Reports: Wednesday, July 22, 2026, before market open | Call at 9:00 a.m. ET with CEO Rob Fauber and CFO Noémie Heuland
MCO shares have been on a wild ride in 2026 — a sharp February selloff took the stock from the low-$500s to the low-$410s, before a grinding recovery through the spring gave way to a sharp rally that lifted shares from roughly $453 at the end of June to nearly $519 by mid-July, before pulling back to close at $490.81 the day before earnings. That run-up means expectations are elevated heading into the print. A recent Motley Fool piece framed the valuation bar directly: Moody's stock has stayed nearly flat year to date, underperforming the S&P 500's 9% gain, and it also looks historically expensive at 37 times its trailing earnings, while the S&P 500 trades at 32 times earnings.
Consensus for the quarter is EPS of $4.23, and per Yahoo Finance data, Moody's is set to report its Q2 earnings on July 22, with expectations of $4.23 EPS, reflecting an 18.8% year-over-year increase. That sits right in the middle of management's own guidance range.
Unusually, Moody's gave fairly specific quarter-level guidance on the Q1 call. CFO Noémie Heuland stated: For the second quarter, we expect MIS revenue growth in the low to mid-teens with adjusted diluted EPS of approximately $4.15 to $4.30. If volatility persists beyond April, we'd have less confidence in a full recovery in Q2 and Q3 and would expect full year MIS revenue growth to moderate to the mid-single-digit range with adjusted diluted EPS trending towards the low end of our guidance range. That framing makes the print something of a binary test of whether the "recovery" thesis is intact — the market will be looking closely at whether issuance actually snapped back as management assumed, or whether the geopolitical volatility (Iran conflict, tariff overhang) that resurfaced later in Q2 pushed results toward the low end.
On segment cadence, Fauber offered a specific bridge: we're expecting issuance to grow in the, call it, high single-digit percent range for the first half of '26 versus the first half of last year... From a revenue perspective, we're expecting, first of all, year-over-year revenue growth in every quarter in 2026, stronger in the first half versus the second half... something like low double-digit percent revenue growth in the first half. Investors should reconcile actual Q2 MIS revenue growth against this low-double-digit first-half framework.
For Moody's Analytics, expect continued mix noise from the Regulatory Solutions divestiture (closed April 30) layered on top of last year's Learning Solutions sale. Management guided that this "moves us towards the lower end of our mid-single-digit MA revenue guidance range," while reiterating that this does not change our expectations for ARR or organic constant currency recurring revenue growth, which both remain anchored in the high single-digit percent growth range. On margins, Heuland flagged: On MA margins, we expect a modest step-up in Q2 and a more meaningful ramp in the second half, consistent with our typical revenue seasonality.
Q1 2026 was a record quarter: MCO revenue of $2.1 billion increased 8% from the prior-year period, and 6% on an organic constant currency basis... Diluted EPS up 8% and Adjusted Diluted EPS up 13%... Operating cash flow of $939 million up 24%; Free Cash Flow of $844 million up 26%. MIS hit a milestone: MIS achieved record revenues of $1.2 billion on over $2 trillion in rated issuance and delivered an adjusted operating margin of 67%. MA continued its steady march with 8% ARR growth and 250 basis points of adjusted operating margin expansion. Capital return was aggressive — Accelerated capital returns: $1.7 billion share repurchases and dividends in the first quarter; raised full-year share repurchase guidance to approximately $2.5 billion. Full-year guidance (revenue high-single-digit growth, Adjusted EPS $16.40–$17.00) was reaffirmed as of the April print.
1. Did the "April dip, Q2/Q3 recovery" thesis hold? Management's base case assumed market turbulence was contained largely to April. Fauber drew a direct parallel to last year's Liberation Day tariff shock: what we saw through the balance of the year was that, that volatility resulted in considerably lower issuance levels in April last year. But then we saw that get made up through the back half of the year... we ultimately ended up essentially right in line with our original full year guidance. The macro backdrop got choppier again during Q2 — the Iran conflict flared, Strait of Hormuz shipping risk resurfaced, and per Moody's own April guidance assumptions, U.S. rate cut expectations pushed out to end of year or beyond; chance of a hike if conflict extends and spurs inflation — so the extent to which spreads, issuance windows, and hyperscaler/AI-related debt supply held up will matter greatly for the MIS print and full-year commentary.
2. Hyperscaler / AI-driven debt issuance — tailwind or risk? This has been a major swing factor for MIS. In Q1, Fauber noted issuance from the top 5 hyperscalers year-to-date has already exceeded full year 2025 levels and flagged potential upside to the full-year hyperscaler estimate. Watch for updates here, especially against a backdrop where credit markets are growing more nervous about AI capex-funded balance sheets more broadly — Oracle's bonds and stock have weakened recently amid "concerns about the firm's deteriorating balance sheet and massive capital expenditure commitments" tied to AI debt load. That's a double-edged dynamic for Moody's: more AI-related issuance is good for transactional revenue, but rising credit-risk scrutiny around AI-financed debt is itself a demand driver for independent rating opinions — worth listening for management's framing.
3. Private credit — durability of the growth engine. Private credit-related ratings revenue grew over 80% year-over-year in Q1, which Fauber attributed to investor-driven demand for independent assessment as private credit scale draws scrutiny. Any read-through on whether this pace is sustainable, and whether more deals are migrating from private to public markets (a dynamic already flagged in Q1), will be a focus.
4. MA ARR trajectory — KYC reacceleration and "Moody's for Compliance." Management guided KYC ARR growth to reaccelerate into the "mid-teens" through the year after a tough Q1 comp, driven partly by the new Moody's for Compliance platform launched in April. Investors should check whether this reacceleration is showing up on schedule, along with continued Banking/Lending Suite momentum (Lending Suite ARR grew 18% y/y in Q1) and Insurance cross-sell trends via the Intelligent Risk Platform.
5. Margin trajectory and cost discipline. MA margin expanded 250bps in Q1 to 32.5%, with management targeting 34–35% for FY26 and "mid- to high 30s" by 2027. MIS margin expanded to 66.7% even as issuance surged, aided by AI-enabled workflow automation in the ratings process. Watch whether margin expansion continues at pace, and whether the previously flagged reserve for an "international non-income tax obligation" (a ~$0.25 EPS/quarter drag baked into guidance) recurs or changes.
6. GenAI monetization — still early, but strategically central. Moody's has been aggressively building distribution via MCP (Model Context Protocol) integrations with Anthropic, AWS, Microsoft, and OpenAI, while retaining direct customer relationships, IP, and pricing control. As Fauber described it on the Q1 call, adoption is still in trial phase across large financial institutions: it's in early days. Lots of really good engagement, a number now of trials, and we'll be looking to convert those to, obviously to sales, through the balance of the year. On the dedicated June GenAI strategy call, management laid out a "bull vs. bear" framework for how AI affects Moody's moat, arguing decision-grade, auditable data becomes more valuable — not less — as agentic workflows proliferate, and that hyperscaler partnerships are "amplifiers," not substitutes, for its distribution reach. Any updated KPIs on MCP adoption, enterprise license upgrades, or consumption-based pricing wins would be new information for the market.
7. Leadership transition in MA. Christina Kosmowski officially became CEO of Moody's Analytics in June, succeeding an interim leadership period. This is her first earnings call in the seat — investors will want to hear her framing of priorities, particularly around the "reshaping the portfolio" theme (continued divestitures/product sunsetting of mature, lower-growth MA products in favor of reallocating resources to higher-growth areas like lending, KYC, and insurance underwriting).
8. Capital returns. Moody's already raised FY26 buyback guidance to ~$2.5 billion after front-loading $1.5 billion of repurchases in Q1, targeting roughly 110% of free cash flow returned to shareholders by year-end. Watch for confirmation of pace and any updated FCF guidance given the divestiture-related cash flow adjustments.
| Metric | Q1 2026 Actual | Q2 2026 Guide/Consensus |
|---|---|---|
| Adjusted Diluted EPS | $4.33 | $4.15–$4.30 (co. guide) / $4.23 (consensus) |
| MIS Revenue Growth | +8% | Low-to-mid teens (co. guide) |
| MCO Adjusted Op. Margin | 53.2% | Expected above FY midpoint in Q2/Q3 |
| MA ARR Growth | +8% | High-single-digit range maintained |
| FY26 Adjusted EPS Guide | $16.40–$17.00 | Watch for reaffirmation/adjustment |
Moody's goes into this print with a strong Q1 baseline, explicit (and fairly tight) management guidance for the quarter, and a stock that has rallied hard into earnings — leaving relatively little room for disappointment at ~37x trailing earnings. The central swing factors are (1) whether MIS issuance actually delivered the low-double-digit revenue growth implied by management's "recovery" framework despite renewed geopolitical volatility, (2) whether MA's ARR and KYC reacceleration are tracking to plan, and (3) any incremental color on how GenAI/MCP distribution and hyperscaler-related debt issuance are translating into monetizable revenue rather than just strategic positioning. A beat-and-reaffirm (or beat-and-raise) outcome would likely be well received given the setup, while any signs that the April volatility bled meaningfully into Q2 issuance — pushing MIS growth toward the guided range's low end — could pressure a stock that has priced in a fairly clean recovery.