer financial health Consumer borrowing levels Securitization activity Expansion of ratings coverage Expansion into emerging markets Rating fees paid by debt issuers account for most of the revenue of MIS.
These enhancements will allow Moody’s to seamlessly integrate climate considerations into its solutions to enable sustainable decision-making. 16 MOODY'S 2022 10-K Table of Contents MOODY’S STRATEGY Moody's is a global integrated risk assessment firm that empowers organizations to make better decisions. Our data, analytical solutions and insights help decision-makers identify opportunities and manage the risks of doing business with others.
THE COMPANY Company Overview Moody’s is a global integrated risk assessment firm that empowers organizations to anticipate, adapt and thrive in a new era of exponential risk. Our data, analytical solutions and insights help decision-makers identify opportunities and manage the risks of doing business with others. Moody's is empowering organizations to make better decisions.
The Company’s comprehensive programs offer resources for physical and mental health that promote preventive care, awareness and support for a healthy MOODY'S 2022 10-K 15 Table of Contents lifestyle. Beyond delivering health, welfare, retirement benefits, and paid vacation and sick days, Moody’s extends other benefits to support its employees and their families, such as parental leave and educational support.
Moody’s is committed to providing competitive benefits programs designed to care for all employees and their families. The Company’s comprehensive programs offer resources for physical and mental health that promote preventive care, awareness and support for a healthy lifestyle.
Illustrative examples include: Enhancements to ratings quality and product extensions Investments that extend ownership and participation in joint ventures and strategic alliances Expansion in emerging markets New products, services, content and technology capabilities to meet customer demands Selective bolt-on acquisitions that accelerate the ability to scale and grow Moody’s businesses MOODY'S 2022 10-K 17 Table of Contents PROSPECTS FOR GROWTH Moody’s believes that the overall long-term outlook remains favorable for continued growth of the global fixed-income market and related financial information market, which includes information such as credit opinions, research, data, analytics, risk management tools and related services.
Illustrative examples include: Enhancements to ratings quality and product extensions Investments that extend ownership and participation in joint ventures and strategic alliances Expansion in emerging markets New products, services, content and technology capabilities, including Gen AI, to meet customer demands Selective bolt-on acquisitions that accelerate the ability to scale and grow Moody’s businesses In this era of exponential risk, we know that risks are interconnected, and organizations want a complete view of risk.
Talent Management, Employee Engagement and Retention Moody’s talent management framework includes learning and development, talent acquisition, performance management, total rewards, succession planning and leadership development. Each of these areas supports the Company’s business strategy and Moody’s culture as a diverse, equitable and inclusive place to work.
To balance the needs of Moody's employees and business, the Company has implemented a "PurposeFirst" framework, which fosters purpose-driven decisions relating to how and where Moody's teams work. Talent Management, Employee Engagement and Retention Moody’s talent management framework includes learning and development, talent acquisition, performance management, total rewards, succession planning and leadership development.
Officers and Managers are calculated using the job categories: executives, senior managers, mid-level managers, and first-level managers. The following data is based on Company records and may involve estimates or assumptions. Total Workforce: Gender U.S. Workforce: Ethnicity Total Officers and Managers: Gender (1) U.S.
The percentage for underrepresented groups includes those who identified as Asian, Hispanic or Latino, Black, American Indian/Alaskan Native, Hawaiian/Other Pacific Island or two or more races. Officers and Managers are calculated using the job categories: executives, senior managers, mid-level managers and first-level managers. The following data is based on Company records and may involve estimates or assumptions.
MOODY'S 2022 10-K 19 Table of Contents In the U.S., CRAs are subject to extensive regulation primarily pursuant to the Reform Act and the Dodd-Frank Act. The Reform Act added Section 15E to the Exchange Act and provided the SEC with the authority to establish a registration and oversight program for CRAs registered as NRSROs.
In the U.S., CRAs are subject to extensive regulation primarily pursuant to Section 15E of the Exchange Act and rules thereunder. MIS is registered with the SEC as an NRSRO and is subject to the SEC's oversight and examination authority. In the EU, the CRA industry is registered and supervised through a pan-EU regulatory framework.
The Company also promotes flexible work arrangements, which support the Company’s efforts to create a work atmosphere in which people feel valued and inspired to give their best. To balance the needs of Moody's employees and business, the Company has implemented a "PurposeFirst" framework, which fosters purpose-driven decisions relating to how and where Moody's teams work.
Beyond delivering health, welfare, retirement benefits and paid vacation and sick days, Moody’s extends other benefits to support its employees and their families, such as parental leave and educational support. The Company also promotes flexible work arrangements, which support the Company’s efforts to create a work atmosphere in which people feel valued and inspired to give their best.
Moody’s efforts to promote sustainability-related thought leadership, assessments and data to market participants include adhering to the policies of recognized sustainability organizations that develop standards or frameworks and/or evaluate and assess performance, including: the Global Reporting Initiative (GRI); Sustainability Accounting Standards Board (SASB); and the World Economic Forum (WEF)’s Stakeholder Capitalism metrics.
Moody’s efforts to promote sustainability-related thought leadership, assessments and data to market participants involve adhering to globally recognized standards including the GRI, SASB and TCFD recommendations.
Tulenko has served as President of Moody’s Analytics since November 2019. Mr. Tulenko served as Executive Director of ERS from 2013 to October 2019 and as Executive Director of Global Sales, Customer Service and Marketing from 2008 to 2013.
Michael West, 55 President, Moody’s Investors Service Mr. West has served as President of Moody’s Investors Service, Inc. since November 2019. Mr. West served as Managing Director—Head of MIS Ratings and Research from June 2016 to October 2019. Previously, Mr.
Kaye previously held various senior financial and risk reporting positions at ING U.S. and ING Group, and was in the investment banking division of Credit Suisse First Boston. MOODY'S 2022 10-K 21 Table of Contents Name, Age, Position and Biographical Data Caroline Sullivan, 54 Chief Accounting Officer and Corporate Controller Ms.
Steele was a corporate lawyer at Wilson Sonsini Goodrich & Rosati, and also held senior legal positions at several firms in financial technology, software and venture capital. MOODY'S 2023 10-K 23 Table of Contents Name, Age, Position and Biographical Data Caroline Sullivan, 55 Interim Chief Financial Officer, Chief Accounting Officer and Corporate Controller Ms.
Moody’s operations are subject to various risks, as more fully described in Part I, Item 1A “Risk Factors,” inherent in conducting business on a global basis. Such risks include currency fluctuations and possible nationalization, expropriation, exchange and price controls, changes in the availability of data from public sector sources, limits on providing information across borders and other restrictive governmental actions.
Through enablement of Gen AI, both internally and through certain strategic partnerships, we are in the process of evolving how we deliver insights on exponential risk to our customers. Moody’s operations are subject to various risks, as more fully described in Part I, Item 1A “Risk Factors,” inherent in conducting business on a global basis.
Furthermore, Moody’s has invested in acquisitions, including RMS, that expand its climate data and analytics capabilities further. To integrate these capabilities into existing offerings, Moody’s is enhancing its technology infrastructure to provide its analysts and researchers with streamlined access to consistent and high-quality climate insights.
The Company is taking steps to integrate these capabilities into existing offerings to provide its analysts and researchers with streamlined access to consistent and high-quality climate insights. 18 MOODY'S 2023 10-K Table of Contents MOODY’S STRATEGY Moody’s is a global integrated risk assessment firm that empowers organizations to anticipate, adapt and thrive in a new era of exponential risk.
Kaye has served as the Company’s Executive Vice President—Chief Financial Officer since April 2021 and as Senior Vice President—Chief Financial Officer from August 2018 to April 2021. Prior to joining the Company, Mr.
Richard Steele, 54 Senior Vice President and General Counsel Mr. Steele has served as the Company’s Senior Vice President and General Counsel since September 2023. Mr. Steele joined Moody’s KMV Company in 2006 as its Chief Legal Officer, and was named General Counsel of Moody’s Analytics in January 2008. Prior to joining the Company, Mr.
The BRGs represent 53 chapters and more than 3,600 employees participating globally as of December 31, 2022.
Our operating model includes 11 active BRGs which represent 53 chapters and are open to all Moody's employees, with more than 3,800 employees participating globally as of December 31, 2023. Data The charts below present additional information regarding the composition of the Company's workforce as of December 31, 2023.
The revenue from these operations is included in the MIS Other LOB and is not material to the results of the MIS segment. MOODY'S 2022 10-K 11 Table of Contents Moody's Analytics Overview Moody's Analytics (MA) is a global provider of: i) data and information; ii) research and insights; and iii) decision solutions, which help customers navigate increasingly complex risks.
The revenue from these operations is included in the MIS Other LOB and is not material to the results of the MIS segment. MOODY'S 2023 10-K 13 Table of Contents Sustainability Moody’s manages its business with the goal of delivering value to all of its stakeholders, including its customers, employees, business partners, local communities and stockholders.
MIS Prospects for Growth Strong secular trends should continue to provide long-term growth opportunities in MIS.
Our comprehensive solutions support the transformation underway across various industries due to: Operational and reputational risks Digitization Evolving regulatory environment Fluctuations in credit and financial markets Climate change Geopolitical risks MIS Prospects for Growth Strong secular trends should continue to provide long-term growth opportunities in MIS.
Compensation, Health and Wellness Moody’s compensation programs are designed to foster and maintain a strong, capable, experienced and motivated global workforce. An important element of the Company’s compensation philosophy is aligning compensation to local market standards so that Moody's can attract and retain the highly-skilled talent needed to thrive.
Additionally, approximately 30% of our Board of Directors identified as female and 30% as members of underrepresented groups. Compensation, Health and Wellness Moody’s compensation programs are designed to foster and maintain a strong, capable, experienced and motivated global workforce.
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THE COMPANY Company Overview Moody’s is a global integrated risk assessment firm that empowers organizations and investors to make better decisions. Moody’s reports activities in two segments: MIS and MA. Financial information and operating results of these segments, including revenue, expenses and Adjusted Operating Income, are included in Part II, Item 8.
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Moody's We provide tools that enable Banks, Insurers, Investors, Corporations and Governments to... What do we do? Issue, Originate, Select, Underwrite Identify, Measure, Monitor & Manage Risk Verify, Comply, Plan & Report Leveraging our set of data, analytics, & domain expertise across... How do we do this?
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Financial Statements of this annual report and are herein incorporated by reference.
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Credit Companies Properties Securities People Economies ESG Climate Moody’s has two reportable segments: MA and MIS.
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Independent provider of credit rating opinions and related information for over 100 years Global integrated risk assessment firm providing credit rating opinions, analytical solutions and insights that empower organizations to make better, faster decisions Provider of financial intelligence and analytical tools supporting customers’ growth, efficiency and risk management objectives Moody's has evolved over the last 15+ years, expanding its suite of capabilities in line with customer needs 2007 - 2016 Expanded beyond ratings agency • Established Moody’s Analytics , risk assessment franchise serving primarily banks and insurance companies • Expanded economic data and modeling capabilities • Expanded ratings to China (i.e., CCXI) 2017 - 2022 Built out substantial data and analytics capabilities • Complemented risk management software business with private company information (i.e., BvD) • Accelerated capability expansion (e.g., company database, CRE data, ESG data, KYC suite) • Invested in insurance data and analytics capabilities, including weather and disaster modeling (i.e., RMS) 2023 and beyond Positioned to serve a wide range of risk assessment markets • Competitive differentiator : integration of data and analytics combined with expertise and technology enablement • Further investment in data and analytics capabilities such as CRE, ESG, Climate and Cyber to serve high growth risk assessment use cases 10 MOODY'S 2022 10-K Table of Contents Moody's Investors Service Overview Moody's Investors Service (MIS) publishes credit ratings and provides assessment services on a wide range of debt obligations, programs and facilities, and the entities that issue such obligations in markets worldwide, including various corporate, financial institution and governmental obligations, and structured finance securities.
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Provider of financial intelligence and analytical tools supporting customers’ growth, efficiency and risk management objectives Independent provider of credit rating opinions and related information for over 100 years Financial information and operating results of these segments, including revenue, expenses and Adjusted Operating Income, are included in Part II, Item 8.
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A rating from MIS enables issuers to create timely, go-to-market debt strategies in order to capture wider investor focus and deeper liquidity options.
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Financial Statements of this annual report and are herein incorporated by reference. 10 MOODY'S 2023 10-K Table of Contents Moody's Analytics Overview MA empowers financial services, corporate and public sector customers to anticipate risks, adapt and thrive in a new era of exponential risk.
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Ratings revenue is derived from the originators and issuers of such transactions who use MIS ratings to support the distribution of their debt issues to investors. Ratings are disseminated via press releases to the public primarily through a variety of electronic media, including the internet and real-time information systems widely used by securities traders and investors.
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MA's combined data, analytics and cloud-based software tools deliver integrated solutions that help customers to start business relationships, monitor and manage risk, and comply and report based on global laws, rules and regulations.
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MA leverages its industry expertise across multiple risks such as credit, market, financial crime, supply chain, catastrophe and climate to deliver integrated risk assessment solutions that enable business leaders to identify, measure and manage the implications of interrelated risks and opportunities.
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MA is comprised of: i) a premier fixed income and economic research business (Research & Insights); ii) a data business powered by the world’s largest database on companies and credit (Data & Information); and iii) three cloud-based SaaS businesses serving banking, insurance and KYC workflows (Decision Solutions).
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MA’s proprietary data, research and analytics combined with cloud-based software tools deliver solutions to meet customer needs as they arise. MA’s subscription businesses provide a significant base of recurring revenue to mitigate cyclical changes in debt issuance volumes that may result in volatility in MIS’s revenues.
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MA creates a holistic view on risk provided by our vast set of proprietary data, analytics, and domain expertise across a range of areas, including credit, companies, properties, securities, people, economies, ESG, climate and more. MA's integrated and technology-enabled solutions provide unique capabilities and insights that are embedded in customer workflows.
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Helping Customers Navigate Increasing Global Risks GLOBAL RISKS MA PROVIDES AN INTEGRATED VIEW OF RISK Heightened operational and reputational risks 1 Proprietary data with models, software and expertise that empower customers to better measure, monitor and manage various types of risk Evolving regulatory environment 2 Unparalleled ability to integrate risk capabilities for unique insights Climate change 3 Tech-enabled solutions deeply embedded in customers’ workflows Fintech disruption & digitization Complex credit and financial markets MA by the Numbers 15,200 + 4,400+ 900+ MA Customers Corporates Insurance Companies 165+ 2,600+ 900+ Countries where MA customers operate Commercial Banks Real Estate Entities 2,300+ 600+ Professional Services Educational Institutions 1,900+ 200+ Asset Managers Securities Dealers and Investment Banks 900+ 500+ Government Entities Others 12 MOODY'S 2022 10-K Table of Contents Sustainability Moody’s manages its business with the goal of delivering value to all of its stakeholders, including but not limited to, its customers, employees, business partners, local communities and stockholders.
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MOODY'S 2023 10-K 11 Table of Contents MA by the Numbers 14,800+ 6,600+ 900+ MA Customers Corporates and Professional Services Real Estate Entities 160+ 2,600+ 600+ Countries where MA customers operate Commercial Banks Educational Institutions 1,900+ 100+ Asset Managers Securities Dealers and Investment Banks 900+ 400+ Government Entities Others 800+ Insurance Companies 12 MOODY'S 2023 10-K Table of Contents Moody's Investors Service Overview MIS is a leading global provider of credit ratings, research, and risk analysis.
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Moody's also issues an annual report on Stakeholder Sustainability and its implementation of the Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations.
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A rating from Moody’s enables issuers to create timely, go-to-market debt strategies with the ability to capture wider investor focus and provides investors with a comprehensive view of global debt markets through our credit ratings and research. Moody’s trusted insights can help decision-makers navigate the safest path through market turmoil and volatility.
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Moody’s sustainability-related achievements in 2022 included the following: – Validated Moody’s long-term net-zero targets with SBTi; – Rolled out an all-employee training on Sustainability and ESG; – Received the following awards/recognition: i) featured on the 2022 CDP ‘A List’ for Climate Action for third consecutive year; ii) included in FTSE4Good Index Series for the fourth consecutive year; iii) received ‘Net Zero Transition’ award from Reuters Responsible Business; iv) named ‘Climate Leader’ by the Finance of the Future Awards; v) awarded 'Best ESG Reporting (large-cap)' from IR Magazine U.S. 2022; vi) received ‘Sustainability reporting of the year – Americas’ from Environmental Finance Company Awards 2022; and vii) included in the Dow Jones Sustainability World Index for the first time; – Published Moody’s 2021 Stakeholder Sustainability report and 2021 TCFD report; and – Issued a global tax policy.
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MIS publishes credit ratings and provides assessment services on a wide range of debt obligations, programs and facilities, and the entities that issue such obligations in markets worldwide, including various corporate, financial institution and governmental obligations, and structured finance securities.
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Deliver trusted perspectives on financial materiality and sustainability performance that help our customers decode risk and unlock opportunity.
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Moody's received the following awards and recognition for its sustainability- related efforts during 2023: – Named 2022 CDP Supplier Engagement Leader on Climate Action for third consecutive year; – Recognized among America’s 100 Most JUST Companies by JUST Capital and CNBC for its commitment to serving its workforce, customers, communities, the environment, and stockholders; – Named to Bloomberg Gender-Equality Index for fourth consecutive year; and – Ranked #1 on Forbes' Net Zero Leaders list.
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Diversity, Equity and Inclusion (DE&I) Moody's believes it is imperative to be visible champions of DE&I because differing thoughts and perspectives help to enrich the Company’s offerings to its many stakeholders and improve performance and retention.
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Inclusion Moody's believes that a diverse workforce, comprised of individuals with varied thoughts, backgrounds, and experiences, fosters an environment that makes our opinions stronger, our products more innovative, our workplace more welcoming, and improves how we relate and respond to our customers. We aim to foster a culture of true inclusion and belonging, valuing everyone's unique perspectives and contributions.
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The key objectives for which the Company focuses with respect to these items include: – incorporating DE&I into Moody’s business strategy; – establishing leadership accountability with respect to diversity, including through executive compensation programs; – working to increase diverse representation (e.g., women and underrepresented groups); – continuing to advance women and underrepresented employees in leadership roles; – enhancing employee training in DE&I matters; – promoting equal employment opportunities in all aspects of employment; – designing the Company’s compensation practices to provide equal pay for equal work; and – incorporating market standards, role, experience and performance into compensation decisions.
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We believe diversity and equity are essential to build a workplace where inclusion thrives. That strategy will guide us as we seek to ensure equal opportunities in all aspects of employment.
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The executive leadership team’s focus on these items is vital to attract, support and retain its skilled talent. Additionally, an Executive Diversity Council is tasked with overseeing the implementation and progression of the DE&I strategy and goals across our business.
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Focus Areas Our current strategy is rooted in the following five focus areas intended to drive meaningful change: – A Broader, More Global Perspective on Diversity We want every one of our employees, everywhere, to be equally involved and supported in all areas of our workplace.
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Chaired by our CEO and composed of senior leaders who are committed to DE&I best practices, the members of the council meet quarterly so that DE&I policies are an ongoing focus throughout the company. 14 MOODY'S 2022 10-K Table of Contents Moody’s has numerous diversity programs and eleven active business resource groups (“BRGs”) that contribute to a more effective and inclusive work environment by fostering the recruitment, development and retention of diverse and talented individuals.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition to the risks addressed elsewhere in this section, operations abroad expose Moody’s to a number of legal, economic and regulatory risks such as: – economic and geopolitical market conditions, including the effect of these conditions on customers and customer retention; – exposure to exchange rate movements between foreign currencies and USD; – restrictions on the ability to convert local currency into USD and the costs, including the tax impact, of repatriating cash held by entities outside the U.S.; – U.S. laws affecting overseas operations, including domestic and foreign export and import restrictions, tariffs and other trade barriers and restrictions, such as those related to the U.S.’s relationship with China and embargoes and sanctions laws with respect to Russia, including the ongoing conflict between Ukraine and Russia, and Venezuela; – differing and potentially conflicting legal or civil liability, compliance and regulatory standards; 26 MOODY'S 2022 10-K Table of Contents – current and future regulations relating to the imposition of mandatory rotation requirements on CRAs hired by issuers of securities; – uncertain and evolving laws and regulations, including those applicable to the financial services industries, such as the European Union’s implementation of the Markets in Financial Instruments Directive II, MiFID II, in January 2018, and to the protection of intellectual property; – uncertainty regarding the future relationship between the U.S. and China, which may result in further restrictions or actions by the U.S. government with respect to doing business in China and/or by the Chinese government with respect to business conducted by foreign entities in China; – the possibility of nationalization, expropriation, price controls and other restrictive governmental actions; – competition with CRAs that have greater familiarity, longer operating histories and/or support from local governments or other institutions; – uncertainties in obtaining data and creating products and services relevant to particular geographic markets; – reduced protection for intellectual property rights; – longer payment cycles and possible problems in collecting receivables; – differing accounting principles and standards; – difficulties in staffing and managing foreign operations; – difficulties and delays in translating documentation into foreign languages; – potentially adverse tax consequences; and – complexities of compliance with employment laws and new data and cybersecurity rules in numerous jurisdictions.
Biggest changeIn addition to the risks addressed elsewhere in this section, operations abroad expose Moody’s to a number of legal, economic and regulatory risks such as: – economic and geopolitical events and market conditions, such as the Russia-Ukraine military conflict and the military conflict in Israel and surrounding areas, including the effect of these events and conditions on customers, customer retention and demands for our products and services; – exposure to exchange rate movements between foreign currencies and USD; – restrictions on the ability to convert local currency into USD and the costs, including the tax impact, of repatriating cash held by entities outside the U.S.; – U.S. laws affecting overseas operations, including domestic and foreign export and import restrictions, tariffs and other trade barriers and restrictions, such as those related to the U.S.’s relationship with China and embargoes and sanctions laws with respect to Russia, including the Russia-Ukraine military conflict; – differing and potentially conflicting legal or civil liability, compliance and regulatory standards; – current and future regulations relating to the imposition of mandatory rotation requirements on CRAs hired by issuers of securities; – uncertain, evolving and new laws and regulations, including those applicable to the financial services industries, such as the European Union’s upcoming implementation of DORA in January 2025, and to the protection of intellectual property and to the emergence of LLMs in the context of Gen AI and other technologies, such as the EU AI Act, including the effect of these laws and regulations on our customers and on the products and services that we offer; – uncertainty regarding the future relationship and increasing tensions between the U.S. and China, which may result in further restrictions or actions by the U.S. government with respect to doing business in China and/or by the Chinese government with respect to business conducted by foreign entities in China; – the possibility of nationalization, expropriation, price controls and other restrictive governmental actions; – competition with CRAs that have greater familiarity, longer operating histories and/or support from local governments or other institutions; – uncertainties in obtaining data and creating products and services relevant to particular geographic markets; – reduced protection for intellectual property rights; MOODY'S 2023 10-K 29 Table of Contents – longer payment cycles and possible problems in collecting receivables; – differing accounting principles and standards; – difficulties in staffing and managing foreign operations; – difficulties and delays in translating documentation into foreign languages; – potentially adverse tax consequences; and – complexities of compliance with employment laws, various proposed and enacted data privacy laws, and cybersecurity rules in numerous jurisdictions.
Conditions that reduce issuers’ ability or willingness to issue debt securities, such as market volatility, declining growth, currency devaluations, changes in laws (including tax-related laws) or other adverse economic trends, reduce the number and dollar-equivalent volume of debt issuances for which Moody’s provides ratings services and thereby adversely affect the fees Moody’s earns in its ratings business.
Conditions that reduce issuers’ ability or willingness to issue debt securities, such as market volatility, declining growth, currency devaluations, changes in laws (including tax-related laws) or other adverse economic trends, reduce the number and dollar-equivalent volume of debt issuances for which MIS provides ratings services and thereby adversely affect the fees Moody’s earns in its ratings business.
Legal proceedings impose additional expenses on the Company and require the attention of senior management to an extent that may significantly reduce their ability to devote time to addressing other business issues, and any of these proceedings, investigations or inquiries could ultimately result in adverse judgments, damages, fines, penalties or activity restrictions.
Legal proceedings and regulatory inquiries and investigations impose additional expenses on the Company and require the attention of senior management to an extent that may significantly reduce their ability to devote time to addressing other business issues, and any of these proceedings, investigations or inquiries could ultimately result in adverse judgments, damages, fines, penalties or activity restrictions.
Although the Company believes its tax estimates and accruals are reasonable, there can be no assurance that any final determination will not be materially different than the treatment reflected in its income tax provisions, accruals and unrecognized tax benefits, which could materially and adversely affect the Company’s business, operating results, cash flows and financial condition. B.
Although the Company believes its tax estimates and accruals are reasonable, there can be no assurance that any final determination will not be materially different than the treatment reflected in its income tax provisions, accruals and unrecognized tax benefits, which could materially and adversely affect the Company’s business, operating results, cash flows and financial condition.
The cost and operational consequences of implementing, maintaining and enhancing further data or system protection measures could increase significantly to overcome increasingly intense, complex, and sophisticated global cyber threats. Despite the Company’s best efforts, it is not fully insulated from, and has in the past experienced, security threats and system disruptions.
Additionally, the cost and operational consequences of implementing, maintaining and enhancing further data or system protection measures could increase significantly to overcome increasingly intense, complex and sophisticated global cyber threats. Despite the Company’s best efforts, it is not fully insulated from, and has in the past experienced, security threats and system disruptions.
If these laws and regulations, and any future rulemaking or court rulings, reduce demand for credit ratings or increase costs, Moody’s may be unable to pass such costs through to customers. In addition, there may be uncertainty over the scope, interpretation and administration of such laws and regulations.
If these laws and regulations, and any future rulemaking or court rulings, reduce demand for credit ratings or increase costs, Moody’s may be unable to pass such costs through to customers. In addition, there may be uncertainty over the scope, interpretation, administration and enforcement of such laws and regulations.
A failure to adequately meet employee expectations may result in an inability to attract and retain talented employees. Moody’s is highly dependent on the continued services of Robert Fauber, the President and Chief Executive Officer, and other senior officers and key employees.
A failure to adequately meet employee expectations may result in an inability to attract and retain talented employees. Moody’s is highly dependent on the continued services of Robert Fauber, the Company's President and Chief Executive Officer, and other senior officers and key employees.
Affecting the Credit Rating Industry and Moody’s Customers. In addition to the extensive and evolving U.S. laws and regulations governing the industry, foreign jurisdictions have taken measures to regulate CRAs and the markets for credit ratings.
Affecting the Credit Rating Industry, Moody’s Businesses, and Moody’s Customers. In addition to the extensive and evolving U.S. laws and regulations governing the credit rating industry, foreign jurisdictions have taken measures to regulate CRAs and the markets for credit ratings.
Any significant failure, compromise, cyber-breach, interruption or a significant slowdown of operations of the Company’s infrastructure, whether due to human error, capacity constraints, hardware failure or defect, weather (including climate change), natural disasters, fire, power loss, telecommunication failures, break-ins, sabotage, intentional acts of vandalism, acts of terrorism, political unrest, pandemic (including the COVID-19 pandemic), war or otherwise, may impair the Company’s ability to deliver its products and services.
Any significant failure, compromise, cyber-breach, interruption or a significant slowdown of operations of the Company’s infrastructure, whether due to human error, capacity constraints, hardware failure or defect, weather (including climate change), natural disasters, fire, power loss, telecommunication failures, break-ins, sabotage, intentional acts of vandalism, acts of terrorism, political unrest, pandemic, war or otherwise, may impair the Company’s ability to deliver its products and services.
Competition for skilled individuals in the financial services industry is intense, and Moody’s ability to attract high quality employees could be impaired if it is unable to offer competitive compensation and other incentives or if the regulatory environment mandates restrictions on or disclosures about individual employees that would not be necessary in competing industries.
Competition for skilled individuals in the financial services and technology industries is intense, and Moody’s ability to attract high quality employees could be impaired if it is unable to offer competitive compensation and other incentives or if the regulatory environment mandates restrictions on or disclosures about individual employees that would not be necessary in competing industries.
Factors that may have already affected credibility and could potentially continue to have an impact in this regard include the appearance of a conflict of interest, the performance of securities relative to the rating assigned to such securities, the timing and nature of changes in ratings, a major compliance failure, negative perceptions or publicity and increased criticism by users of ratings, regulators and legislative bodies, including as to the ratings process, including as to the Company’s recent ESG initiatives, and its implementation with respect to one or more securities and intentional, poor representation of our products and services by our partners or agents, manipulation of our products and services by third parties, or unintentional misrepresentations of Moody’s products and services in advertising materials, public relations information, social media or other external communications.
Factors that may have already affected credibility and could potentially continue to have an impact in this regard include the appearance of a conflict of interest, the performance of securities relative to the rating assigned to such securities, the timing and nature of changes in ratings, a major compliance failure, negative perceptions or publicity and increased criticism by users of ratings, regulators and legislative bodies, including as to the ratings process, or the Company’s recent ESG initiatives and our incorporation of climate- and other ESG- related risks in the Company's rating process, and its implementation with respect to one or more securities and intentional, poor representation of our products and services by our partners or agents, manipulation of our products and services by third parties, or unintentional misrepresentations of Moody’s products and services in advertising materials, public relations information, social media or other external communications.
Moody’s growth prospects also could be adversely affected by Moody’s failure to make necessary or optimal capital infrastructure expenditures and improvements and the inability of its information technologies to provide adequate capacity and capabilities to meet increased demands of producing quality ratings and research products at levels achieved by competitors.
Moody’s growth prospects and operating margins also could be adversely affected by Moody’s failure to make necessary or optimal capital infrastructure expenditures and improvements and the inability of its information technologies to provide adequate capacity and capabilities to meet increased demands of producing quality ratings and research products at levels achieved by competitors.
Changes in the economic condition of the various foreign economies in which the Company operates have an impact on the Company’s business. For example, economic uncertainty in the Eurozone or elsewhere, including, but not limited to, in Latin America or China, affects the number of securities offerings undertaken within those particular areas.
Changes in the economic condition of the various foreign economies in which the Company operates have an impact on the Company’s business. For example, economic uncertainty in the Eurozone or elsewhere, including, but not limited to, in Latin America, China or the Middle East, affects the number of securities offerings undertaken within those particular areas.
Recent weak economic growth has intensified competitive pricing pressures, which may result in customers’ use of free or lower-cost information that is available from alternative sources or their development of alternative, proprietary systems for assessing credit risk that replace the products currently purchased from Moody’s.
Recent weak economic growth has intensified competitive pricing pressures, which may result in customers’ use of free or lower-cost information that is increasingly becoming available from alternative sources or their development of alternative, proprietary systems for assessing credit risk that replace the products currently purchased from Moody’s.
Recent well-publicized security breaches at other companies have led to enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber-attacks, and may in the future result in heightened cybersecurity compliance requirements, including additional regulatory expectations for oversight of vendors and service providers.
Recent well-publicized security breaches at other companies have led to enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber-attacks, and may in the future result in heightened cybersecurity compliance requirements, including additional regulatory expectations for oversight of third-party vendors and service providers.
This can result in delayed or reduced sales to such customers, adversely affect MA’s relationship with such customers, increase the costs of doing business with such customers and/or result in MA assuming greater financial and legal risk under service agreements with such customers.
This can result in delayed or reduced sales to such customers, adversely affect MA’s relationship with such customers, increase the costs of doing business with such customers and/or result in MA assuming greater financial and legal risk under its agreements with such customers.
All of these evolving compliance and operational requirements have required changes to certain business practices, thereby increasing costs, requiring significant management time and attention, and subjecting the Company to negative publicity, as well as remedies that may harm its business, including fines, modified demands or orders, the cessation of existing business practices, and exposure to litigation, regulatory actions, sanctions or other statutory penalties.
All of these evolving compliance and operational requirements have required or could require in the future, changes to certain business practices, thereby increasing costs, requiring significant management time and attention, and subjecting the Company to negative publicity, as well as remedies that may harm its business, including fines, modified demands or orders, the cessation of existing business practices and exposure to litigation, regulatory actions, sanctions or other statutory penalties.
These factors include increases in interest rates (as well as the related monetary policy by governments in the response to inflation), the withdrawal of COVID-19 economic stimulus, inflationary pressures, increases in mortgage rates, widening credit spreads, regulatory and political developments (including uncertainty in various jurisdictions where Moody's operates), difficult economic conditions, growth in the use of alternative sources of credit, and defaults by significant issuers.
These factors include increases in or uncertainty around interest rates (as well as related monetary policy by governments in the response to factors such as inflation), the withdrawal of COVID-19 economic stimulus, inflationary pressures, increases or volatility in mortgage rates, widening credit spreads, regulatory and political developments (including uncertainty in various jurisdictions where Moody's operates), difficult economic conditions, growth in the use of alternative sources of credit, and defaults by significant issuers.
Any inability of Moody’s to compete successfully may have a material adverse effect on its business, operating results and financial condition. Moody’s Is Exposed to Risks Related to Loss of Skilled Employees and Related Compensation Cost Pressures. Moody’s success depends upon its ability to recruit, retain and motivate highly skilled, experienced professionals, including financial analysts.
Any inability of Moody’s to compete successfully may have a material adverse effect on its business, operating results and financial condition. Moody’s Is Exposed to Risks Related to Loss of Skilled Employees and Related Compensation Cost Pressures. Moody’s success depends upon its ability to recruit, retain and motivate highly skilled, experienced professionals, including financial analysts, data scientists and software engineers.
Moody’s ability to conduct business may be materially and adversely impacted by a disruption in the infrastructure that supports its businesses and the communities in which Moody’s is located, including: (i) New York City, the location of Moody’s headquarters, (ii) major cities worldwide in which Moody’s has offices, (iii) locations in Europe that may be affected by the conflict in Russia/Ukraine; and (iv) locations in China used for certain Moody’s work.
Moody’s ability to conduct business may be materially and adversely impacted by a disruption in the infrastructure that supports its businesses and the communities in which Moody’s is located, including: (i) New York City, the location of Moody’s headquarters, (ii) major cities worldwide in which Moody’s has offices, (iii) locations that may be affected by the Russia-Ukraine military conflict and the military conflict in Israel and surrounding areas; and (iv) locations in China used for certain Moody’s work.
These regulations could: (i) affect the need for debt securities to be rated, (ii) expand supervisory remits to include credit ratings issued outside the home jurisdiction and used for regulatory purposes, (iii) increase the level of competition in the market for credit ratings, (iv) establish criteria for credit ratings or limit the entities authorized to provide credit ratings, (v) restrict the collection, use, accuracy, correction and sharing of personal information by CRAs, or (vi) regulate pricing (for example to require fees that are based on costs and are non-discriminatory) on products and services provided by MA such as those products that incorporate credit ratings and research originated by MIS.
These regulations could: – affect the need for debt securities to be rated; – expand supervisory remits to include credit ratings issued outside the home jurisdiction and used for regulatory purposes; – increase the level of competition in the market for credit ratings, including the distribution of credit ratings; – establish criteria for credit ratings or limit the entities authorized to provide credit ratings; – restrict the collection, use, accuracy, correction and sharing of personal information by CRAs; or – regulate pricing (for example to require fees that are based on costs and are non-discriminatory) on products and services provided by MA such as those products that incorporate credit ratings and research originated by MIS.
The Company’s ability to comply with applicable laws and regulations, including anti-corruption, antitrust and securities trading laws, is largely dependent on its establishment and maintenance of compliance, review and reporting systems, as well as its ability to attract and retain qualified compliance and risk management personnel.
The Company’s ability to comply with applicable laws and regulations, including anti-corruption, antitrust and securities trading laws, the Reform Act, the Dodd-Frank Act and regulations thereunder, is largely dependent on its establishment and maintenance of compliance, review and reporting systems, as well as its ability to attract and retain qualified compliance and risk management personnel.
Changes in the tax, accounting and other laws, treaties, regulations, policies and administrative practices, or changes to their interpretation or enforcement, including changes applicable to multinational corporations such as the Base Erosion Profit Shifting and the global minimum tax rate initiatives being led by the Organization for Economic Co-operation and Development, which requires companies to disclose more information to tax authorities on operations around the world, and the European Union’s state aid rulings, could have a material adverse effect on the Company’s effective tax rate, results of operations and financial condition and may lead to greater audit scrutiny of profits earned in various countries.
Changes in the tax, accounting and other laws, treaties, regulations, policies and administrative practices, or changes to their interpretation or enforcement, including changes applicable to multinational corporations such as the Base Erosion Profit Shifting and the global minimum tax rate initiatives being led by the OECD, which requires companies to disclose more information to tax authorities on operations around the world, and the EU’s state aid rulings, could have a material adverse effect on the Company’s effective tax rate, results of operations and financial condition and may lead to greater audit scrutiny of profits earned in various countries.
There is a risk that even when the Company invests significant resources in attempting to attract, train and retain qualified personnel, it will not succeed in its efforts, and its business could be harmed. Further, employee expectations in areas such as environmental, social matters and corporate governance have been rapidly evolving and increasing.
There is a risk that even when the Company invests significant resources in attempting to attract, train and retain qualified personnel, it will not succeed in its efforts, and its business could be harmed. Further, employee expectations in areas such as ESG have been rapidly evolving and increasing.
Moody’s future tax rates could be affected by changes in the composition of earnings in countries or states with differing tax rates or other factors, including by increased earnings in jurisdictions where Moody’s faces higher tax rates, losses incurred in jurisdictions for which Moody’s is not able to realize the related tax benefit, or changes in foreign currency exchange rates.
Moody’s future tax rates could be affected by changes in the composition of earnings in countries or states with 28 MOODY'S 2023 10-K Table of Contents differing tax rates or other factors, including by increased earnings in jurisdictions where Moody’s faces higher tax rates, losses incurred in jurisdictions for which Moody’s is not able to realize the related tax benefit, or changes in foreign currency exchange rates.
Competitors may develop quantitative methodologies or related services for assessing credit risk that customers and market participants may deem preferable, more cost-effective or more valuable than the credit risk assessment methods currently employed by Moody’s, or may position, price or market their products in manners that differ from those utilized by Moody’s.
Competitors may develop quantitative methodologies or related services, including services based on LLMs and Gen AI, for assessing credit risk that customers and market participants may deem preferable, more cost-effective or more valuable than the credit risk assessment methods currently employed by Moody’s, or may position, price or market their products in manners that differ from those utilized by Moody’s.
MOODY'S 2022 10-K 31 Table of Contents The Company Is Dependent on the Use of Third-Party Software, Data, Hosted Solutions, Data Centers, Cloud and Network Infrastructure (Together, “Third Party Technology”), and Any Reduction in Third-Party Product Quality or Service Offerings, Could Have a Material Adverse Effect on the Company’s Business, Financial Condition or Results of Operations.
The Company Is Dependent on the Use of Third-Party Software, Data, Hosted Solutions, Data Centers, Cloud and Network Infrastructure (Together, the “Third-Party Technology”), and Any Reduction in Third-Party Product Quality or Service Offerings, Could Have a Material Adverse Effect on the Company’s Business, Financial Condition or Results of Operations.
MOODY'S 2022 10-K 25 Table of Contents Moody’s Faces Risks Related to Protecting Its Intellectual Property Rights. Moody’s considers many aspects of its products and services to be proprietary. Failure to protect the Company’s intellectual property adequately could harm its reputation and affect the Company’s ability to compete effectively.
Moody’s Faces Risks Related to Protecting Its Intellectual Property Rights. Moody’s considers many aspects of its products and services to be proprietary. Failure to protect the Company’s intellectual property adequately could harm its reputation and affect the Company’s ability to compete effectively.
A. Legal and Regulatory Risks Moody’s Faces Risks Related to U.S. Laws and Regulations Affecting the Credit Rating Industry and Moody’s Customers. Moody’s operates in a highly regulated industry and is subject to extensive regulation by federal, state and local authorities in the U.S., including the Reform Act and the Dodd-Frank Act.
A. Legal and Regulatory Risks Moody’s Faces Risks Related to U.S. Laws and Regulations Applicable to the Financial Industry that Affect th e Credit Rating Industry and Moody’s Customers. Moody’s operates in a highly regulated industry and is subject to extensive regulation by federal, state and local authorities in the U.S., including the Reform Act and the Dodd-Frank Act.
In addition, Moody’s is subject to regular examination of its income tax returns by the Internal Revenue Service and other tax authorities around the world.
In addition, Moody’s is subject to regular examination of its income tax returns by the IRS and other tax authorities around the world.
To the extent any of the Company’s third-party providers ceases to provide these services in an efficient, cost-effective manner or fails to adequately expand its services to meet the Company’s needs and the needs of the Company’s customers, the Company could MOODY'S 2022 10-K 27 Table of Contents experience lower revenues and higher costs.
To the extent any of the Company’s third-party providers ceases to provide these services in an efficient, cost-effective manner or fails to adequately expand its services to meet the Company’s needs and the needs of the Company’s customers, the Company could experience lower revenues and higher costs.
This can result in delayed or reduced sales to such customers, adversely affect MA’s relationship with such customers, increase the costs of doing business with such customers and/or result in MA assuming greater financial and legal risk under service agreements with such customers. MOODY'S 2022 10-K 23 Table of Contents Moody’s Faces Risks Related to Financial Reforms Outside the U.S.
This can result in delayed or reduced sales to such customers, adversely affect MA’s relationship with such customers, increase the costs of doing business with such customers and/or result in MA assuming greater financial and legal risk under its agreements with such customers. Moody’s Faces Risks Related to Financial Reforms Outside the U.S.
The markets for credit ratings, research, credit risk management services, business intelligence and analytical services are highly competitive and characterized by rapid technological change, changes in customer and investor demands, and evolving regulatory requirements, industry standards and market preferences.
The markets for credit ratings, research, credit risk management services, business intelligence and analytical services are highly competitive and characterized by rapid technological change, including change based on our Gen AI offerings, changes in customer and investor demands, and evolving regulatory requirements, industry standards and market preferences.
Such laws are broadly crafted and the implementation and interpretation of such laws are subject to the broad discretion of Chinese regulators, which could affect the Company's ability to conduct business in China. 24 MOODY'S 2022 10-K Table of Contents – In addition, U.S. economic sanctions have increasingly targeted Chinese persons.
Such laws are broadly crafted and the implementation, interpretation and enforcement of such laws are subject to the broad discretion of Chinese regulators, which could affect the Company’s ability to conduct business in China. – In addition, U.S. economic sanctions have increasingly targeted Chinese persons.
CRA Regulation contains requirements for the registration, regulation and supervision of CRAs based in the U.K. It also sets out the circumstances in which U.K. financial institutions can use credit ratings for regulatory purposes, as well as specific obligations for issuers, originators and sponsors relating to structured finance instruments.
It also sets out the circumstances in which U.K. financial institutions can use credit ratings for regulatory purposes, as well as specific obligations for issuers, originators and sponsors relating to structured finance instruments.
In addition to the effects of general economic conditions, including inflation and related monetary policy actions in response to inflation, and resulting global disruptions on our business and operations discussed in Item 7 of this Form 10-K and in the risk factors below, additional or unforeseen effects from the global economic climate may give rise to or amplify many of these risks discussed below.
In addition to the effects of general economic conditions, including inflation and related monetary policy actions in response to inflation, changes in international conditions, including the impact of ongoing or new developments in the Russia-Ukraine military conflict and the military conflict in Israel and surrounding areas, and resulting global disruptions on our business and operations discussed in Item 7 of this Form 10-K and in the risk factors below, additional or unforeseen effects from the global economic climate may give rise to or amplify many of these risks discussed below.
In addition, MA derives a significant amount of its sales from banks and other financial services providers who are subject to regulatory oversight.
MOODY'S 2023 10-K 25 Table of Contents In addition, MA derives a significant amount of its sales from banks and other financial services providers who are subject to regulatory oversight.
Additionally, the Company may be exposed to additional threats as the Company migrates its data from legacy systems to cloud-based solutions, and increased dependence on third parties to store cloud-based data subjects the Company to further cyber risks.
Additionally, the Company may be exposed to additional threats as the Company migrates its data from legacy systems to cloud-based solutions, and becomes increasingly dependent on third parties to store cloud-based data subjects.
The Economics of the Company’s Business is Dependent on the Volume of Debt Securities Issued in Domestic and/or Global Capital Markets. Recent Financial Market Conditions, Including Decreased Asset Levels and Flows into Investment Vehicles, Increases in Interest Rates and Other Volatility Has Had, and May Continue to Have, a Material Adverse Impact on the Volume of Debt Securities Issued.
Recent Financial Market Conditions, Including Decreased Asset Levels and Flows into Investment Vehicles, Increases in Interest Rates and Other Volatility Has Had, and May Continue to Have, a Material Adverse Impact on the Volume of Debt Securities Issued. Moody’s business is impacted by general economic conditions and volatility in world financial markets.
The Company Is Exposed to Risks Related to Protection of Personal Information To conduct its operations, the Company regularly moves data across national borders, and consequently is subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data security such as the Federal Trade Commission Act in the United States, the General Data Protection Regulation (“GDPR”) in the European Union, the General Data Protection Regulation in the U.K., the Cyber Security Law, the Data Security Law, and the Personal Information Protection Law in China and various other international, federal, state and local laws and regulations.
The Company Is Exposed to Risks Related to Protection of Confidential and Personal Information To conduct its operations, the Company regularly moves data across national borders, and consequently is subject to a variety of continuously evolving and developing laws and regulations in the U.S. and abroad regarding privacy, data protection and data security, such as the Federal Trade Commission Act in the U.S., the GDPR in the EU, the GDPR in the U.K., the Cyber Security Law, the Data Security Law, and the Personal Information Protection Law in China and various other international, federal, state 34 MOODY'S 2023 10-K Table of Contents and local laws and regulations.
The frequency and impact of extreme weather events on critical infrastructure has the potential to disrupt the Company’s ongoing operations, as well as the operations of our vendors and customers, and may result in losses and additional costs to maintain or resume operations. C. Technology Risks The Company Is Exposed to Risks Related to Cybersecurity and Protection of Confidential Information.
The frequency and impact of extreme weather events on critical infrastructure has the potential to disrupt the Company’s ongoing operations, as well as the operations of our third-party vendors and customers, and may result in losses and additional costs to maintain or resume operations. C.
Competition for customers and market share has spurred more aggressive tactics by some competitors in areas such as pricing and services, as well as increased competition from non-NRSROs that evaluate debt risk for issuers or investors.
Competition for customers and market share has spurred more aggressive tactics by some competitors in areas such as pricing and services, as well as increased competition from non-NRSROs that evaluate debt risk for issuers or investors, and the emergence of LLMs, Gen AI and other technologies may further intensify these pressures.
In particular, the EU has adopted a common regulatory framework for CRAs operating in the EU and continues to monitor the credit rating industry and analyze approaches that may strengthen existing regulation. Credit ratings emanating from outside the EU are subject to ESMA’s oversight if they are endorsed into the EU.
In particular, the EU has adopted a common regulatory framework for CRAs operating in the EU and continues to monitor the credit rating industry and analyze approaches that may strengthen existing regulation.
The California Privacy Rights Act of 2020 (“CPRA”) became effective on January 1, 2023. The effects of non-compliance with the CCPA, CPRA and other similar data privacy laws in other jurisdictions are significant, and may require the Company to modify its data processing practices and policies and to incur additional costs and expenses.
The effects of non-compliance with the CCPA, CPRA and other similar data privacy laws are significant, and may require the Company to modify its data processing practices and policies and to incur additional costs and expenses.
Operational errors, whether by Moody’s or a Moody’s competitor, could also harm the reputation of the Company or the credit rating industry. Damage to reputation and credibility could have a material adverse impact on Moody’s business, operating results and financial condition, as well as on the Company’s ability to find suitable candidates for acquisition.
Damage to reputation and credibility could have a material adverse impact on Moody’s business, operating results and financial condition, as well as on the Company’s ability to find suitable candidates for acquisition.
As a global company, our employees and offices are subject to risks related to the impact of climate change. We have offices in locations that are vulnerable to the effects of climate change and extreme weather. In addition, continued reliable energy sources are critical for business continuity globally and those sources too can be impacted by extreme weather.
Our business could be negatively impacted by climate change . As a global company, our employees and offices, as well as those of our vendors, are subject to risks related to the impact of climate change. We have offices in locations that are vulnerable to the effects of climate change and extreme weather.
MOODY'S 2022 10-K 29 Table of Contents Moody’s Acquisitions, Dispositions and Other Strategic Transactions or Investments May Not Produce Anticipated Results Exposing the Company to Future Significant Impairment Charges Relating to Its Goodwill, Intangible Assets or Property and Equipment.
Moody’s Acquisitions, Dispositions and Other Strategic Transactions or Investments May Not Produce Anticipated Results Exposing the Company to Future Significant Impairment Charges Relating to Its Goodwill, Intangible Assets or Property and Equipment. Moody’s regularly evaluates and enters into acquisitions, dispositions or other strategic transactions and investments to strengthen its business and grow the Company.
Measures that Moody’s takes to avoid, detect, mitigate or recover from material incidents can be expensive, and may be insufficient, circumvented, or may become ineffective.
Additionally, any measures that Moody’s takes in connection with such third parties to avoid, detect, mitigate or recover from material cyber security threats or incidents can be expensive, and may be insufficient, circumvented, or may become ineffective.
The risks the Company faces range from cyber-attacks common to most industries, to more advanced threats that target the Company because of its prominence in the global marketplace, or due to its ratings of sovereign debt.
The risks the Company faces range from cyber-attacks common to most industries, to more advanced threats that target the Company because of its prominence in the global marketplace, or due to its ratings of sovereign debt and corporate issuers. The Company and its third-party service providers, including our vendors, regularly experience cyber-attacks and data breaches of varying degrees.
The Company faces intense competition for acquisition targets, especially in light of industry consolidation, which may affect Moody’s ability to complete such transactions on favorable terms or at all. Additionally, the Company makes significant investments in technology, including software for internal use, which can be expensive, time-intensive and complex to develop and implement.
Such transactions and investments present significant challenges and risks. The Company faces intense competition for acquisition targets, especially in light of industry consolidation, which may affect Moody’s ability to complete such transactions on favorable terms or at all.
The Company cannot predict with certainty all of the adverse effects that could result from the Company’s failure, or the failure of a third party, to efficiently address and resolve these delays and interruptions. A disruption to Moody’s operations or infrastructure may have a material adverse effect on its reputation, business, operating results and financial condition.
The Company cannot predict with certainty all of the adverse effects that could result from the Company’s failure, or the failure of a third party, to efficiently address and resolve these delays and interruptions.
For example: – In the EU and the U.K., applicable rules include procedural requirements with respect to credit ratings of sovereign issuers, liability for intentional or grossly negligent failure to abide by applicable regulations, mandatory rotation requirements of CRAs hired by issuers of securities for credit ratings of resecuritizations, and restrictions on CRAs or their shareholders if certain ownership thresholds are crossed.
For example: – MIS is a registered entity and is therefore subject to formal regulation and periodic or other inspections in the EU and other foreign jurisdictions, such as, but not limited to, Hong Kong and China, where it operates through registered subsidiaries. – In the EU and the U.K., applicable rules include procedural requirements with respect to credit ratings of sovereign issuers, liability for intentional or grossly negligent failure to abide by applicable regulations, mandatory rotation requirements of CRAs hired by issuers of securities for credit ratings of resecuritizations, and restrictions on CRAs or their shareholders if certain ownership thresholds are crossed.
Parties who invest in securities rated by MIS have pursued claims against MIS or Moody’s for losses they faced in their portfolios. For instance, Moody’s faced numerous class action lawsuits and other litigation, government investigations and inquiries concerning events linked to the U.S. subprime residential mortgage sector and broader deterioration in the credit markets during the financial crisis of 2007-2008.
For instance, MOODY'S 2023 10-K 27 Table of Contents Moody’s faced numerous class action lawsuits and other litigation, government investigations and inquiries concerning events linked to the U.S. subprime residential mortgage sector and broader deterioration in the credit markets during the financial crisis of 2007-2008.
Breaches of Moody’s or Moody’s vendors’ technology and systems, whether from circumvention of security systems, denial-of-service attacks or other cyber-attacks some of which may be carried out by state-sponsored actors, hacking, “phishing” attacks, computer viruses, social media impersonation, ransomware, or malware, employee or insider error, malfeasance, social engineering, physical breaches or other actions, may result in manipulation or corruption of sensitive data, material interruptions or malfunctions in the Company’s or such vendors’ web sites or systems, applications, data processing, or disruption of other business operations, or may compromise the confidentiality and integrity of material information held by the Company (including information about Moody’s business, employees or customers), as well as sensitive personally identifiable information (PII), the disclosure of which could lead to identity theft.
Cyber-attacks targeting Moody’s or Moody’s vendors’ technology and systems, whether from circumvention of security systems, denial-of-service attacks, ransomware, malware, hacking, social engineering or "phishing" attacks, computer viruses, employee or insider threats, malfeasance, supply chain attacks, physical breaches, payment fraud or other cyber-attacks some of which may be carried out by state-sponsored actors, may result in unauthorized access, exfiltration, manipulation or corruption of sensitive data, material interruptions or malfunctions in the Company’s or such vendors’ web sites or systems, applications, data processing, or disruption of other business operations.
At December 31, 2022, Moody’s had $5,839 million of goodwill and $2,210 million of intangible assets on its balance sheet. Approximately 94% of the goodwill and intangible assets reside in the MA business, including those related to Bureau van Dijk and RMS, and are allocated to the two reporting units within MA.
At December 31, 2023, Moody’s had $5,956 million of goodwill and $2,049 million of intangible assets on its balance sheet. Approximately 95% of the goodwill and intangible assets reside in the MA business and are allocated to the two reporting units within MA. The remaining 5% of goodwill and intangible assets reside in MIS and primarily relate to ICRA.
Investment banks, investors and competitors may seek to attract analyst talent by providing more favorable working conditions or offering significantly more attractive compensation packages than Moody’s. Moody’s also may not be able to identify and hire the appropriate qualified employees in some markets outside the U.S. with the required experience or skills to perform sophisticated credit analysis.
Moody’s also may not be able to identify and hire the appropriate qualified employees in some markets outside the U.S. with the required experience or skills to perform sophisticated credit analysis.
The Company also monitors its use of Third Party Technology to comply with applicable license and other contractual requirements. Despite the Company’s efforts, the Company cannot ensure that such third parties will permit Moody’s use in the future, resulting in increased Third Party Technology acquisition costs and loss of rights.
Despite the Company’s efforts, the Company cannot ensure that such third parties will permit Moody’s use in the future, resulting in increased Third-Party Technology acquisition costs and loss of rights. In addition, the Company’s operating costs could increase if license or other usage fees for Third-Party Technology increase or the efforts to incorporate enhancements to Third-Party Technology are substantial.
Future regulations could also affect products and services the Company offers in the ESG sector. Following the Brexit implementation period that ended December 31, 2020 the MIS U.K. registered CRA ceased to be registered with and regulated by ESMA and became subject to regulation by the U.K. Financial Conduct Authority ("FCA").
Following the Brexit implementation period that ended December 31, 2020, the MIS U.K. registered CRA ceased to be registered with and regulated by ESMA and became subject to regulation by the U.K. Financial Conduct Authority (“FCA”). MIS put arrangements in place to endorse its U.K. credit ratings into the EU and its EU credit ratings into the U.K.
MIS put arrangements in place to endorse its U.K. credit ratings into the EU and its EU credit ratings into the U.K. On December 31, 2020, the U.K. also onshored the EU CRA Regulation, with certain necessary modifications, into U.K. domestic law (the “U.K. CRA Regulation”). The U.K.
On December 31, 2020, the U.K. also onshored the EU CRA Regulation, with certain necessary modifications, into U.K. domestic law (the “U.K. CRA Regulation”). The U.K. CRA Regulation contains requirements for the registration, regulation and supervision of CRAs based in the U.K.
In addition, the potential for goodwill impairment is increased during periods of economic uncertainty. An asset impairment charge could have a material adverse effect on Moody’s business, operating results and financial condition. The Global COVID-19 Pandemic May Have a Material Adverse Impact on the Company’s Operations and Financial Performance.
Determining whether an impairment of goodwill exists can be especially difficult in periods of market or economic uncertainty and turmoil, and requires significant management estimates and judgment. In addition, the potential for goodwill impairment is increased during periods of economic uncertainty. An asset impairment charge could have a material adverse effect on Moody’s business, operating results and financial condition.
To the extent that the rating agency business as a whole or Moody's, relative to its competitors, suffers a loss in credibility, Moody’s business will be significantly impacted.
MOODY'S 2023 10-K 31 Table of Contents The Company Is Exposed to Reputation and Credibility Concerns. Moody’s reputation and the strength of its brand are key competitive strengths. To the extent that the rating agency business as a whole or Moody's, relative to its competitors, suffers a loss in credibility, Moody’s business will be significantly impacted.
The FCA also identified its supervisory priorities for CRAs, which consist of: ratings process and methodologies; governance and oversight; market and perimeter risks; and operational resilience and resourcing.
The FCA also identified its supervisory priorities for CRAs, which consist of: ratings process and methodologies; governance and oversight; market and perimeter risks; and operational resilience and resourcing. In March 2023, the FCA initiated a review of competition in the markets for certain types of wholesale market data. Credit rating data is included as one element of the FCA’s review.
The anticipated growth, synergies and other strategic objectives of completed transactions may not be fully realized, and a variety of factors may adversely affect any anticipated benefits from such transactions.
Additionally, the Company makes significant investments in technology, including software for internal use, which can be expensive, time-intensive and complex to develop and implement. The anticipated growth, synergies and other strategic objectives of completed transactions may not be fully realized, and a variety of factors may adversely affect any anticipated benefits from such transactions.
We could also fail to effectively respond to evolving perceptions and goals of those in our workforce or whom we might seek to hire, including in response to changes brought on by the COVID-19 pandemic, with respect to flexible working or other matters.
We could also fail to effectively respond to evolving perceptions and goals of those in our workforce or whom we might seek to hire, including with respect to flexible working or other matters. Also, the emergence and adoption of LLM and Gen AI technologies will require upskilling and additional training of Moody's employees, making retention and training increasingly important.
The Company’s operations rely on the secure processing, storage and transmission of confidential, sensitive, proprietary and other types of information relating to its business operations and confidential and sensitive information about its customers and employees in the Company’s computer systems and networks, and in those of its third party vendors.
Such information relates to its business operations and confidential and sensitive information about its MOODY'S 2023 10-K 33 Table of Contents customers and employees in the Company’s computer systems and networks, and in those of its third-party vendors.
The remaining 6% of goodwill and intangible assets reside in MIS and primarily relate to ICRA. Failure to achieve business objectives and financial projections in any of these reporting units could result in a significant asset impairment charge, which would result in a non-cash charge to operating expenses.
Failure to achieve business objectives and financial projections in any of these reporting units could result in a significant asset impairment charge, which would result in a non-cash charge to operating expenses. Goodwill and intangible assets are tested for impairment on an annual basis and also when events or changes in circumstances indicate that impairment may have occurred.
Unauthorized disclosure of 30 MOODY'S 2022 10-K Table of Contents this information could cause our customers to lose faith in our ability to protect their confidential information and therefore cause customers to cease doing business with us.
Unauthorized disclosure of the foregoing information could cause our customers to lose faith in our ability to protect their confidential information, affecting the trading of their securities, damage their reputations or competitive positions and therefore cause customers to cease doing business with us, and potentially expose us to risk of litigation.
Businesses the Company acquires also involve intellectual property portfolios, which increase the challenges the Company faces in protecting its strategic advantage. In addition, the Company’s operating results can be adversely affected by inadequate or changing legal and technological protections for intellectual property and proprietary rights in some jurisdictions and markets.
In addition, the Company’s operating results can be adversely affected by inadequate or changing legal and technological protections for intellectual property and proprietary rights in some jurisdictions and markets, including if and how rights in these markets evolve to address advances in LLMs and Gen AI.
Although past incidents have not had a material adverse effect on the Company's operating results, there can be no assurance of a similar result in the future. Because the methods used for these systems cyberattacks are rapidly changing, the Company, despite significant focus and investment, may be unable to anticipate/deploy sufficient protections against such incidents.
Because the methods used for these systems cyberattacks are rapidly changing, the Company or its third-party vendors, despite significant focus and investment, may be unable to anticipate and/or deploy sufficient protections against such incidents.
Moody’s business is impacted by general economic conditions and volatility in world financial markets. Furthermore, issuers of debt securities have increasingly elected to issue securities without ratings or securities which are rated or evaluated by non-traditional parties such as financial advisors, rather than traditional CRAs, such as MIS.
Furthermore, issuers of debt securities have increasingly elected to issue securities without ratings or securities which are rated or evaluated by non-traditional parties such as financial advisors, rather than traditional CRAs, such as MIS. Companies are also increasingly accessing alternative sources of financing, such as loans and debt financing from non-bank lenders that do not involve a CRA-issued credit rating.
To date, such attacks have not resulted in a material adverse impact to our business operations, but there can be no guarantee we will not experience such an impact. Some of these third-party suppliers are also Moody’s competitors, increasing the risks noted above.
To date, such attacks have not resulted in a material adverse impact to Moody’s business operations, but there can be no guarantee the Company will not experience such an impact in the future. If any of these risks materialize, they could have a material adverse effect on the Company’s business, financial condition or results of operations. ITEM 1B.
The EU and other jurisdictions, as discussed further below, adopt legislation and engage in rulemaking on an ongoing basis that significantly impacts operations and the markets for the Company's products and services. Future laws and regulations could extend to products and services not currently regulated.
See “Regulation” in Part 1, Item 1 of this annual report on Form 10-K for more information. The EU and other jurisdictions, as discussed further below, adopt legislation and engage in rulemaking on an ongoing basis that significantly impacts operations and the markets for the Company ’ s products and services.
Furthermore, in some of the countries in which Moody’s operates, governments may provide financial or other support to local rating agencies.
Furthermore, in some of the countries in which Moody’s operates, governments may provide financial or other support to local rating agencies. Any inability of Moody’s to compete successfully with respect to the pricing of its products and services will have a material adverse impact on its business, operating results and financial condition.
Evolving expectations on ESG disclosures and reporting could also result in new regulatory actions at a corporate and business unit level.
Evolving expectations on ESG disclosures and reporting could also result in increased regulatory scrutiny and new regulatory actions at a corporate and business unit level. MA’s offering of products and services relating to sanctions, KYC and financial crime may result in increased regulatory scrutiny and could expose the Company to increased risk of litigation from data subjects and other third-parties.
In addition, the Company’s operating costs could increase if license or other usage fees for Third Party Technology increase or the efforts to incorporate enhancements to Third Party Technology are substantial. In the ordinary course, our third-parties, including our vendors, are subject to various forms of cyber attacks.
Some of these third-party suppliers are also Moody’s competitors, increasing the risks noted above. In the ordinary course, third-parties, including the Company’s vendors, are subject to various forms of cyber-attacks.
Additionally, other foreign jurisdictions have taken measures to increase regulation of CRAs and markets for credit ratings. See “Regulation” in Part 1, Item 1 of this annual report on Form 10-K for more information.
Credit ratings emanating from outside the EU are subject to ESMA’s oversight if they are endorsed into the EU, and ratings endorsed into the U.K. are similarly subject to oversight of the FCA. Additionally, other foreign jurisdictions have taken measures to increase regulation of CRAs and markets for credit ratings.
Removed
The FCA also identified some other priority areas where it will be carrying out work relevant to CRAs, including a market study on accessing and using wholesale data and ongoing work on ESG ratings. Both of Moody’s segments face risks related to financial reforms outside the U.S. affecting the credit rating industry and Moody’s customers.
Added
Future laws and regulations could extend to products and services not currently regulated.
Removed
MIS is a registered entity and is therefore subject to formal regulation and periodic or other inspections in the EU and other foreign jurisdictions, such as, but not limited to, Hong Kong and China, where it operates through registered subsidiaries.
Added
Future regulations could also affect products and services the Company offers that incorporate or are based on artificial intelligence technologies. As part of the legislative package on sustainable finance, in June 2023, the European Commission published a proposal on the transparency and integrity of ESG rating activities.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThese properties are generally considered to be both suitable and adequate to meet current operating requirements. ITEM 3. LEGAL PROCEEDINGS For information regarding legal proceedings, see Part II, Item 8 –“Financial Statements”, Note 21 “Contingencies” in this Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeThese properties are generally considered to be both suitable and adequate to meet current operating requirements. ITEM 3. LEGAL PROCEEDINGS For information regarding legal proceedings, see Part II, Item 8 – “Financial Statements,” Note 21 “Contingencies” in this Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
ITEM 2. PROPERTIES Moody’s corporate headquarters is located at 7 World Trade Center at 250 Greenwich Street, New York, New York 10007. As of December 31, 2022, Moody’s operations were conducted from 29 U.S. offices and 89 non-U.S. office locations, all of which are leased. These properties are geographically distributed to meet operating and sales requirements worldwide.
ITEM 2. PROPERTIES Moody’s corporate headquarters is located at 7 World Trade Center at 250 Greenwich Street, New York, New York 10007. As of December 31, 2023, Moody’s operations were conducted from 31 U.S. offices and 81 non-U.S. office locations, all of which are leased. These properties are geographically distributed to meet operating and sales requirements worldwide.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 35 The Company 35 Current Matters Impacting Moody's Business 35 Critical Accounting Estimates 35 -39 Reportable Segments 39 Results of Operations 40 -53 Market Risk 53 -54 Liquidity and Capital Resources 55 -61 Recently Issued Accounting Pronouncements 61 Contingencies 61 Forward-Looking Statements 61 -62 Item 7A.
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 40 The Company 40 Current Matters Impacting Moody's Business 40 Critical Accounting Estimates 40 Reportable Segments 44 Results of Operations 45 Market Risk 59 Liquidity and Capital Resources 60 Recently Issued Accounting Pronouncements 65 Contingencies 65 Forward-Looking Statements 65 2 MOODY'S 2023 10-K Table of Contents Page Item 7A.
Item 4. MINE SAFETY DISCLOSURES 32 PART II. Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 32 Moody’s Purchases of Equity Securities 32 Common Stock Information 33 Equity Compensation Plan Information 33 Performance Graph 34 Item 7.
Item 4. MINE SAFETY DISCLOSURES 37 PART II. Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 37 Moody’s Purchases of Equity Securities 37 Common Stock Information 38 Equity Compensation Plan Information 38 Performance Graph 39 Item 7.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 63 Item 8. FINANCIAL STATEMENTS 63 -120 2 MOODY'S 2022 10-K Table of Contents Page(s)
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 67 Item 8. FINANCIAL STATEMENTS 67

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(3) Includes 12,577,447 shares available for issuance as under the 2001 Stock Incentive Plan, of which all may be issued as options and 6,718,549 may be issued as restricted stock, performance shares or other stock-based awards under the 2001 Stock Incentive Plan, 442,093 shares available for issuance as options, shares of restricted stock or performance shares under the Risk Management Solutions, Inc. 2015 Equity Incentive Plan, and 873,572 shares available for issuance as options, shares of restricted stock or performance shares under the 1998 Directors Plan, and 2,522,380 shares available for issuance under the Company’s Employee Stock Purchase Plan.
Biggest change(3) Includes 15,956,514 shares available for issuance as under the 2001 Stock Incentive Plan, of which all may be issued as options and 10,173,336 may be issued as awards of unrestricted shares, restricted stock, restricted stock units, performance shares or any other stock-based awards under the 2001 Stock Incentive Plan, 449,049 shares available for issuance as options or restricted stock units under the Risk Management Solutions, Inc. 2015 Equity Incentive Plan, 866,673 shares available for issuance as options, shares of restricted stock, restricted stock units or performance shares under the 1998 Directors Plan, and 2,464,707 shares available for issuance under the Company’s Employee Stock Purchase Plan. 38 MOODY'S 2023 10-K Table of Contents PERFORMANCE GRAPH The following graph compares the total cumulative shareholder return of the Company to the performance of Standard & Poor’s 500 Composite Index and the Russell 3000 Financial Services Index.
The comparison assumes that $100.00 was invested in the Company’s common stock and in each of the foregoing indices on December 31, 2017. The comparison also assumes the reinvestment of dividends, if any.
The comparison assumes that $100.00 was invested in the Company’s common stock and in each of the foregoing indices on December 31, 2018. The comparison also assumes the reinvestment of dividends, if any.
This number also includes a maximum of 655,394 performance shares outstanding under the Company's 2001 Key Employees' Stock Incentive Plan, which is the maximum number of shares issuable pursuant to performance share awards assuming the maximum payout of 200% of the target award for performance shares granted in 2020, 2021 and 2022.
This number also includes a maximum of 594,140 performance shares outstanding under the Company's 2001 Key Employees' Stock Incentive Plan, which is the maximum number of shares issuable pursuant to performance share awards assuming the maximum payout of 200% of the target award for performance shares granted in 2021, 2022 and 2023.
Assuming payout at target, the number of shares to be issued upon the vesting of outstanding performance share awards is 327,697. (2) Does not reflect unvested restricted shares or performance share awards included in column (a) because these awards have no exercise price.
Assuming payout at target, the number of shares to be issued upon the vesting of outstanding performance share awards is 297,070. (2) Does not reflect unvested restricted stock units or performance share awards included in column (a) because these awards have no exercise price.
The total return for the Company's common stock was 98% during the performance period as compared with a total return during the same period of 57% and 48% for the S&P 500 Composite Index and the Russell 3000 Financial Services Index, respectively.
The total return for the Company's common stock was 192% during the performance period as compared with a total return during the same period of 107% and 97% for the S&P 500 Composite Index and the Russell 3000 Financial Services Index, respectively.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 3,035,203 (1) $ 181.35 16,415,492 (3) Equity compensation plans not approved by security holders — $ — — Total 3,035,203 $ 181.35 16,415,492 (1) Includes 2,269,406 options and unvested restricted shares outstanding under the Company's 2001 Key Employees' Stock Incentive Plan, 104,033 options and unvested restricted shares outstanding under the Risk Management Solutions, Inc. 2015 Equity Incentive Plan and 6,370 unvested restricted shares outstanding under the 1998 Non-Employee Directors' Stock Incentive Plan.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 2,732,417 (1) $ 212.29 19,736,943 (3) Equity compensation plans not approved by security holders — $ — — Total 2,732,417 $ 212.29 19,736,943 (1) Includes 2,065,581 options and unvested restricted stock units outstanding under the Company's 2001 Key Employees' Stock Incentive Plan, 66,855 options and unvested restricted stock units outstanding under the Risk Management Solutions, Inc. 2015 Equity Incentive Plan and 5,841 unvested restricted stock units outstanding under the 1998 Non-Employee Directors' Stock Incentive Plan.
MOODY’S PURCHASES OF EQUITY SECURITIES For the three months ended December 31, 2022: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under The Program (2) October 1- 31 8,398 $ — — $848 million November 1- 30 529 $ — — $848 million December 1- 31 493 $ — — $848 million Total 9,420 $ — — (1) Includes surrender to the Company of 8,398, 529 and 493 shares of common stock in October, November and December, respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.
MOODY’S PURCHASES OF EQUITY SECURITIES For the three months ended December 31, 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under The Program (2) October 1- 31 154,055 $ 315.47 143,847 $527 million November 1- 30 281,831 $ 341.59 280,953 $431 million December 1- 31 190,073 $ 378.28 189,577 $359 million Total 625,959 $ 346.80 614,377 (1) Includes surrender to the Company of 10,208; 878; and 496 shares of common stock in October, November and December, respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.
During the fourth quarter of 2022, Moody’s issued a net 38 thousand shares under employee stock-based compensation plans. 32 MOODY'S 2022 10-K Table of Contents COMMON STOCK INFORMATION The Company’s common stock trades on the New York Stock Exchange under the symbol “MCO”. The number of registered shareholders of record at January 31, 2023 was 1,555.
There is no established expiration date for the remaining authorizations. During the fourth quarter of 2023, Moody’s issued a net 100 thousand shares under employee stock-based compensation plans. MOODY'S 2023 10-K 37 Table of Contents COMMON STOCK INFORMATION The Company’s common stock trades on the New York Stock Exchange under the symbol “MCO”.
(2) Amounts shown are as of the last day of each of the months. On February 9, 2021, the Board authorized $1 billion in share repurchase authority and on February 7, 2022, the Board of Directors approved an additional $750 million of share repurchase authority.
(2) As of the last day of each of the months. On February 7, 2022, the Board of Directors authorized $750 million of share repurchase authority. At December 31, 2023, there was approximately $359 million of share repurchase authority remaining under this authorization. On February 5, 2024, the Board of Directors authorized an additional $1 billion in share repurchase authority.
A substantially greater number of the Company’s common stock is held by beneficial holders whose shares of record are held by banks, brokers and other financial institutions. EQUITY COMPENSATION PLAN INFORMATION The table below sets forth, as of December 31, 2022, certain information regarding the Company’s equity compensation plans.
The number of registered shareholders of record at January 31, 2024 was 1,461. A substantially greater number of the Company’s common stock is held by beneficial holders whose shares of record are held by banks, brokers and other financial institutions.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Moody’s Corporation, the Standard & Poor’s 500 Composite Index, and the Russell 3000 Financial Services Index Year Ended December 31, 2017 2018 2019 2020 2021 2022 Moody’s Corporation $ 100.00 $ 95.90 $ 164.22 $ 202.45 $ 274.46 $ 197.60 S&P 500 Composite Index $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.89 Russell 3000—Financial Services Index $ 100.00 $ 91.65 $ 121.82 $ 129.87 $ 174.77 $ 147.73 The comparisons in the graph above are provided in response to disclosure requirements of the SEC and are not intended to forecast or be indicative of future performance of the Company’s common stock. 34 MOODY'S 2022 10-K Table of Contents
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Moody’s Corporation, the Standard & Poor’s 500 Composite Index, and the Russell 3000 Financial Services Index Year Ended December 31, 2018 2019 2020 2021 2022 2023 Moody’s Corporation $ 100.00 $ 171.25 $ 211.11 $ 286.21 $ 206.05 $ 291.60 S&P 500 Composite Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Russell 3000—Financial Services Index $ 100.00 $ 137.65 $ 136.25 $ 187.43 $ 160.35 $ 196.70 The comparisons in the graph above are provided in response to disclosure requirements of the SEC and are not intended to forecast or be indicative of future performance of the Company’s common stock.
Removed
A t December 31, 2022, there was approximately $848 million of combined share repurchase authority remaining. There is no established expiration date for the remaining authorization.
Added
EQUITY COMPENSATION PLAN INFORMATION The table below sets forth, as of December 31, 2023, certain information regarding the Company’s equity compensation plans.
Removed
MOODY'S 2022 10-K 33 Table of Contents PERFORMANCE GRAPH The following graph compares the total cumulative shareholder return of the Company to the performance of Standard & Poor’s 500 Composite Index and the Russell 3000 Financial Services Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

93 edited+33 added−40 removed92 unchanged
Biggest changeYear Ended December 31, Financial measure: 2022 2021 % Change Favorable / (Unfavorable) Insight and Key Drivers of Change Compared to Prior Year Moody's total revenue $ 5,468 $ 6,218 (12 %) — reflects lower MIS revenue partially offset by growth in MA MIS external revenue $ 2,699 $ 3,812 (29 %) — credit market activity remained muted across all sectors given ongoing market volatility, central bank actions, high levels of balance sheet cash, as well as heightened inflationary and recessionary concerns MA external revenue $ 2,769 $ 2,406 15 % — inorganic growth from acquisitions; and — strong organic growth across all LOBs, most notably for KYC and compliance solutions coupled with continued strong retention and demand for credit research, analytics and models Total operating and SG&A expenses $ 3,140 $ 3,117 (1 %) — operational and integration costs associated with recent acquisitions; and — increases in hiring and salary growth; mostly offset by: — lower incentive compensation accruals and performance-based equity compensation; and — favorable changes in FX translation rates Depreciation and amortization $ 331 $ 257 (29 %) — higher amortization of intangible assets reflecting recent M&A activity (most notably RMS); and — amortization of internally developed software, primarily related to the development of MA SaaS solutions Restructuring $ 114 $ — NM — relates to the Company's 2022 - 2023 Geolocation Restructuring Program, more fully discussed in Note 11 to the consolidated financial statements Total non-operating (expense) income, net $ (123) $ (89) (38 %) — a $45 million benefit in 2021 related to the reversal of tax-related interest accruals pursuant to the resolution of uncertain tax positions; — a $36 million non-cash gain in 2021 relating to the exchange of the Company's minority investment in VisibleRisk for shares of BitSight; — a $31 million increase in interest expense in 2022 primarily due to debt issued late in 2021 and in 2022; and — $20 million in FX translation losses reclassified to earnings in 2022 resulting from the Company no longer conducting commercial operations in Russia; partially offset by: — a $70 million gain on extinguishment of debt in 2022, as more fully discussed in Note 18 to the consolidated financial statements Operating Margin 34.4 % 45.7 % (1,130BPS) — margin declines are primarily due to the aforementioned decrease in MIS revenue Adjusted Operating Margin (1) 42.6 % 49.9 % (730BPS) ETR 21.9 % 19.6 % (230BPS) — tax benefits realized upon resolution of uncertain tax positions during 2021 that did not recur to the same extent in 2022; and — a non-deductible loss in 2022 associated with the Company no longer conducting commercial operations in Russia Diluted EPS $ 7.44 $ 11.78 (37) % — primarily due to declines in MIS revenue Adjusted Diluted EPS (1) $ 8.57 $ 12.29 (30) % MOODY'S 2022 10-K 41 Table of Contents Moody’s Corporation Year Ended December 31, % Change Favorable (Unfavorable) 2022 2021 Revenue: United States $ 2,873 $ 3,383 (15 %) Non-U.S.: EMEA 1,682 1,885 (11 %) Asia-Pacific 556 603 (8 %) Americas 357 347 3 % Total Non-U.S. 2,595 2,835 (8 %) Total 5,468 6,218 (12 %) Expenses: Operating 1,613 1,637 1 % SG&A 1,527 1,480 (3 %) Depreciation and amortization 331 257 (29 %) Restructuring 114 — NM Total 3,585 3,374 (6 %) Operating income 1,883 2,844 (34 %) Adjusted Operating Income (1) 2,328 3,101 (25 %) Interest expense, net (231) (171) (35 %) Other non-operating income, net 38 82 (54 %) Gain on extinguishment of debt 70 — NM Non-operating (expense) income, net (123) (89) (38 %) Net income attributable to Moody’s $ 1,374 $ 2,214 (38 %) Diluted weighted average shares outstanding 184.7 187.9 2 % Diluted EPS attributable to Moody’s common shareholders $ 7.44 $ 11.78 (37 %) Adjusted Diluted EPS (1) $ 8.57 $ 12.29 (30 %) Operating margin 34.4 % 45.7 % Adjusted Operating Margin (1) 42.6 % 49.9 % Effective tax rate 21.9 % 19.6 % GLOBAL REVENUE 2022 --------------------------------------------------------------------------------------- 2021 _________________________________________________ _________ ______________________________________________ Global revenue ⇓ $750 million U.S.
Biggest changeYear Ended December 31, Financial measure: 2023 2022 % Change Favorable / (Unfavorable) Insight and Key Drivers of Change Compared to Prior Year Moody's total revenue $ 5,916 $ 5,468 8 % — reflects growth in both segments MA external revenue $ 3,056 $ 2,769 10 % — sustained demand for KYC solutions, as well as continued growth from insurance products and SaaS-based banking offerings; — ongoing strong retention for ratings data feeds; and — elevated usage and demand for credit and economic research MIS external revenue $ 2,860 $ 2,699 6 % — increased investment-grade/speculative-grade corporate debt issuance coupled with higher infrastructure finance issuance relative to suppressed activity in the prior year; and — increases in banking-related revenue mainly due to favorable mix of infrequent issuers, as well as higher issuance volumes; partially offset by — declines across most asset classes in SFG reflecting a decrease in securitization activity amidst capital market volatility Total operating and SG&A expenses $ 3,319 $ 3,140 (6 %) — higher incentive compensation accruals and performance-based equity compensation aligned with actual/expected financial and operating performance; and — higher salaries and benefits, primarily reflecting hiring and salary increases in MA to support business growth Depreciation and amortization $ 373 $ 331 (13 %) — higher amortization relating to internally developed software, primarily related to the development of MA SaaS solutions Restructuring $ 87 $ 114 24 % — relates to the Company's 2022 - 2023 Geolocation Restructuring Program, more fully discussed in Note 11 to the consolidated financial statements Total non-operating (expense) income, net $ (202) $ (123) (64 %) — higher realized losses of $81 million on fixed-to-floating interest rate swaps resulting from higher interest rates (more fully discussed in Note 7 to the consolidated financial statements); — a $70 million gain on extinguishment of debt in in the prior year; and — a $20 million net increase in foreign exchange losses recorded during the year; partially offset by — an increase in interest income of $48 million related to higher cash balances and interest yields; — higher gains on certain of the Company's investments of $28 million; and — a $22 million benefit related to the resolutions of tax matters in the first quarter of 2023 Operating Margin 36.1 % 34.4 % 170BPS — operating margin and Adjusted Operating Margin (1) expansion is primarily due to revenue growth, partially offset by increases in operating and SG&A costs Adjusted Operating Margin (1) 43.9 % 42.6 % 130BPS ETR 16.9 % 21.9 % 500BPS — lower ETR primarily reflects tax benefits recognized in the first quarter of 2023, which resulted from the resolutions of UTPs in various U.S. and non-U.S. tax jurisdictions Diluted EPS $ 8.73 $ 7.44 17 % — increase in Diluted EPS and Adjusted Diluted EPS (1) is mostly attributable to growth in operating income/Adjusted Operating Income (1) coupled with a $0.76/share benefit related to the resolutions of tax matters in the first quarter of 2023, compared to $0.12/share for similar matters in the first quarter of 2022 Adjusted Diluted EPS (1) $ 9.90 $ 8.57 16 % 46 MOODY'S 2023 10-K Table of Contents Moody’s Corporation Year Ended December 31, % Change Favorable (Unfavorable) 2023 2022 Revenue: United States $ 3,098 $ 2,873 8 % Non-U.S.: EMEA 1,848 1,682 10 % Asia-Pacific 577 556 4 % Americas 393 357 10 % Total Non-U.S. 2,818 2,595 9 % Total 5,916 5,468 8 % Expenses: Operating 1,687 1,613 (5 %) SG&A 1,632 1,527 (7 %) Depreciation and amortization 373 331 (13 %) Restructuring 87 114 24 % Total 3,779 3,585 (5 %) Operating income 2,137 1,883 13 % Adjusted Operating Income (1) 2,597 2,328 12 % Interest expense, net (251) (231) (9 %) Other non-operating income, net 49 38 29 % Gain on extinguishment of debt — 70 (100 %) Non-operating (expense) income, net (202) (123) (64 %) Net income attributable to Moody’s $ 1,607 $ 1,374 17 % Diluted weighted average shares outstanding 184.0 184.7 — % Diluted EPS attributable to Moody’s common shareholders $ 8.73 $ 7.44 17 % Adjusted Diluted EPS (1) $ 9.90 $ 8.57 16 % Operating margin 36.1 % 34.4 % Adjusted Operating Margin (1) 43.9 % 42.6 % ETR 16.9 % 21.9 % GLOBAL REVENUE 2023 --------------------------------------------------------------------------------------- 2022 _________________________________________________ _________ ______________________________________________ Global revenue ⇑ $448 million U.S.
Those statements appear at various places throughout this annual report on Form 10-K, including in the sections entitled “Contingencies” under Item 7, “MD&A”, commencing on page 35 of this annual report on Form 10-K, under “Legal Proceedings” in Part I, Item 3, of this Form 10-K, and elsewhere in the context of statements containing the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “will,” “predict,” “potential,” “continue,” “strategy,” “aspire,” “target,” “forecast,” “project,” “estimate,” “should,” “could,” “may,” and similar expressions or words and variations thereof relating to the Company’s views on future events, trends and contingencies or otherwise convey the prospective nature of events or outcomes generally indicative of forward-looking statements.
Those statements appear at various places throughout this annual report on Form 10-K, including in the sections entitled “Contingencies” under Item 7, “MD&A”, commencing on page 40 of this annual report on Form 10-K, under “Legal Proceedings” in Part I, Item 3, of this Form 10-K, and elsewhere in the context of statements containing the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “will,” “predict,” “potential,” “continue,” “strategy,” “aspire,” “target,” “forecast,” “project,” “estimate,” “should,” “could,” “may,” and similar expressions or words and variations thereof relating to the Company’s views on future events, trends and contingencies or otherwise convey the prospective nature of events or outcomes generally indicative of forward-looking statements.
These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements are described in greater detail under “Risk Factors” in Part I, Item 1A of Moody’s annual report on Form 10-K for the year ended December 31, 2022, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein.
These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements are described in greater detail under “Risk Factors” in Part I, Item 1A of Moody’s annual report on Form 10-K for the year ended December 31, 2023, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein.
The effects of revaluing assets and liabilities that are denominated in currencies other than a subsidiary’s functional currency are charged to other non-operating income (expense), net in the Company’s consolidated statements of operations.
The effects of revaluing assets and liabilities that are denominated in currencies other than a subsidiary’s functional currency are charged to other non-operating income, net in the Company’s consolidated statements of operations.
The table below shows the estimated effect that a one percentage-point decrease in each of these assumptions will have on Moody’s 2023 income before provision for income taxes. These effects have been calculated using the Company’s current projections of 2023 expenses, assets and liabilities related to Moody’s Retirement Plans, which could change as updated data becomes available.
The table below shows the estimated effect that a one percentage-point decrease in each of these assumptions will have on Moody’s 2024 income before provision for income taxes. These effects have been calculated using the Company’s current projections of 2024 expenses, assets and liabilities related to Moody’s Retirement Plans, which could change as updated data becomes available.
For additional information on the Company's outstanding debt, CP program and 2021 Facility, refer to Note 18 to the consolidated financial statements. Management may consider pursuing additional long-term financing when it is appropriate in light of cash requirements for operations, share repurchases and other strategic opportunities, which would result in higher financing costs.
For additional information on the Company's outstanding debt, CP program and 2021 Facility, refer to Note 18 to the consolidated financial statements. Management may consider pursuing additional long-term financing when it is appropriate in light of cash requirements for operations, share repurchases and other strategic opportunities, which could result in higher financing costs.
Based on current projections, the Company estimates that expenses related to Retirement Plans will be immaterial in 2023. Investments in Non-consolidated Affiliates Equity method investments are reviewed for indicators of other-than-temporary impairment on a quarterly basis. These investments are written down to fair value if there is evidence of a loss in value that is other-than-temporary.
Based on current projections, the Company estimates that expenses related to Retirement Plans will be immaterial in 2024. Investments in Non-consolidated Affiliates Equity method investments are reviewed for indicators of other-than-temporary impairment on a quarterly basis. These investments are written down to fair value if there is evidence of a loss in value that is other-than-temporary.
The discount rates used to measure the present value of the Company’s benefit obligation for its Retirement Plans as of December 31, 2022 were derived using a cash flow matching method whereby the Company compares each plan’s projected payment obligations by year with the corresponding yield on the FTSE pension discount curve.
The discount rates used to measure the present value of the Company’s benefit obligation for its Retirement Plans as of December 31, 2023 were derived using a cash flow matching method whereby the Company compares each plan’s projected payment obligations by year with the corresponding yield on the FTSE pension discount curve.
Discussions related to the year ended December 31, 2020 financial results and year-to-year comparisons between the years ended December 31, 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 .
Discussions related to the year ended December 31, 2021 financial results and year-to-year comparisons between the years ended December 31, 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 .
Cross-currency swaps As of December 31, 2022, the Company had cross-currency swaps designated as hedges of euro denominated net investments in subsidiaries, for which the notional values and corresponding interest rates are disclosed in Note 7 to the consolidated financial statements located in Item 8 of this Form 10-K.
Cross-currency swaps As of December 31, 2023, the Company had cross-currency swaps designated as hedges of euro denominated net investments in subsidiaries, for which the notional values and corresponding interest rates are disclosed in Note 7 to the consolidated financial statements located in Item 8 of this Form 10-K.
If the euro were to strengthen 10% relative to the U.S. dollar, there would be an approximate $310 million unfavorable impact to the fair value of the cross-currency swaps recognized in OCI, which would be offset by favorable currency translation gains on the Company’s euro net investment in foreign subsidiaries.
If the euro were to strengthen 10% relative to the U.S. dollar, there would be an approximate $321 million unfavorable impact to the fair value of the cross-currency swaps recognized in OCI, which would be offset by favorable currency translation gains on the Company’s euro net investment in foreign subsidiaries.
Free Cash Flow: The Company defines Free Cash Flow as net cash provided by operating activities minus payments for capital additions. Management believes that Free Cash Flow is a useful metric in assessing the Company’s cash flows to service debt, pay dividends and to fund acquisitions and share repurchases.
Free Cash Flow: The Company defines Free Cash Flow as net cash provided by operating activities minus cash paid for capital additions. Management believes that Free Cash Flow is a useful metric in assessing the Company’s cash flows to service debt, pay dividends and to fund acquisitions and share repurchases.
If the euro were to strengthen 10% relative to the U.S. dollar, there would be an approximate $133 million unfavorable adjustment to OCI related to these net investment hedges. This adjustment would be offset by favorable translation adjustments on the Company’s euro net investment in subsidiaries.
If the euro were to strengthen 10% relative to the U.S. dollar, there would be an approximate $138 million unfavorable adjustment to OCI related to these net investment hedges. This adjustment would be offset by favorable translation adjustments on the Company’s euro net investment in subsidiaries.
Additionally, ARR excludes contracts related to acquisitions to provide additional perspective in assessing growth excluding the impacts from certain acquisition activity. The Company’s definition of ARR may differ from definitions utilized by other companies reporting similarly named measures, and this metric should be viewed in addition to, and not as a substitute for, financial measures presented in accordance with U.S.
Additionally, ARR excludes contracts related to acquisitions to provide additional perspective in assessing growth excluding the impacts from certain acquisition activity. The Company’s definition of ARR may differ from definitions utilized by other companies reporting similarly named measures, and this metric should be viewed in addition to, and not as a substitute for, financial measures presented in accordance with GAAP.
Other assets and liabilities, including applicable corporate assets, are allocated to the extent they are related to the operation of respective reporting units. Annual goodwill impairment assessment performed at July 31, 2022 At July 31, 2022, the Company performed qualitative assessments for each of the four reporting units.
Other assets and liabilities, including applicable corporate assets, are allocated to the extent they are related to the operation of respective reporting units. Annual goodwill impairment assessment performed at July 31, 2023 At July 31, 2023, the Company performed qualitative assessments for each of the four reporting units.
Contingencies Legal proceedings in which the Company is involved also may impact Moody’s liquidity or operating results. No assurance can be provided as to the outcome of such proceedings. In addition, litigation inherently involves significant costs. For information regarding legal proceedings, see Part II, Item 8 – “Financial Statements”, Note 21 “Contingencies” in this Form 10-K.
Contingencies Legal proceedings in which the Company is involved also may impact Moody’s liquidity or operating results. No assurance can be provided as to the outcome of such proceedings. In addition, litigation inherently involves significant costs. For information regarding legal proceedings, see Part II, Item 8 – “Financial Statements,” Note 21 “Contingencies” in this Form 10-K.
Euro-denominated debt As of December 31, 2022, the Company has designated €500 million of the 2015 Senior Notes and €750 million of the 2019 Senior Notes as a net investment hedge to mitigate FX exposure relating to euro denominated net investments in subsidiaries.
Euro-denominated debt As of December 31, 2023, the Company has designated €500 million of the 2015 Senior Notes and €750 million of the 2019 Senior Notes as a net investment hedge to mitigate FX exposure relating to euro denominated net investments in subsidiaries.
In response to the conflict, the Company is no longer conducting commercial operations in Russia for both MIS and MA and is complying with all applicable regulatory restrictions set forth by the jurisdictions in which Moody's operates. Furthermore, the Company also has withdrawn MIS credit ratings on Russian entities.
In response to the Russia-Ukraine military conflict, the Company is no longer conducting commercial operations in Russia for both MA and MIS and is complying with all applicable regulatory restrictions set forth by authorities in the jurisdictions in which Moody's operates. Furthermore, the Company also has withdrawn MIS credit ratings on Russian entities.
Therefore, income tax expense is based on reported income before income taxes, and deferred income taxes reflect the effect of temporary differences between the amounts of assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. The Company is subject to tax audits in various jurisdictions.
Therefore, income tax expense is based on reported income before income taxes, and deferred income taxes reflect the effect of temporary differences between the amounts of assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. The Company is subject to tax audits in the U.S. and various foreign jurisdictions.
The Company is unable to predict either the near-term or longer-term impact that the conflict may have on its financial position and operating results due to numerous uncertainties regarding the severity and duration of the conflict and its broader potential macroeconomic impact.
The Company is unable to predict either the near-term or longer-term impact that the conflicts may have on its financial position and operating results due to numerous uncertainties regarding the severity and duration of the conflicts and their broader potential macroeconomic impact.
Restructuring Charge The restructuring charge in 2022 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 11 to the consolidated financial statements.
Restructuring The restructuring charge in both periods relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 11 to the consolidated financial statements.
Accordingly, the Company has commenced repatriating a portion of its non-U.S. cash in these subsidiaries and will continue to repatriate certain of its offshore cash in a manner that addresses compliance with local statutory requirements, sufficient offshore working capital and any other factors that may be relevant in certain jurisdictions.
Accordingly, the Company continues to repatriate a portion of its non-U.S. cash in these subsidiaries and will continue to repatriate certain of its offshore cash in a manner that addresses compliance with local statutory requirements, sufficient offshore working capital and any other factors that may be relevant in certain jurisdictions.
Material Cash Requirements The Company's material cash requirements consist of the following contractual and other obligations: Financing Arrangements Indebtedness At December 31, 2022, Moody’s had $7.4 billion of outstanding debt and approximately $1 billion of additional capacity available under the Company’s CP program, which is backstopped by the $1.25 billion 2021 Facility.
Material Cash Requirements The Company's material cash requirements consist of the following contractual and other obligations: Financing Arrangements Indebtedness At December 31, 2023, Moody’s had $7.0 billion of outstanding debt and approximately $1 billion of additional capacity available under the Company’s CP program, which is backstopped by the $1.25 billion 2021 Facility.
As of December 31, 2022, approximately 51% of Moody’s assets were located outside the U.S., making the Company susceptible to fluctuations in FX rates. The effects of translating assets and liabilities of non-U.S. operations with non-U.S. functional currencies to the U.S. dollar are charged or credited to OCI.
As of December 31, 2023, approximately 52% of Moody’s assets were located outside the U.S., making the Company susceptible to fluctuations in FX rates. The effects of translating assets and liabilities of non-U.S. operations with non-U.S. functional currencies to the U.S. dollar are charged or credited to OCI.
Accordingly, the Company enters into foreign exchange forwards to partially mitigate the change in fair value on certain assets and liabilities denominated in currencies other than a subsidiary’s functional currency.
Accordingly, the Company enters into foreign exchange forward contracts to partially mitigate the change in fair value on certain assets and liabilities denominated in currencies other than a subsidiary’s functional currency.
A hypothetical change of 100 BPS in the LIBOR/SOFR-based swap rate would result in an approximate $110 million change to the fair value of the swaps, which would be offset by the change in fair value of the hedged item.
A hypothetical change of 100 BPS in the SOFR-based swap rate would result in an approximate $275 million change to the fair value of the swaps, which would be offset by the change in fair value of the hedged item.
In 2022, approximately 40% of the Company’s revenue and approximately 38% of the Company's expenses were denominated in functional currencies other than the U.S. dollar, principally in the British pound and the euro. As such, the Company is exposed to market risk from changes in FX rates.
In 2023, approximately 41% of the Company’s revenue and approximately 38% of the Company's expenses were denominated in functional currencies other than the U.S. dollar, principally in the British pound and the euro. As such, the Company is exposed to market risk from changes in FX rates.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains Forward-Looking Statements. See “Forward-Looking Statements” commencing on page 61 and Item 1A. “Risk Factors” commencing on page 23 for a discussion of uncertainties, risks and other factors associated with these statements.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains Forward-Looking Statements. See “Forward-Looking Statements” commencing on page 65 and Item 1A. “Risk Factors” commencing on page 25 for a discussion of uncertainties, risks and other factors associated with these statements.
As permitted under ASC Topic 715, the Company amortizes the impact of asset returns over a five-year period for purposes of calculating the market-related value of assets that is used in determining the expected return on assets’ component of annual expense and in calculating the total unrecognized gain or loss subject to amortization.
As permitted under ASC Topic 715, the Company amortizes the impact of asset returns over a five-year period for purposes of calculating the market-related value of assets that is used in determining the expected return on assets’ component of annual expense and in calculating the total unrecognized gain or loss subject to MOODY'S 2023 10-K 43 Table of Contents amortization.
Those factors, risks and uncertainties include, but are not limited to: – the impact of general economic conditions, including inflation and related monetary policy actions by governments in response to inflation, on worldwide credit markets and economic activity and its effect on the volume of debt and other securities issued in domestic and/or global capital markets; – the global impacts of each of the conflict in Ukraine and the COVID-19 pandemic on volatility in world financial markets, on general economic conditions and GDP in the U.S. and worldwide, on global relations and on the Company's own operations and personnel; MOODY'S 2022 10-K 61 Table of Contents – other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including regulation, credit quality concerns, changes in interest rates, inflation and other volatility in the financial markets, as well as the number of issuances of securities without ratings or securities which are rated or evaluated by non-traditional parties; – the level of merger and acquisition activity in the U.S. and abroad; – the uncertain effectiveness and possible collateral consequences of U.S. and foreign government actions affecting credit markets, international trade and economic policy, including those related to tariffs, tax agreements and trade barriers; – the impact of MIS’s withdrawal of its credit ratings on Russian entities and of Moody’s no longer conducting commercial operations in Russia; – concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of independent credit agency ratings; – the introduction of competing products or technologies by other companies; – pricing pressure from competitors and/or customers; – the level of success of new product development and global expansion; – the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations; – the potential for increased competition and regulation in the EU and other foreign jurisdictions; – exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquiries to which Moody’s may be subject from time to time; – provisions in U.S. legislation modifying the pleading standards and EU regulations modifying the liability standards applicable to credit rating agencies in a manner adverse to credit rating agencies; – provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services and the expansion of supervisory remit to include non-EU ratings used for regulatory purposes; – uncertainty regarding the future relationship between the U.S. and China; – the possible loss of key employees and the impact of the global labor environment; – failures or malfunctions of our operations and infrastructure; – any vulnerabilities to cyber threats or other cybersecurity concerns; – the timing and effectiveness of our restructuring programs, such as the 2022 - 2023 Geolocation Restructuring Program; – currency and foreign exchange volatility; – the outcome of any review by controlling tax authorities of Moody’s global tax planning initiatives; – exposure to potential criminal sanctions or civil remedies if Moody’s fails to comply with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which Moody’s operates, including data protection and privacy laws, sanctions laws, anti-corruption laws, and local laws prohibiting corrupt payments to government officials; – the impact of mergers, acquisitions, such as our acquisition of RMS, or other business combinations and the ability of Moody’s to successfully integrate acquired businesses; – the level of future cash flows; – the levels of capital investments; and – a decline in the demand for credit risk management tools by financial institutions.
Those factors, risks and uncertainties include, but are not limited to: – the impact of general economic conditions (including significant government debt and deficit levels, and inflation and related monetary policy actions by governments in response to inflation) on worldwide credit markets and on economic activity, including on the volume of mergers and acquisitions, and their effects on the volume of debt and other securities issued in domestic and/or global capital markets; MOODY'S 2023 10-K 65 Table of Contents – the uncertain effectiveness and possible collateral consequences of U.S. and foreign government initiatives and monetary policy to respond to the current economic climate, including instability of financial institutions, credit quality concerns, and other potential impacts of volatility in financial and credit markets; – the global impacts of the Russia-Ukraine military conflict and the military conflict in Israel and the surrounding areas on volatility in world financial markets, on general economic conditions and GDP in the U.S. and worldwide, on global relations and on the Company's own operations and personnel; – other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including regulation, increased utilization of technologies that have the potential to intensify competition and accelerate disruption and disintermediation in the financial services industry, as well as the number of issuances of securities without ratings or securities which are rated or evaluated by non-traditional parties; – the level of merger and acquisition activity in the U.S. and abroad; – the uncertain effectiveness and possible collateral consequences of U.S. and foreign government actions affecting credit markets, international trade and economic policy, including those related to tariffs, tax agreements and trade barriers; – the impact of MIS’s withdrawal of its credit ratings on countries or entities within countries and of Moody’s no longer conducting commercial operations in countries where political instability warrants such actions; – concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of independent credit agency ratings; – the introduction or development of competing and/or emerging technologies and products; – pricing pressure from competitors and/or customers; – the level of success of new product development and global expansion; – the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations; – the potential for increased competition and regulation in the jurisdictions in which we operate, including the EU; – exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquiries to which Moody’s may be subject from time to time; – provisions in U.S. legislation modifying the pleading standards and EU regulations modifying the liability standards applicable to CRAs in a manner adverse to CRAs; – provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services and the expansion of supervisory remit to include non-EU ratings used for regulatory purposes; – uncertainty regarding the future relationship between the U.S. and China; – the possible loss of key employees and the impact of the global labor environment; – failures or malfunctions of our operations and infrastructure; – any vulnerabilities to cyber threats or other cybersecurity concerns; – the timing and effectiveness of our restructuring programs, such as the 2022 - 2023 Geolocation Restructuring Program; – currency and foreign exchange volatility; – the outcome of any review by tax authorities of Moody’s global tax planning initiatives; – exposure to potential criminal sanctions or civil remedies if Moody’s fails to comply with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which Moody’s operates, including data protection and privacy laws, sanctions laws, anti-corruption laws, and local laws prohibiting corrupt payments to government officials; – the impact of mergers, acquisitions, such as our acquisition of RMS, or other business combinations and the ability of Moody’s to successfully integrate acquired businesses; – the level of future cash flows; – the levels of capital investments; and – a decline in the demand for credit risk management tools by financial institutions.
The Company manages its credit risk exposure by allocating its cash equivalents among various money market deposit accounts and certificates of deposit and by limiting the amount it can invest with any single issuer.
The Company manages its credit risk exposure by allocating its cash equivalents among various money market deposit accounts and certificates of deposit and by limiting the amount it can invest with any single issuer. Short-term investments primarily consist of certificates of deposit.
Restructuring charges/adjustments, the gain on extinguishment of debt, FX translation losses reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia, and the non-cash gain relating to the Company's minority interest in BitSight are excluded as the frequency and magnitude of these items may vary widely across periods and companies.
Restructuring charges/adjustments, the gain on extinguishment of debt, and FX translation losses reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia are excluded as the frequency and magnitude of these items may vary widely across periods and companies.
Adjusted Net Income and Adjusted Diluted EPS exclude the impact of: i) amortization of acquired intangible assets; ii) restructuring charges/adjustments; iii) a gain on the extinguishment of debt; iv) FX translation losses reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia; and v) a non-cash gain relating to the Company’s minority investment in BitSight.
Adjusted Net Income and Adjusted Diluted EPS exclude the impact of: i) amortization of acquired intangible assets; ii) restructuring charges/adjustments; iii) a gain on the extinguishment of debt; and iv) FX translation losses reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia.
As of December 31, 2022, the Company has an unrecognized loss of $106 million, of which $19 million will be recognized in the market-related value of assets that is used to calculate the expected return on assets component of 2023 expense.
As of December 31, 2023, the Company has an unrecognized loss of $71 million, of which $10 million will be recognized in the market-related value of assets that is used to calculate the expected return on assets component of 2024 expense.
Differences in the WACC used between reporting units is primarily due to distinct risks and uncertainties regarding the cash flows of the different reporting units. A sensitivity analysis of the WACC was performed on all reporting units as of July 31, 2021 for each reporting unit.
Differences in the WACC used between reporting units is primarily due to MOODY'S 2023 10-K 41 Table of Contents distinct risks and uncertainties regarding the cash flows of the different reporting units. A sensitivity analysis of the WACC was performed on all reporting units as of July 31, 2021 for each reporting unit.
MOODY'S 2022 10-K 37 Table of Contents Costs to Obtain a Contract with a Customer: Costs incurred to obtain customer contracts, such as sales commissions, are deferred and recorded within other current assets and other assets when such costs are determined to be incremental to obtaining a contract, would not have been incurred otherwise and the Company expects to recover those costs.
Costs to Obtain a Contract with a Customer: Costs incurred to obtain customer contracts, such as sales commissions, are deferred and recorded within other current assets and other assets when such costs are determined to be incremental to obtaining a contract, would not have been incurred otherwise and the Company expects to recover those costs.
The following table shows the impact to the fair value of MOODY'S 2022 10-K 53 Table of Contents the forward contracts if currencies being purchased were to weaken by 10%: Foreign Currency Forwards (1) Impact on fair value of contract Sell Buy U.S. dollar British pound $18 million unfavorable impact U.S. dollar Euro $12 million unfavorable impact Euro U.S. dollar $9 million unfavorable impact U.S. dollar Canadian dollar $8 million unfavorable impact U.S. dollar Singapore dollar $5 million unfavorable impact U.S. dollar Indian rupee $2 million unfavorable impact U.S. dollar Japanese yen $2 million unfavorable impact $56 million unfavorable impact (1) Refer to Note 7 to the consolidated financial statements in Item 8 of this Form 10-K for further detail on the forward contracts.
The following table shows the impact to the fair value of the forward contracts if currencies being purchased were to weaken by 10%: Foreign Currency Forwards (1) Impact on fair value of contract Sell Buy U.S. dollar British pound $52 million unfavorable impact U.S. dollar Canadian dollar $14 million unfavorable impact U.S. dollar Euro $6 million unfavorable impact U.S. dollar Singapore dollar $5 million unfavorable impact U.S. dollar Indian rupee $2 million unfavorable impact U.S. dollar Japanese yen $1 million unfavorable impact Canadian dollar U.S. dollar $2 million favorable impact $78 million unfavorable impact (1) Refer to Note 7 to the consolidated financial statements in Item 8 of this Form 10-K for further detail on the forward contracts.
To the extent that changes in rated issuance volumes had a material impact to MIS's revenue compared to the prior year, those impacts are discussed below. MOODY'S 2022 10-K 45 Table of Contents MOODY'S INVESTORS SERVICE REVENUE 2022 --------------------------------------------------------------------------------------- 2021 _________________________________________________ _________ ______________________________________________ MIS: Global revenue ⇓ $1,113 million U.S. Revenue ⇓ $710 million Non-U.S.
To the extent that changes in rated issuance volumes had a material impact to MIS's revenue compared to the prior year, those impacts are discussed below. 54 MOODY'S 2023 10-K Table of Contents MOODY'S INVESTORS SERVICE REVENUE 2023 --------------------------------------------------------------------------------------- 2022 _________________________________________________ _________ ______________________________________________ MIS: Global revenue ⇑ $161 million U.S. Revenue ⇑ $116 million Non-U.S.
In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. 62 MOODY'S 2022 10-K Table of Contents
In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Revenue ⇓ $266 million 46 MOODY'S 2022 10-K Table of Contents Global CFG revenue for the years ended December 31, 2022 and 2021 was comprised as follows : (1) Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes and ICRA corporate finance revenue.
Revenue ⇑ $15 million Global CFG revenue for the years ended December 31, 2023 and 2022 was comprised as follows : * Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.
(dollars in millions) Assumptions Used for 2023 Estimated Impact on 2023 Income before Provision for Income Taxes (Decrease)/Increase Weighted Average Discount Rates (1) 4.93%/4.90% $ (1) Weighted Average Assumed Compensation Growth Rate 3.63% $ 1 Assumed Long-Term Rate of Return on Pension Assets 6.55% $ (5) (1) Weighted average discount rates of 4.93% and 4.90% for pension plans and Other Retirement Plans, respectively.
(dollars in millions) Assumptions Used for 2024 Estimated Impact on 2024 Income before Provision for Income Taxes (Decrease)/Increase Weighted Average Discount Rates (1) 4.73%/4.75% $ (4) Weighted Average Assumed Compensation Growth Rate 3.60% $ 1 Assumed Long-Term Rate of Return on Pension Assets 6.10% $ (5) (1) Weighted average discount rates of 4.73% and 4.75% for pension plans and Other Retirement Plans, respectively.
The cost of debt component is calculated as the 36 MOODY'S 2022 10-K Table of Contents weighted average cost associated with all of the Company’s outstanding borrowings as of the date of the impairment test and was immaterial to the computation of the WACC.
The cost of debt component is calculated as the weighted average cost associated with all of the Company’s outstanding borrowings as of the date of the impairment test and was immaterial to the computation of the WACC.
Management believes that the exclusion of the aforementioned items, as detailed in the reconciliation below, allows for an additional perspective on the Company’s operating results from period to period and across companies. The Company defines Adjusted Operating Margin as Adjusted Operating Income divided by revenue.
Management believes that the exclusion of the aforementioned items, as detailed in the reconciliation below, allows for an additional perspective on the Company’s operating results from period to period and across companies.
New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the Company assess the potential effect of any new factors on it.
New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the 66 MOODY'S 2023 10-K Table of Contents Company assess the potential effect of any new factors on it.
These costs are amortized to expense on a systematic basis consistent with the transfer of products or services to the customer for which the asset relates.
These costs are amortized to expense on a systematic basis consistent with the 42 MOODY'S 2023 10-K Table of Contents transfer of products or services to the customer for which the asset relates.
The Company has entered into interest rate swaps to convert the fixed interest rate on certain of its long-term debt to a floating interest rate based on the 3-month and 6-month LIBOR as well as SOFR.
The Company has entered into interest rate swaps to convert the fixed interest rate on certain of its long-term debt to a floating interest rate based on the SOFR.
SFG REVENUE 2022 --------------------------------------------------------------------------------------- 2021 _________________________________________________ _________ ______________________________________________ SFG: Global revenue ⇓ $98 million U.S. Revenue ⇓ $56 million Non-U.S. Revenue ⇓ $42 million Global SFG revenue for the years ended December 31, 2022 and 2021 was comprised as follows: The decrease in SFG revenue of 18% reflected declines both in the U.S. (15%) and internationally (21%).
SFG REVENUE 2023 --------------------------------------------------------------------------------------- 2022 _________________________________________________ _________ ______________________________________________ SFG: Global revenue ⇓ $57 million U.S. Revenue ⇓ $56 million Non-U.S. Revenue ⇓ $1 million Global SFG revenue for the years ended December 31, 2023 and 2022 was comprised as follows: The decrease in SFG revenue of 12% reflected declines in both the U.S. (18%) and internationally (1%).
Allocating consideration to performance obligations: Management judgment is required in the determination of the SSP, which is utilized to allocate the transaction price to each distinct performance obligation at contract inception when the contract includes multiple distinct performance obligations.
Allocating consideration to performance obligations: Management judgment is required in the determination of the SSP, which is utilized to allocate the transaction price to each distinct performance obligation at contract inception when the contract includes multiple distinct performance obligations. In the MA segment, for performance obligations where an observable price exists, such as PCS, the observable price is utilized.
The following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes: Year Ended December 31, $ Change Favorable/ (unfavorable) 2022 2021 Net cash provided by operating activities $ 1,474 $ 2,005 $ (531) Net cash used in investing activities $ (262) $ (2,619) $ 2,357 Net cash used in financing activities $ (1,208) $ (122) $ (1,086) Free Cash Flow (1) $ 1,191 $ 1,866 $ (675) (1) Free Cash Flow is a non-GAAP measure and is defined by the Company as net cash provided by operating activities minus cash paid for capital expenditures.
The following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes: Year Ended December 31, $ Change Favorable/ (unfavorable) 2023 2022 Net cash provided by operating activities $ 2,151 $ 1,474 $ 677 Net cash used in investing activities $ (247) $ (262) $ 15 Net cash used in financing activities $ (1,584) $ (1,208) $ (376) Free Cash Flow (1) $ 1,880 $ 1,191 $ 689 (1) Free Cash Flow is a non-GAAP measure and is defined by the Company as net cash provided by operating activities minus cash paid for capital additions.
Year ended December 31, 2022 2021 Operating income $ 1,883 $ 2,844 Adjustments: Depreciation and amortization 331 257 Restructuring 114 — Adjusted Operating Income $ 2,328 $ 3,101 Operating margin 34.4 % 45.7 % Adjusted Operating Margin 42.6 % 49.9 % MOODY'S 2022 10-K 57 Table of Contents Adjusted Net Income and Adjusted Diluted EPS attributable to Moody’s common shareholders: The Company presents Adjusted Net Income and Adjusted Diluted EPS because management deems these metrics to be useful measures to provide additional perspective on Moody's operating performance.
The Company defines Adjusted Operating Margin as Adjusted Operating Income divided by revenue. 62 MOODY'S 2023 10-K Table of Contents Year ended December 31, 2023 2022 Operating income $ 2,137 $ 1,883 Adjustments: Depreciation and amortization 373 331 Restructuring 87 114 Adjusted Operating Income $ 2,597 $ 2,328 Operating margin 36.1 % 34.4 % Adjusted Operating Margin 43.9 % 42.6 % Adjusted Net Income and Adjusted Diluted EPS attributable to Moody’s common shareholders: The Company presents Adjusted Net Income and Adjusted Diluted EPS because management deems these metrics to be useful measures to provide additional perspective on Moody's operating performance.
The Company is exposed to interest rate risk on its various outstanding fixed-rate debt for which the fair value of the outstanding fixed rate debt fluctuates based on changes in interest rates.
Moody’s uses interest rate swaps as deemed necessary to assist in accomplishing these objectives. The Company is exposed to interest rate risk on its various outstanding fixed-rate debt for which the fair value of the outstanding fixed rate debt fluctuates based on changes in interest rates.
Refer to Item 1A. “Risk Factors” for further disclosure relating to the risks of the COVID-19 pandemic on the Company's business. Critical Accounting Estimates Moody’s discussion and analysis of its financial condition and results of operations are based on the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Critical Accounting Estimates Moody’s discussion and analysis of its financial condition and results of operations are based on the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Interest rate and credit risk: Interest rate swaps designated as a fair value hedge: The Company’s interest rate risk management objectives are to reduce the funding cost and volatility to the Company and to alter the interest rate exposure to a desired risk profile. Moody’s uses interest rate swaps as deemed necessary to assist in accomplishing these objectives.
MOODY'S 2023 10-K 59 Table of Contents Interest rate and credit risk: Interest rate swaps designated as a fair value hedge: The Company’s interest rate risk management objectives are to reduce the funding cost and volatility to the Company and to alter the interest rate exposure to a desired risk profile.
The repayment schedule for the Company’s borrowings outstanding at December 31, 2022 is as follows: Future interest payments and fees associated with the Company's debt and credit facility are expected to be $4.8 billion, of which approximately $316 million is expected to be paid over the next twelve months.
The repayment schedule for the Company’s borrowings outstanding at December 31, 2023 is as follows: Future interest payments and fees associated with the Company's debt and credit facility are expected to be $5.0 billion, of which approximately $300 million is expected to be paid in each of the next five years, and the remaining amount expected to be paid thereafter.
GAAP amount: Year ended December 31, 2022 2021 Diluted earnings per share attributable to Moody’s common shareholders $ 7.44 $ 11.78 Pre-tax Acquisition-Related Intangible Amortization Expenses $ 1.08 $ 0.84 Tax on Acquisition-Related Intangible Amortization Expenses (0.25) (0.19) Net Acquisition-Related Intangible Amortization Expenses 0.83 0.65 Pre-tax restructuring $ 0.62 $ — Tax on restructuring (0.14) — Net restructuring 0.48 — Pre-tax gain on extinguishment of debt $ (0.38) $ — Tax on gain on extinguishment of debt 0.09 — Net gain on extinguishment of debt (0.29) — FX losses resulting from the Company no longer conducting commercial operations in Russia 0.11 — Pre-tax gain relating to minority investment in BitSight $ — $ (0.19) Tax on gain relating to minority investment in BitSight — 0.05 Net gain relating to minority investment in BitSight — (0.14) Adjusted Diluted EPS $ 8.57 $ 12.29 Note: the tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates.
Year ended December 31, Amounts in millions 2023 2022 Net income attributable to Moody’s common shareholders $ 1,607 $ 1,374 Pre-tax Acquisition-Related Intangible Amortization Expenses $ 198 $ 200 Tax on Acquisition-Related Intangible Amortization Expenses (48) (47) Net Acquisition-Related Intangible Amortization Expenses 150 153 Pre-tax restructuring $ 87 $ 114 Tax on restructuring (22) (26) Net restructuring 65 88 Pre-tax gain on extinguishment of debt $ — $ (70) Tax on gain on extinguishment of debt — 17 Net gain on extinguishment of debt — (53) FX losses resulting from the Company no longer conducting commercial operations in Russia — 20 Adjusted Net Income $ 1,822 $ 1,582 MOODY'S 2023 10-K 63 Table of Contents Year ended December 31, 2023 2022 Diluted earnings per share attributable to Moody’s common shareholders $ 8.73 $ 7.44 Pre-tax Acquisition-Related Intangible Amortization Expenses $ 1.08 $ 1.08 Tax on Acquisition-Related Intangible Amortization Expenses (0.26) (0.25) Net Acquisition-Related Intangible Amortization Expenses 0.82 0.83 Pre-tax restructuring $ 0.47 $ 0.62 Tax on restructuring (0.12) (0.14) Net restructuring 0.35 0.48 Pre-tax gain on extinguishment of debt $ — $ (0.38) Tax on gain on extinguishment of debt — 0.09 Net gain on extinguishment of debt — (0.29) FX losses resulting from the Company no longer conducting commercial operations in Russia — 0.11 Adjusted Diluted EPS $ 9.90 $ 8.57 Note: the tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates.
The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board. On February 9, 2021, the Board approved $1 billion in share repurchase authority, and on February 7, 2022, the Board approved an additional $750 million of share repurchase authority.
The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board. On February 7, 2022, the Board approved $750 million in share repurchase authority. At December 31, 2023, the Company had approximately $359 million of remaining authority.
Pension and Other Retirement Plan Obligations The Company does not anticipate making significant contributions to its funded pension plan in the next twelve months. This plan is overfunded at December 31, 2022, and accordingly holds sufficient investments to fund future benefit obligations. Payments for the Company's unfunded plans are not expected to be material in either the short or long-term.
This plan is overfunded at December 31, 2023, and accordingly holds sufficient investments to fund future benefit obligations. Payments for the Company's unfunded plans are not expected to be material in either the short or long-term. For further information on the Company's pension and other retirement plan obligations, refer to Note 15 to the consolidated financial statements.
Gain on extinguishment of debt The gain in 2022 relates to the early redemption of a portion of the 2.55% 2020 Senior Notes, Due 2060, as more fully discussed in Note 18 to the consolidated financial statements.
Gain on extinguishment of debt The gain in the prior year relates to the early redemption of a portion of the 2.55% 2020 Senior Notes, Due 2060.
Moody’s Analytics The table below provides a summary of revenue and operating results, followed by further insight and commentary: Year Ended December 31, % Change Favorable (Unfavorable) 2022 2021 Revenue: Decision Solutions (DS) $ 1,324 $ 1,011 31 % Research and Insights (R&I) 733 697 5 % Data and Information (D&I) 712 698 2 % Total external revenue 2,769 2,406 15 % Intersegment revenue 8 7 14 % Total MA Revenue 2,777 2,413 15 % Expenses: Operating and SG&A (external) 1,763 1,621 (9 %) Operating and SG&A (intersegment) 174 165 (5 %) Total operating and SG&A expense 1,937 1,786 (8 %) Adjusted Operating Income $ 840 $ 627 34 % Adjusted Operating Margin 30.2 % 26.0 % Depreciation and amortization 250 185 (35 %) Restructuring 49 1 NM 50 MOODY'S 2022 10-K Table of Contents MOODY'S ANALYTICS REVENUE 2022 --------------------------------------------------------------------------------------- 2021 _________________________________________________ _________ ______________________________________________ MA: Global revenue ⇑ $363 million U.S.
MOODY'S 2023 10-K 49 Table of Contents Segment Results Moody’s Analytics The table below provides a summary of revenue and operating results, followed by further insight and commentary: Year Ended December 31, % Change Favorable (Unfavorable) 2023 2022 Revenue: Decision Solutions (DS) $ 1,383 $ 1,245 11 % Research and Insights (R&I) 884 812 9 % Data and Information (D&I) 789 712 11 % Total external revenue 3,056 2,769 10 % Intersegment revenue 13 8 63 % Total MA Revenue 3,069 2,777 11 % Expenses: Operating and SG&A (external) 1,946 1,763 (10 %) Operating and SG&A (intersegment) 186 174 (7 %) Total operating and SG&A expense 2,132 1,937 (10 %) Adjusted Operating Income $ 937 $ 840 12 % Adjusted Operating Margin 30.5 % 30.2 % Depreciation and amortization 298 250 (19 %) Restructuring 59 49 (20 %) MOODY'S ANALYTICS REVENUE 2023 --------------------------------------------------------------------------------------- 2022 _________________________________________________ _________ ______________________________________________ MA: Global revenue ⇑ $287 million U.S.
Additional excess capital is returned to the Company’s shareholders via a combination of dividends and share repurchases. Cash Flow The Company is currently financing its operations, capital expenditures, acquisitions and share repurchases from operating and financing cash flows.
Cash Flow The Company is currently financing its operations, capital expenditures, acquisitions and share repurchases from operating and financing cash flows.
Short-term investments primarily consist of certificates of deposit. 54 MOODY'S 2022 10-K Table of Contents Liquidity and Capital Resources Moody's remains committed to using its strong cash flow to create value for shareholders by both investing in the Company's employees and growing the business through targeted organic initiatives and inorganic acquisitions aligned with strategic priorities.
Liquidity and Capital Resources Moody's remains committed to using its strong cash flow to create value for shareholders by both investing in the Company's employees and growing the business through targeted organic initiatives and inorganic acquisitions aligned with strategic priorities. Additional excess capital is returned to the Company’s shareholders via a combination of dividends and share repurchases.
Reportable Segments The Company is organized into two reportable segments at December 31, 2022: MIS and MA, which are more fully described in the section entitled “The Company” above and in Note 22 to the consolidated financial statements.
Reportable Segments The Company is organized into two reportable segments at December 31, 2023: MA and MIS, which are more fully described in the section entitled “The Company” above and in Note 22 to the consolidated financial statements. 44 MOODY'S 2023 10-K Table of Contents Results of Operations This section of this Form 10-K generally discusses the year ended December 31, 2023 and 2022 financial results and year-to-year comparisons between these years.
Refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for items excluded in the derivation of Adjusted Diluted EPS. 44 MOODY'S 2022 10-K Table of Contents Segment Results Moody’s Investors Service The table below provides a summary of revenue and operating results, followed by further insight and commentary: Year Ended December 31, % Change Favorable (Unfavorable) 2022 2021 Revenue: Corporate finance (CFG) $ 1,269 $ 2,087 (39 %) Structured finance (SFG) 462 560 (18 %) Financial institutions (FIG) 491 602 (18 %) Public, project and infrastructure finance (PPIF) 431 521 (17 %) Total ratings revenue 2,653 3,770 (30 %) MIS Other 46 42 10 % Total external revenue 2,699 3,812 (29 %) Intersegment royalty 174 165 5 % Total 2,873 3,977 (28 %) Expenses: Operating and SG&A (external) 1,377 1,496 8 % Operating and SG&A (intersegment) 8 7 (14 %) Total operating and SG&A expense 1,385 1,503 8 % Adjusted Operating Income $ 1,488 $ 2,474 (40 %) Adjusted Operating Margin 51.8 % 62.2 % Depreciation and amortization 81 72 (13 %) Restructuring 65 (1) NM The following chart presents changes in rated issuance volumes compared to 2021.
MOODY'S 2023 10-K 53 Table of Contents Moody’s Investors Service The table below provides a summary of revenue and operating results, followed by further insight and commentary: Year Ended December 31, % Change Favorable (Unfavorable) 2023 2022 Revenue: Corporate finance (CFG) $ 1,404 $ 1,269 11 % Structured finance (SFG) 405 462 (12 %) Financial institutions (FIG) 545 491 11 % Public, project and infrastructure finance (PPIF) 476 431 10 % Total ratings revenue 2,830 2,653 7 % MIS Other 30 46 (35 %) Total external revenue 2,860 2,699 6 % Intersegment royalty 186 174 7 % Total 3,046 2,873 6 % Expenses: Operating and SG&A (external) 1,373 1,377 — % Operating and SG&A (intersegment) 13 8 (63 %) Total operating and SG&A expense 1,386 1,385 — % Adjusted Operating Income $ 1,660 $ 1,488 12 % Adjusted Operating Margin 54.5 % 51.8 % Depreciation and amortization 75 81 7 % Restructuring 28 65 57 % The following chart presents changes in rated issuance volumes compared to 2022.
If an observable price does not currently exist, the Company will utilize management’s best estimate of SSP for that good or service using estimation methods that maximize the use of observable data points. The SSP in both segments is usually apportioned along the lines of class of customer, nature of product/services, and other attributes related to those products and services.
If an observable price does not currently exist, the Company will utilize management’s best estimate of SSP for that good or service using estimation methods that maximize the use of observable data points.
MOODY'S 2022 10-K 55 Table of Contents Cash and cash equivalents and short-term investments The Company’s aggregate cash and cash equivalents and short-term investments of $1.9 billion at December 31, 2022 included approximately $1.4 billion located outside of the U.S. Approximately 42% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in euros and British pounds.
Cash and cash equivalents and short-term investments The Company’s aggregate cash and cash equivalents and short-term investments of $2.2 billion at December 31, 2023 included approximately $1.7 billion located outside of the U.S. Approximately 43% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in EUR and GBP.
While market volatility in 2022 has resulted in declines in rated issuance volumes, the Company believes that these declines are predominantly cyclical in nature. However, due to various uncertainties, Moody's is unable to predict the severity and duration of current macroeconomic and geopolitical uncertainties and their potential impact on future ratings issuance volumes. Refer to Item 1A.
However, due to various uncertainties, Moody's is unable to predict the severity and duration of current macroeconomic and geopolitical uncertainties and their potential impact on future rated issuance volumes. Refer to Item 1A. “Risk Factors” for further disclosure relating to these risks.
For Moody’s Retirement Plans, the total actuarial losses as of December 31, 2022 that have not been recognized in annual expense are $68 million, and Moody’s expects the net periodic expense related to the amortization of net actuarial (losses)/gains will be immaterial in 2023. 38 MOODY'S 2022 10-K Table of Contents For Moody’s funded U.S. pension plan, the differences between the expected long-term rate of return assumption and actual returns could also affect the net periodic pension expense.
For Moody’s Retirement Plans, the total actuarial losses as of December 31, 2023 that have not been recognized in annual expense are $72 million, and Moody’s expects the net periodic expense related to the amortization of net actuarial (losses)/gains will be immaterial in 2024.
MOODY'S 2022 10-K 35 Table of Contents Goodwill and Other Acquired Intangible Assets At July 31st of each year, Moody’s evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment (i.e., MIS and MA), or one level below an operating segment (i.e., a component of an operating segment).
Goodwill and Other Acquired Intangible Assets At July 31st of each year, Moody’s evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment (i.e., MA and MIS), or one level below an operating segment (i.e., a component of an operating segment). 40 MOODY'S 2023 10-K Table of Contents The Company has four reporting units: two reporting units within MA consisting of businesses that offer: i) data and data-driven analytical solutions; and ii) risk-management software, workflow and CRE solutions, and two within the Company’s ratings business (one for the ICRA business and one that encompasses all of Moody’s other ratings operations).
Amounts in millions December 31, 2022 December 31, 2021 Change Growth MA ARR Decision Solutions $ 1,235 $ 1,110 $ 125 11% Research and Insights 770 707 63 9% Data and Information 768 705 63 9% Total MA ARR $ 2,773 $ 2,522 $ 251 10% Recently Issued Accounting Pronouncements Refer to Note 2 to the consolidated financial statements located in Part II, Item 8 on this Form 10-K for a discussion on the impact to the Company relating to recently issued accounting pronouncements.
Amounts in millions December 31, 2023 December 31, 2022 Change Growth MA ARR Decision Solutions Banking $ 418 $ 385 $ 33 9% Insurance 533 482 51 11% KYC 326 279 47 17% Total Decision Solutions $ 1,277 $ 1,146 $ 131 11% Research and Insights 879 819 60 7% Data and Information 806 733 73 10% Total MA ARR $ 2,962 $ 2,698 $ 264 10% Recently Issued Accounting Pronouncements Refer to Note 2 to the consolidated financial statements located in Part II, Item 8 on this Form 10-K for a discussion on the impact to the Company relating to recently issued accounting pronouncements.
Purchase Obligations Purchase obligations generally include multi-year agreements with vendors to purchase goods or services and mainly include data center/cloud hosting fees and fees for information technology licensing and maintenance. As of December 31, 2022, these purchase obligations totaled $218 million, of which $138 million is expected to be paid in the next twelve months.
Purchase Obligations Purchase obligations generally include multi-year agreements with vendors to purchase goods or services and mainly include data center/cloud hosting fees and fees for information technology licensing and maintenance.
Current Matters Impacting Moody's Business Current Macroeconomic Uncertainties/Market Volatility The Company is monitoring current macroeconomic and geopolitical uncertainties that have contributed to declines in rated issuance volumes in 2022. A substantial portion of MIS’s revenue is impacted by the level of issuance activity in the fixed income capital markets, both in the U.S. and internationally.
A substantial portion of MIS’s revenue is impacted by the level of issuance activity in the fixed income capital markets, both in the U.S. and internationally. While market volatility has resulted in suppressed rated issuance volumes in certain sectors, the Company believes that these suppressed volumes are predominantly transitory in nature.
At December 31, 2022, the Company had approximately $848 million of remaining authority. There is no established expiration date for the remaining authorizations. Restructuring As more fully discussed in Note 11 to the consolidated financial statements, the Company is currently in the process of executing the 2022 - 2023 Geolocation Restructuring Program.
On February 5, 2024, the Board of Directors authorized an additional $1 billion in share repurchase authority. There is no established expiration date for the remaining authorizations. Restructuring As more fully discussed in Note 11 to the consolidated financial statements, the Company has substantially completed the 2022 - 2023 Geolocation Restructuring Program.
The Company Moody’s is a global integrated risk assessment firm that empowers organizations and investors to make better decisions. Moody’s reports in two segments: MIS and MA.
The Company Moody’s is a global integrated risk assessment firm that empowers organizations to anticipate, adapt and thrive in a new era of exponential risk. Moody’s reports in two segments: MA and MIS. MA is a global provider of: i) research and insights; ii) data and information; and iii) decision solutions, which help companies make better and faster decisions.
Restructuring The restructuring charge in 2022 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 11 to the consolidated financial statements. Market Risk Foreign exchange risk: Moody’s maintains a presence in more than 40 countries.
Restructuring The restructuring charges in both periods relate to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 11 to the consolidated financial statements.
(2) Refer to the section entitled "Key Performance Metrics" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric. 40 MOODY'S 2022 10-K Table of Contents Year ended December 31, 2022 compared with year ended December 31, 2021 Executive Summary The following table provides an executive summary of key operating results for the year ended December 31, 2022.
(2) Refer to the section entitled "Key Performance Metrics" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.
FIG REVENUE 2022 --------------------------------------------------------------------------------------- 2021 _________________________________________________ _________ ______________________________________________ FIG: Global revenue ⇓ $111 million U.S. Revenue ⇓ $66 million Non-U.S. Revenue ⇓ $45 million Global FIG revenue for the years ended December 31, 2022 and 2021 was comprised as follows: The decrease in FIG revenue of 18% reflected declines both in the U.S.
Revenue ⇑ $80 million Global DS revenue for the for the years ended December 31, 2023 and 2022 was comprised as follows : Global DS revenue grew 11% and reflects increases in both the U.S. (11%) and internationally (11%).
Net cash used in financing activities The $1,086 million increase in cash used in financing activities was primarily attributed to: – higher net issuance (issuance, less repayment) of $810 million in long-term debt in 2021; – higher cash paid for treasury share repurchases in 2022 of $233 million, which includes payment for shares made under an ASR agreement executed in the first quarter of 2022; and – higher dividend payments of $52 million in 2022.
Net cash used in financing activities The $376 million increase in cash used in financing activities was primarily attributed to: – debt repayments of $500 million in 2023, compared to net issuance of $362 million in the prior year (refer to the section "Material Cash Requirements" below for further discussion on the Company's financing arrangements); partially offset by: – higher cash paid for treasury share repurchases in 2022 of $493 million, which includes payment for shares made under an ASR agreement executed in the first quarter of 2022.
For further information on the Company's pension and other retirement plan obligations, refer to Note 15 to the consolidated financial statements. 56 MOODY'S 2022 10-K Table of Contents Dividends and share repurchases On January 30, 2023, the Board approved the declaration of a quarterly dividend of $0.77 per share for Moody’s common stock, payable March 17, 2023 to shareholders of record at the close of business on February 24, 2023.
Dividends and share repurchases On February 5, 2024, the Board approved the declaration of a quarterly dividend of $0.85 per share for Moody’s common stock, payable March 15, 2024 to shareholders of record at the close of business on February 23, 2024.
Below is a reconciliation of the Company’s net cash flows from operating activities to Free Cash Flow: Year ended December 31, 2022 2021 Net cash provided by operating activities $ 1,474 $ 2,005 Capital additions (283) (139) Free Cash Flow $ 1,191 $ 1,866 Net cash used in investing activities $ (262) $ (2,619) Net cash used in financing activities $ (1,208) $ (122) MOODY'S 2022 10-K 59 Table of Contents Organic Constant Currency Revenue Growth (Decline)/Constant Currency Revenue Growth (Decline): Beginning in the second quarter of 2022, the Company began presenting organic constant currency revenue growth (decline) and constant currency revenue growth (decline) as its non-GAAP measure of revenue growth (decline).
Below is a reconciliation of the Company’s net cash flows from operating activities to Free Cash Flow: Year ended December 31, 2023 2022 Net cash provided by operating activities $ 2,151 $ 1,474 Capital additions (271) (283) Free Cash Flow $ 1,880 $ 1,191 Net cash used in investing activities $ (247) $ (262) Net cash used in financing activities $ (1,584) $ (1,208) 64 MOODY'S 2023 10-K Table of Contents Key Performance Metrics: The Company presents ARR on a constant currency organic basis for its MA business as a supplemental performance metric to provide additional insight on the estimated value of MA's recurring revenue contracts at a given point in time.
Cash requirements for periods beyond the next twelve months will depend, among other things, on the Company’s profitability and its ability to manage working capital requirements. The Company may also borrow from various sources as described above.
Sources of Funding to Satisfy Material Cash Requirements The Company believes that it has the financial resources needed to meet its cash requirements and expects to have positive operating cash flow in 2024. Cash requirements for periods beyond the next twelve months will depend, among other things, on the Company’s profitability and its ability to manage working capital requirements.

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