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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form10-Q
(Mark one)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022March 31, 2023
Or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-14037
____________________
Moody’s Corporation
(Exact name of registrant as specified in its charter)
Delaware13-3998945
(State of Incorporation)(I.R.S. Employer Identification No.)
7 World Trade Center at 250 Greenwich Street, New York, New York 10007
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code:
(212) 553-0300
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareMCONew York Stock Exchange
1.75% Senior Notes Due 2027MCO 27New York Stock Exchange
0.950% Senior Notes Due 2030MCO 30New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months, or for such shorter period that the registrant was required to submit such files. Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer☑Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Shares Outstanding at September 30, 2022March 31, 2023
183.2183.5 million
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MOODY’S CORPORATION
INDEX TO FORM 10-Q
Page(s)
3-6
PART I. FINANCIAL INFORMATION
7
8
Consolidated Balance Sheets (Unaudited) at September 30, 2022March 31, 2023 and December 31, 20212022
9
10
11-1124
1513-4342
4335
4335-36
4336-44
44-45
4536
4537-73-49
7349-78-54
7854
7854
78-79
7954-8560
8056-81
8156
PART II. OTHER INFORMATION

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8257
8257
8257
8358

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GLOSSARY OF TERMS AND ABBREVIATIONS
The following terms, abbreviations and acronyms are used to identify frequently used terms in this report:
TERMDEFINITION
Acquisition-Related Intangible Amortization ExpenseAmortization of definite-lived intangible assets acquired by the Company from all business combination transactions
Adjusted Diluted EPSDiluted EPS excluding the impact of certain items as detailed in the section entitled “Non-GAAP Financial Measures”
Adjusted Net IncomeNet Income excluding the impact of certain items as detailed in the section entitled “Non-GAAP Financial Measures”
Adjusted Operating IncomeOperating income excluding the impact of certain items as detailed in the section entitled “Non-GAAP Financial Measures”
Adjusted Operating MarginAdjusted Operating Income divided by revenue
AmericasRepresents countries within North and South America, excluding the U.S.
AOCI(L)Accumulated other comprehensive income/loss; a separate component of shareholders’ equity
ARRAnnualized Recurring Revenue (ARR)ARevenue; a supplemental performance metric to provide additional insight on the estimated value of MA's recurring revenue contracts at a given point in time, excluding the impact of FX and contracts related to acquisitions
ASCThe FASB Accounting Standards Codification; the sole source of authoritative GAAP as of July 1, 2009 except for rules and interpretive releases of the SEC, which are also sources of authoritative GAAP for SEC registrants
Asia-PacificRepresents Australia and countries in Asia including but not limited to: China, India, Indonesia, Japan, Republic of South Korea, Malaysia, Singapore, Sri Lanka and Thailand
ASRAccelerated Share Repurchase
ASUThe FASB Accounting Standards Update to the ASC. Provides background information for accounting guidance and the bases for conclusions on the changes in the ASC. ASUs are not considered authoritative until codified into the ASC
BitSightA provider that helps global market participants understand cyber risk through ratings, analytics, and performance management tools
BoardThe board of directors of the Company
BPSBasis points
CCXIChina Cheng Xin International Credit Rating Co. Ltd.; China’s first and largest domestic credit rating agency approved by the People’s Bank of China; the Company acquired a 49% interest in 2006; currently Moody’s owns 30% of CCXI
CDPAnCarbon Disclosure Project; an international nonprofit organization that helps companies, cities, states and regions manage their environmental impact through a global disclosure system
CFGCorporate finance group; an LOB of MIS
CMBSCommercial mortgage-backed securities; an asset class within SFG
COLICorporate-Owned Life Insurance
CommissionEuropean Commission
Common StockThe Company’s common stock
CompanyMoody’s Corporation and its subsidiaries; MCO; Moody’s
CorteraA provider of North American credit data and workflow solutions; the Company acquired Cortera in March 2021
COVID-19An outbreak of a novel strain of coronavirus resulting in an international public health crisis and a global pandemic
CPCommercial Paper
CP ProgramA program entered into on August 3, 2016 allowing the Company to privately place CP up to a maximum of $1 billion for which the maturity may not exceed 397 days from the date of issue, and which is backstopped by the 2021 Facility
CRAsCredit rating agencies
Data and Information (D&I)LOB within MA which provides vast data sets on companies and securities via data feeds and data applications products
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TERMDEFINITION
Decision Solutions (DS)LOB within MA that provides software and workflow tools for specific use cases (banking, insurance, KYC/KYS, CRE and structured finance solutions). This LOB utilizes components from the Data & Information and Research & Insights LOBs to provide integrated risk solutions
Dodd-Frank ActDodd-Frank Wall Street Reform and Consumer Protection Act
EMEARepresents countries within Europe, the Middle East and Africa
EPSEarnings per share
ERSEnterprise Risk Solutions; former LOB within MA, which offered risk management software solutions as well as related risk management advisory engagements services. As of January 1, 2022, the MA LOBs have been realigned from RD&A and ERS to Decision Solutions, Research and Insights, and Data and Information
ESGEnvironmental, Social, and Governance
ESMAEuropean Securities and Markets Authority
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TERMDEFINITION
ESTREuro Short-Term Rate
ETREffective tax rate
EUEuropean Union
EURIBORThe Euro Interbank Offered Rate
Excess Tax BenefitsThe difference between the tax benefit realized at exercise of an option or delivery of a restricted share and the tax benefit recorded at the time the option or restricted share is expensed under GAAP
Exchange ActThe Securities Exchange Act of 1934, as amended
External RevenueRevenue excluding any intersegment amounts
FASBFinancial Accounting Standards Board
FIGFinancial institutions group; an LOB of MIS
Free Cash FlowNet cash provided by operating activities less cash paid for capital additions
FXForeign exchange
GAAPU.S. Generally Accepted Accounting Principles
GBPBritish pounds
GDPGross domestic product
GRIGlobal Reporting Initiative,Initiative; an international independent standards organization that helps organizations understand and disclose their impact on climate change, human rights and corruption
ICRAICRA Limited; a provider of credit ratings and research in India
ISSBInternational Sustainability Standards Board
kompany360kompany AG (kompany); a Vienna, Austria-based platform for business verification and Know Your Customer (KYC) technology solutions, acquired by the Company in February 2022
KoreaRepublic of South Korea
KYCKnow-your-customer
LIBORLondon Interbank Offered Rate
LOBLine of business
MAMoody’s Analytics - a reportable segment of MCO which provides a wide range of products and services that support financial analysis and risk management activities of institutional participants in global financial markets; consists of three LOBs - Decision Solutions; Research and Insights; and Data and Information
MAKSMoody’s Analytics Knowledge Services; formerly known as Copal Amba; provided offshore research and analytic services to the global financial and corporate sectors; business was divested in the fourth quarter of 2019 and was formerly part of the PS LOB and a reporting unit within the MA reportable segment
MCOMoody’s Corporation and its subsidiaries; the Company; Moody’s
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
MISMoody’s Investors Service - a reportable segment of MCO; consists of five LOBs - SFG; CFG; FIG; PPIF; and MIS Other
MIS OtherConsists of financial instruments pricing services in the Asia-Pacific region, ICRA non-ratings revenue, and revenue from providing ESG research, data and assessments.professional services. These businesses are components of MIS; MIS Other is an LOB of MIS
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TERMDEFINITION
Moody’sMoody’s Corporation and its subsidiaries; MCO; the Company
MSSMoody's Shared Services; primarily consists of information technology and support staff such as finance, human resources and legal that support both MISMA and MAMIS
Net IncomeNet income attributable to Moody’s Corporation, which excludes net income from consolidated noncontrolling interests belonging to the minority interest holder
NMPercentage change is not meaningful
Non-GAAPA financial measure not in accordance with GAAP; these measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company’s performance, facilitate comparisons to competitors’ operating results and to provide greater transparency to investors of supplemental information used by management in its financial and operational decision making
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TERMDEFINITION
NRSRONationally Recognized Statistical Rating Organization, which is a credit rating agency registered with the SEC
OCIOther comprehensive income (loss); includes gains and losses on cash flow and net investment hedges, certain gains and losses relating to pension and other retirement benefit obligations and foreign currency translation adjustments
Operating segmentTerm defined in the ASC relating to segment reporting; the ASC defines an operating segment as a component of a business entity that has each of the three following characteristics: i) the component engages in business activities from which it may recognize revenue and incur expenses; ii) the operating results of the component are regularly reviewed by the entity’s chief operating decision maker; and iii) discrete financial information about the component is available
PassFortA U.K. SaaS-based workflow platform for identity verification, customer onboarding, and risk analysis; acquired by the Company in November 2021
PPIFPublic, project and infrastructure finance; an LOB of MIS
Q3Third Quarter
RD&AResearch, Data and Analytics; former LOB within MA that offered subscription-based research, data and analytical products, including: credit ratings produced by MIS; credit research; quantitative credit scores and other analytical tools; economic research and forecasts; business intelligence and company information products; commercial real estate data and analytical tools; and learning solutions. As of January 1, 2022, the MA LOBs have been realigned from RD&A and ERS to Decision Solutions, Research and Insights, and Data and Information
RealXDataA provider of CRE lease-level portfolio management with benchmarking and rent forecasting capabilities; acquired by the Company in September 2021
Recurring RevenueFor MA, represents subscription-based revenue and software maintenance revenue. For MIS, represents recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations, as well as revenue from programs such as commercial paper, medium-term notes and shelf registrations. For MIS Other, represents subscription-based revenue. For MA, represents subscription-based revenue and software maintenance revenue
Reform ActCredit Rating Agency Reform Act of 2006
Reporting unitThe level at which Moody’s evaluates its goodwill for impairment under U.S. GAAP; defined as an operating segment or one level below an operating segment
Research and Insights (R&I)
LOB within MA that provides models, scores, expert insights and commentary. This LOB includes credit research; credit models and analytics; and economics data and models
Revenue Accounting StandardUpdates to the ASC pursuant to ASU No. 2014-09, “Revenue from Contracts with Customers (ASC Topic 606).” This accounting guidance significantly changed the accounting framework under U.S. GAAP relating to revenue recognition and to the accounting for the deferral of incremental costs of obtaining or fulfilling a contract with a customer
RMBSResidential mortgage-backed securities; an asset class within SFG
RMSA global provider of climate and natural disaster risk modeling and analytics; acquired by the Company in September 2021
SaaSSoftware-as-a-Service
SASBSustainability Accounting Standards Board
SBTi
Science Based Targets initiative; a partnership between CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature created to encourage the private sector to take the lead on urgent climate action
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TERMDEFINITION
SECU.S. Securities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
SFGStructured finance group; an LOB of MIS
SG&ASelling, general and administrative expenses
SOFRSecured Overnight Financing Rate
Tax ActThe “Tax Cuts and Jobs Act” enacted into U.S. law on December 22, 2017 which significantly amends the tax code in the U.S.
TCFDTask Force on Climate-Related Financial Disclosures
Total DebtAll indebtedness of the Company as reflected on the consolidated balance sheets
Transaction RevenueFor MA, represents perpetual software license fees and revenue from software implementation services, risk management advisory projects, and training and certification services. For MIS (excluding MIS Other), represents the initial rating of a new debt issuance as well as other one-time fees. For MIS Other, represents revenue from professional services as well as data services, research and analytical engagements. For MA, represents perpetual software license fees and revenue from software implementation services, risk management advisory projects, and training and certification servicesservices.
U.K.United Kingdom
U.S.United States
USDU.S. dollar
UTPsUncertain tax positions
WEFWorld Economic ForumForum; an independent international organization for public-private cooperation that engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas
YTDYear-to-date
2020 MA Strategic Reorganization Restructuring ProgramRestructuring program approved by the chief executive officer of Moody’s on December 22, 2020, relating to a strategic reorganization in the MA reportable segment
2022 - 2023 Geolocation Restructuring ProgramRestructuring program approved by the chief executive officer of Moody’s on June 30, 2022 and expanded on October 24, 2022 relating to the Company's post-COVID-19 geolocation strategy
2013 Senior Notes due 2024Principal amount of $500 million, 4.875% senior unsecured notes due in February 2024
2014 Senior Notes due 2044Principal amount of $600 million, 5.25% senior unsecured notes due in July 2044
2015 Senior Notes due 2027Principal amount of €500 million, 1.75% senior unsecured notes due in March 2027
2017 Senior Notes due 2023Principal amount of $500 million, 2.625% senior unsecured notes due January 15, 2023
2017 Senior Notes due 2028Principal amount of $500 million, 3.250% senior unsecured notes due January 15, 2028
2018 Senior Notes due 2029Principal amount of $400 million, 4.25% senior unsecured notes due February 1, 2029
2018 Senior Notes due 2048Principal amount of $400 million, 4.875% senior unsecured notes due December 17, 2048
2019 Senior Notes due 2030Principal amount of €750 million, 0.950% senior unsecured notes due February 25, 2030
2020 Senior Notes due 2025Principal amount of $700 million, 3.75% senior unsecured notes due March 24, 2025
2020 Senior Notes due 2050Principal amount of $300 million, 3.25% senior unsecured notes due May 20, 2050
2020 Senior Notes due 2060Principal amount of $500 million, 2.55% senior unsecured notes due August 18, 2060
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TERMDEFINITION
2021 FacilityFive-year unsecured revolving credit facility, with capacity to borrow up to $1.25 billion; backstops CP issued under the CP Program
2021 Senior Notes due 2031Principal amount of $600 million, 2.00% senior unsecured notes due August 19, 2031
2021 Senior Notes due 2041Principal amount of $600 million, 2.75% senior unsecured notes due August 19, 2041
2021 Senior Notes due 2061Principal amount of $500 million, 3.10% senior unsecured notes due November 15, 2061
2022 Senior Notes due 2052Principal amount of $500 million, 3.75% senior unsecured notes due February 25, 2052
2022 Senior Notes due 2032Principal amount of $500 million, 4.25% senior unsecured notes due January 15, 2032

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PART I. FINANCIAL INFORMATION
Item 1.         Financial Statements
MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
March 31,
202220212022202120232022
RevenueRevenue$1,275 $1,526 $4,178 $4,679 Revenue$1,470 $1,522 
ExpensesExpensesExpenses
OperatingOperating393 394 1,203 1,152 Operating428 417 
Selling, general and administrative385 395 1,124 1,015 
Selling, general, and administrativeSelling, general, and administrative386 371 
Depreciation and amortizationDepreciation and amortization83 61 242 180 Depreciation and amortization88 78 
RestructuringRestructuring1 — 32 2 Restructuring14 — 
Total expensesTotal expenses862 850 2,601 2,349 Total expenses916 866 
Operating incomeOperating income413 676 1,577 2,330 Operating income554 656 
Non-operating (expense) income, netNon-operating (expense) income, netNon-operating (expense) income, net
Interest expense, netInterest expense, net(58)(53)(166)(109)Interest expense, net(48)(53)
Other non-operating income (expense), netOther non-operating income (expense), net26 (4)22 18 Other non-operating income (expense), net— 6 
Total non-operating (expense) income, netTotal non-operating (expense) income, net(32)(57)(144)(91)Total non-operating (expense) income, net(48)(47)
Income before provision for income taxesIncome before provision for income taxes381 619 1,433 2,239 Income before provision for income taxes506 609 
Provision for income taxesProvision for income taxes78 145 305 452 Provision for income taxes5 111 
Net income attributable to Moody'sNet income attributable to Moody's$303 $474 $1,128 $1,787 Net income attributable to Moody's$501 $498 
Earnings per share attributable to Moody's common shareholdersEarnings per share attributable to Moody's common shareholdersEarnings per share attributable to Moody's common shareholders
BasicBasic$1.65 $2.55 $6.13 $9.58 Basic$2.73 $2.69 
DilutedDiluted$1.65 $2.53 $6.10 $9.51 Diluted$2.72 $2.68 
Weighted average number of shares outstandingWeighted average number of shares outstandingWeighted average number of shares outstanding
BasicBasic183.2 186.0 

184.1 186.6 Basic183.3 185.1 
DilutedDiluted183.9 187.3 

184.9 188.0 Diluted184.1 186.1 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Amounts in millions)
Three Months Ended
September 30, 2022
Three Months Ended
September 30, 2021
Pre-tax
amounts		Tax
amounts		After-tax
amounts		Pre-tax
amounts		Tax
amounts		After-tax
amounts
Net Income$303 $474 
Other Comprehensive Income (Loss):
Foreign Currency Adjustments:
Foreign currency translation adjustments, net$(358)$6 (352)$(124)$5 (119)
Net gains on net investment hedges256 (63)193 99 (26)73 
Cash Flow Hedges:
Reclassification of losses included in net income1 (1)— 1 — 1 
Pension and Other Retirement Benefits:
Amortization of actuarial losses/prior service costs and settlement charge included in net income1 — 1 3 (1)2 
Net actuarial gains and prior service costs— — — 4 (1)3 
Total other comprehensive (loss) income$(100)$(58)$(158)$(17)$(23)$(40)
Comprehensive income145 434 
Less: comprehensive (loss) income attributable to noncontrolling interests(9)(3)
Comprehensive Income Attributable to Moody's$154 $437 

Nine Months Ended
September 30, 2022		Nine Months Ended
September 30, 2021		Three Months Ended
March 31, 2023		Three Months Ended
March 31, 2022
Pre-tax
amounts		Tax
amounts		After-tax
amounts		Pre-tax
amounts		Tax
amounts		After-tax
amounts		Pre-tax
amounts		Tax
amounts		After-tax
amounts		Pre-tax
amounts		Tax
amounts		After-tax
amounts
Net IncomeNet Income$1,128 $1,787 Net Income$501 $498 
Other Comprehensive Income (Loss):Other Comprehensive Income (Loss):Other Comprehensive Income (Loss):
Foreign Currency Adjustments:Foreign Currency Adjustments:Foreign Currency Adjustments:
Foreign currency translation adjustments, netForeign currency translation adjustments, net$(806)$10 (796)$(234)$9 (225)Foreign currency translation adjustments, net$109 $(2)107 $(108)$1 (107)
Foreign currency translation adjustments - reclassification of losses included in net income20 — 20 — — — 
Net gains on net investment hedges561 (140)421 233 (56)177 
Net investment hedges - reclassification of gains included in net income— — — (2)1 (1)
Net (losses) gains on net investment hedgesNet (losses) gains on net investment hedges(76)19 (57)64 (17)47 
Cash Flow Hedges:Cash Flow Hedges:Cash Flow Hedges:
Reclassification of losses included in net incomeReclassification of losses included in net income2 (1)1 2 — 2 Reclassification of losses included in net income1 — 1 1 — 1 
Pension and Other Retirement Benefits:Pension and Other Retirement Benefits:Pension and Other Retirement Benefits:
Amortization of actuarial losses/prior service costs and settlement charge included in net income2 — 2 16 (4)12 
Net actuarial gains and prior service costs3 (1)2 4 (1)3 
Total other comprehensive (loss) income$(218)$(132)$(350)$19 $(51)$(32)
Net actuarial losses and prior service costsNet actuarial losses and prior service costs— — — (3)1 (2)
Total other comprehensive income (loss)Total other comprehensive income (loss)$34 $17 $51 $(46)$(15)$(61)
Comprehensive incomeComprehensive income778 1,755 Comprehensive income552 437 
Less: comprehensive (loss) income attributable to noncontrolling interests(12)(2)
Less: comprehensive loss attributable to noncontrolling interestsLess: comprehensive loss attributable to noncontrolling interests(3)— 
Comprehensive Income Attributable to Moody'sComprehensive Income Attributable to Moody's$790 $1,757 Comprehensive Income Attributable to Moody's$555 $437 
The accompanying notes are an integral part of the condensed consolidated financial statements.

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MOODY’S CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in millions, except share and per share data)
September 30, 2022December 31, 2021March 31, 2023December 31, 2022
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$1,656 $1,811 Cash and cash equivalents$2,119 $1,769 
Short-term investmentsShort-term investments89 91 Short-term investments78 90 
Accounts receivable, net of allowance for credit losses of $42 in 2022 and $32 in 20211,518 1,720 
Accounts receivable, net of allowance for credit losses of $38 in 2023 and $40 in 2022Accounts receivable, net of allowance for credit losses of $38 in 2023 and $40 in 20221,712 1,652 
Other current assetsOther current assets463 389 Other current assets517 583 
Total current assetsTotal current assets3,726 4,011 Total current assets4,426 4,094 
Property and equipment, net of accumulated depreciation of $1,078 in 2022 and $1,010 in 2021472 347 
Property and equipment, net of accumulated depreciation of $1,153 in 2023 and $1,123 in 2022Property and equipment, net of accumulated depreciation of $1,153 in 2023 and $1,123 in 2022525 502 
Operating lease right-of-use assetsOperating lease right-of-use assets387 438 Operating lease right-of-use assets332 346 
GoodwillGoodwill5,617 5,999 Goodwill5,892 5,839 
Intangible assets, netIntangible assets, net2,182 2,467 Intangible assets, net2,177 2,210 
Deferred tax assets, netDeferred tax assets, net336 384 Deferred tax assets, net268 266 
Other assetsOther assets1,219 1,034 Other assets1,099 1,092 
Total assetsTotal assets$13,939 $14,680 Total assets$14,719 $14,349 
LIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:Current liabilities:Current liabilities:
Accounts payable and accrued liabilitiesAccounts payable and accrued liabilities$807 $1,142 Accounts payable and accrued liabilities$805 $1,011 
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities104 105 Current portion of operating lease liabilities106 106 
Current portion of long-term debtCurrent portion of long-term debt499 — 
Deferred revenueDeferred revenue1,155 1,249 Deferred revenue1,578 1,258 
Total current liabilitiesTotal current liabilities2,066 2,496 Total current liabilities2,988 2,375 
Non-current portion of deferred revenueNon-current portion of deferred revenue78 86 Non-current portion of deferred revenue70 75 
Long-term debtLong-term debt7,476 7,413 Long-term debt6,963 7,389 
Deferred tax liabilities, netDeferred tax liabilities, net604 488 Deferred tax liabilities, net476 457 
Uncertain tax positionsUncertain tax positions308 388 Uncertain tax positions205 322 
Operating lease liabilitiesOperating lease liabilities389 455 Operating lease liabilities349 368 
Other liabilitiesOther liabilities588 438 Other liabilities610 674 
Total liabilitiesTotal liabilities11,509 11,764 Total liabilities11,661 11,660 
Contingencies (Note 17)
Contingencies (Note 16)Contingencies (Note 16)
Shareholders' equity:Shareholders' equity:Shareholders' equity:
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized; no shares issued and outstandingPreferred stock, par value $0.01 per share; 10,000,000 shares authorized; no shares issued and outstanding— — Preferred stock, par value $0.01 per share; 10,000,000 shares authorized; no shares issued and outstanding— — 
Series common stock, par value $0.01 per share; 10,000,000 shares authorized; no shares issued and outstandingSeries common stock, par value $0.01 per share; 10,000,000 shares authorized; no shares issued and outstanding— — Series common stock, par value $0.01 per share; 10,000,000 shares authorized; no shares issued and outstanding— — 
Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 342,902,272 shares issued at September 30, 2022 and December 31, 2021, respectively.3 3 
Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 342,902,272 shares issued at March 31, 2023 and December 31, 2022, respectivelyCommon stock, par value $0.01 per share; 1,000,000,000 shares authorized; 342,902,272 shares issued at March 31, 2023 and December 31, 2022, respectively3 3 
Capital surplusCapital surplus1,013 885 Capital surplus1,068 1,054 
Retained earningsRetained earnings13,501 12,762 Retained earnings13,979 13,618 
Treasury stock, at cost; 159,739,888 and 157,262,484 shares of common stock at September 30, 2022 and December 31, 2021(11,514)(10,513)
Treasury stock, at cost; 159,404,478 and 159,702,362 shares of common stock at March 31, 2023 and December 31, 2022, respectivelyTreasury stock, at cost; 159,404,478 and 159,702,362 shares of common stock at March 31, 2023 and December 31, 2022, respectively(11,570)(11,513)
Accumulated other comprehensive lossAccumulated other comprehensive loss(748)(410)Accumulated other comprehensive loss(589)(643)
Total Moody's shareholders' equityTotal Moody's shareholders' equity2,255 2,727 Total Moody's shareholders' equity2,891 2,519 
Noncontrolling interestsNoncontrolling interests175 189 Noncontrolling interests167 170 
Total shareholders' equityTotal shareholders' equity2,430 2,916 Total shareholders' equity3,058 2,689 
Total liabilities, noncontrolling interests and shareholders' equity$13,939 $14,680 
Total liabilities, noncontrolling interests, and shareholders' equityTotal liabilities, noncontrolling interests, and shareholders' equity$14,719 $14,349 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in millions)
Nine Months Ended September 30,Three Months Ended March 31,
2022202120232022
Cash flows from operating activitiesCash flows from operating activitiesCash flows from operating activities
Net incomeNet income$1,128 $1,787 Net income$501 $498 
Reconciliation of net income to net cash provided by operating activities:Reconciliation of net income to net cash provided by operating activities:Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization242 180 Depreciation and amortization88 78 
Stock-based compensationStock-based compensation130 127 Stock-based compensation47 46 
Deferred income taxesDeferred income taxes58 (79)Deferred income taxes— 30 
FX translation losses reclassified to net income20 — 
Changes in assets and liabilities:Changes in assets and liabilities:Changes in assets and liabilities:
Accounts receivableAccounts receivable123 (137)Accounts receivable(51)(117)
Other current assetsOther current assets(140)64 Other current assets74 (11)
Other assetsOther assets10 (7)Other assets(21)(21)
Lease obligationsLease obligations(14)(10)Lease obligations(5)(2)
Accounts payable and accrued liabilitiesAccounts payable and accrued liabilities(358)(10)Accounts payable and accrued liabilities(178)(296)
Deferred revenueDeferred revenue(20)(75)Deferred revenue296 290 
Uncertain tax positionsUncertain tax positions(41)(79)Uncertain tax positions(119)(18)
Other liabilitiesOther liabilities(41)(55)Other liabilities(24)(7)
Net cash provided by operating activitiesNet cash provided by operating activities1,097 1,706 Net cash provided by operating activities608 470 
Cash flows from investing activitiesCash flows from investing activitiesCash flows from investing activities
Capital additionsCapital additions(204)(77)Capital additions(73)(59)
Purchases of investmentsPurchases of investments(244)(137)Purchases of investments(45)(46)
Sales and maturities of investmentsSales and maturities of investments153 102 Sales and maturities of investments55 27 
Cash paid for acquisitions, net of cash acquiredCash paid for acquisitions, net of cash acquired(97)(2,026)Cash paid for acquisitions, net of cash acquired— (83)
Receipts from settlements of net investment hedges220 26 
Payments for settlements of net investment hedges— (49)
Net cash used in investing activitiesNet cash used in investing activities(172)(2,161)Net cash used in investing activities(63)(161)
Cash flows from financing activitiesCash flows from financing activitiesCash flows from financing activities
Issuance of notes988 1,178 
Repayment of notes(500)— 
Proceeds from stock-based compensation plansProceeds from stock-based compensation plans21 30 Proceeds from stock-based compensation plans11 8 
Treasury sharesTreasury shares(41)(560)
Cash paid for ASR contract relating to shares retained by counterparty until final settlementCash paid for ASR contract relating to shares retained by counterparty until final settlement— (98)
Repurchase of shares related to stock-based compensationRepurchase of shares related to stock-based compensation(85)(82)Repurchase of shares related to stock-based compensation(45)(58)
Treasury shares(983)(628)
DividendsDividends(141)(130)
Dividends(387)(347)
Issuance of notesIssuance of notes— 491 
Debt issuance costs and related feesDebt issuance costs and related fees(10)(13)Debt issuance costs and related fees— (5)
Dividends to noncontrolling interest(1)(3)
Net cash (used in) provided by financing activities(957)135 
Net cash used in financing activitiesNet cash used in financing activities(216)(352)
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents(123)(38)Effect of exchange rate changes on cash and cash equivalents21 (18)
Decrease in cash and cash equivalents(155)(358)
Increase (decrease) in cash and cash equivalentsIncrease (decrease) in cash and cash equivalents350 (61)
Cash and cash equivalents, beginning of periodCash and cash equivalents, beginning of period1,811 2,597 Cash and cash equivalents, beginning of period1,769 1,811 
Cash and cash equivalents, end of periodCash and cash equivalents, end of period$1,656 $2,239 Cash and cash equivalents, end of period$2,119 $1,750 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
(Amounts in millions, except per share data)
Shareholders of Moody's Corporation
Common StockCapital SurplusRetained EarningsTreasury StockAccumulated
Other
Comprehensive
Loss		Total Moody's
Shareholders'
Equity		Non- Controlling
Interests		Total
Shareholders'
Equity
SharesAmountSharesAmount
Balance at June 30, 2021342.9 $3 $784 $12,094 (156.7)$(10,270)$(425)$2,186 $194 $2,380 
Net income474 474 — 474 
Dividends ($0.62 per share)(117)(117)(2)(119)
Stock-based compensation41 41 41 
Shares issued for stock-based compensation plans at average cost, net7 — 1 8 8 
Treasury shares repurchased(0.3)(125)(125)(125)
Currency translation adjustment, net of net investment hedge activity (net of tax of $21 million)(43)(43)(3)(46)
Net actuarial gains and prior service costs (net of tax of $1 million)3 3 3 
Amortization of prior service costs/actuarial losses and settlement charge (net of tax of $1 million)2 2 2 
Net realized gain on cash flow hedges1 1 1 
Balance at September 30, 2021342.9 $3 $832 $12,451 (157.0)$(10,394)$(462)$2,430 $189 $2,619 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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MOODY'S CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(Amounts in millions, except per share data)
Shareholders of Moody's Corporation
Common StockCapital
Surplus		Retained
Earnings		Treasury StockAccumulated
Other
Comprehensive
Loss		Total Moody's
Shareholders'
Equity		Non- Controlling
Interests		Total
Shareholders'
Equity
SharesAmountSharesAmount
Balance at December 31, 2020342.9 $3 $735 $11,011 (155.8)$(9,748)$(432)$1,569 $194 $1,763 
Net income1,787 1,787 — 1,787 
Dividends ($1.86 per share)(347)(347)(3)(350)
Stock-based compensation127 127 127 
Shares issued for stock-based compensation plans at average cost, net(30)0.7 (18)(48)(48)
Treasury shares repurchased(1.9)(628)(628)(628)
Currency translation adjustment, net of net investment hedge activity (net of tax of $46 million)(47)(47)(2)(49)
Net actuarial losses and prior service costs (net of tax of $1 million)3 3 3 
Amortization of prior service costs/actuarial losses and settlement charge (net of tax of $4 million)12 12 12 
Net realized and unrealized gain on cash flow hedges2 2 2 
Balance at September 30, 2021342.9 $3 $832 $12,451 (157.0)$(10,394)$(462)$2,430 $189 $2,619 
The accompanying notes are an integral part of the condensed consolidated financial statements.

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MOODY'S CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(Amounts in millions, except per share data)
Shareholders of Moody's Corporation
Common StockCapital
Surplus		Retained
Earnings		Treasury StockAccumulated
Other
Comprehensive
Loss		Total Moody's
Shareholders'
Equity		 Non- Controlling
Interests		Total
Shareholders'
Equity
SharesAmountSharesAmount
Balance at June 30, 2022342.9 $3 $965 $13,328 (159.4)$(11,403)$(599)$2,294 $185 $2,479 
Net income303 303 — 303 
Dividends ($0.70 per share)(130)(130)(1)(131)
Stock-based compensation46 46 46 
Shares issued for stock-based compensation plans at average cost, net2 0.1 1 3 3 
Treasury shares repurchased(0.4)(112)(112)(112)
Currency translation adjustment, net of net investment hedge activity (net of tax of $57 million)(150)(150)(9)(159)
Amortization of prior service costs and actuarial losses1 1 1 
Balance at September 30, 2022342.9 $3 $1,013 $13,501 (159.7)$(11,514)$(748)$2,255 $175 $2,430 
The accompanying notes are an integral part of the condensed consolidated financial statements.

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MOODY'S CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(Amounts in millions, except per share data)
Shareholders of Moody's CorporationShareholders of Moody's CorporationShareholders of Moody's Corporation
Common StockCapital
Surplus		Retained
Earnings		Treasury StockAccumulated
Other
Comprehensive
Loss		Total Moody's
Shareholders'
Equity		Non- Controlling
Interests		Total
Shareholders'
Equity		Common StockCapital SurplusRetained EarningsTreasury StockAccumulated
Other
Comprehensive
Loss		Total Moody's
Shareholders'
Equity		Non- Controlling
Interests		Total
Shareholders'
Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 2021Balance at December 31, 2021342.9 $3 $885 $12,762 (157.3)$(10,513)$(410)$2,727 $189 $2,916 Balance at December 31, 2021342.9 $3 $885 $12,762 (157.3)$(10,513)$(410)$2,727 $189 $2,916 
Net incomeNet income1,128 1,128 — 1,128 Net income498 498 — 498 
Dividends ($2.10 per share)(389)(389)(2)(391)
Dividends ($0.70 per share)Dividends ($0.70 per share)(128)(128)(1)(129)
Stock-based compensationStock-based compensation130 130 130 Stock-based compensation46 46 46 
Shares issued for stock-based compensation plans at average cost, netShares issued for stock-based compensation plans at average cost, net(34)0.6 (30)(64)(64)Shares issued for stock-based compensation plans at average cost, net(42)0.5 (32)(74)(74)
Shares issued as consideration to acquire kompany(1)
Shares issued as consideration to acquire kompany(1)
35 0.1 9 44 44 
Shares issued as consideration to acquire kompany(1)
35 0.1 9 44 44 
Treasury shares repurchasedTreasury shares repurchased(1.7)(560)(560)(560)
Accelerated Share Repurchase pending final settlementAccelerated Share Repurchase pending final settlement(98)(98)(98)
Currency translation adjustment, net of net investment hedge activity (net of tax of $16 million)Currency translation adjustment, net of net investment hedge activity (net of tax of $16 million)(60)(60)— (60)
Net actuarial gains and prior service costs (net of tax of $1 million)Net actuarial gains and prior service costs (net of tax of $1 million)(2)(2)(2)
Treasury shares repurchased(3)(3.1)(980)(983)(983)
Currency translation adjustment, net of net investment hedge activity (net of tax of $130 million)(343)(343)(12)(355)
Net actuarial gains and prior service costs (net of tax of $1 million)2 2 2 
Amortization of prior service costs and actuarial losses2 2 2 
Net realized and unrealized gain on cash flow hedges1 1 1 
Balance at September 30, 2022342.9 $3 $1,013 $13,501 (159.7)$(11,514)$(748)$2,255 $175 $2,430 
Net realized gain on cash flow hedgesNet realized gain on cash flow hedges1 1 1 
Balance at March 31, 2022Balance at March 31, 2022342.9 $3 $826 $13,132 (158.4)$(11,096)$(471)$2,394 $188 $2,582 
The accompanying notes are an integral part of the condensed consolidated financial statements.

(1) Represents a non-cash investing activity relating to the issuance of common stock to fund a portion of the purchase price for kompany.
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MOODY'S CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(Amounts in millions, except per share data)
Shareholders of Moody's Corporation
Common StockCapital
Surplus		Retained
Earnings		Treasury StockAccumulated
Other
Comprehensive
Loss		Total Moody's
Shareholders'
Equity		Non- Controlling
Interests		Total
Shareholders'
Equity
SharesAmountSharesAmount
Balance at December 31, 2022342.9 $3 $1,054 $13,618 (159.7)$(11,513)$(643)$2,519 $170 $2,689 
Net income501 501 — 501 
Dividends ($0.77 per share)(140)(140)— (140)
Stock-based compensation47 47 47 
Shares issued for stock-based compensation plans at average cost, net(33)0.4 (15)(48)(48)
Treasury shares repurchased— (0.1)(42)(42)(42)
Currency translation adjustment, net of net investment hedge activity (net of tax of $17 million)53 53 (3)50 
Net realized and unrealized gain on cash flow hedges1 1 1 
Balance at March 31, 2023342.9 $3 $1,068 $13,979 (159.4)$(11,570)$(589)$2,891 $167 $3,058 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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MOODY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(tabular dollar and share amounts in millions, except per share data)
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Moody’s is a global integrated risk assessment firm that empowers organizations and investors to make better decisions. Moody’s reports in two reportable segments: MISMA and MA.
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.MIS.
MA is a global provider of: i) data and information; ii) research and insights; and iii) decision solutions, which help companies make better and faster decisions. 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.
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.
These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the Company’s consolidated financial statements and related notes in the Company’s 20212022 annual report on Form 10-K filed with the SEC on February 22, 2022.15, 2023. The results of interim periods are not necessarily indicative of results for the full year or any subsequent period. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
Certain reclassifications have been made to prior period amounts to conform to the current presentation.
Adoption of New Accounting Standards in 2023
OnIn January 1,2021, the FASB issued ASU 2021-01, “Reference Rate Reform - Scope,” which clarified the scope and application of the original guidance, ASU No. 2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU No. 2020-04"), issued in March 2020 (codified into ASC Topic 848 "Reference Rate Reform"). ASU No. 2020-04 provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. In December 2022, the Company adoptedFASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets2022-06, "Reference Rate Reform—Deferral of the Sunset Date of Topic 848," which deferred the sunset date of Topic 848 to December 31, 2024. These ASU's were effective upon issuance and Contract Liabilities from Contracts with Customers" ("ASU No. 2021-08"). This ASU requires companies to apply the definition of a performance obligation under ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. The adoption of this ASU will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. Accordingly, upon adoption, the Company will no longeramendments may be required to adjust acquired deferred revenue to fair value in business combination transactions. The amendments in ASU No. 2021-08 are applied prospectively and have been applied to business combination transactions completed subsequent to January 1, 2022.through December 31, 2024 as the transition from LIBOR is completed.
COVID-19
The COVID-19 pandemic has not had a material adverse impact on the Company's reported results to date and is currently not expected to have a material adverse impact on its near-term outlook. However, Moody's is unable to predict the longer-term impact that the pandemic may have on its business, future results of operations, financial position or cash flows due to numerous uncertainties.
Russia/Ukraine Conflict
The Company is closely monitoring the impact of the ongoing Russia/Ukraine conflict on all aspects of its business. 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.
While Moody's Russian operations and net assets are not material, broader global market volatility, which partially relates to uncertainties surrounding the conflict, has contributed to an adverse impact on rated issuance volumes in 2022. 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.
Reclassification of Previously Reported Revenue by LOB
InDuring the first quarter of 2022,2023, the Company realignedmodified the contractual terms of certain of its revenue by LOB reporting structure forinterest rate swaps designated as fair value hedges and cross-currency swaps designated as net investment hedges. These modifications replaced the MA operating segmentprevious LIBOR/EURIBOR-based reference rates included in the swap agreements to enhance insight and transparency into this business. As of January 1, 2022, the MA LOBs have been realigned from RD&A and ERS to:
–Decision Solutions (DS) - provides software and workflow tools for specific use cases (banking, insurance, KYC/KYS, CRE and structured finance solutions). This LOB utilizes components from the Data & Information and Research & Insights LOBs to provide integrated risk solutions;
–Research & Insights (R&I) - provides models, scores, expert insights and commentary. This LOB includes: credit research; credit models and analytics; and economics data and models; and
–Data & Information (D&I) - provides vast data sets on companies and securities via data feeds and data applications products.
Prior year revenue by LOB disclosures have been reclassified to conformSOFR/ESTR-based rates. Pursuant to the new LOB reporting structure, whichmodification of the contractual terms of these instruments, the Company utilized the optional expedients set forth in ASC Topic 848 relating to derivative instruments used in hedging relationships. The aggregate notional amounts of these swaps is presenteddisclosed in Note 2.8.
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NOTE 2. REVENUES
Revenue by Category
The following table presents the Company’s revenues disaggregated by LOB:
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
March 31,
202220212022202120232022
MA:MA:
Decision SolutionsDecision Solutions$354 $334 
Research and InsightsResearch and Insights195 183 
Data and InformationData and Information188 178 
Total external revenueTotal external revenue737 695 
Intersegment revenueIntersegment revenue3 2 
Total MATotal MA740 697 
MIS:MIS:MIS:
Corporate Finance (CFG)Corporate Finance (CFG)Corporate Finance (CFG)
Investment-gradeInvestment-grade$67 $105 $249 $341 Investment-grade115 114 
High-yieldHigh-yield21 82 91 347 High-yield32 39 
Bank loansBank loans47 145 232 482 Bank loans59 113 
Other accounts (1)
Other accounts (1)
142 156 444 473 Other accounts(1)150 151 
Total CFGTotal CFG277 488 1,016 1,643 Total CFG356 417 
Structured Finance (SFG)Structured Finance (SFG)Structured Finance (SFG)
Asset-backed securitiesAsset-backed securities26 29 89 88 Asset-backed securities27 32 
RMBSRMBS22 31 85 89 RMBS25 35 
CMBSCMBS19 26 84 73 CMBS14 38 
Structured creditStructured credit34 57 109 148 Structured credit32 39 
Other accounts(1)— — 1 1 
Other accountsOther accounts1 — 
Total SFGTotal SFG101 143 368 399 Total SFG99 144 
Financial Institutions (FIG)Financial Institutions (FIG)Financial Institutions (FIG)
BankingBanking76 105 258 315 Banking100 89 
InsuranceInsurance24 38 82 114 Insurance33 34 
Managed investmentsManaged investments6 8 19 29 Managed investments6 5 
Other accountsOther accounts3 2 9 7 Other accounts3 3 
Total FIGTotal FIG109 153 368 465 Total FIG142 131 
Public, Project and Infrastructure Finance (PPIF)Public, Project and Infrastructure Finance (PPIF)Public, Project and Infrastructure Finance (PPIF)
Public finance / sovereignPublic finance / sovereign44 61 157 191 Public finance / sovereign52 58 
Project and infrastructureProject and infrastructure48 69 180 212 Project and infrastructure77 65 
Total PPIFTotal PPIF92 130 337 403 Total PPIF129 123 
Total ratings revenueTotal ratings revenue579 914 2,089 2,910 Total ratings revenue726 815 
MIS OtherMIS Other11 11 34 31 MIS Other7 12 
Total external revenueTotal external revenue590 925 2,123 2,941 Total external revenue733 827 
Intersegment revenueIntersegment revenue43 42 129 124 Intersegment revenue45 43 
Total MISTotal MIS633 967 2,252 3,065 Total MIS778 870 
MA:
Decision Solutions325 250 971 697 
Research and Insights184 177 552 523 
Data and Information176 174 532 518 
Total external revenue685 601 2,055 1,738 
Intersegment revenue2 2 5 6 
Total MA687 603 2,060 1,744 
EliminationsEliminations(45)(44)(134)(130)Eliminations(48)(45)
Total MCOTotal MCO$1,275 $1,526 $4,178 $4,679 Total MCO$1,470 $1,522 
(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.
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The following table presents the Company’s revenues disaggregated by LOB and geographic area:
Three Months Ended September 30, 2022Three Months Ended September 30, 2021Three Months Ended March 31, 2023Three Months Ended March 31, 2022
U.S.Non-U.STotalU.S.Non-U.STotalU.S.Non-U.STotalU.S.Non-U.STotal
MA:MA:
Decision SolutionsDecision Solutions$152 $202 $354 $147 $187 $334 
Research and InsightsResearch and Insights105 90 195 103 80 183 
Data and InformationData and Information67 121 188 60 118 178 
Total MATotal MA324 413 737 310 385 695 
MIS:MIS:MIS:
Corporate FinanceCorporate Finance$188 $89 $277 $334 $154 $488 Corporate Finance246 110 356 275 142 417 
Structured FinanceStructured Finance69 32 101 98 45 143 Structured Finance61 38 99 97 47 144 
Financial InstitutionsFinancial Institutions47 62 109 71 82 153 Financial Institutions63 79 142 65 66 131 
Public, Project and Infrastructure FinancePublic, Project and Infrastructure Finance57 35 92 76 54 130 Public, Project and Infrastructure Finance76 53 129 75 48 123 
Total ratings revenueTotal ratings revenue361 218 579 579 335 914 Total ratings revenue446 280 726 512 303 815 
MIS OtherMIS Other1 10 11 1 10 11 MIS Other— 7 7 1 11 12 
Total MISTotal MIS362 228 590 580 345 925 Total MIS446 287 733 513 314 827 
MA:
Decision Solutions143 182 325 107 143 250 
Research and Insights100 84 184 96 81 177 
Data and Information63 113 176 58 116 174 
Total MA306 379 685 261 340 601 
Total MCOTotal MCO$668 $607 $1,275 $841 $685 $1,526 Total MCO$770 $700 $1,470 $823 $699 $1,522 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
U.S.Non-U.STotalU.S.Non-U.STotal
MIS:
Corporate Finance$673 $343 $1,016 $1,093 $550 $1,643 
Structured Finance249 119 368 254 145 399 
Financial Institutions165 203 368 226 239 465 
Public, Project and Infrastructure Finance210 127 337 233 170 403 
Total ratings revenue1,297 792 2,089 1,806 1,104 2,910 
MIS Other4 30 34 3 28 31 
Total MIS1,301 822 2,123 1,809 1,132 2,941 
MA:
Decision Solutions425 546 971 294 403 697 
Research and Insights303 249 552 284 239 523 
Data and Information185 347 532 170 348 518 
Total MA913 1,142 2,055 748 990 1,738 
Total MCO$2,214 $1,964 $4,178 $2,557 $2,122 $4,679 

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The following table presents the Company’s reportable segment revenues disaggregated by segment and geographic region:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
MIS:
U.S.$362 $580 $1,301 $1,809 
Non-U.S.:
EMEA139 211 497 707 
Asia-Pacific57 90 211 287 
Americas32 44 114 138 
Total Non-U.S.228 345 822 1,132 
Total MIS590 925 2,123 2,941 
MA:
U.S.306 261 913 748 
Non-U.S.:
EMEA254 232 774 695 
Asia-Pacific72 59 211 173 
Americas53 49 157 122 
Total Non-U.S.379 340 1,142 990 
Total MA685 601 2,055 1,738 
Total MCO$1,275 $1,526 $4,178 $4,679 
The following tables summarize the split between transaction and recurring revenue. In the MIS segment, excluding MIS Other, transaction revenue represents the initial rating of a new debt issuance as well as other one-time fees while recurring revenue represents the recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations, as well as revenue from programs such as commercial paper, medium-term notes and shelf registrations. In MIS Other, transaction revenue represents revenue from professional services and recurring revenue represents subscription-based revenues. In the MA segment, recurring revenue represents subscription-based revenues and software maintenance revenue. Transaction revenue in MA represents perpetual software license fees and revenue from software implementation services, risk management advisory projects, and training and certification services.
Three Months Ended
March 31,
20232022
MA:
U.S.$324 $310 
Non-U.S.:
EMEA278 264 
Asia-Pacific80 67 
Americas55 54 
Total Non-U.S.413 385 
Total MA737 695 
MIS:
U.S.446 513 
Non-U.S.:
EMEA173 193 
Asia-Pacific71 74 
Americas43 47 
Total Non-U.S.287 314 
Total MIS733 827 
Total MCO$1,470 $1,522 
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Three Months Ended September 30,
20222021
TransactionRecurringTotalTransactionRecurringTotal
Corporate Finance$153 $124 $277 $366 $122 $488 
55 %45 %100 %75 %25 %100 %
Structured Finance$51 $50 $101 $93 $50 $143 
50 %50 %100 %65 %35 %100 %
Financial Institutions$41 $68 $109 $83 $70 $153 
38 %62 %100 %54 %46 %100 %
Public, Project and Infrastructure Finance$50 $42 $92 $88 $42 $130 
54 %46 %100 %68 %32 %100 %
MIS Other$1 $10 $11 $1 $10 $11 
9 %91 %100 %9 %91 %100 %
Total MIS$296 $294 $590 $631 $294 $925 
50 %50 %100 %68 %32 %100 %
Decision Solutions$37 $288 $325 $34 $216 $250 
11 %89 %100 %14 %86 %100 %
Research and Insights$1 $183 $184 $2 $175 $177 
1 %99 %100 %1 %99 %100 %
Data and Information$— $176 $176 $1 $173 $174 
— %100 %100 %1 %99 %100 %
Total MA$38 (1)$647 $685 $37 $564 $601 
6 %94 %100 %6 %94 %100 %
Total Moody's Corporation$334 $941 $1,275 $668 $858 $1,526 
26 %74 %100 %44 %56 %100 %
The following tables summarize the split between Transaction Revenue and Recurring Revenue.
Nine Months Ended September 30,Three Months Ended March 31,
2022202120232022
TransactionRecurringTotalTransactionRecurringTotal
Decision SolutionsDecision Solutions$43 $311 $354 $43 $291 $334 
12 %88 %100 %13 %87 %100 %
Research and InsightsResearch and Insights$2 $193 $195 $1 $182 $183 
1 %99 %100 %1 %99 %100 %
Data and InformationData and Information$— $188 $188 $— $178 $178 
— %100 %100 %— %100 %100 %
Total MATotal MA$45 (1)$692 $737 $44 $651 $695 
TransactionRecurringTotalTransactionRecurringTotal6 %94 %100 %6 %94 %100 %
Corporate FinanceCorporate Finance$645 $371 $1,016 $1,280 $363 $1,643 Corporate Finance$230 $126 $356 $293 $124 $417 
63 %37 %100 %78 %22 %100 %65 %35 %100 %70 %30 %100 %
Structured FinanceStructured Finance$217 $151 $368 $251 $148 $399 Structured Finance$45 $54 $99 $93 $51 $144 
59 %41 %100 %63 %37 %100 %45 %55 %100 %65 %35 %100 %
Financial InstitutionsFinancial Institutions$159 $209 $368 $252 $213 $465 Financial Institutions$70 $72 $142 $61 $70 $131 
43 %57 %100 %54 %46 %100 %49 %51 %100 %47 %53 %100 %
Public, Project and Infrastructure FinancePublic, Project and Infrastructure Finance$211 $126 $337 $276 $127 $403 Public, Project and Infrastructure Finance$86 $43 $129 $79 $44 $123 
63 %37 %100 %68 %32 %100 %67 %33 %100 %64 %36 %100 %
MIS OtherMIS Other$3 $31 $34 $3 $28 $31 MIS Other$— $7 $7 $3 $9 $12 
9 %91 %100 %10 %90 %100 %— %100 %100 %25 %75 %100 %
Total MISTotal MIS$1,235 $888 $2,123 $2,062 $879 $2,941 Total MIS$431 $302 $733 $529 $298 $827 
58 %42 %100 %70 %30 %100 %59 %41 %100 %64 %36 %100 %
Decision Solutions$120 $851 $971 $111 $586 $697 
12 %88 %100 %16 %84 %100 %
Research and Insights$4 $548 $552 $6 $517 $523 
1 %99 %100 %1 %99 %100 %
Data and Information$— $532 $532 $3 $515 $518 
— %100 %100 %1 %99 %100 %
Total MA$124 (1)$1,931 $2,055 $120 $1,618 $1,738 
6 %94 %100 %7 %93 %100 %
Total Moody's CorporationTotal Moody's Corporation$1,359 $2,819 $4,178 $2,182 $2,497 $4,679 Total Moody's Corporation$476 $994 $1,470 $573 $949 $1,522 
33 %67 %100 %47 %53 %100 %32 %68 %100 %38 %62 %100 %
(1) Revenue from software implementation services and risk management advisory projects, while classified by management as transactional revenue, is recognized over time under the Revenue Accounting StandardU.S. GAAP (please also refer to the following table).

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The following table presents the timing of revenue recognition:
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022Three Months Ended March 31, 2023Three Months Ended March 31, 2022
MISMATotalMISMATotalMAMISTotalMAMISTotal
Revenue recognized at a point in timeRevenue recognized at a point in time$296 $20 $316 $1,235 $77 $1,312 Revenue recognized at a point in time$27 $431 $458 $41 $529 $570 
Revenue recognized over timeRevenue recognized over time294 665 959 888 1,978 2,866 Revenue recognized over time710 302 1,012 654 298 952 
TotalTotal$590 $685 $1,275 $2,123 $2,055 $4,178 Total$737 $733 $1,470 $695 $827 $1,522 
Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
MISMATotalMISMATotal
Revenue recognized at a point in time$631 $29 $660 $2,062 $78 $2,140 
Revenue recognized over time294 572 866 879 1,660 2,539 
Total$925 $601 $1,526 $2,941 $1,738 $4,679 
Unbilled receivables, deferred revenue and remaining performance obligations
Unbilled receivables
CertainFor certain MA arrangements, the timing of when the Company has the unconditional right to consideration and recognizes revenue occurs prior to invoicing the customer. In addition, certain MIS arrangements contain contractual terms whereby the customers are billed in arrears for annual monitoring services, requiring revenue to be accrued as an unbilled receivable as such services are provided. In addition, for certain MA arrangements, the timing of when the Company has the unconditional right to consideration and recognizes revenue occurs prior to invoicing the customer.
The following table presents the Company's unbilled receivables, which are included within accounts receivable, net, at September 30, 2022March 31, 2023 and December 31, 2021:2022:
As of September 30, 2022As of December 31, 2021
MISMAMISMA
Unbilled Receivables$381 $147 $386 $152 
As of March 31, 2023As of December 31, 2022
MAMISMAMIS
Unbilled Receivables$114 $439 $148 $385 


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Deferred revenue
The Company recognizes deferred revenue when a contract requires a customer to pay consideration to the Company in advance of when revenue related to that contract is recognized. This deferred revenue is relieved when the Company satisfies the related performance obligation and revenue is recognized.
Significant changes in the deferred revenue balances during the three and nine months ended September 30,March 31, 2023 and 2022 and 2021 are as follows:
Three Months Ended September 30, 2022Three Months Ended September 30, 2021
MISMATotalMISMATotal
Balance at June 30,$347 $1,019 $1,366 $368 $867 $1,235 
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue balance at the beginning of the period(110)(480)(590)(118)(484)(602)
Increases due to amounts billable excluding amounts recognized as revenue during the period82 389 471 85 393 478 
Increases due to acquisitions during the period— — — — 89 89 
Effect of exchange rate changes(5)(9)(14)(2)(12)(14)
Total changes in deferred revenue(33)(100)(133)(35)(14)(49)
Balance at September 30,$314 $919 $1,233 $333 $853 $1,186 
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Three Months Ended March 31, 2023Three Months Ended March 31, 2022
MAMISTotalMAMISTotal
Balance at December 31,$1,055 $278 $1,333 $1,039 $296 $1,335 
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue balance at the beginning of the period(471)(98)(569)(431)(95)(526)
Increases due to amounts billable excluding amounts recognized as revenue during the period688 179 867 636 178 814 
Increases due to acquisitions during the period— — — 1 — 1 
Effect of exchange rate changes16 1 17 (11)(2)(13)
Total changes in deferred revenue233 82 315 195 81 276 
Balance at March 31,$1,288 $360 $1,648 $1,234 $377 $1,611 
Deferred revenue - current$1,287 $291 $1,578 $1,231 $294 $1,525 
Deferred revenue - non-current$1 $69 $70 $3 $83 $86 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
MISMATotalMISMATotal
Balance at December 31,$296 $1,039 $1,335 $313 $874 $1,187 
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue balance at the beginning of the period(186)(883)(1,069)(200)(814)(1,014)
Increases due to amounts billable excluding amounts recognized as revenue during the period218 819 1,037 224 713 937 
Increases due to acquisitions during the period— 1 1 — 93 93 
Effect of exchange rate changes(14)(57)(71)(4)(13)(17)
Total changes in deferred revenue18 (120)(102)20 (21)(1)
Balance at September 30,$314 $919 $1,233 $333 $853 $1,186 
Deferred revenue - current$238 $917 $1,155 $247 $852 $1,099 
Deferred revenue - non-current$76 $2 $78 $86 $1 $87 
For the MIS segment, the changesThe increase in the deferred revenue balance during both the three and nine months ended September 30,March 31, 2023 and 2022 wereis primarily relateddue to the significant portion of contract renewals that occurredoccur during the first quarter of 2022 and are generally recognized over a one year period.within both segments.
For the MA segment, the decrease in deferred revenue for the three months ended September 30, 2022 was primarily due to the recognition of annual subscription and maintenance billings from December 2021 and January 2022. For the nine months ended September 30, 2022, the decrease in the deferred revenue balance is attributable to recognition of revenues related to the aforementioned December 2021 billings and unfavorable changes in FX translation rates being mostly offset by the impact of the high concentration of billings in the first quarter of 2022.
Remaining performance obligations
Remaining performance obligations in the MA segment include both amounts recorded as deferred revenue on the balance sheet as of March 31, 2023 as well as amounts not yet invoiced to customers as of March 31, 2023, largely reflecting future revenue related to signed multi-year arrangements for hosted and installed subscription-based products. As of March 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $3.3 billion. The Company expects to recognize into revenue approximately 65% of this balance within one year, approximately 25% of this balance between one to two years and the remaining amount thereafter.
Remaining performance obligations in the MIS segment largely reflect deferred revenue related to monitoring fees for certain structured finance products, primarily CMBS, where the issuers can elect to pay the monitoring fees for the life of the security in advance. As of September 30, 2022,March 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $103$98 million. The Company expects to recognize into revenue approximately 20%25% of this balance within one year, approximately 50% of this balance between one to five years and the remaining amount thereafter. With respect to the remaining performance obligations for the MIS segment, the Company has applied a practical expedient set forth in ASC Topic 606 permitting the omission from the amounts stated above relating to unsatisfied performance obligations for contracts with an original expected length of one year or less.
Remaining performance obligations in the MA segment include both amounts recorded as deferred revenue on the balance sheet as of September 30, 2022 as well as amounts not yet invoiced to customers as of September 30, 2022, largely reflecting future revenue related to signed multi-year arrangements for hosted and installed subscription-based products. As of September 30, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $3.1 billion. The Company expects to recognize into revenue approximately 60% of this balance within one year, approximately 30% of this balance between one to two years and the remaining amount thereafter.
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NOTE 3. STOCK-BASED COMPENSATION
Presented below is a summary of the stock-based compensation cost and associated tax benefit included in the accompanying consolidated statements of operations:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202220212022202120232022
Stock-based compensation costStock-based compensation cost$46 $41 $130 $127 Stock-based compensation cost$47 $46 
Tax benefitTax benefit$10 $8 $30 $29 Tax benefit$10 $11 
During the first ninethree months of 2022,2023, the Company granted 0.1 million employee stock options, which had a weighted average grant date fair value of $84.00$94.67 per share. The Company also granted 0.6 million shares of restricted stock in the first ninethree months of 2022,2023, which had a weighted average grant date fair value of $321.70$295.53 per share. Both the employee stock options and restricted stock generally vest ratably over four years. Additionally, the Company granted 0.1 million shares of performance-based awards whereby the number of shares that ultimately vest are based on the achievement of certain non-market-based performance metrics of the Company over three years. The weighted average grant date fair value of these awards was $310.62$286.04 per share.
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The following weighted average assumptions were used in determining the fair value using the Black-Scholes option-pricing model for options granted in 2022:2023:
Expected dividend yield0.861.04 %
Expected stock volatility2729 %
Risk-free interest rate1.914.18 %
Expected holding period5.65.8 years
Unrecognized stock-based compensation expense at September 30, 2022March 31, 2023 was $18$20 million and $260$354 million for stock options and unvested restricted stock, respectively, which is expected to be recognized over a weighted average period of 2.12.2 years and 2.62.8 years, respectively. Additionally, there was $34$43 million of unrecognized stock-based compensation expense relating to the aforementioned non-market-based performance-based awards, which is expected to be recognized over a weighted average period of 1.62.4 years.
The following table summarizes information relating to stock option exercises and restricted stock vesting:
Nine Months Ended
September 30,		Three Months Ended
March 31,
2022202120232022
Exercise of stock options:Exercise of stock options:Exercise of stock options:
Proceeds from stock option exercisesProceeds from stock option exercises$6 $20 Proceeds from stock option exercises$7 $3 
Aggregate intrinsic valueAggregate intrinsic value$7 $44 Aggregate intrinsic value$15 $4 
Tax benefit realized upon exerciseTax benefit realized upon exercise$2 $10 Tax benefit realized upon exercise$4 $1 
Number of shares exercised (1)
Number of shares exercised (1)
— 0.2 
Number of shares exercised (1)
0.1 — 
Vesting of restricted stock:Vesting of restricted stock:Vesting of restricted stock:
Fair value of shares vestedFair value of shares vested$174 $193 Fair value of shares vested$140 $166 
Tax benefit realized upon vestingTax benefit realized upon vesting$41 $43 Tax benefit realized upon vesting$33 $39 
Number of shares vestedNumber of shares vested0.5 0.7 Number of shares vested0.5 0.5 
Vesting of performance-based restricted stock:Vesting of performance-based restricted stock:Vesting of performance-based restricted stock:
Fair value of shares vestedFair value of shares vested$50 $28 Fair value of shares vested$24 $50 
Tax benefit realized upon vestingTax benefit realized upon vesting$7 $4 Tax benefit realized upon vesting$3 $7 
Number of shares vestedNumber of shares vested0.2 0.1 Number of shares vested0.1 0.2 
(1) The number of options exercised in 2022 was approximately 4120 thousand.
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NOTE 4. INCOME TAXES
Moody’s effective tax rate (ETR) was 20.5%1.0% and 23.4%18.2% for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and 21.3% and 20.2% for the nine months ended September 30, 2022 and 2021, respectively. The 2.9%17.2% decrease in the ETR for the three months ended September 30, 2022 compared to the same period in the prior year was primarily due to lower pre-tax income, which increases the percentage impact of net beneficial discrete items, as well as a favorable mix of earnings in the jurisdictions in which Moody’s operates. The 1.1% increase in the ETR for the nine months ended September 30, 2022March 31, 2023 compared to the same period in the prior year was primarily due to tax benefits realized upon resolutionrecognized in the first quarter of UTPs during 2021 that did not recur to2023, which reflect the same extentresolutions of uncertain tax positions in 2022various U.S. and a non-deductible loss associated with the Company no longer conducting commercial operations in Russia.non-U.S. tax jurisdictions. The Company’s year-to-date 2022first quarter 2023 provision for income tax expensetaxes differs from the tax computed by applying its estimated annual effective tax rate to the pre-tax earnings primarily due to the following items recognized in 2022:2023: i) Excess Tax Benefits from stock-based compensation of $19 million; and ii) net reductions in UTPs of $20$117 million related to the resolutionresolutions of UTPs.UTPs; and ii) excess tax benefits from stock-based compensation of $6 million.
The Company classifies interest related to UTPs in interest expense, net in its consolidated statements of operations. Penalties, if incurred, would be recognized in other non-operating (expense) income (expense), net. The Company had a decrease in its UTPs of $28 million (net of federal tax) during the third quarter of 2022 and a decrease in its UTPs of $80 million ($75 million net of federal tax) during the nine months of 2022, which primarily related to the aforementioned resolution of UTPs.
Moody’s Corporation and subsidiaries are subject to U.S. federal income tax as well as income tax in various state, local and foreign jurisdictions. The Company’s U.S. federal income tax returns for 20172019 through 2020 are currently under examination and 2021 remains open to examination. The Company’s New York State tax returns for 2017 through 2018 and New York City tax returns for 2015 through 20182019 are currently under examination. The Company’s U.K. tax returns for 20122017 through 20202021 remain open to examination.
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For ongoing audits, it is possible the balance of UTPs could decrease in the next twelve months as a result of the settlement of such audits, which might involve the payment of additional taxes, the adjustment of certain deferred taxes and/or the recognition of tax benefits. It is also possible that new issues will be raised by tax authorities which could necessitate increases to the balance of UTPs. As the Company is unable to predict the timing or outcome of these audits, it is unable to estimate the amount of changes to the balance of UTPs at this time. However, the Company believes that it has adequately provided for its financial exposure relating to all open tax years, by tax jurisdiction, in accordance with the applicable provisions of ASC Topic 740 of the ASC regarding UTPs.
The following table shows the amount the Company paid for income taxes:
Nine Months Ended September 30,
20222021
Income taxes paid$394 $501 
Three Months Ended March 31,
20232022
Income taxes paid$66 $70 
In August 2022, the U.S. Congress passed the Inflation Reduction Act, which included a corporate minimum tax on book earnings of 15%, an excise tax on corporate share repurchases of 1%, and certain climate change and energy tax credit incentives. The adoption of a corporate minimum tax of 15% is not expected to impact Moody’s ETR. The excise tax of 1% on corporate share buybacks will not have an impact on the Company’s ETR for the years 2022 or 2023.
NOTE 5. RECONCILIATION OF WEIGHTED AVERAGE SHARES OUTSTANDING
Below is a reconciliation of basic to diluted shares outstanding:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202220212022202120232022
BasicBasic183.2 186.0 184.1 186.6 Basic183.3 185.1 
Dilutive effect of shares issuable under stock-based compensation plansDilutive effect of shares issuable under stock-based compensation plans0.7 1.3 0.8 1.4 Dilutive effect of shares issuable under stock-based compensation plans0.8 1.0 
DilutedDiluted183.9 187.3 184.9 188.0 Diluted184.1 186.1 
Anti-dilutive options to purchase common shares and restricted stock as well as contingently issuable restricted stock which are excluded from the table aboveAnti-dilutive options to purchase common shares and restricted stock as well as contingently issuable restricted stock which are excluded from the table above0.5 0.1 0.4 0.2 Anti-dilutive options to purchase common shares and restricted stock as well as contingently issuable restricted stock which are excluded from the table above0.7 0.3 
The calculation of diluted EPS requires certain assumptions regarding the use of both cash proceeds and assumed proceeds that would be received upon the exercise of stock options and vesting of restricted stock outstanding as of September 30, 2022March 31, 2023 and 2021.2022.
NOTE 6. ACCELERATED SHARE REPURCHASE PROGRAM
On March 1, 2022, the Company entered into an ASR agreement with a financial institution counterparty to repurchase $500 million of its outstanding common stock. The Company paid $500 million to the counterparty and received an initial delivery of 1.2 million shares of its common stock. Final settlement of the ASR agreement was completed in April 2022 and the Company received delivery of an additional 0.3 million shares of the Company’s common stock.
In total, the Company repurchased 1.5 million shares of the Company’s common stock during the term of the ASR Agreement, based on the volume-weighted average price (net of discount) of $324.20 per share over the duration of the program. The initial share repurchase and final share settlement were recorded as a reduction to shareholders’ equity.
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NOTE 7. CASH EQUIVALENTS AND INVESTMENTS
The table below provides additional information on the Company’s cash equivalents and investments:
As of September 30, 2022As of March 31, 2023
Balance sheet locationBalance sheet location
CostGains/(Losses)Fair ValueCash and cash equivalentsShort-term
investments		Other
assets		CostGains/(Losses)Fair ValueCash and cash equivalentsShort-term
investments		Other
assets
Certificates of deposit and money market deposit accounts (1)
Certificates of deposit and money market deposit accounts (1)
$739 $— $739 $640 $89 $10 
Certificates of deposit and money market deposit accounts (1)
$729 $— $729 $645 $78 $6 
Mutual fundsMutual funds$72 $(2)$70 $— $— $70 Mutual funds$80 $3 $83 $— $— $83 
As of December 31, 2021As of December 31, 2022
Balance sheet locationBalance sheet location

Cost		Gains/(Losses)
Fair Value		Cash and cash
equivalents		Short-term
investments		Other
assets
Cost		Gains/(Losses)
Fair Value		Cash and cash
equivalents		Short-term
investments		Other
assets
Certificates of deposit and money market deposit accounts (1)
Certificates of deposit and money market deposit accounts (1)
$691 $— $691 $584 $91 $16 
Certificates of deposit and money market deposit accounts (1)
$914 $— $914 $808 $90 $16 
Mutual fundsMutual funds$65 $8 $73 $— $— $73 Mutual funds$71 $— $71 $— $— $71 
(1) Consists of time deposits and money market deposit accounts. The remaining contractual maturities for the certificates of deposits classified as short-term investments are one month to 12 months at both September 30, 2022March 31, 2023 and December 31, 2021.2022. The remaining contractual maturities for the certificates of deposits classified in other assets are 13 months to 2721 months at September 30, 2022March 31, 2023 and 13 months to 2924 months at December 31, 2021.2022. Time deposits with a maturity of less than 90 days at time of purchase are classified as cash and cash equivalents.
In addition, the Company invests in Corporate-Owned Life Insurance (COLI). As of September 30, 2022March 31, 2023 and December 31, 2021,2022, the contract value of the COLI was $38$44 million and $37$40 million, respectively.
NOTE 8. ACQUISITIONS
The material business combination described below is accounted for using the acquisition method of accounting whereby assets acquired and liabilities assumed were recognized at fair value or other values set forth in U.S. GAAP on the date of the transaction. Any excess of the purchase price over the fair value of the assets acquired and liabilities assumed was recorded to goodwill. Goodwill typically results through expected synergies from combining operations of an acquiree and an acquirer, anticipated new customer acquisition and products, as well as from intangible assets that do not qualify for separate recognition.
RMS
On September 15, 2021, the Company acquired 100% of RMS, a global provider of climate and natural disaster risk modeling and analytics. The cash payment was funded with new debt financing and a combination of U.S. and offshore cash on hand. The acquisition will expand Moody’s insurance data and analytics business and accelerate the development of the Company’s global integrated risk capabilities to address the next generation of risk assessment.
The table below details the total consideration relating to the acquisition:
Cash paid at closing$1,922 
Replacement equity compensation awards5 
Total consideration$1,927 
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Shown below is the purchase price allocation, which summarizes the fair value of the assets and liabilities assumed, at the date of acquisition:
Cash (1)
$55 
Accounts receivable38 
Other current assets (1)
12 
Property and equipment, net13 
Operating lease right-of-use assets64 
Intangible assets:
Customer relationships (23 year useful life)$518 
Product technology (7 year useful life)212 
Trade name (9 year useful life)49 
Total intangible assets (18 year weighted average useful life)779 
Goodwill (1)
1,357 
Deferred tax assets, net50 
Other assets99 
Liabilities:
Accounts payable and accrued liabilities (1)
$(96)
Deferred revenue(89)
Operating lease liabilities(68)
Deferred tax liabilities, net(214)
Uncertain tax positions (1)
(71)
Other liabilities(2)
Total liabilities(540)
Net assets acquired$1,927 
(1) During the third quarter of 2022, the Company adjusted the purchase price allocation pursuant to the receipt of additional information from the sellers relating to RMS's pre-acquisition income taxes. These adjustments included a decrease to UTPs of $25 million along with other immaterial adjustments. These adjustments resulted in a corresponding decrease in goodwill of $19 million.
Goodwill
The goodwill recognized as a result of this acquisition includes, among other things, the value of combining the complementary product portfolios of Moody's and RMS, which is expected to extend the Company's reach into new market segments. The goodwill also includes the combined company's ability to accelerate technology innovations into new product adjacencies (leveraging RMS's team of data scientists, modelers and software engineers) as well as combining RMS's products with Moody’s core data and analytics offerings to provide holistic integrated risk solutions.
Goodwill, of which $1,267 million and $90 million has been assigned to the MA and MIS segments, respectively, is not deductible for tax purposes. The amount of goodwill allocated to the MIS segment relates to the integration of certain of RMS's models/processes into the Company's ESG solutions offerings.
Other assets in the table above includes an indemnification asset of $95 million related to UTPs assumed in the transaction, for which the Company expects to be indemnified by the sellers in the event of an unfavorable outcome.
Transaction costs
Transaction costs incurred in the year ended December 31, 2021 directly related to the RMS acquisition were $22 million and were recorded in SG&A expenses in the statement of operations.
Supplementary Unaudited Pro Forma Information
Supplemental information on an unaudited pro forma basis is presented below for the three and nine months ended September 30, 2021 as if the acquisition of RMS occurred on January 1, 2020. The pro forma financial information is presented for comparative purposes only and is based on certain estimates and assumptions, which the Company believes to be reasonable but not necessarily indicative of future results of operations or the results that would have been reported if the acquisition had been completed at January 1, 2020. The unaudited pro forma information includes amortization of acquired intangible assets, based on the purchase price allocation and an estimate of useful lives reflected above, and incremental financing costs resulting from the acquisition, net of income tax, which was estimated using the weighted average statutory tax rates in effect in the jurisdiction for which the pro forma adjustment relates.
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Three Months Ended September 30, 2021Nine Months Ended
September 30, 2021
Pro forma Revenue$1,597 $4,910 
Pro forma Net Income attributable to Moody's$506 $1,807 
The unaudited pro forma results do not include any anticipated cost savings or other effects of the planned integration of RMS. Accordingly, the pro forma results above are not necessarily indicative of the results that would have been reported if the acquisition had occurred on the dates indicated, nor are the pro forma results indicative of results which may occur in the future. The RMS results included in the above have been converted to U.S. GAAP from IFRS as issued by the IASB and have been translated to USD at rates in effect for the periods presented.
NOTE 9.8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to global market risks, including risks from changes in FX rates and changes in interest rates. Accordingly, the Company uses derivatives in certain instances to manage the aforementioned financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for speculative purposes.
Derivatives and non-derivative instruments designated as accounting hedges:
Fair Value Hedges
Interest Rate Swaps
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 LIBOR, 6-month LIBOR, and SOFR. The purpose of these hedges is to mitigate the risk associated with changes in the fair value of the long-term debt, thus the Company has designated these swaps as fair value hedges. The fair value of the swaps is adjusted quarterly with a corresponding adjustment to the carrying value of the debt. The changes in the fair value of the swaps and the underlying hedged item generally offset and the net cash settlements on the swaps are recorded each period within interest expense, net in the Company’s consolidated statements of operations.
The following table summarizes the Company’s interest rate swaps designated as fair value hedges:
Notional AmountAs of March 31, 2023As of December 31, 2022
Hedged ItemHedged ItemNature of Swap
As of
September 30, 2022
As of
December 31, 2021
Floating Interest RateHedged ItemNature of SwapNotional Amount
Floating Interest Rate (1)
Notional AmountFloating Interest Rate
2017 Senior Notes due 2023Pay Floating/Receive Fixed$— $250 3-month USD LIBOR
2017 Senior Notes due 20282017 Senior Notes due 2028Pay Floating/Receive Fixed$500 $500 3-month USD LIBOR2017 Senior Notes due 2028Pay Floating/Receive Fixed$500 SOFR$500 3-month LIBOR
2020 Senior Notes due 20252020 Senior Notes due 2025Pay Floating/Receive Fixed$300 $300 6-month USD LIBOR2020 Senior Notes due 2025Pay Floating/Receive Fixed300 SOFR300 6-month LIBOR
2014 Senior Notes due 20442014 Senior Notes due 2044Pay Floating/Receive Fixed$300 $300 3-month USD LIBOR2014 Senior Notes due 2044Pay Floating/Receive Fixed300 SOFR300 3-month LIBOR
2018 Senior Notes due 20482018 Senior Notes due 2048Pay Floating/Receive Fixed$300 $300 3-month USD LIBOR2018 Senior Notes due 2048Pay Floating/Receive Fixed300 SOFR300 3-month LIBOR
2018 Senior Notes due 2029 (1)
Pay Floating/Receive Fixed$400 $— SOFR
2022 Senior Notes due 2052 (2)
Pay Floating/Receive Fixed$500 $— SOFR
2022 Senior Notes due 2032 (3)
Pay Floating/Receive Fixed$250 $— SOFR
2018 Senior Notes due 20292018 Senior Notes due 2029Pay Floating/Receive Fixed400 SOFR400 SOFR
2022 Senior Notes due 20522022 Senior Notes due 2052Pay Floating/Receive Fixed500 SOFR500 SOFR
2022 Senior Notes due 20322022 Senior Notes due 2032Pay Floating/Receive Fixed250 SOFR250 SOFR
TotalTotal$2,550 $1,650 Total$2,550 $2,550 
(1) ExecutedContractual terms of instruments using the 3-month or 6-month LIBOR at December 31, 2022 were modified to the SOFR reference rate in the first quarter of 2022.2023.
20
(2) Executed in the second quarterTable of 2022.Contents
(3) Executed in the third quarter of 2022.
Refer to Note 1514 for information on the cumulative amount of fair value hedging adjustments included in the carrying amount of the above hedged items.
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Table of Contents
The following table summarizes the impact to the statements of operations of the Company’s interest rate swaps designated as fair value hedges:
Total amounts of financial statement line item presented in the statements of operations in which the effects of fair value hedges are recordedTotal amounts of financial statement line item presented in the statements of operations in which the effects of fair value hedges are recordedAmount of income/(loss) recognized in the consolidated statements of operationsTotal amounts of financial statement line item presented in the statements of operations in which the effects of fair value hedges are recordedAmount of income/(loss) recognized in the consolidated statements of operations
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202220212022202120232022
Interest expense, netInterest expense, net$(58)$(53)$(166)$(109)Interest expense, net$(48)$(53)

Descriptions
Descriptions		Location on Consolidated Statements of Operations
Descriptions		Location on Consolidated Statements of Operations
Net interest settlements and accruals on interest rate swapsNet interest settlements and accruals on interest rate swapsInterest expense, net$(4)$6 $5 $17 Net interest settlements and accruals on interest rate swapsInterest expense, net$(18)$6 
Fair value changes on interest rate swapsFair value changes on interest rate swapsInterest expense, net$(95)$(16)$(227)$(40)Fair value changes on interest rate swapsInterest expense, net$46 $(85)
Fair value changes on hedged debtFair value changes on hedged debtInterest expense, net$95 $16 $227 $40 Fair value changes on hedged debtInterest expense, net$(46)$85 
Net investment hedges
Debt designated as net investment hedges
The Company has designated €500 million of the 2015 Senior Notes Due 2027 and €750 million of the 2019 Senior Notes due 2030 as net investment hedges to mitigate FX exposure related to a portion of the Company’s euro net investment in certain foreign subsidiaries against changes in euro/USD exchange rates. These hedges are designated as accounting hedges under the applicable sections of ASC Topic 815 and will end upon the repayment of the notes in 2027 and 2030, respectively, unless terminated early at the discretion of the Company.
Cross currency swaps designated as net investment hedges
The Company enters into cross-currency swaps to mitigate FX exposure related to a portion of the Company’s euro net investment in certain foreign subsidiaries against changes in euro/USD exchange rates. The following table provides information on the cross-currency swaps designated as net investment hedges under ASC Topic 815:
September 30, 2022
March 31, 2023March 31, 2023
PayReceivePayReceive
Nature of SwapNature of SwapNotional AmountWeighted Average Interest RateNotional AmountWeighted Average Interest RateNature of SwapNotional AmountWeighted Average Interest RateNotional AmountWeighted Average Interest Rate
Pay Fixed/Receive FixedPay Fixed/Receive Fixed€765 3.67%$800 5.25%Pay Fixed/Receive Fixed€765 3.67%$800 5.25%
Pay Floating/Receive FloatingPay Floating/Receive Floating450 Based on 3-month EURIBOR500 Based on 3-month USD LIBORPay Floating/Receive Floating2,138 Based on ESTR2,250 Based on SOFR
Pay Floating/Receive Floating1,688 Based on ESTR1,750 Based on SOFR
TotalTotal€2,903 $3,050 Total€2,903 $3,050 
December 31, 2021
December 31, 2022December 31, 2022
PayReceivePayReceive
Nature of SwapNature of SwapNotional AmountWeighted Average Interest RateNotional AmountWeighted Average Interest RateNature of SwapNotional AmountWeighted Average Interest RateNotional AmountWeighted Average Interest Rate
Pay Fixed/Receive FixedPay Fixed/Receive Fixed€909 2.16%$1,050 4.45%Pay Fixed/Receive Fixed€765 3.67%$800 5.25%
Pay Floating/Receive FloatingPay Floating/Receive Floating1,179 Based on 3-month EURIBOR1,350 Based on 3-month USD LIBORPay Floating/Receive Floating450 Based on 3-month EURIBOR500 Based on 3-month USD LIBOR
Pay Floating/Receive FloatingPay Floating/Receive Floating1,688 Based on ESTR1,750 Based on SOFR
TotalTotal€2,088 $2,400 Total€2,903 $3,050 
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As of September 30, 2022March 31, 2023 these hedges will expire and the notional amounts will be settled as follows unless terminated early at the discretion of the Company:
Years Ending December 31,
2026€450 
2027€531 
2028€588 
2029€373 
2031€481 
2032€480 
Total€2,903 
The following tables provide information on the gains/(losses) on the Company’s net investment and cash flow hedges:
Derivative and Non-Derivative Instruments in Net Investment Hedging RelationshipsAmount of Gain/(Loss) Recognized in AOCL on Derivative, net of TaxAmount of Gain/(Loss) Reclassified from AOCL into Income, net of TaxGain/(Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
Three Months Ended
September 30,
Three Months Ended
September 30,
Three Months Ended
September 30,
202220212022202120222021
FX forward contracts$— $2 $— $— $— $— 
Cross currency swaps131 44 — — 17 8 
Long-term debt62 26 — — — — 
Total net investment hedges$193 $72 $— $— $17 $8 
Derivatives in Cash Flow Hedging Relationships
Interest rate contracts$— $1 $— $(1)$— $— 
Total cash flow hedges$— $1 $— $(1)$— $— 
Total$193 $73 $— $(1)$17 $8 
Derivative and Non-Derivative Instruments in Net Investment Hedging RelationshipsAmount of Gain/(Loss) Recognized in AOCL on Derivative, net of TaxAmount of Gain/(Loss) Reclassified from AOCL into Income, net of TaxGain/(Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
Nine Months Ended
September 30,		Nine Months Ended
September 30,		Nine Months Ended
September 30,
202220212022202120222021
FX forward contracts$— $18 $— $1 $— $— 
Cross currency swaps273 98 — — 38 27 
Long-term debt148 61 — — — — 
Total net investment hedges$421 $177 $— $1 $38 $27 
Derivatives in Cash Flow Hedging Relationships
Interest rate contracts$— $— $(1)$(2)$— $— 
Total cash flow hedges$— $— $(1)$(2)$— $— 
Total$421 $177 $(1)$(1)$38 $27 
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Derivative and Non-Derivative Instruments in Net Investment Hedging RelationshipsAmount of Gain/(Loss) Recognized in AOCL on Derivative, net of TaxAmount of Loss Reclassified from AOCL into Income, net of TaxGain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
202320222023202220232022
Cross currency swaps$(39)$24 $— $— $16 $10 
Long-term debt(18)23 — — — — 
Total net investment hedges$(57)$47 $— $— $16 $10 
Derivatives in Cash Flow Hedging Relationships
Interest rate contracts$— $— $(1)$(1)$— $— 
Total cash flow hedges$— $— $(1)$(1)$— $— 
Total$(57)$47 $(1)$(1)$16 $10 
The cumulative amount of net investment hedge and cash flow hedge gains (losses) remaining in AOCL is as follows:
Cumulative Gains/(Losses), net of taxCumulative Gains/(Losses), net of tax
September 30, 2022December 31, 2021March 31, 2023December 31, 2022
Net investment hedgesNet investment hedgesNet investment hedges
Cross currency swapsCross currency swaps$292 $19 Cross currency swaps$79 $118 
FX forwardsFX forwards29 29 FX forwards29 29 
Long-term debtLong-term debt121 (27)Long-term debt20 38 
Total net investment hedgesTotal net investment hedges$442 $21 Total net investment hedges$128 $185 
Cash flow hedgesCash flow hedgesCash flow hedges
Interest rate contractsInterest rate contracts$(48)$(49)Interest rate contracts$(46)$(47)
Cross currency swapsCross currency swaps2 2 Cross currency swaps2 2 
Total cash flow hedgesTotal cash flow hedges(46)(47)Total cash flow hedges(44)(45)
Total net gain (loss) in AOCL$396 $(26)
Total net gain in AOCLTotal net gain in AOCL$84 $140 
Derivatives not designated as accounting hedges:
Foreign exchange forwards
The Company also enters into foreign exchange forward contracts to mitigate the change in fair value on certain assets and liabilities denominated in currencies other than a subsidiary’s functional currency. These forward contracts are not designated as accounting hedges under the applicable sections of ASC Topic 815 of the ASC.815. Accordingly, changes in the fair value of these contracts are recognized immediately in other non-operating income (expense), net in the Company’s consolidated statements of operations along with the FX gain or loss recognized on the assets and liabilities denominated in a currency other than the subsidiary’s functional currency. These contracts have expiration dates at various times through JanuaryMay 2023.
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Table of Contents
The following table summarizes the notional amounts of the Company’s outstanding foreign exchange forwards:
September 30, 2022December 31, 2021March 31, 2023December 31, 2022
Notional amount of currency pair:Notional amount of currency pair:SellBuySellBuyNotional amount of currency pair:SellBuySellBuy
Contracts to sell USD for GBPContracts to sell USD for GBP$138 £115 $126 £92 Contracts to sell USD for GBP$295 £241 $170 £146 
Contracts to sell USD for Japanese yenContracts to sell USD for Japanese yen$18 ¥2,500 $22 ¥2,500 Contracts to sell USD for Japanese yen$15 ¥2,000 $24 ¥3,500 
Contracts to sell USD for Canadian dollarsContracts to sell USD for Canadian dollars$141 C$183 $120 C$150 Contracts to sell USD for Canadian dollars$78 C$105 $87 C$120 
Contracts to sell USD for Singapore dollarsContracts to sell USD for Singapore dollars$58 S$80 $67 S$90 Contracts to sell USD for Singapore dollars$52 S$70 $50 S$70 
Contracts to sell USD for eurosContracts to sell USD for euros$332 €325 $364 €315 Contracts to sell USD for euros$160 €148 $116 €115 
Contracts to sell USD for Russian ruble$— ₽— $16 ₽1,200 
Contracts to sell USD for Indian rupeeContracts to sell USD for Indian rupee$20 ₹1,600 $7 ₹500 Contracts to sell USD for Indian rupee$23 ₹1,900 $19 ₹1,600 
Contracts to sell GBP for USD£— $— £172 $231 
Contracts to sell euros for USDContracts to sell euros for USD€135 $134 €— $— Contracts to sell euros for USD€25 $27 €85 $89 
NOTE: € = euro, £ = British pound, $ = U.S. dollar, ¥ = Japanese yen, C$ = Canadian dollar, S$= Singapore dollars,₽= Russian ruble, ₹= Indian rupee
The following table summarizes the impact to the consolidated statements of operations relating to the net losses on the Company’s derivatives which are not designated as hedging instruments:
Derivatives not designated as accounting hedgesLocation on Consolidated Statements of Operations
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
FX forwardsOther non-operating income, net$(46)$(18)$(103)$(25)
Foreign exchange forwards relating to RMS acquisition(1)
Other non-operating (expense) income, net$— $(13)$— $(13)
(1) The Company entered into forward contracts to sell $1,675 million for £1,200 to hedge a portion of the GBP denominated RMS purchase price. The contract was terminated on September 14, 2021 and resulted in a $13 million loss.
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Table of Contents
Derivatives not designated as accounting hedgesLocation on Consolidated Statements of Operations
Three Months Ended
March 31,
20232022
FX forwardsOther non-operating income, net$5 $(19)
The table below shows the classification between assets and liabilities on the Company’s consolidated balance sheets for the fair value of the derivative instrument as well as the carrying value of its non-derivative debt instruments designated and qualifying as net investment hedges:
Derivative and Non-Derivative InstrumentsDerivative and Non-Derivative Instruments
Balance Sheet LocationSeptember 30, 2022December 31, 2021Balance Sheet LocationMarch 31, 2023December 31, 2022
Assets:Assets:Assets:
Derivatives designated as accounting hedges:Derivatives designated as accounting hedges:Derivatives designated as accounting hedges:
Cross-currency swaps designated as net investment hedgesCross-currency swaps designated as net investment hedgesOther assets$181 $53 Cross-currency swaps designated as net investment hedgesOther assets$12 $27 
Interest rate swaps designated as fair value hedgesOther assets— 13 
Total derivatives designated as accounting hedges181 66 
Derivatives not designated as accounting hedges:Derivatives not designated as accounting hedges:Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilitiesFX forwards on certain assets and liabilitiesOther current assets— 1 FX forwards on certain assets and liabilitiesOther current assets4 19 
Total assetsTotal assets$181 $67 Total assets$16 $46 
Liabilities:Liabilities:Liabilities:
Derivatives designated as accounting hedges:Derivatives designated as accounting hedges:Derivatives designated as accounting hedges:
Cross-currency swaps designated as net investment hedgesCross-currency swaps designated as net investment hedgesOther liabilities$— $17 Cross-currency swaps designated as net investment hedgesOther liabilities$115 $78 
Interest rate swaps designated as fair value hedgesInterest rate swaps designated as fair value hedgesOther liabilities237 23 Interest rate swaps designated as fair value hedgesOther liabilities192 239 
Total derivatives designated as accounting hedgesTotal derivatives designated as accounting hedges237 40 Total derivatives designated as accounting hedges307 317 
Non-derivatives designated as accounting hedges:Non-derivatives designated as accounting hedges:Non-derivatives designated as accounting hedges:
Long-term debt designated as net investment hedgeLong-term debt designated as net investment hedgeLong-term debt1,225 1,421 Long-term debt designated as net investment hedgeLong-term debt1,358 1,334 
Derivatives not designated as accounting hedges:Derivatives not designated as accounting hedges:Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilitiesFX forwards on certain assets and liabilitiesAccounts payable and accrued liabilities28 12 FX forwards on certain assets and liabilitiesAccounts payable and accrued liabilities1 2 
Total liabilitiesTotal liabilities$1,490 $1,473 Total liabilities$1,666 $1,653 





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Table of Contents
NOTE 10.9. GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
The following table summarizes the activity in goodwill for the periods indicated:
Nine Months Ended September 30, 2022Three Months Ended March 31, 2023
MISMAConsolidatedMAMISConsolidated
Gross goodwillAccumulated impairment
charge		Net
goodwill		Gross goodwillAccumulated
impairment
charge		Net
goodwill		Gross goodwillAccumulated
impairment
charge		Net
goodwill		Gross goodwillAccumulated
impairment
charge		Net
goodwill		Gross goodwillAccumulated impairment
charge		Net
goodwill		Gross goodwillAccumulated
impairment
charge		Net
goodwill
Balance at beginning
of year		Balance at beginning
of year		$396 $— $396 $5,615 $(12)$5,603 $6,011 $(12)$5,999 Balance at beginning
of year		$5,474 $(12)$5,462 $377 $— $377 $5,851 $(12)$5,839 
Additions/
adjustments (1)
Additions/
adjustments (1)
3 — 3 87 — 87 90 — 90 
Additions/
adjustments (1)
90 — 90 (90)— (90)— — — 
Foreign currency translation adjustmentsForeign currency translation adjustments(21)— (21)(451)— (451)(472)— (472)Foreign currency translation adjustments56 — 56 (3)— (3)53 — 53 
Ending balanceEnding balance$378 $— $378 $5,251 $(12)$5,239 $5,629 $(12)$5,617 Ending balance$5,620 $(12)$5,608 $284 $— $284 $5,904 $(12)$5,892 
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Table of Contents
Year Ended December 31, 2021Year Ended December 31, 2022
MISMAConsolidatedMAMISConsolidated
Gross goodwill
Accumulated impairment
charge
Net
goodwill
Gross goodwill
Accumulated
impairment
charge
Net
goodwill
Gross goodwill
Accumulated
impairment
charge
Net
goodwill
Gross goodwill
Accumulated
impairment
charge
Net
goodwill
Gross goodwill
Accumulated impairment
charge
Net
goodwill
Gross goodwill
Accumulated
impairment
charge
Net
goodwill
Balance at beginning
of year		Balance at beginning
of year		$311 $— $311 $4,257 $(12)$4,245 $4,568 $(12)$4,556 Balance at beginning
of year		$5,615 $(12)$5,603 $396 $— $396 $6,011 $(12)$5,999 
Additions/
adjustments (2)
Additions/
adjustments (2)
90 — 90 1,525 — 1,525 1,615 — 1,615 
Additions/
adjustments (2)
88 — 88 4 — 4 92 — 92 
Foreign currency translation
adjustments		Foreign currency translation
adjustments		(5)— (5)(167)— (167)(172)— (172)Foreign currency translation
adjustments		(229)— (229)(23)— (23)(252)— (252)
Ending balanceEnding balance$396 $— $396 $5,615 $(12)$5,603 $6,011 $(12)$5,999 Ending balance$5,474 $(12)$5,462 $377 $— $377 $5,851 $(12)$5,839 
(1)The 2023 additions/adjustments relate to a reallocation of goodwill pursuant to a realignment of certain components of the Company's ESG business in the first quarter of 2023.
(2) The 2022 additions/adjustments for the MA segment in the table above primarily relate to the acquisition of kompany in the first quarter of 2022, partially offset by RMS measurement period adjustments in the third quarter2022.
24
Table of 2022, which are more fully discussed in Note 8.Contents
(2) The 2021 additions/adjustments for the MA segment in the table above relate to the acquisitions of Cortera, RMS, RealXData, Bogard, and PassFort. The 2021 additions/adjustments for the MIS segment relate to certain revenue synergies from the RMS acquisition that are expected to benefit the ESG solutions group within the MIS Other LOB.
Acquired intangible assets and related amortization consisted of:
September 30,
2022		December 31,
2021		March 31,
2023		December 31,
2022
Customer relationshipsCustomer relationships$1,947 $2,101 Customer relationships$2,043 $2,024 
Accumulated amortizationAccumulated amortization(412)(381)Accumulated amortization(480)(453)
Net customer relationshipsNet customer relationships1,535 1,720 Net customer relationships1,563 1,571 
Software/product technologySoftware/product technology633 663 Software/product technology667 661 
Accumulated amortizationAccumulated amortization(251)(219)Accumulated amortization(305)(283)
Net software/product technologyNet software/product technology382 444 Net software/product technology362 378 
DatabaseDatabase176 179 Database178 178 
Accumulated amortizationAccumulated amortization(58)(46)Accumulated amortization(69)(64)
Net databaseNet database118 133 Net database109 114 
Trade namesTrade names192 207 Trade names198 197 
Accumulated amortizationAccumulated amortization(53)(47)Accumulated amortization(62)(58)
Net trade namesNet trade names139 160 Net trade names136 139 
Other (1)
Other (1)
52 54 
Other (1)
52 52 
Accumulated amortizationAccumulated amortization(44)(44)Accumulated amortization(45)(44)
Net otherNet other8 10 Net other7 8 
Total acquired intangible assets, netTotal acquired intangible assets, net$2,182 $2,467 Total acquired intangible assets, net$2,177 $2,210 
(1) Other intangible assets primarily consist of trade secrets, covenants not to compete, and acquired ratings methodologies and models.
Amortization expense relating to acquired intangible assets is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Amortization expense$48 $37 $150 $108 
Three Months Ended
March 31,
20232022
Amortization expense$51 $51 
31
Table of Contents
NOTE 11.10. RESTRUCTURING
On June 30, 2022, the chief executive officer of Moody’s approved a restructuring program (the “2022 - 2023 Geolocation Restructuring Program”) for which the scope was expanded in October 2022, prior to the filing of this quarterly report on Form 10-Q.. The Company estimates that the program will result in annualized savings of $100$120 million to $135$140 million per year. This program relates to the Company's post-COVID-19 geolocation strategy and includes the rationalization and exit of certain real estate leasesleased office spaces and a reduction in staff, including the relocation of certain job functions from their current locations.functions. The exit from certain leased office spaces is expected to begin latebegan in the fourth quarter of 2022 or early 2023 and is expected to result in $50 million to $70 million of pre-tax charges to either terminate or subleasefrom vacating the affected real estate leases.office spaces, a large portion of which Moody's intends to sublease. The program also includes $75$105 million to $100$120 million of pre-tax personnel-related restructuring charges, an amount that includes severance costs, expense related to the modification of equity awards, and related costs primarily determined under the Company’s existing severance plans. The savings generated from the 2022 - 2023 Geolocation Restructuring Program are expected to strengthen the Company's operating margin, with a portion being deployed to support strategic investments, including the Company's Workplaceworkplace of the Futurefuture program and employee retention initiatives. The 2022 - 2023 Geolocation Restructuring Program is expected to be substantially complete by the end of 2023. Cash outlays associated with this program, which primarily relate to personnel-related costs, are expected to be $75$105 million to $100$120 million, which are expected to be paid through 2024.
On December 22, 2020,Substantially all of the chief executive officer of Moody’s approved a restructuring program (the “2020 MA Strategic Reorganization Restructuring Program”) that the Company estimates will result in annualized savings of $20 million per year. This program relates to a strategic reorganization in the MA reportable segment consisting of severance and related costs primarily determined under the Company’s existing severance plans. The 2020 MA Strategic Reorganization Restructuring Program resulted in a total of $19$14 million in pre-taxrestructuring charges and was substantially completed inrecognized during the first halfquarter ended March 31, 2023 relate to employee termination costs.
25
Table of 2021. Cash outlays associated with this program are expected to be $20 million, which will be paid through 2022.Contents
Total expense included in the accompanying consolidated statements of operations relating to the aforementioned restructuring program is below:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
2020 MA Strategic Reorganization Restructuring Program$— $— $(1)$2 
2022 - 2023 Geolocation Restructuring Program1 — 33 — 
Total Restructuring$1 $— $32 $2 
Changes to the restructuring liability for the aforementioned restructuring programs during the first ninethree months of 20222023 were as follows:
Employee Termination Costs
Balance as of December 31, 2021$4
Balance as of December 31, 2022$65
2020 MA Strategic Reorganization Restructuring Program:
Cost incurred and adjustments(1)
Cash payments and adjustments(2)
2022 - 2023 Geolocation Restructuring Program:
Cost incurred and adjustments33 $14
Cash payments and adjustments(6)$(42)
Balance as of September 30, 2022March 31, 2023$2837��
Cumulative expense incurred to date
2020 MA Strategic Reorganization Restructuring Program$19
2022 - 2023 Geolocation Restructuring Program$33
32
Cumulative expense incurred through March 31, 2023Employee 
Termination 
Costs		Real Estate Related
Costs		Other CostsTotal
2022 - 2023 Geolocation Restructuring Program$98 $28 $1 $127 
Table of Contents
NOTE 12.11. FAIR VALUE    
The table below presents information about items that are carried at fair value at September 30, 2022March 31, 2023 and December 31, 2021:2022:
Fair Value Measurement as of September 30, 2022Fair Value Measurement as of March 31, 2023
DescriptionDescriptionBalanceLevel 1Level 2DescriptionBalanceLevel 1Level 2
Assets:Assets:Assets:
Derivatives (1)
Derivatives (1)
$181 $— $181 
Derivatives (1)
$16 $— $16 
Mutual fundsMutual funds70 70 — Mutual funds83 83 — 
TotalTotal$251 $70 $181 Total$99 $83 $16 
Liabilities:Liabilities:Liabilities:
Derivatives (1)
Derivatives (1)
$265 $— $265 
Derivatives (1)
$308 $— $308 
TotalTotal$265 $— $265 Total$308 $— $308 
Fair Value Measurement as of December 31, 2021Fair Value Measurement as of December 31, 2022
DescriptionDescriptionBalanceLevel 1Level 2DescriptionBalanceLevel 1Level 2
Assets:Assets:Assets:
Derivatives (1)
Derivatives (1)
$67 $— $67 
Derivatives (1)
$46 $— $46 
Mutual fundsMutual funds73 73 — Mutual funds71 71 — 
TotalTotal$140 $73 $67 Total$117 $71 $46 
Liabilities:Liabilities:Liabilities:
Derivatives (1)
Derivatives (1)
$52 $— $52 
Derivatives (1)
$319 $— $319 
TotalTotal$52 $— $52 Total$319 $— $319 
(1) Represents FX forward contracts, interest rate swaps and cross-currency swaps as more fully described in Note 98 to the condensed consolidated financial statements.
The following are descriptions of the methodologies utilized by the Company to estimate the fair value of its derivative contracts, mutual funds and money market mutual funds:
Derivatives:
In determining the fair value of the derivative contracts in the table above, the Company utilizes industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using spot rates, forward points, currency volatilities, interest rates as well as the risk of non-performance of the Company and the counterparties with whom it has derivative contracts. The Company established strict counterparty credit guidelines and only enters into transactions with financial institutions that adhere to these guidelines. Accordingly, the risk of counterparty default is deemed to be minimal.
Mutual funds:
The mutual funds in the table above are deemed to be equity securities with readily determinable fair values with changes in the fair value recognized through net income under ASC Topic 321. The fair value of these instruments is determined using Level 1 inputs as defined in the ASC Topic 820.
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NOTE 13.12. OTHER BALANCE SHEET AND STATEMENTS OF OPERATIONS INFORMATION
The following tables contain additional detail related to certain balance sheet captions:
September 30, 2022December 31, 2021March 31, 2023December 31, 2022
Other current assets:Other current assets:Other current assets:
Prepaid taxesPrepaid taxes$203 $112 Prepaid taxes$191 $235 
Prepaid expensesPrepaid expenses105 99 Prepaid expenses131 119 
Capitalized costs to obtain and fulfill sales contractsCapitalized costs to obtain and fulfill sales contracts90 103 Capitalized costs to obtain and fulfill sales contracts117 106 
Foreign exchange forwards on certain assets and liabilitiesForeign exchange forwards on certain assets and liabilities4 19 
OtherOther65 75 Other74 104 
Total other current assetsTotal other current assets$463 $389 Total other current assets$517 $583 
Other assets:Other assets:Other assets:
Investments in non-consolidated affiliatesInvestments in non-consolidated affiliates$504 $443 Investments in non-consolidated affiliates$520 $517 
Deposits for real-estate leasesDeposits for real-estate leases14 14 Deposits for real-estate leases15 15 
Indemnification assets related to acquisitionsIndemnification assets related to acquisitions109 106 Indemnification assets related to acquisitions112 110 
Mutual funds and fixed depositsMutual funds and fixed deposits80 89 Mutual funds and fixed deposits89 87 
Company owned life insurance (at contract value)Company owned life insurance (at contract value)38 37 Company owned life insurance (at contract value)44 40 
Costs to obtain sales contractsCosts to obtain sales contracts143 138 Costs to obtain sales contracts181 171 
Derivative instruments designated as accounting hedgesDerivative instruments designated as accounting hedges181 66 Derivative instruments designated as accounting hedges12 27 
Pension and other retirement employee benefitsPension and other retirement employee benefits73 77 Pension and other retirement employee benefits41 40 
OtherOther77 64 Other85 85 
Total other assetsTotal other assets$1,219 $1,034 Total other assets$1,099 $1,092 
Accounts payable and accrued liabilities:Accounts payable and accrued liabilities:Accounts payable and accrued liabilities:
Salaries and benefitsSalaries and benefits$154 $211 Salaries and benefits$135 $104 
Incentive compensationIncentive compensation155 324 Incentive compensation88 276 
Customer credits, advanced payments and advanced billingsCustomer credits, advanced payments and advanced billings83 100 Customer credits, advanced payments and advanced billings110 102 
DividendsDividends9 6 Dividends4 6 
Professional service feesProfessional service fees63 75 Professional service fees47 49 
Interest accrued on debt51 85 
Accrued interestAccrued interest85 144 
Accounts payableAccounts payable34 47 Accounts payable70 52 
Income taxesIncome taxes79 115 Income taxes84 86 
Pension and other retirement employee benefitsPension and other retirement employee benefits7 7 Pension and other retirement employee benefits7 7 
Accrued royaltiesAccrued royalties18 36 Accrued royalties31 23 
Foreign exchange forwards on certain assets and liabilitiesForeign exchange forwards on certain assets and liabilities28 12 Foreign exchange forwards on certain assets and liabilities1 2 
Restructuring liabilityRestructuring liability24 4 Restructuring liability37 65 
OtherOther102 120 Other106 95 
Total accounts payable and accrued liabilitiesTotal accounts payable and accrued liabilities$807 $1,142 Total accounts payable and accrued liabilities$805 $1,011 
Other liabilities:
Pension and other retirement employee benefits$212 $235 
Interest accrued on UTPs44 59 
MAKS indemnification provisions22 33 
Income tax liability - non-current portion23 23 
Derivative instruments designated as accounting hedges237 40 
Restructuring liability - non-current portion4 — 
Other46 48 
Total other liabilities$588 $438 

Other liabilities:
Pension and other retirement employee benefits$195 $189 
Interest accrued on UTPs28 47 
MAKS indemnification provisions19 23 
Income tax liability - non-current portion15 48 
Derivative instruments designated as accounting hedges307 317 
Other46 50 
Total other liabilities$610 $674 
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Allowance for credit losses:
During the nine months ended September 30, 2022, the Company increased its allowance for credit losses by $10 million. This increase was primarily due to reserves recorded for the Company's Russian-domiciled customers pursuant to the impacts of the Russia/Ukraine conflict, which is more fully described in Note 1.
Investments in non-consolidated affiliates:
The following table provides additional detail regarding Moody's investments in non-consolidated affiliates, as included in other assets in the consolidated balance sheets:
September 30, 2022December 31, 2021March 31, 2023December 31, 2022
Equity method investments (1)
Equity method investments (1)
$178 $121 
Equity method investments (1)
$190 $187 
Investments measured using the measurement alternative (2)
Investments measured using the measurement alternative (2)
321 318 
Investments measured using the measurement alternative (2)
325 325 
OtherOther5 4 Other5 5 
Total investments in non-consolidated affiliatesTotal investments in non-consolidated affiliates$504 $443 Total investments in non-consolidated affiliates$520 $517 
(1) Equity securities in which the Company has significant influence over the investee but does not have a controlling financial interest in accordance with ASC Topic 323.
(1) Equity securities in which the Company has significant influence over the investee but does not have a controlling financial interest in accordance with ASC Topic 323.
(1) Equity securities in which the Company has significant influence over the investee but does not have a controlling financial interest in accordance with ASC Topic 323.
(2) Equity securities without readily determinable fair value for which the Company has elected to apply the measurement alternative in accordance with ASC Topic 321.
(2) Equity securities without readily determinable fair value for which the Company has elected to apply the measurement alternative in accordance with ASC Topic 321.
(2) Equity securities without readily determinable fair value for which the Company has elected to apply the measurement alternative in accordance with ASC Topic 321.
Moody's holds various investments accounted for under the equity method, the most significant of which is the Company's minority investment in CCXI. Moody's also holds various investments measured using the measurement alternative, the most significant of which is the Company's minority interest in BitSight.
Earnings from non-consolidated affiliates, which are included within other non-operating income (expense), net, are disclosed within the table below.
Other non-operating income (expense), net:
The following table summarizes the components of other non-operating income (expense), net:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
FX gain/(loss) (1)
$13 $(2)$(9)$(2)
Purchase price hedge loss (2)
— (13)— (13)
Net periodic pension costs - other components6 4 18 5 
Income from investments in non-consolidated affiliates10 6 14 15 
Other(3)1 (1)13 
Total$26 $(4)$22 $18 
(1) FX loss for the nine months ended September 30, 2022 includes FX translation losses of $20 million reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia.
(2) The amounts for the three and nine months ended September 30, 2021 represent a loss in the prior year on a forward contract used to hedge a portion of the GBP denominated RMS purchase price.
Three Months Ended March 31,
20232022
FX (loss) gain (1)
$(26)$— 
Net periodic pension costs - other components9 6 
Income from investments in non-consolidated affiliates2 2 
Other(2)
15 (2)
Total$— $6 

(1) The amount for the three months ended March 31, 2023 includes a $23 million loss recorded pursuant to an immaterial out-of-period adjustment relating to the 2022 fiscal year.
(2) The amount for the three months ended March 31, 2023 reflects a benefit of $9 million related to the favorable resolutions of various tax matters and gains of $4 million on certain of the Company's investments.
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NOTE 14.13. COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table provides details about the reclassifications out of AOCL:
Three Months Ended September 30,Location in the consolidated statements of operations
Losses on cash flow hedges20222021
Interest rate contract$(1)$(1)Other non-operating income, net
Income tax effect of item above1 — Provision for income taxes
Total net gains (losses) on cash flow hedges— (1)
Pension and other retirement benefits
Amortization of actuarial losses and prior service costs included in net income(1)(2)Other non-operating income, net
Settlement charge— (1)Other non-operating income, net
Total before income taxes(1)(3)
Income tax effect of items above— 1 Provision for income taxes
Total pension and other retirement benefits(1)(2)
Total net losses included in Net Income attributable to reclassifications out of AOCL$(1)$(3)
Nine Months Ended September 30,Location in the consolidated statements of operations
Losses on currency translation adjustments20222021
Foreign currency translation adjustments - reclassification of losses included in net income$(20)$— Other non-operating income, net
Total losses on currency translation adjustments(20)— 
Losses on cash flow hedges
Interest rate contract(2)(2)Other non-operating income, net
Income tax effect of item above1 — Provision for income taxes
Total net losses on cash flow hedges(1)(2)
Gains (losses) on net investment hedges
FX forwards— 2 Other non-operating income, net
Income tax effect of item above— (1)Provision for income taxes
Total net gains on net investment hedges— 1 
Pension and other retirement benefits
Amortization of actuarial losses and prior service costs included in net income(2)(8)Other non-operating income, net
Settlement charge— (8)Other non-operating income, net
Total before income taxes(2)(16)
Income tax effect of item above— 4 Provision for income taxes
Total pension and other retirement benefits(2)(12)
Total net losses included in Net Income attributable to reclassifications out of AOCL$(23)$(13)

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The following tables show changes in AOCL by component (net of tax):
Three Months Ended September 30,
20222021
Gains/(Losses)Pension and Other Retirement BenefitsCash Flow HedgesForeign Currency Translation AdjustmentsNet Investment HedgesTotalPension and Other Retirement BenefitsCash Flow HedgesForeign Currency Translation AdjustmentsNet Investment HedgesTotal
Balance at June 30,$(46)$(46)$(756)$249 $(599)$(108)$(48)$(152)$(117)$(425)
Other comprehensive income/(loss) before reclassifications— — (343)193 (150)3 — (116)73 (40)
Amounts reclassified from AOCL1 — — — 1 2 1 — — 3 
Other comprehensive income/(loss)1 — (343)193 (149)5 1 (116)73 (37)
Balance at September 30,$(45)$(46)$(1,099)$442 $(748)$(103)$(47)$(268)$(44)$(462)
Nine Months Ended September 30,
20222021
Gains/(Losses)Pension and Other Retirement BenefitsCash Flow HedgesForeign Currency Translation AdjustmentsNet Investment HedgesTotalPension and Other Retirement BenefitsCash Flow HedgesForeign Currency Translation AdjustmentsNet Investment HedgesTotal
Balance at December 31,$(49)$(47)$(335)$21 $(410)$(118)$(49)$(45)$(220)$(432)
Other comprehensive income/(loss) before reclassifications2 — (784)421 (361)3 — (223)177 (43)
Amounts reclassified from AOCL2 1 20 — 23 12 2 — (1)13 
Other comprehensive income/(loss)4 1 (764)421 (338)15 2 (223)176 (30)
Balance at September 30,$(45)$(46)$(1,099)$442 $(748)$(103)$(47)$(268)$(44)$(462)
Three Months Ended March 31,
20232022
Gains/(Losses)Pension and Other Retirement BenefitsCash Flow HedgesForeign Currency Translation AdjustmentsNet Investment HedgesTotalPension and Other Retirement BenefitsCash Flow HedgesForeign Currency Translation AdjustmentsNet Investment HedgesTotal
Balance at December 31,$(47)$(45)$(736)$185 $(643)$(49)$(47)$(335)$21 $(410)
Other comprehensive income/(loss) before reclassifications— — 110 (57)53 (2)— (107)47 (62)
Amounts reclassified from AOCL— 1 — — 1 — 1 — — 1 
Other comprehensive income/(loss)— 1 110 (57)54 (2)1 (107)47 (61)
Balance at March 31,$(47)$(44)$(626)$128 $(589)$(51)$(46)$(442)$68 $(471)
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NOTE 15.14. INDEBTEDNESS
The Company’s debt is recorded at its carrying amount, which represents the issuance amount plus or minus any issuance premium or discount, except for certain debt as depicted in the table below, which is recorded at the carrying amount adjusted for the fair value of an interest rate swap used to hedge the fair value of the note.
The following table summarizes total indebtedness:
September 30, 2022
March 31, 2023March 31, 2023
Notes Payable:Notes Payable:Principal Amount
Fair Value of Interest Rate Swaps (1)
Unamortized (Discount) PremiumUnamortized Debt Issuance CostsCarrying ValueNotes Payable:Principal Amount
Fair Value of Interest Rate Swaps (1)
Unamortized (Discount) PremiumUnamortized Debt Issuance CostsCarrying Value
4.875% 2013 Senior Notes, due 20244.875% 2013 Senior Notes, due 2024$500 $— $(1)$(1)$498 4.875% 2013 Senior Notes, due 2024$500 $— $— $(1)$499 
5.25% 2014 Senior Notes, due 20445.25% 2014 Senior Notes, due 2044600 (42)3 (5)556 5.25% 2014 Senior Notes, due 2044600 (37)3 (4)562 
1.75% 2015 Senior Notes, due 20271.75% 2015 Senior Notes, due 2027490 — — (2)488 1.75% 2015 Senior Notes, due 2027543 — — (2)541 
3.25% 2017 Senior Notes, due 20283.25% 2017 Senior Notes, due 2028500 (38)(3)(2)457 3.25% 2017 Senior Notes, due 2028500 (31)(3)(2)464 
4.25% 2018 Senior Notes, due 20294.25% 2018 Senior Notes, due 2029400 (41)(2)(2)355 4.25% 2018 Senior Notes, due 2029400 (34)(2)(2)362 
4.875% 2018 Senior Notes, due 20484.875% 2018 Senior Notes, due 2048400 (44)(6)(4)346 4.875% 2018 Senior Notes, due 2048400 (38)(6)(4)352 
0.950% 2019 Senior Notes, due 20300.950% 2019 Senior Notes, due 2030735 — (2)(4)729 0.950% 2019 Senior Notes, due 2030815 — (2)(4)809 
3.75% 2020 Senior Notes, due 20253.75% 2020 Senior Notes, due 2025700 (28)(1)(3)668 3.75% 2020 Senior Notes, due 2025700 (23)— (3)674 
3.25% 2020 Senior Notes, due 20503.25% 2020 Senior Notes, due 2050300 — (4)(3)293 3.25% 2020 Senior Notes, due 2050300 — (4)(3)293 
2.55% 2020 Senior Notes, due 20602.55% 2020 Senior Notes, due 2060500 — (4)(5)491 2.55% 2020 Senior Notes, due 2060300 — (2)(3)295 
2.00% 2021 Senior Notes, due 20312.00% 2021 Senior Notes, due 2031600 — (7)(4)589 2.00% 2021 Senior Notes, due 2031600 — (7)(4)589 
2.75% 2021 Senior Notes, due 20412.75% 2021 Senior Notes, due 2041600 — (13)(5)582 2.75% 2021 Senior Notes, due 2041600 — (13)(5)582 
3.10% 2021 Senior Notes, due 20613.10% 2021 Senior Notes, due 2061500 — (7)(5)488 3.10% 2021 Senior Notes, due 2061500 — (7)(5)488 
3.75% 2022 Senior Notes, due 20523.75% 2022 Senior Notes, due 2052500 (32)(9)(5)454 3.75% 2022 Senior Notes, due 2052500 (21)(8)(5)466 
4.25% 2022 Senior Notes, due 20324.25% 2022 Senior Notes, due 2032500 (12)(2)(4)482 4.25% 2022 Senior Notes, due 2032500 (8)(2)(4)486 
Total debtTotal debt$7,758 $(192)$(53)$(51)$7,462 
Current portionCurrent portion(499)
Total long-term debtTotal long-term debt$7,825 $(237)$(58)$(54)$7,476 Total long-term debt$6,963 
December 31, 2021
December 31, 2022December 31, 2022
Notes Payable:Notes Payable:Principal Amount
Fair Value of Interest Rate Swaps (1)
Unamortized (Discount) PremiumUnamortized Debt Issuance CostsCarrying ValueNotes Payable:Principal Amount
Fair Value of Interest Rate Swaps (1)
Unamortized (Discount) PremiumUnamortized Debt Issuance CostsCarrying Value
4.875% 2013 Senior Notes, due 20244.875% 2013 Senior Notes, due 2024$500 $— $(1)$(1)$498 4.875% 2013 Senior Notes, due 2024$500 $— $(1)$(1)$498 
5.25% 2014 Senior Notes, due 20445.25% 2014 Senior Notes, due 2044600 (7)3 (5)591 5.25% 2014 Senior Notes, due 2044600 (42)3 (4)557 
1.75% 2015 Senior Notes, due 20271.75% 2015 Senior Notes, due 2027568 — — (2)566 1.75% 2015 Senior Notes, due 2027534 — — (2)532 
2.625% 2017 Senior Notes, due 2023500 5 — (1)504 
3.25% 2017 Senior Notes, due 20283.25% 2017 Senior Notes, due 2028500 8 (3)(2)503 3.25% 2017 Senior Notes, due 2028500 (37)(3)(2)458 
4.25% 2018 Senior Notes, due 20294.25% 2018 Senior Notes, due 2029400 — (2)(2)396 4.25% 2018 Senior Notes, due 2029400 (42)(2)(2)354 
4.875% 2018 Senior Notes, due 20484.875% 2018 Senior Notes, due 2048400 (7)(6)(4)383 4.875% 2018 Senior Notes, due 2048400 (44)(6)(4)346 
0.950% 2019 Senior Notes, due 20300.950% 2019 Senior Notes, due 2030853 — (2)(5)846 0.950% 2019 Senior Notes, due 2030800 — (2)(4)794 
3.75% 2020 Senior Notes, due 20253.75% 2020 Senior Notes, due 2025700 (9)(1)(4)686 3.75% 2020 Senior Notes, due 2025700 (27)(1)(3)669 
3.25% 2020 Senior Notes, due 20503.25% 2020 Senior Notes, due 2050300 — (4)(3)293 3.25% 2020 Senior Notes, due 2050300 — (4)(3)293 
2.55% 2020 Senior Notes, due 20602.55% 2020 Senior Notes, due 2060500 — (4)(5)491 2.55% 2020 Senior Notes, due 2060300 — (2)(3)295 
2.00% 2021 Senior Notes, due 20312.00% 2021 Senior Notes, due 2031600 — (8)(5)587 2.00% 2021 Senior Notes, due 2031600 — (7)(4)589 
2.75% 2021 Senior Notes, due 20412.75% 2021 Senior Notes, due 2041600 — (13)(6)581 2.75% 2021 Senior Notes, due 2041600 — (13)(5)582 
3.10% 2021 Senior Notes, due 20613.10% 2021 Senior Notes, due 2061500 — (7)(5)488 3.10% 2021 Senior Notes, due 2061500 — (7)(5)488 
3.75% 2022 Senior Notes, due 20523.75% 2022 Senior Notes, due 2052500 (35)(8)(5)452 
4.25% 2022 Senior Notes, due 20324.25% 2022 Senior Notes, due 2032500 (12)(2)(4)482 
Total long-term debtTotal long-term debt$7,521 $(10)$(48)$(50)$7,413 Total long-term debt$7,734 $(239)$(55)$(51)$7,389 
(1) The fair value of interest rate swaps in the table above represents the cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged debt.
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Notes Payable
In the first nine months of 2022, the Company issued the 2022 Senior Notes due 2052 and the 2022 Senior Notes due 2032. The key terms of this debt issuance are set forth in the table above.
Additionally, in the first nine months of 2022, the Company fully repaid $500 million of the 2017 Senior Notes due 2023.
At September 30, 2022,March 31, 2023, the Company was in compliance with all covenants contained within all of the debt agreements. All the debt agreements contain cross default provisions which state that default under one of the aforementioned debt instruments could in turn permit lenders under other debt instruments to declare borrowings outstanding under those instruments to be immediately due and payable. As of September 30, 2022,March 31, 2023, there were no such cross defaults.
The repayment schedule for the Company’s borrowings is as follows:
Year Ending December 31,Year Ending December 31,Year Ending TotalYear Ending December 31,Year Ending Total
2022 (After September 30,)$— 
2023— 
2023 (After March 31,)2023 (After March 31,)$— 
20242024500 2024500 
20252025700 2025700 
20262026— 2026— 
20272027543 
ThereafterThereafter6,625 Thereafter6,015 
TotalTotal$7,825 Total$7,758 
Interest expense, net
The following table summarizes the components of interest as presented in the consolidated statements of operations and the cash paid for interest:
Three Months Ended
September 30,
Nine Months Ended September 30,
Three Months Ended
March 31,
202220212022202120232022
IncomeIncome$5 $3 $9 $7 Income$10 $2 
Expense on borrowingsExpense on borrowings(54)(47)(152)(129)Expense on borrowings(70)(48)
Income (expense) on UTPs and other tax related liabilities(2)(1)
Income (expense) on UTPs and other tax related liabilities(2)(1)
(5)(5)(11)25 
Income (expense) on UTPs and other tax related liabilities(2)(1)
18 (3)
Net periodic pension costs - interest componentNet periodic pension costs - interest component(4)(4)(12)(12)Net periodic pension costs - interest component(6)(4)
Interest expense, netInterest expense, net$(58)$(53)$(166)$(109)Interest expense, net$(48)$(53)
Interest paid(1)(2)
Interest paid(1)(2)
$77 $53 $167 $139 
Interest paid(1)(2)
$96 $78 
(1) The amount for the three months ended March 31, 2023 reflects a $22 million reduction of tax-related interest expense primarily related to the resolutions of tax matters.
(2)Interest paid includes net settlements on interest rate swaps more fully discussed in Note 9.
(2) Income (expense) on UTPs and other tax related liabilities for the nine months ended September 30, 2021 includes a $40 million benefit relating to the reversal of tax-related interest accruals pursuant to the resolution of tax matters.8.
The fair value and carrying value of the Company’s debt as of September 30, 2022March 31, 2023 and December 31, 20212022 are as follows:
September 30, 2022December 31, 2021
Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Long-term debt$7,476 $6,426 $7,413 $7,982 
March 31, 2023December 31, 2022
Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Long-term debt$7,462 $6,744 $7,389 $6,564 
The fair value of the Company’s long-term debt is estimated based on quoted market prices for similar instruments. Accordingly, the inputs used to estimate the fair valuein active markets as of the Company’s long-term debtreporting date, which are classified asconsidered Level 21 inputs within the fair value hierarchy.

NOTE 16. LEASE COMMITMENTS15. LEASES
The Company has operating leases, substantially all of which relate to the lease of office space. The Company’s leases which are classified as finance leases are not material to the consolidated financial statements. Certain of the Company’s leases include options to renew, with renewal terms that can extend the lease term from one year to 20 years at the Company’s discretion.
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The following table presents the components of the Company’s lease cost:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202220212022202120232022
Operating lease costOperating lease cost$25 $24 $77 $71 Operating lease cost$24 $27 
Sublease incomeSublease income(2)(2)(6)(4)Sublease income(2)(2)
Variable lease costVariable lease cost5 5 15 15 Variable lease cost5 5 
Total lease costTotal lease cost$28 $27 $86 $82 Total lease cost$27 $30 
The following tables present other information related to the Company’s operating leases:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202220212022202120232022
Cash paid for amounts included in the measurement of operating lease liabilitiesCash paid for amounts included in the measurement of operating lease liabilities$29 $27 $89 $83 Cash paid for amounts included in the measurement of operating lease liabilities$30 $31 
Right-of-use assets obtained in exchange for new operating lease liabilitiesRight-of-use assets obtained in exchange for new operating lease liabilities$1 $117 $31 $123 Right-of-use assets obtained in exchange for new operating lease liabilities$5 $15 
September 30, 2022September 30, 2021March 31, 2023March 31, 2022
Weighted-average remaining lease termWeighted-average remaining lease term5.1 years5.9 yearsWeighted-average remaining lease term4.8 years5.5 years
Weighted-average discount rate applied to operating leasesWeighted-average discount rate applied to operating leases3.1 %3.1 %Weighted-average discount rate applied to operating leases3.1 %3.1 %
The following table presents a maturity analysis of the future minimum lease payments included within the Company’s operating lease liabilities at September 30, 2022:March 31, 2023:
Year Ending December 31,Year Ending December 31,Operating LeasesYear Ending December 31,Operating Leases
2022 (After September 30,)$29 
2023117 
2023 (After March 31,)2023 (After March 31,)$90 
20242024111 2024113 
2025202596 2025100 
2026202678 202681 
After 2026102 
2027202765 
After 2027After 202741 
Total lease payments (undiscounted)Total lease payments (undiscounted)533 Total lease payments (undiscounted)490 
Less: InterestLess: Interest40 Less: Interest35 
Present value of lease liabilities:Present value of lease liabilities:$493 Present value of lease liabilities:$455 
Lease liabilities - currentLease liabilities - current$104 Lease liabilities - current$106 
Lease liabilities - noncurrentLease liabilities - noncurrent$389 Lease liabilities - noncurrent$349 
NOTE 17.16. CONTINGENCIES
Given the nature of the Company's activities, Moody’s and its subsidiaries are subject to legal and tax proceedings, governmental, regulatory and legislative investigations, subpoenas and other inquiries, and claims and litigation by governmental and private parties that are based on ratings assigned by MIS or that are otherwise incidental to the Company’s business. Moody’s and MIS also are subject to periodic reviews, inspections, examinations and investigations by regulators in the U.S. and other jurisdictions, any of which may result in claims, legal proceedings, assessments, fines, penalties or restrictions on business activities. Moody’s also is subject to ongoing tax audits as addressed in Note 4 to the condensed consolidated financial statements.
Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available. For claims, litigation and proceedings and governmental investigations and inquiries not related to income taxes, the Company records liabilities in the consolidated financial statements when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated and periodically adjusts these as appropriate. When the reasonable estimate of the loss is within a range of amounts, the minimum amount of the range is accrued unless some higher amount within the range is a better estimate than another amount within the range. In instances when a loss is reasonably possible but uncertainties exist related to the probable outcome and/or the amount or range of loss, management does not record a liability but discloses the contingency if material. As additional information becomes available, the Company adjusts its assessments and estimates of such matters accordingly. Moody’s also discloses material pending legal proceedings pursuant to SEC rules and other pending matters as it may determine to be appropriate.
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In view of the inherent difficulty of assessing the potential outcome of legal proceedings, governmental, regulatory and legislative investigations and inquiries, claims and litigation and similar matters and contingencies, particularly when the claimants seek large or indeterminate damages or assert novel legal theories or the matters involve a large number of parties, the Company often cannot predict what the eventual outcome of the pending matters will be or the timing of any resolution of such matters. The Company also may be unable to predict the impact (if any) that any such matters may have on how its business is conducted, on its competitive position or on its financial position, results of operations or cash flows. As the process to resolve any pending matters progresses, management will continue to review the latest information available and assess its ability to predict the outcome of such matters and the effects, if any, on its operations and financial condition and to accrue for and disclose such matters as and when required. However, because such matters are inherently unpredictable and unfavorable developments or resolutions can occur, the ultimate outcome of such matters, including the amount of any loss, may differ from those estimates.
NOTE 18.17. SEGMENT INFORMATION
The Company is organized into two operating segments: MISMA and MAMIS and accordingly, the Company reports in two reportable segments: MISMA and MA.MIS.
The MA segment develops a wide range of products and services that support the risk management activities of institutional participants in global financial markets. The MA segment consists of three LOBs - Decision Solutions, Research and Insights, and Data and Information.
The MIS segment consists of five LOBs. The CFG, FIG, PPIF and SFG LOBs generate revenue principally from fees for the assignment and ongoing monitoring of credit ratings on debt obligations and the entities that issue such obligations in markets worldwide. The MIS Other LOB primarily consists of financial instruments pricing services in the Asia-Pacific region, ICRA non-ratings revenue and revenue from providing ESG research, dataprofessional services.
Revenue for MA and assessments.
Theexpenses for MIS include an intersegment fee charged to MIS from MA segment develops a wide range offor certain MA products and services that support the risk management activities of institutional participantsutilized in global financial markets. The MA segment consists of three LOBs - Decision Solutions, Research and Insights, and Data and Information.
RevenueMIS’s ratings process. Additionally, revenue for MIS and expenses for MA include intersegment fees charged to MA for the rights to use and distribute content, data and products developed by MIS. Additionally, revenue for MA and expenses for MIS include an intersegment fee charged to MIS from MA for certain MA products and services utilized in MIS’s ratings process. These intersegment fees are generally based on the market value of the products and services being transferred between the segments.
Overhead expenses include costs such as rent and occupancy, information technology and support staff such as finance, human resources and legal. Such costs and corporate expenses that exclusively benefit one segment are fully charged to that segment.
For overhead costs and corporate expenses that benefit both segments, costs are allocated to each segment based on the segment’s share of full-year 2018 actual revenue which comprises a “Baseline Pool” established in 2019, which will remain fixed over time. In subsequent periods, incremental overhead costs (or reductions thereof) will be allocated to each segment based on the prevailing shares of total revenue represented by each segment.
“Eliminations” in the following table represent intersegment revenue/expense. Moody’s does not report the Company’s assets by reportable segment, as this metric is not used by the chief operating decision maker to allocate resources to the segments. Consequently, it is not practical to show assets by reportable segment.
Financial Information by Segment
The table below shows revenue and Adjusted Operating Income by reportable segment. Adjusted Operating Income is a financial metric utilized by the Company’s chief operating decision maker to assess the profitability of each reportable segment. Refer to Note 2 for further details on the components of the Company’s revenue.
Three Months Ended September 30,Three Months Ended March 31,
2022202120232022
MISMAEliminationsConsolidatedMISMAEliminationsConsolidatedMAMISEliminationsConsolidatedMAMISEliminationsConsolidated
Total external revenueTotal external revenue$590 $685 $— $1,275 $925 $601 $— $1,526 Total external revenue$737 $733 $— $1,470 $695 $827 $— $1,522 
Intersegment revenueIntersegment revenue43 2 (45)— 42 2 (44)— Intersegment revenue3 45 (48)— 2 43 (45)— 
RevenueRevenue633 687 (45)1,275 967 603 (44)1,526 Revenue740 778 (48)1,470 697 870 (45)1,522 
Operating, SG&AOperating, SG&A344 479 (45)778 387 446 (44)789 Operating, SG&A526 336 (48)814 473 360 (45)788 
Adjusted Operating IncomeAdjusted Operating Income$289 $208 $— $497 $580 $157 $— $737 Adjusted Operating Income$214 $442 $— $656 $224 $510 $— $734 
Add:Add:

Add:

Depreciation and
amortization		Depreciation and
amortization		21 62 — 83 17 44 — 61 Depreciation and
amortization		70 18 — 88 60 18 — 78 
RestructuringRestructuring— 1 — 1 — — — — Restructuring8 6 — 14 — — — — 
Operating IncomeOperating Income$413 $676 Operating Income$554 $656 
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Nine Months Ended September 30,
20222021
MISMAEliminationsConsolidatedMISMAEliminationsConsolidated
Total external revenue$2,123 $2,055 $— $4,178 $2,941 $1,738 $— $4,679 
Intersegment revenue129 5 (134)— 124 6 (130)— 
Revenue2,252 2,060 (134)4,178 3,065 1,744 (130)4,679 
Operating, SG&A1,038 1,423 (134)2,327 1,079 1,218 (130)2,167 
Adjusted Operating Income$1,214 $637 $— $1,851 $1,986 $526 $— $2,512 
Add:
Depreciation and amortization60 182 — 242 53 127 — 180 
Restructuring15 17 — 32 — 2 — 2 
Operating Income$1,577 $2,330 
The table below shows cumulative restructuring charge for the MAexpense incurred through March 31, 2023 by reportable segment relatedsegment.
MAMISTotal
2022 - 2023 Geolocation Restructuring Program$57 $70 $127 
The costs expected to the 2020 MA Strategic Reorganization Restructuring Program is $19 million. The cumulative restructuring charge for the MIS and MA reportable segmentsbe incurred related to the 2022 - 2023 Geolocation Restructuring Program is $15are $75 million - $100 million for the MA segment and $18$80 million respectively. - $90 million for the MIS segment.
The restructuring programs areprogram is more fully discussed in Note 11.10.
Consolidated Revenue Information by Geographic Area
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202220212022202120232022
United StatesUnited States$668 $841 $2,214 $2,557 United States$770 $823 
Non-U.S.:Non-U.S.:Non-U.S.:
EMEAEMEA393 443 1,271 1,402 EMEA451 457 
Asia-PacificAsia-Pacific129 149 422 460 Asia-Pacific151 141 
AmericasAmericas85 93 271 260 Americas98 101 
Total Non-U.S.Total Non-U.S.607 685 1,964 2,122 Total Non-U.S.700 699 
TotalTotal$1,275 $1,526 $4,178 $4,679 Total$1,470 $1,522 
NOTE 19.18. SUBSEQUENT EVENT
On OctoberApril 24, 2022,2023, the Board approved the declaration of a quarterly dividend of $0.70$0.77 per share of Moody’s common stock, payable on December 14, 2022June 9, 2023 to shareholders of record at the close of business on November 23, 2022.May 19, 2023.
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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
This discussion and analysis of financial condition and results of operations should be read in conjunction with the Moody’s Corporation condensed consolidated financial statements and notes thereto included elsewhere in this quarterly report on Form 10–Q.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains Forward-Looking Statements. See “Forward-Looking Statements” commencing on page 7954 for a discussion of uncertainties, risks and other factors associated with these statements.
THE COMPANY
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.
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.
07 - MA_RGB_Blue.jpg

01 - MCO_RGB_Blue_550x375.jpg

03 - MIS_RGB_Blue.jpg
08 - MA financial intelligence.jpg
Provider of financial intelligence and analytical tools supporting customers’ growth, efficiency and risk management objectives
02 - MCO leading global provider.jpg
Global integrated risk assessment firm providing credit rating opinions, analytical solutions and insights that empower organizations to make better, faster decisions
04 - MIS independent provider.jpg
Independent provider of credit rating opinions and related information for over 100 years
MA is a global provider of: i) data and information; ii) research and insights; and iii) decision solutions, which help companies make better and faster decisions. 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.
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.
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. As part of this effort, Moody’s advances sustainability by considering environmental, social, and governance (“ESG”) factors throughoutin 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. 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); International Sustainability Accounting Standards Board (SASB)(ISSB); and the World Economic Forum (WEF)’s Stakeholder Capitalism metrics. On April 20, 2023, Moody's also issues anissued its 2022 annual reportreports on Stakeholder Sustainability and on how the Company has implemented the Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations.. Moody’s sustainability-related achievements during the first three quartersquarter of 20222023 included the following:
–Validated Moody’s long-term net-zero targets with SBTi;
–Rolled out an all-employee training on Sustainability and ESG;
–Named 20212022 CDP Supplier Engagement Leader on Climate Action for secondthird consecutive year;
–Awarded Best ESG Reporting (large-cap) from IR Magazine U.S. 2022Recognized among America’s 100 Most JUST Companies by JUST Capital and ‘Sustainability reporting ofCNBC for its commitment to serving its workforce, customers, communities, the year – Americas’ from Environmental Finance Company Awards 2022;
–Published Moody’s 2021 Stakeholder Sustainability reportenvironment, and 2021 TCFD report;
–Issued an inaugural global tax policy;stockholders; and
–Updated Moody’s decarbonization planNamed to Bloomberg Gender-Equality Index for fourth consecutive year.
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 Audit Committee oversees financial, risk and other disclosures made in the Company’s annual and quarterly reports related to sustainability and has overseen the expanded voluntary disclosures the Company has made in its periodic filings. The Governance & Nominating Committee oversees sustainability matters, including significant issues of corporate social and environmental responsibility, as they pertain to the Company’s business and to long-term value creation for the Company and its stockholders, and makes recommendations to the Board regarding these issues. This has helped to develop the Company’s robust ESG strategy. Finally, the Compensation & Human Resources Committee oversees inclusion of sustainability-related performance goals for determining compensation of all senior executives. This oversight has resulted in the Company more fully integrating sustainability-related performance metrics into the strategic & operational compensation metric of all senior executives. The Board also oversees Moody’s policies for assessing and managing ourthe Company's exposure to risk, including climate-related risks such as business continuity disruption.disruption and reputational or credibility concerns stemming from incorporation of climate-related risks into the credit methodologies and credit ratings of MIS.
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Three Pillars of Moody's Sustainability Strategy
3.0 Better Business icon.jpg
3.0 Better Lives icon.jpg
3.0 Better Solutions icon.jpg
Better BusinessBetter LivesBetter Solutions
For Moody's operations and value chainFor Moody's people and communitiesFor market transformation
Strive to embed responsible, sustainable decision-making into our operations and value chain.Aim to foster a nurturing and inclusive culture across Moody's people and communities.Deliver trusted perspectives on financial materiality and sustainability performance that help our customers decode risk and unlock opportunity.
Current Matters Impacting Moody's Business
Current Macroeconomic Uncertainties/Market Volatility
The Company is monitoringcontinues to monitor current macroeconomic and geopolitical uncertainties that have contributed to declines in rated issuance volumes beginning in 2022.2022, which have continued into the first quarter of 2023. These uncertainties include, but are not limited to: i) increasing inflation; ii) rising interest rates; and iii) volatility in the global capital markets partly resulting from the ongoing Russia/Ukraine conflict (further discussed below) and the failures of certain banking institutions in the first quarter of 2023. 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 in 2022 has resulted in declines in rated issuance volumes, the Company believes that these declines are predominantly transitory 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 ratingsrated issuance volumes. Refer to Item 1A. “Risk Factors” contained in the Company’s annual report on Form 10-K for the year ended December 31, 20212022 for further disclosure relating to these risks.
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Russia/Ukraine Conflict
The Company is closely monitoring the impact of the ongoing Russia/Ukraine conflict on all aspects of its business. In response to the conflict, the Company is no longer conducting commercial operations in Russia for both MISMA and MAMIS 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.
While Moody's Russian operations and net assets are not material, broader global market volatility, which partially relates to uncertainties surrounding the conflict, has contributed to an adverse impact on rated issuance volumes in 2022.volumes. This impact to rated issuance volumes is more fully discussed in the "Results of Operations" section of this MD&A. 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.
COVID-19
The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. The Company continues to monitor regional developments relating to the COVID-19 pandemic to inform decisions regarding its offices and its business travel policies. As of the date of the filing of this quarterly report on Form 10-Q, the Company has reopened all of its offices for employees to access.
The COVID-19 pandemic has not had a material adverse impact on the Company's reported results to date and is currently not expected to have a material adverse impact on its near-term outlook. However, Moody's is unable to predict the longer-term impact that the pandemic may have on its business, future results of operations, financial position or cash flows due to numerous uncertainties. Refer to Item 1A. “Risk Factors” contained in the Company’s annual report on Form 10-K for the year ended December 31, 2021 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. The preparation of these financial statements requires Moody’s to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and revenue and expenses during the reporting periods. These estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, Moody’s evaluates its estimates, including those related to revenue recognition, accounts receivable allowances, contingencies, restructuring, goodwill and acquired intangible assets, pension and other retirement benefits, stock-based compensation, and income taxes. Actual results may differ from these estimates under different assumptions or conditions. Item 7, MD&A, in the Company’s annual report on Form 10-K for the year ended December 31, 2021, includes descriptions of some of the judgments that Moody’s makes in applying its accounting estimates in these areas. Since the date of the annual report on Form 10-K, there have been no material changes to the Company’s critical accounting estimates disclosures other than the update below relating to the results of the Company's annual impairment assessment as of July 31, 2022.
Goodwill and Other Acquired Intangible Assets
On 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). At July 31, 2022, the Company has four reporting units: two within the Company's ratings business (one for the ICRA business and one that encompasses all of Moody's other ratings operations) and 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.
The Company evaluates the recoverability of goodwill using a two-step impairment test approach at the reporting unit level. In the first step, the Company assesses various qualitative factors to determine whether the fair value of a reporting unit may be less than its carrying amount. If a determination is made based on the qualitative factors that an impairment does not exist, the Company is not required to perform further testing. If the aforementioned qualitative assessment results in the Company concluding that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount, the fair value of the reporting unit will be quantitatively determined and compared to its carrying value including goodwill. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and the Company is not required to perform further testing. If the fair value of the reporting unit is less than the carrying value, the Company will record a goodwill impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value. The Company evaluates its reporting units on an annual basis, or more frequently if there are changes in the reporting structure of the Company due to acquisitions, realignments or if there are indicators of potential impairment. For the reporting units where the Company is consistently able to conclude that no impairment exists using only a qualitative approach, the Company’s accounting policy is to perform the second step of the aforementioned goodwill impairment assessment at least once every three years.
The Company last performed quantitative assessments on all reporting units at July 31, 2021, pursuant to a change in reporting unit structure in the MA reportable segment, which is more fully discussed in Item 7, MD&A, in the Company's annual report on Form 10-K for the year ended December 31, 2021. The quantitative assessments performed at July 31, 2021 resulted in fair values that significantly exceeded carrying values for all reporting units.
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Determining the fair value of a reporting unit involves the use of significant estimates and assumptions, which are more fully described within Item 7, MD&A, in the Company’s annual report on Form 10-K for the year ended December 31, 2021. In addition, the Company also makes certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of its reporting units.
Annual goodwill impairment assessment performed at July 31, 2022
At July 31, 2022, the Company performed a qualitative assessment for each of the reporting units. The qualitative analyses resulted in the Company determining that it was not more likely than not that the fair value of any reporting unit was less than its carrying amount.
Reportable Segments
The Company is organized into two reportable segments as of September 30, 2022:March 31, 2023: MA and MIS, and MA, which are more fully described in the section entitled “The Company” above and in Note 1817 to the condensed consolidated financial statements.
Reclassification
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Table of Previously Reported Revenue by LOB
In the first quarter of 2022, the Company realigned its revenue by LOB reporting structure for the MA operating segment to enhance insight and transparency into this business. As of January 1, 2022, the MA LOBs have been realigned from RD&A and ERS to:
–Decision Solutions (DS) - provides software and workflow tools for specific use cases (banking, insurance, KYC/KYS, CRE and structured finance solutions). This LOB utilizes components from the Data & Information and Research & Insights LOBs to provide integrated risk solutions;Contents
–Research & Insights (R&I) - provides models, scores, expert insights and commentary. This LOB includes: credit research; credit models and analytics; and economics data and models; and
–Data & Information (D&I) - provides vast data sets on companies and securities via data feeds and data applications products.
Prior year revenue by LOB amounts have been reclassified to conform to the new LOB reporting structure, which is presented below in the section entitled "Results of Operations."
RESULTS OF OPERATIONS
Impact of acquisitions on comparative results
Moody’s completed the following acquisitions, which impact the Company's year-over-year comparative results:
–Cortera on March 19, 2021;
–RMS on September 15, 2021;
–RealXData on September 17, 2021;
–PassFort on November 30, 2021; and
–kompany on February 28, 2022.
Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definitions of how the Company determines certain organic growth measures used in this MD&A that exclude the impact of acquisition activity.
The following footnotes are applicable throughout the discussion of the Company's results of operations:
(1) Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.
(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.
(3) Adjusted Operating Income, Adjusted Operating Margin and Adjusted Diluted EPS are non-GAAP financial measures. Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for further information regarding these measures.
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Three months ended September 30, 2022March 31, 2023 compared with three months ended September 30, 2021March 31, 2022
Executive Summary
The following table provides an executive summary of key operating results for the quarter ended September 30, 2022.March 31, 2023. Following this executive summary is a more detailed discussion of the Company’s operating results as well as a discussion of the operating results of the Company’s reportable segments.
Three Months Ended
September 30,
Three Months Ended
March 31,
Financial measure:Financial measure:20222021% Change Favorable
(Unfavorable)		Insight and Key Drivers of Change Compared to Prior YearFinancial measure:20232022% Change Favorable
(Unfavorable)		Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenueMoody's total revenue$1,275 $1,526 (16 %)— reflects lower MIS revenue partially offset by growth in MAMoody's total revenue$1,470 $1,522 (3 %)— reflects lower MIS revenue partially offset by growth in MA
MA external revenueMA external revenue$737 $695 6 %
— sustained demand for KYC and insurance solutions as well as ratings data feeds; partially offset by:
— unfavorable changes in FX translation rates
MIS external revenueMIS external revenue$590 $925 (36 %)— 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 concernsMIS external revenue$733 $827 (11 %)— ongoing uncertainty around inflation, interest rates, recessionary concerns and stress in the banking sector broadly impacted credit markets, constraining rated issuance volumes across most LOBs
MA external revenue$685 $601 14 %
— inorganic growth from acquisitions; and
— sustained demand for Know Your Customer solutions, credit research and insights, and data feeds; partially offset by:
— unfavorable changes in FX translation rates
Total operating and SG&A expensesTotal operating and SG&A expenses$778 $789 1 %
— operational and integration costs associated with recent acquisitions; and
— increases in hiring and salary growth;
offset by:
— lower incentive compensation accruals and performance-based equity compensation; and
— favorable changes in FX translation rates
Total operating and SG&A expenses$814 $788 (3 %)
— higher incentive compensation accruals;
— hiring in MA coupled with annual salary increases; and
— costs to support organic investments;
 partially offset by:
— favorable changes in FX translation rates; and
— benefits from cost management initiatives
Depreciation and amortizationDepreciation and amortization$83 $61 (36 %)
— higher amortization of intangible assets reflecting recent M&A activity (most notably RMS); and
— higher amortization relating to internally developed software
Depreciation and amortization$88 $78 (13 %)— higher amortization relating to internally developed software, primarily related to the development of MA SaaS solutions
RestructuringRestructuring$14 $— NM— relates to the Company's 2022 - 2023 Geolocation Restructuring Program, more fully discussed in Note 10 to the condensed consolidated financial statements
Total non-operating (expense) income, netTotal non-operating (expense) income, net$(32)$(57)44 %
— increase in FX gains primarily due to the strengthening of the U.S. dollar to the euro; and
— a $13 million loss in the prior year on a forward contract used to hedge a portion of the GBP-denominated RMS purchase price
Total non-operating (expense) income, net$(48)$(47)(2 %)— reflects $26 million of FX losses recorded in the first quarter of 2023, mostly offset by lower tax-related interest expense related to the resolutions of tax matters
Operating marginOperating margin32.4 %44.3 %(1,190 BPS)— margin declines primarily due to the aforementioned decrease in MIS revenueOperating margin37.7 %43.1 %(540 BPS)— margin declines primarily due to the aforementioned decrease in MIS revenue coupled with an increase in operating and SG&A expenses in MA to support growth
Adjusted Operating MarginAdjusted Operating Margin39.0 %48.3 %(930 BPS)Adjusted Operating Margin44.6 %48.2 %(360 BPS)
ETRETR20.5 %23.4 %(290 BPS)— primarily reflects lower pre-tax income and a favorable mix of earnings in the jurisdictions in which Moody’s operatesETR1.0 %18.2 %(1,720 BPS)— significantly lower ETR reflects tax benefits recognized in the first quarter of 2023, which resulted from the resolutions of uncertain tax positions in various U.S. and non-U.S. tax jurisdictions
Diluted EPSDiluted EPS$1.65 $2.53 (35 %)— mainly due to declines in MIS revenueDiluted EPS$2.72 $2.68 1 %— increase reflects a $0.75/share benefit related to the resolutions of tax matters in the first quarter of 2023, partially offset by lower operating income/Adjusted Operating Income
Adjusted Diluted EPSAdjusted Diluted EPS$1.85 $2.69 (31 %)Adjusted Diluted EPS$2.99 $2.89 3 %
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Moody's Corporation
Three Months Ended September 30,
% Change Favorable
(Unfavorable)
Three Months Ended March 31,
% Change Favorable
(Unfavorable)
2022202120232022
Revenue:Revenue:Revenue:
United StatesUnited States$668 $841 (21 %)United States$770 $823 (6 %)
Non-U.S.:Non-U.S.:Non-U.S.:
EMEAEMEA393 443 (11 %)EMEA451 457 (1 %)
Asia-PacificAsia-Pacific129 149 (13 %)Asia-Pacific151 141 7 %
AmericasAmericas85 93 (9 %)Americas98 101 (3 %)
Total Non-U.S.Total Non-U.S.607 685 (11 %)Total Non-U.S.700 699 — %
TotalTotal1,275 1,526 (16 %)Total1,470 1,522 (3 %)
Expenses:Expenses:Expenses:
OperatingOperating393 394 — %Operating428 417 (3 %)
SG&ASG&A385 395 3 %SG&A386 371 (4 %)
Depreciation and amortizationDepreciation and amortization83 61 (36 %)Depreciation and amortization88 78 (13 %)
RestructuringRestructuring1 — NMRestructuring14 — NM
TotalTotal862 850 (1 %)Total916 866 (6 %)
Operating incomeOperating income$413 $676 (39 %)Operating income$554 $656 (16 %)
Adjusted Operating Income (3)
Adjusted Operating Income (3)
$497 $737 (33 %)
Adjusted Operating Income (3)
$656 $734 (11 %)
Interest expense, netInterest expense, net$(58)$(53)(9 %)Interest expense, net$(48)$(53)9 %
Other non-operating income, netOther non-operating income, net26 (4)NMOther non-operating income, net— 6 (100 %)
Non-operating (expense) income, netNon-operating (expense) income, net$(32)$(57)44 %Non-operating (expense) income, net$(48)$(47)(2 %)
Net income attributable to Moody'sNet income attributable to Moody's$303 $474 (36 %)Net income attributable to Moody's$501 $498 1 %
Diluted weighted average shares outstandingDiluted weighted average shares outstanding183.9 187.3 2 %Diluted weighted average shares outstanding184.1 186.1 1 %
Diluted EPS attributable to Moody's common shareholdersDiluted EPS attributable to Moody's common shareholders$1.65 $2.53 (35 %)Diluted EPS attributable to Moody's common shareholders$2.72 $2.68 1 %
Adjusted Diluted EPS (3)
Adjusted Diluted EPS (3)
$1.85 $2.69 (31 %)
Adjusted Diluted EPS (3)
$2.99 $2.89 3 %
Operating marginOperating margin32.4 %44.3 %Operating margin37.7 %43.1 %
Adjusted Operating Margin(3)
Adjusted Operating Margin(3)
39.0 %48.3 %
Adjusted Operating Margin(3)
44.6 %48.2 %
Effective tax rateEffective tax rate20.5 %23.4 %Effective tax rate1.0 %18.2 %
The table below shows Moody’s global staffing by geographic area:
September 30,ChangeMarch 31,Change
20222021%20232022%
MAMAU.S.2,899 2,708 7 %
Non-U.S.4,412 4,076 8 %
Total7,311 6,784 8 %
MISMISU.S.1,547 1,442 7 %MISU.S.1,488 1,504 (1 %)
Non-U.S.3,969 3,725 7 %Non-U.S.3,975 3,895 2 %
Total5,516 5,167 7 %
MAU.S.2,859 2,602 10 %
Non-U.S.4,368 3,770 16 %Total5,463 5,399 1 %
Total7,227 6,372 13 %
MSSMSSU.S.785 697 13 %MSSU.S.659 749 (12 %)
Non-U.S.1,043 888 17 %Non-U.S.986 981 1 %
Total1,828 1,585 15 %Total1,645 1,730 (5 %)
Total MCOTotal MCOU.S.5,191 4,741 9 %Total MCOU.S.5,046 4,961 2 %
Non-U.S.9,380 8,383 12 %Non-U.S.9,373 8,952 5 %
Total14,571 13,124 11 %Total14,419 13,913 4 %

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GLOBAL REVENUE
Three months ended September 30,March 31,
20222023-----------------------------------------------------------------------------------20212022
_______________________________________________________________________________________________________
1893mco-20220930_g2.jpg1898mco-20220930_g3.jpg1907mco-20220930_g4.jpg1912
Global revenue ⇓ $251$52 millionU.S. Revenue ⇓ $173$53 millionNon-U.S. Revenue ⇓ $78⇑ $1 million
The decrease in global revenue reflected declines in MIS, mainly in the U.S. and EMEA, partially offset by growth in MA in all regions. Refer to the section entitled “Segment Results” of this MD&A for a more fulsome discussion of the Company’s segment revenue.
–Foreign currency translation unfavorably impacted global revenue by 4% percent.
–Organic constant currency revenue(1) decreased 17%.
Q3First Quarter Operating Expense ⇓ $1⇑ $11 millionQ3First Quarter SG&A Expense ⇓ $10⇑ $15 million
mco-20220930_g5.jpg2317---------- ---------mco-20220930_g6.jpg2340    
Compensation expenses decreased $22increased $1 million reflecting:Compensation expenses increased $13$24 million reflecting:
— lowerhigher salaries and benefits in MA to support growth mostly offset by the benefits from cost management initiatives in MIS.— higher incentive compensation accruals and performance-based equity compensation of $32$11 million, which aligns with actual/projected financial and operating performance; and
— higher salaries and benefits of $26approximately $7 million primarily due toreflecting hiring and salary increases; and
— lower salaries and benefits of $15 million reflecting a higher percentage of costs capitalizedincreases in MA for product development;

partially offset by:
— inorganicto support continued growth from acquisitions of $13 million;
partially offset by:
in the business.
— lower incentive compensation accruals and performance-based equity compensation of $20 million, which aligns with actual/projected financial and operating performance.
— inorganic growth from acquisitions of $29 million.
Non-compensation expenses increased $21$10 million reflecting:Non-compensation expenses decreased $23$9 million reflecting:
— inorganic growth from acquisitions of $10 million; and— operating and transaction-related costs in 2021 associated with acquisitions, most notably $22 million in RMS acquisition-related costs that did not recur in 2022; and
— higher costs of $7 million primarily relating to strategic initiatives to support business growth coupled with enhancements toinvestments in technology, infrastructure to enable automation, innovation and efficiency.product development.— higher bad debt reserves of $10 million in the prior year resulting from the impact of the Russia/Ukraine conflict; and
— charitable contributions via the Moody's Foundation in 2021 that did not recur in 2022;
lower legal fees of $5 million; partially offset by:by
— inorganic growth from acquisitionshigher travel and entertainment costs of $9$6 million.
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Depreciation and amortization
The increase in depreciation and amortization expense is driven by amortization of intangible assets recently acquired (primarily RMS) and amortization of internally developed software, recently capitalized.which is primarily related to the development of MA SaaS solutions.

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Operating margin 32.4%37.7%, down 1,190540 BPSAdjusted Operating Margin 39.0%44.6%, down 930360 BPS
Overall, margin declines primarily resulted from the aforementioned decrease in MIS revenue.revenue coupled with increases in operating and SG&A expenses in the MA segment.
Interest Expense, net ⇑⇓ $5 millionOther non-operating income ⇑ $30⇓ $6 million
IncreaseDecrease in expense is primarily due to:IncreaseDecrease in income is primarily due to:
— a $22 million reduction of tax-related interest expense primarily related to the resolutions of tax matters; and
— FX losses of $26 million recorded in the first quarter of 2023 mostly due to an immaterial out-of-period adjustment relating to the 2022 fiscal year; partially offset by
— higher interest income of $8 million related to increased earnings on borrowings resulting from the issuance of new long-term debt in 2022 (refer to the "Material Cash Requirements" section of this MD&A for further information on the Company's indebtedness)Moody's cash balances driven by higher interest rates; partially offset by
— higher FX gains of $15$10 million primarily dueon certain of the Company's investments; and
— realized losses of $18 million on fixed-to-floating interest rate swaps resulting from higher interest rates (more fully discussed in Note 8 to the strengthening of the U.S. dollar relative to the euro; andcondensed consolidated financial statements).
— a $13benefit of $9 million loss in 2021 on a forward contract usedrelated to hedge a portionthe favorable resolution of the GBP-denominated RMS purchase price.various tax matters.
ETR ⇓ 2901,720 BPS
The decrease in ETR primarily reflects lower pre-taxthe resolutions of uncertain tax positions in various U.S. and non-U.S. tax jurisdictions, which resulted in a $113 million reduction to the provision for income which increases the percentage impact of net beneficial discrete items, and a favorable mix of earningstaxes in the jurisdictions in which Moody’s operates.first quarter of 2023.
Diluted EPS ⇓ $0.88⇑ $0.04Adjusted Diluted EPS ⇓ $0.84⇑ $0.10
Diluted EPS and Adjusted Diluted EPS declined mainly duegrowth reflects a $0.75/share benefit related to the resolutions of tax matters in the first quarter of 2023, partially offset by lower operating income and Adjusted Operating Income, respectively, the components of which are more fully described above. Refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for items excluded in the derivation of Adjusted Diluted EPS.
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Segment Results
Moody’s Analytics
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
Three Months Ended March 31,
% Change Favorable
(Unfavorable)
20232022
Revenue:
Decision Solutions (DS)$354 $334 6 %
Research and Insights (R&I)195 183 7 %
Data and Information (D&I)188 178 6 %
Total external revenue737 695 6 %
Intersegment revenue3 2 50 %
Total MA revenue740 697 6 %
Expenses:
Operating and SG&A (external)481 430 (12 %)
Operating and SG&A (intersegment)45 43 (5 %)
Total operating and SG&A526 473 (11 %)
Adjusted Operating Income$214 $224 (4 %)
Adjusted Operating Margin28.9 %32.1 %
Depreciation and amortization70 60 (17 %)
Restructuring8 — NM
MOODY'S ANALYTICS REVENUE
Three months ended March 31,
2023-----------------------------------------------------------------------------------2022
_______________________________________________________________________________________________________
357359368370
MA: Global revenue ⇑ $42 millionU.S. Revenue ⇑ $14 millionNon-U.S. Revenue ⇑ $28 million
The 6% increase in global MA revenue reflects growth both in the U.S. (5%) and internationally (7%) in all LOBs. Changes in foreign currency translation rates unfavorably impacted MA revenue by three percentage points.
–Constant currency revenue growth(1) was 9% reflecting increases across all LOBs.
–ARR(2) grew 10% reflecting strong growth across all LOBs.
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DECISION SOLUTIONS REVENUE
Three months ended March 31,
2023-----------------------------------------------------------------------------------2022
_______________________________________________________________________________________________________
1185118911901192
 DS: Global revenue ⇑ $20 millionU.S. Revenue ⇑ $5 millionNon-U.S. Revenue ⇑ $15 million
Global DS revenue grew 6% compared to the first quarter of 2022 and reflects growth in both the U.S. (3%) and internationally (8%) with the most notable drivers of the increase reflecting:
–continued demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage;
–higher revenue from RMS primarily due to a reduction of revenue in the first quarter of 2022 pursuant to a fair value adjustment to deferred revenue previously required as part of acquisition accounting; and
–growth in subscription-based revenue for actuarial modeling tools in support of certain international accounting standards relating to insurance contracts.
Changes in foreign currency translation rates unfavorably impacted DS revenue by two percentage points.
Constant currency revenue(1) growth was 8%.
ARR(2) grew 11% primarily reflecting continued demand for KYC, banking and insurance products.

RESEARCH AND INSIGHTS REVENUE
Three months ended March 31,
2023-----------------------------------------------------------------------------------2022
___________________________________________________ ________________________________________________
1976197719781980
R&I: Global revenue ⇑ $12 millionU.S. Revenue ⇑ $2 millionNon-U.S. Revenue ⇑ $10 million
Global R&I revenue increased 7% compared to the first quarter of 2022 and reflects growth in both the U.S. (2%) and internationally (13%), mainly driven by continued strong retention and demand for credit research, analytics and models.
Constant currency revenue growth(1) was 8%.
ARR(2) grew 9% primarily reflecting the aforementioned strong retention and demand for credit research, analytics and models.
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DATA AND INFORMATION REVENUE
Three months ended March 31,
2023-----------------------------------------------------------------------------------2022
________________________________________________________________________________________________________
2594259525962598
D&I: Global revenue ⇑ $10 millionU.S. Revenue ⇑ $7 millionNon-U.S. Revenue ⇑ $3 million
Global D&I revenue increased 6% compared to the first quarter of 2022 and reflects growth in both the U.S. (12%) and internationally (3%) mainly driven by:
–strong retention and new sales for ratings feeds coupled with higher pricing realization; and
–continued demand for company data.
Changes in foreign currency translation rates unfavorably impacted D&I revenue by four percentage points.
Constant currency revenue growth(1) was 10%.
ARR(2) grew 9% reflecting increasing demand for company data and ratings data feed products.
MA: First Quarter Operating and SG&A Expense ⇑ $51 million
3061
The increase in operating and SG&A expenses compared to the first quarter of 2022 reflected growth in both compensation and non-compensation costs of $28 million and $23 million, respectively. The most notable drivers of these changes were:
Compensation costsNon-compensation costs
The increase is primarily due to:The increase is primarily due to:
— higher salaries and benefits of $13 million related to headcount growth and annual salary increases; and— higher consulting/professional fees of $7 million primarily related to strategic investments in technology, innovation and product development; and
— higher incentive compensation accruals of $10 million aligned with actual/expected financial and operational performance as well as headcount growth.
— higher travel and entertainment costs of $8 million.
Favorable changes in FX translation rates reduced compensation and non-compensation costs by $9 million and $4 million, respectively.
MA: Adjusted Operating Margin 28.9% ⇓ 320 BPS
The Adjusted Operating Margin decrease for MA is primarily due to operating and SG&A expense growth of 12% outpacing the 6% increase in global MA revenue.
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Depreciation and amortization
The increase in depreciation and amortization expense primarily reflects higher amortization of internally developed software relating to the development of SaaS-based solutions.
Restructuring Charge
The restructuring charge in 2023 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 10 to the condensed consolidated financial statements.
Moody’s Investors Service
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
Three Months Ended
September 30,
% Change Favorable
(Unfavorable)
Three Months Ended
March 31,
% Change Favorable
(Unfavorable)
2022202120232022
Revenue:Revenue:Revenue:
Corporate finance (CFG)Corporate finance (CFG)$277 $488 (43 %)Corporate finance (CFG)$356 $417 (15 %)
Structured finance (SFG)Structured finance (SFG)101 143 (29 %)Structured finance (SFG)99 144 (31 %)
Financial institutions (FIG)Financial institutions (FIG)109 153 (29 %)Financial institutions (FIG)142 131 8 %
Public, project and infrastructure finance (PPIF)Public, project and infrastructure finance (PPIF)92 130 (29 %)Public, project and infrastructure finance (PPIF)129 123 5 %
Total ratings revenueTotal ratings revenue579 914 (37 %)Total ratings revenue726 815 (11 %)
MIS OtherMIS Other11 11 — %MIS Other7 12 (42 %)
Total external revenueTotal external revenue590 925 (36 %)Total external revenue733 827 (11 %)
Intersegment revenueIntersegment revenue43 42 2 %Intersegment revenue45 43 5 %
Total MIS revenueTotal MIS revenue633 967 (35 %)Total MIS revenue778 870 (11 %)
Expenses:Expenses:Expenses:
Operating and SG&A (external)Operating and SG&A (external)342 385 11 %Operating and SG&A (external)333 358 7 %
Operating and SG&A (intersegment)Operating and SG&A (intersegment)2 2 — %Operating and SG&A (intersegment)3 2 (50 %)
Total operating and SG&ATotal operating and SG&A344 387 11 %Total operating and SG&A336 360 7 %
Adjusted Operating IncomeAdjusted Operating Income$289 $580 (50 %)Adjusted Operating Income$442 $510 (13 %)
Adjusted Operating MarginAdjusted Operating Margin45.7 %60.0 %Adjusted Operating Margin56.8 %58.6 %
Depreciation and amortizationDepreciation and amortization21 17 (24 %)Depreciation and amortization18 18 — %
RestructuringRestructuring6 — NM
The following chart presents changes in rated issuance volumes compared to the thirdfirst quarter of2021. 2022. 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.
mco-20220930_g7.jpg388

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MOODY'S INVESTORS SERVICE REVENUE
Three months ended September 30,March 31,
20222023-----------------------------------------------------------------------------------20212022
_______________________________________________________________________________________________________
620mco-20220930_g9.jpg622mco-20220930_g10.jpg630mco-20220930_g11.jpg632
MIS: Global revenue ⇓ $335$94 millionU.S. Revenue ⇓ $218$67 millionNon-U.S. Revenue ⇓ $117$27 million
–The decrease in global MIS revenue primarily reflects a 41%13% decrease in rated issuance volumes, which resulted in transaction revenue declining $335$98 million compared to the same period in the prior year. The decline in rated issuance volumes compared to the thirdfirst quarter of 20212022 reflected muted credit market activity across all sectors given ongoing market volatility, central bank actions, high levelsuncertainty around inflation, interest rates, recessionary concerns and stress in the banking sector following the failure of balance sheet cash, as well as heightened inflationary and recessionary concernscertain banks in the first quarter of 2023.
–Foreign currency translation unfavorably impacted MIS revenue by three percentage points.
CFG REVENUE
Three months ended September 30,March 31,
20222023-----------------------------------------------------------------------------------20212022
_______________________________________________________________________________________________________
mco-20220930_g12.jpg1405mco-20220930_g13.jpg1407mco-20220930_g14.jpg1415mco-20220930_g15.jpg1417
CFG: Global revenue ⇓ $211$61 millionU.S. Revenue ⇓ $146$29 millionNon-U.S. Revenue ⇓ $65$32 million
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Global CFG revenue for the three months ended September 30,March 31, 2023 and 2022 and 2021 was comprised as follows:
mco-20220930_g16.jpg1503
(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.
The decrease in CFG revenue of 43%15% reflected declines in both U.S. (44%(11%) and internationally (42%(23%).
Transaction revenue decreased $213$63 million compared to the same period in the prior year.
The decrease compareddecline reflected:
•lower leveraged finance revenue across all regions as geopolitical and macroeconomic uncertainties have continued to impact issuance levels;
partially offset by:
•growth in investment grade issuance activity within the U.S., which included a strong periodnumber of issuancejumbo deals within the healthcare and technology industries in the thirdfirst quarter of 2021 reflected declines in leveraged finance and investment-grade issuance activity in all regions resulting from muted credit market activity across all sectors given ongoing market volatility, central bank actions, high levels of balance sheet cash, as well as heightened inflationary and recessionary concerns.2023.
Changes in foreign currency translation rates unfavorably impacted CFG revenue by
two percentage points.
SFG REVENUE
Three months ended September 30,March 31,
20222023---------------------------------------------------------------------------20212022
_______________________________________________________________________________________________________
mco-20220930_g17.jpg2600mco-20220930_g18.jpg2605mco-20220930_g19.jpg26142619
SFG: Global revenue ⇓ $42$45 millionU.S. Revenue ⇓ $29$36 millionNon-U.S. Revenue ⇓ $13$9 million

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Global SFG revenue for the three months ended September 30,March 31, 2023 and 2022 and 2021 was comprised as follows:
mco-20220930_g21.jpg2706
The 29%31% decrease in SFG revenue was substantially allreflected declines in theboth U.S. (37%) and EMEA.internationally (19%).
Transaction revenue decreased $42$48 million compared to the thirdfirst quarter of 2021.2022.
The most notable driversdriver of the decline in SFG revenue includedwas lower CLO and RMBSCMBS activity compared to a strong prior year period reflecting higher credit spreads and market volatility given ongoing market volatility, central bank actions,geopolitical and heightened inflationary and recessionary concerns.macroeconomic uncertainties.
Changes in foreign currency translation rates unfavorably impacted SFG revenue by three percentage points.

FIG REVENUE
Three months ended September 30,March 31,
20222023-----------------------------------------------------------------------------------20212022
_______________________________________________________________________________________________________
mco-20220930_g22.jpg3390mco-20220930_g23.jpg3395mco-20220930_g24.jpg3404mco-20220930_g25.jpg3409
FIG: Global revenue ⇓ $44⇑ $11 millionU.S. Revenue ⇓ $24$2 millionNon-U.S. Revenue ⇓ $20⇑ $13 million
Global FIG revenue for the three months ended September 30,March 31, 2023 and 2022 and 2021 was comprised as follows:
mco-20220930_g26.jpg3495
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The decreaseincrease in FIG revenue of 29%8% reflected revenue growth internationally (20%) partially offset by declines in boththe U.S. (34%) and internationally (24%(3%).
Transaction revenue decreased $42increased $9 million compared to the thirdfirst quarter of 2021.2022.
The most notable drivers of the decline reflected lower revenue from U.S. banking and insurance issuers, mainly due to:growth primarily reflects:
–•an unfavorable product mix; and
–lowerhigher rated issuance volumes resultingin the banking sector early in the first quarter of 2023, before volatility from market volatilityrecent bank stress events muted issuance activity; and macroeconomic/geopolitical uncertainties.
•a favorable product mix internationally within the banking sector.
Changes in foreign currency translation rates unfavorably impacted FIG revenue by fourtwo percentage points.


PPIF REVENUE
Three months ended September 30,March 31,
20222023-----------------------------------------------------------------------------------20212022
_______________________________________________________________________________________________________
mco-20220930_g27.jpg4230mco-20220930_g28.jpg4235mco-20220930_g29.jpg4243mco-20220930_g30.jpg4248
PPIF: Global revenue ⇓ $38⇑ $6 millionU.S. Revenue ⇓ $19⇑ $1 millionNon-U.S. Revenue ⇓ $19⇑ $5 million
Global PPIF revenue for the three months ended September 30,March 31, 2023 and 2022 and 2021 was comprised as follows:
mco-20220930_g31.jpg4335
Transaction revenue decreased $38increased $7 million compared to the thirdfirst quarter of 2021.2022.
The decreaseincrease in PPIF revenue of 29%5% reflected declinesgrowth in the U.S. (25%(1%) and internationally (35%(10%).
The main drivers of the decreasegrowth were:
–increases in investment-grade infrastructure finance activity both in the U.S. and internationally;

partially offset by:
–declines in U.S. public finance and project finance revenue resulting from market volatility, which increased funding costs, coupled with issuerscompared to strong activity in these sectors being currently well capitalized;the prior year; and
–declines in international sovereign and project/infrastructurelower U.S. public finance activity compared to a strong prior year period.as the elevated and uncertain interest rate environment suppressed issuance.
Changes in foreign currency translation rates unfavorably impacted PPIF revenue by threetwo percentage points.
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MIS: Q3First Quarter Operating and SG&A Expense ⇓ $43$25 million
mco-20220930_g32.jpg4962
The decline is primarily due to lower compensation costs of $46 million, partially offset by higher non-compensation costs of $3$23 million with the most notable drivers reflecting:
Compensation costsNon-compensation costs
The decrease is primarily due to:The modest increase is primarily due to:
— lower incentive compensation accruals and performance-based equity compensation, which aligns with actual/projected financial and operating performance; and— higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency; and
— favorable changes in FX translation rates.
— higher travel costs compared to minimal travel in the prior year in light of COVID-19;
mostly offset by:
— charitable contributions viahigher bad debt expense of $10 million in the Moody's Foundation in 2021 that did not recur in 2022; andprior year resulting from the impact of the Russia/Ukraine conflict;
— favorable changeslower legal fees of $5 million; and
— lower rent expense of $4 million primarily resulting from savings pursuant to the 2022-2023 Geolocation Restructuring Program, further described in FX translation rates.Note 10 to the condensed consolidated financial statements.
Favorable changes in FX translation rates reduced compensation and non-compensation costs by $6 million and $1 million, respectively.
MIS: Adjusted Operating Margin 45.7%56.8% ⇓ 1,430180 BPS
The MIS Adjusted Operating Margin decline primarily reflected the aforementioned 36%11% decrease in revenue.
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Moody’s Analytics
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
Three Months Ended September 30,
% Change Favorable
(Unfavorable)
20222021
Revenue:
Decision Solutions (DS)$325 $250 30 %
Research and Insights (R&I)184 177 4 %
Data and Information (D&I)176 174 1 %
Total external revenue685 601 14 %
Intersegment revenue2 2 — %
Total MA revenue687 603 14 %
Expenses:
Operating and SG&A (external)436 404 (8 %)
Operating and SG&A (intersegment)43 42 (2 %)
Total operating and SG&A479 446 (7 %)
Adjusted Operating Income$208 $157 32 %
Adjusted Operating Margin30.3 %26.0 %
Depreciation and amortization62 44 (41 %)
Restructuring1 — NM
MOODY'S ANALYTICS REVENUE
Three months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g33.jpgmco-20220930_g34.jpgmco-20220930_g35.jpgmco-20220930_g36.jpg
MA: Global revenue ⇑ $84 millionU.S. Revenue ⇑ $45 millionNon-U.S. Revenue ⇑ $39 million
The 14% increase in global MA revenue reflects growth both in the U.S. (17%) and internationally (11%) in all LOBs and includes revenue from the acquisitions of RMS, RealXData, PassFort and kompany. Changes in foreign currency translation rates unfavorably impacted MA revenue by seven percentage points.
–Organic constant currency revenue growth(1) was 9% reflecting increases across all LOBs.
–ARR(2) grew 9% representing increased demand for KYC and banking products within the Decision Solutions LOB coupled with growth for company data and ratings feeds products in the Data & Information LOB.
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DECISION SOLUTIONS REVENUE
Three months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g37.jpgmco-20220930_g38.jpgmco-20220930_g39.jpgmco-20220930_g40.jpg
 DS: Global revenue ⇑ $75 millionU.S. Revenue ⇑ $36 millionNon-U.S. Revenue ⇑ $39 million
Global DS revenue grew 30% compared to the third quarter of 2021 and reflects growth in both the U.S. (34%) and internationally (27%) with the most notable drivers of the increase reflecting:
–inorganic revenue growth from the acquisitions of RMS, PassFort, RealXData, and kompany; and
–continued demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage.
Changes in foreign currency translation rates unfavorably impacted DS revenue by five percentage points.
Constant currency organic revenue(1) growth was 7%.
ARR(2) grew 10%.
RESEARCH AND INSIGHTS REVENUE
Three months ended September 30,
2022-----------------------------------------------------------------------------------2021
___________________________________________________ ________________________________________________
mco-20220930_g41.jpgmco-20220930_g42.jpgmco-20220930_g43.jpgmco-20220930_g42.jpg
R&I: Global revenue ⇑ $7 millionU.S. Revenue ⇑ $4 millionNon-U.S. Revenue ⇑ $3 million
Global R&I revenue increased 4% compared to the third quarter of 2021 and reflects growth in both the U.S. (4%) and internationally (4%) mainly driven by continued strong retention and demand for credit research, analytics and models.
Changes in foreign currency translation rates unfavorably impacted R&I revenue by six percentage points.
Constant currency revenue growth(1) was 10%.
ARR(2) grew 8%.
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DATA AND INFORMATION REVENUE
Three months ended September 30,
2022-----------------------------------------------------------------------------------2021
________________________________________________________________________________________________________
mco-20220930_g44.jpgmco-20220930_g45.jpgmco-20220930_g46.jpgmco-20220930_g42.jpg
D&I: Global revenue ⇑ $2 millionU.S. Revenue ⇑ $5 millionNon-U.S. Revenue ⇓ $3 million
Global D&I revenue increased 1% compared to the third quarter of 2021 and reflects growth in the U.S. (9%) partially offset by decreases internationally (3%) mainly driven by:
–strong retention and new sales for ratings feeds coupled with pricing increases; and
–continued demand for company data.
Changes in foreign currency translation rates unfavorably impacted D&I revenue by eleven percentage points.
Organic constant currency revenue growth(1) was 12%.
ARR(2) grew 9%.
MA: Q3 Operating and SG&A Expense ⇑ $32 million
mco-20220930_g47.jpg
The increase in operating and SG&A expenses compared to the third quarter of 2021 reflected growth in compensation costs of $39 million partially offset by a decrease in non-compensation of $7 million. The most notable drivers of these changes were:
Compensation costsNon-compensation costs
The increase is primarily due to:The decrease is primarily due to:
— inorganic expense growth from acquisitions; and— transaction-related costs in 2021 associated with acquisitions, most notably $22 million in RMS acquisition-related costs that did not recur in 2022;
— higher salaries and benefits related to headcount growth; partially offset by:
— favorable changes in FX translation rates.— charitable contributions via the Moody's Foundation in 2021 that did not recur in 2022; and
— favorable changes in FX translation rates;
partially offset by:
— operating and integration-related costs associated with recent acquisitions.
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MA: Adjusted Operating Margin 30.3% ⇑ 430 BPS
The Adjusted Operating Margin increase for MA is primarily due to the 14% increase in global MA revenue.
Depreciation and amortization
The increase in depreciation and amortization expense is driven by higher amortization of intangible assets reflecting recent M&A activity (most notably RMS) and amortization of internally developed software.
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Nine months ended September 30, 2022 compared with nine months ended September 30, 2021
Executive Summary
–The following table provides an executive summary of key operating results for the nine months ended September 30, 2022. Following this executive summary is a more detailed discussion of the Company’s operating results as well as a discussion of the operating results of the Company’s reportable segments.
Nine Months Ended September 30,
Financial measure:20222021% ChangeInsight and Key Drivers of Change Compared to Prior Year
Moody's total revenue$4,178 $4,679 (11 %)— reflects lower MIS revenue partially offset by growth in MA
MIS external revenue$2,123 $2,941 (28 %)— 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$2,055 $1,738 18 %
— 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$2,327 $2,167 (7 %)
— operational and integration costs associated with recent acquisitions; and
— increases in hiring and salary growth;
partially offset by:
— lower incentive compensation accruals and performance-based equity compensation; and
— favorable changes in FX translation rates
Depreciation and amortization$242 $180 (34 %)
— higher amortization of intangible assets reflecting recent M&A activity (most notably RMS); and
— amortization of internally developed software
Restructuring$32 $2 NM— the 2022 charge is pursuant to the Company's 2022 - 2023 Geolocation Restructuring Program, more fully discussed in Note 11 to the condensed consolidated financial statements
Total non-operating (expense) income, net$(144)$(91)(58 %)
— reflects a $40 million benefit in the prior period related to the reversal of tax-related interest accruals pursuant to the resolution of tax matters; and
— the 2022 amount includes FX translation losses of $20 million reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia
Operating margin37.7 %49.8 %(1210 BPS)— margin declines primarily due to the aforementioned decrease in MIS revenue
Adjusted Operating Margin44.3 %53.7 %(940 BPS)
ETR21.3 %20.2 %(110BPS)
— primarily reflects the non-deductible nature of the aforementioned FX translation losses resulting from the Company no longer conducting commercial operations in Russia; and
— the resolution of UTPs in the first nine months of 2021 that did not recur to the same extent in the first nine months of 2022;
partially offset by:
— a favorable mix of earnings in the jurisdictions in which Moody's operates
Diluted EPS$6.10 $9.51 (36 %)— primarily due to declines in MIS revenue coupled with the aforementioned increase in expenses
Adjusted Diluted EPS$6.96 $9.96 (30 %)
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Moody’s Corporation
Nine Months Ended September 30,% Change Favorable
(Unfavorable)
20222021
Revenue:
United States$2,214 $2,557 (13 %)
Non-U.S.:
EMEA1,271 1,402 (9 %)
Asia-Pacific422 460 (8 %)
Americas271 260 4 %
Total Non-U.S.1,964 2,122 (7 %)
Total4,178 4,679 (11 %)
Expenses:
Operating1,203 1,152 (4 %)
SG&A1,124 1,015 (11 %)
Depreciation and amortization242 180 (34 %)
Restructuring32 2 NM
Total2,601 2,349 (11 %)
Operating income1,577 2,330 (32 %)
Adjusted Operating Income (1)
1,851 2,512 (26 %)
Interest expense, net(166)(109)(52 %)
Other non-operating income, net22 18 22 %
Non-operating (expense) income, net(144)(91)(58 %)
Net income attributable to Moody’s$1,128 $1,787 (37 %)
Diluted weighted average shares outstanding184.9 188.0 2 %
Diluted EPS attributable to Moody’s common shareholders$6.10 $9.51 (36 %)
Adjusted Diluted EPS (1)
$6.96 $9.96 (30 %)
Operating margin37.7 %49.8 %
Adjusted Operating Margin (1)
44.3 %53.7 %
Effective tax rate21.3 %20.2 %
GLOBAL REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g48.jpgmco-20220930_g49.jpgmco-20220930_g50.jpgmco-20220930_g51.jpg
Global revenue ⇓ $501 millionU.S. Revenue ⇓ $343 millionNon-U.S. Revenue ⇓ $158 million
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The decrease in global revenue reflected declines in MIS in all regions, partially offset by growth in MA in all regions. Refer to the section entitled “Segment Results” of this MD&A for a more fulsome discussion of the Company’s segment revenue.
Changes in foreign currency translation rates unfavorably impacted global revenue by three percent.
Organic constant currency revenue(1) for MCO decreased 13%.
(1) Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.
YTD Operating Expense ⇑ $51 millionYTD SG&A Expense ⇑ $109 million
mco-20220930_g52.jpg-------------------------------------mco-20220930_g53.jpg
Compensation expenses decreased $9 million and reflected:Compensation expenses increased $74 million reflecting:
— lower incentive compensation accruals and performance-based equity compensation of $67 million, which aligns with actual/projected financial and operating performance; and— inorganic growth from acquisitions of $43 million; and
— higher salaries and benefits of approximately $86 million primarily due to hiring and salary increases;
partially offset by:
— approximately $35 million in higher compensation costs eligible for capitalization in 2022 reflecting certain product development in the MA operating segment;
partially offset by:
— lower incentive compensation accruals and performance-based equity compensation of $46 million, which aligns with actual/projected financial and operating performance.
— inorganic growth from acquisitions of $101 million.
Non-compensation expenses increased $60 million reflecting:Non-compensation expenses increased $35 million reflecting:
— inorganic growth from acquisitions of $31 million; and— inorganic growth from acquisitions of $30 million; and
— higher costs of $20 million relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency.
— higher bad debt reserves of $13 million resulting from the impact of the Russia/Ukraine conflict;
partially offset by:
— charitable contributions via the Moody's Foundation in 2021 that did not recur in 2022.
Depreciation and amortization
The increase in depreciation and amortization expense is driven by higher amortization of intangible assets reflecting recent M&A activity (most notably RMS) and amortization of internally developed software.
Restructuring Charge
The restructuring charge in the first nine months of 20222023 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 11 to the condensed consolidated financial statements.
Operating margin 37.7%, down 1,210 BPSAdjusted Operating Margin 44.3%, down 940 BPS
Overall, margin declines resulted from the aforementioned decrease in MIS revenue coupled with operating expense growth (mainly from inorganic expense growth from acquisitions).
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Interest Expense, net ⇑ $57 millionOther non-operating income ⇑ $4 million
Increase in expense is primarily due to:Increase in income is primarily due to:
— a $40 million benefit in the prior year related to the reversal of tax-related interest accruals pursuant to the resolution of UTPs; and— an increase in FX gains primarily due to the strengthening of the U.S. dollar relative to the euro;
— higher interest on borrowings resulting from the issuance of new long-term debt in 2022 (refer to the "Material Cash Requirements" section of this MD&A for further information on the Company's indebtedness).— a $13 million loss in 2021 on a forward contract used to hedge a portion of the GBP-denominated RMS purchase price;
— an $11 million benefit in 2022 relating to statute of limitations lapses on certain indemnification obligations relating to the MAKS divestiture; and
— an $8 million loss in 2021 on the settlement of pension obligations resulting from lump sum distributions from the Company's defined benefit pension plans; partially offset by
— FX translation losses of $20 million reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia (refer to the section above entitled "Russia/Ukraine Conflict" for further information).
ETR ⇑ 110 BPS
The drivers for the increase in the ETR include:
–approximately $40 million in higher tax benefits from the resolution of UTPs in the first nine months of 2021 compared to the first nine months of 2022; and
–the non-deductible nature of the aforementioned FX translation losses resulting from the Company no longer conducting commercial operations in Russia;
partially offset by:
–a favorable mix of earnings in the jurisdictions in which Moody's operates.
Diluted EPS ⇓ $3.41Adjusted Diluted EPS ⇓ $3.00
Diluted EPS and Adjusted Diluted EPS declined mainly due to lower operating income and Adjusted Operating Income, respectively. Refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for items excluded in the derivation of Adjusted Diluted EPS.
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Moody’s Investors Service
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
Nine Months Ended September 30,% Change Favorable
(Unfavorable)
20222021
Revenue:
Corporate finance (CFG)$1,016 $1,643 (38 %)
Structured finance (SFG)368 399 (8 %)
Financial institutions (FIG)368 465 (21 %)
Public, project and infrastructure finance (PPIF)337 403 (16 %)
Total ratings revenue2,089 2,910 (28 %)
MIS Other34 31 10 %
Total external revenue2,123 2,941 (28 %)
Intersegment royalty129 124 4 %
Total2,252 3,065 (27 %)
Expenses:
Operating and SG&A (external)1,033 1,073 4 %
Operating and SG&A (intersegment)5 6 17 %
Total operating and SG&A expense1,038 1,079 4 %
Adjusted Operating Income$1,214 $1,986 (39 %)
Adjusted Operating Margin53.9 %64.8 %
Depreciation and amortization60 53 (13 %)
Restructuring15 — NM
The following chart presents changes in rated issuance volumes compared to the first nine months of2021. 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.
mco-20220930_g54.jpg
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MOODY'S INVESTORS SERVICE REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g55.jpgmco-20220930_g56.jpgmco-20220930_g57.jpgmco-20220930_g58.jpg
MIS: Global revenue ⇓ $818 millionU.S. Revenue ⇓ $508 millionNon-U.S. Revenue ⇓ $310 million
–The decrease in global MIS revenue primarily relates to a 30% decrease in rated issuance volumes, which resulted in transaction revenue declining $827 million compared to the same period in the prior year. The decline in rated issuance volumes compared to the first nine months of 2021 reflected muted credit market activity across all sectors given ongoing market volatility, central bank actions, high levels of balance sheet cash, as well as heightened inflationary and recessionary concerns.
–Changes in foreign currency translation rates unfavorably impacted MIS revenue by two percentage points.
CFG REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g59.jpgmco-20220930_g60.jpgmco-20220930_g61.jpgmco-20220930_g62.jpg
CFG: Global revenue ⇓ $627 millionU.S. Revenue ⇓ $420 millionNon-U.S. Revenue ⇓ $207 million
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Global CFG revenue for the nine months ended September 30, 2022 and 2021 was comprised as follows:
mco-20220930_g63.jpg
(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.
The decrease in CFG revenue of 38% reflected declines both in the U.S. and internationally of 38% each, which resulted in a $635 million decrease in transaction revenue.
The most notable drivers of the decrease compared to the first nine months of 2021 reflected declines in leveraged finance and investment-grade issuance activity compared to a strong prior year period resulting from muted credit market activity given ongoing market volatility, central bank actions, high levels of balance sheet cash, as well as heightened inflationary and recessionary concerns.
SFG REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g64.jpgmco-20220930_g65.jpgmco-20220930_g66.jpgmco-20220930_g67.jpg
SFG: Global revenue ⇓ $31 millionU.S. Revenue ⇓ $5 millionNon-U.S. Revenue ⇓ $26 million
Global SFG revenue for the nine months ended September 30, 2022 and 2021 was comprised as follows:
mco-20220930_g68.jpg
The decrease in SFG revenue of 8% reflected declines in both the U.S. (2%) and internationally (18%). Transaction revenue decreased $34 million compared to the first nine months of 2021.
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The most notable drivers of the decline in SFG revenue were:
–a decrease in CLO refinancing activity in the U.S. and EMEA resulting from the widening of credit spreads for this asset class;
partially offset by:
–strong growth in U.S. CMBS securitization activity before a widening of credit spreads late in the first quarter of 2022.
Changes in foreign currency translation rates unfavorably impacted SFG revenue by three percentage points.
FIG REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g69.jpgmco-20220930_g70.jpgmco-20220930_g71.jpgmco-20220930_g72.jpg
FIG: Global revenue ⇓ $97 millionU.S. Revenue ⇓ $61 millionNon-U.S. Revenue ⇓ $36 million
Global FIG revenue for the nine months ended September 30, 2022 and 2021 was comprised as follows:
mco-20220930_g73.jpg
The decrease in FIG revenue of 21% reflected declines in both the U.S. (27%) and internationally (15%) which resulted in a $93 million decrease in transaction revenue compared to the same period in the prior year.
The most notable drivers of the decline reflected lower revenue from banking and insurance issuers, mainly due to:
–an unfavorable product mix; and
–a decline in opportunistic issuance, as banks, insurers and asset management issuers were well capitalized following financing activity in the prior year period ahead of anticipated interest rate increases.
Changes in foreign currency translation rates unfavorably impacted FIG revenue by three percentage points.
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PPIF REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g74.jpgmco-20220930_g75.jpgmco-20220930_g76.jpgmco-20220930_g77.jpg
PPIF: Global revenue ⇓ $66 millionU.S. Revenue ⇓ $23 millionNon-U.S. Revenue ⇓ $43 million
Global PPIF revenue for the nine months ended September 30, 2022 and 2021 was comprised as follows:
mco-20220930_g78.jpg
Transaction revenue decreased $65 million compared to the same period in the prior year.
The 16% decrease in PPIF revenue reflected declines in both the U.S. (10%) and internationally (25%). The decrease in revenue was mainly due to:
–declines in U.S. public finance revenue resulting from market volatility, which increased funding costs, coupled with issuers in this sector being currently well capitalized; and
–declines in sovereign, project finance and infrastructure finance rated issuance volumes in EMEA resulting from market volatility and rising funding costs.
Changes in foreign currency translation rates unfavorably impacted PPIF revenue by two percentage points.
MIS: YTD Operating and SG&A Expense ⇓ $40 million
mco-20220930_g79.jpg
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The decrease in operating and SG&A expense reflects an $85 million decrease in compensation costs partially offset by a $45 million increase in non-compensation expenses. The most notable drivers of these changes are as follows:
Compensation costsNon-compensation costs
The decrease is primarily due to:The increase is primarily due to:
— lower incentive compensation accruals and performance-based equity compensation, which aligns with actual/projected financial and operating performance; and— higher bad debt reserves resulting from the impact of the Russia/Ukraine conflict, which represented approximately 35% of the increase;
— favorable changes in FX translation rates.— higher costs relating to strategic initiatives to support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and efficiency, which represented approximately 25% of the increase; and
— higher travel costs resulting from minimal travel in the prior year in light of COVID-19, which represented approximately 15% of the increase;
partially offset by:
— charitable contributions via the Moody's Foundation in 2021 that did not recur in 2022.
Other Expenses
The restructuring charge in the first nine months of 2022 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 11 to the condensed consolidated financial statements.
Adjusted Operating Margin of 53.9% ⇓ 1,090 BPS
The MIS Adjusted Operating Margin decline primarily reflected the aforementioned 28% decrease in revenue.
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Moody’s Analytics
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
Nine Months Ended September 30,% Change Favorable
(Unfavorable)
20222021
Revenue:
Decision Solutions (DS)$971 $697 39 %
Research and Insights (R&I)552 523 6 %
Data and Information (D&I)532 518 3 %
Total external revenue2,055 1,738 18 %
Intersegment revenue5 6 (17 %)
Total MA Revenue2,060 1,744 18 %
Expenses:
Operating and SG&A (external)1,294 1,094 (18 %)
Operating and SG&A (intersegment)129 124 (4 %)
Total operating and SG&A expense1,423 1,218 (17 %)
Adjusted Operating Income$637 $526 21 %
Adjusted Operating Margin30.9 %30.2 %
Depreciation and amortization182 127 (43 %)
Restructuring17 2 NM
MOODY'S ANALYTICS REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g80.jpgmco-20220930_g81.jpgmco-20220930_g82.jpgmco-20220930_g83.jpg
MA: Global revenue ⇑ $317 millionU.S. Revenue ⇑ $165 millionNon-U.S. Revenue ⇑ $152 million
The 18% increase in global MA revenue reflects growth both in the U.S. (22%) and internationally (15%) in all LOBs and includes revenue from the acquisitions of Cortera, RMS, RealXData, PassFort and kompany. Change in foreign currency translation rates unfavorably impacted MA revenue by five percentage points.
–Organic constant currency revenue(1) growth was 10%.
–ARR(2) grew 9% reflecting increased demand for KYC and banking products within the Decision Solutions LOB coupled with growth for company data and ratings feeds products in the Data & Information LOB.
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DECISION SOLUTIONS REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g84.jpgmco-20220930_g85.jpgmco-20220930_g86.jpgmco-20220930_g87.jpg
DS: Global revenue ⇑ $274 millionU.S. Revenue ⇑ $131 millionNon-U.S. Revenue ⇑ $143 million
Global DS revenue grew 39% compared to the first nine months of 2021 with the most notable drivers of the increase reflecting:
–inorganic revenue growth from the acquisitions of RMS, PassFort, RealXData and kompany;
–continued demand for KYC and compliance solutions reflecting increased customer and supplier risk data usage;
–growth in recurring revenue for banking solutions reflecting strong renewals of multi-year commitments; and
–growth in subscription-based revenue for pension and actuarial modeling tools in support of certain international accounting standards relating to insurance contracts.
Changes in foreign currency translation rates unfavorably impacted DS revenue by four percentage points.
Organic constant currency revenue(1) grew 10%.
ARR(2) grew 10%.
RESEARCH AND INSIGHTS REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g88.jpgmco-20220930_g89.jpgmco-20220930_g90.jpgmco-20220930_g89.jpg
R&I: Global revenue ⇑ $29 millionU.S. Revenue ⇑ $19 millionNon-U.S. Revenue ⇑ $10 million
Global R&I revenue increased 6% compared to the first nine months of 2021 mainly driven by growth in recurring revenue of 6%, primarily due to continued strong retention and demand for credit research, analytics and models.
Changes in foreign currency translation rates unfavorably impacted R&I revenue by twopercentage points.
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Constant currency revenue(1) growth for R&I was 8%.
ARR(2) grew 8%.
DATA AND INFORMATION REVENUE
Nine months ended September 30,
2022-----------------------------------------------------------------------------------2021
_______________________________________________________________________________________________________
mco-20220930_g91.jpgmco-20220930_g92.jpgmco-20220930_g93.jpgmco-20220930_g89.jpg
D&I: Global revenue ⇑ $14 millionU.S. Revenue ⇑ $15 millionNon-U.S. Revenue ⇓ $1 million
Global D&I revenue increased 3% compared to the first nine months of 2021 and includes inorganic revenue growth from the acquisition of Cortera. The main drivers of the increase were:
–continued strong retention and new sales for ratings feeds coupled with pricing increases; and
–increased demand for company data.
Changes in foreign currency translation unfavorably impacted D&I revenue by eight percentage points.
Organic constant currency revenue(1) growth for D&I was 10%.
ARR(2) grew 9%.
MA: YTD Operating and SG&A Expense ⇑ $200 million
mco-20220930_g94.jpg
The increase in operating and SG&A expenses compared to the first nine months of 2021 is primarily due to growth in both compensation and non-compensation costs of $153 million and $47 million, respectively, reflecting:
Compensation costsNon-compensation costs
— inorganic expense growth from acquisitions, which represented approximately 95% of the growth;
partially offset by:
— operating and integration-related costs associated with recent acquisitions;
partially offset by:
— favorable changes in FX translation rates.— favorable changes in FX translation rates.
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MA: Adjusted Operating Margin 30.9% ⇑ 70BPS
The Adjusted Operating Margin increase for MA is primarily due to the 18% increase in global MA revenue partially offset by operational and integration-related costs associated with recent acquisitions.
Depreciation and amortization
The increase in depreciation and amortization expense is driven by higher amortization of intangible assets reflecting recent M&A activity (most notably RMS) and amortization of internally developed software.
Restructuring
The restructuring charge in the first nine months of 2022 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed in Note 1110 to the condensed consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
Moody's remains committed to using its cash flow to create value for shareholders by both investing in the Company's employees and growing the business through targeted organic initiatives and inorganic acquisitions aligned with strategic priorities. Additional excess capital is returned to the Company’s shareholders via a combination of dividends and share repurchases.
Cash Flow
The Company is currently financing its operations, capital expenditures acquisitions and share repurchases from operating and financing cash flows.
The following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes:
Nine Months Ended September 30,$ Change
Favorable (Unfavorable)		Three Months Ended March 31,$ Change
Favorable (Unfavorable)
2022202120232022
Net cash provided by operating activitiesNet cash provided by operating activities$1,097 $1,706 $(609)Net cash provided by operating activities$608 $470 $138 
Net cash used in investing activitiesNet cash used in investing activities$(172)$(2,161)$1,989 Net cash used in investing activities$(63)$(161)$98 
Net cash (used in) provided by financing activities$(957)$135 $(1,092)
Net cash used in financing activitiesNet cash used in financing activities$(216)$(352)$136 
Free Cash Flow (1)
Free Cash Flow (1)
$893 $1,629 $(736)
Free Cash Flow (1)
$535 $411 $124 
(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. Refer to “Non-GAAP Financial Measures” of this MD&A for further information on this financial measure.
Net cash provided by operating activities
Net cash flows from operating activities in the ninethree months ended September 30, 2022 decreased $609March 31, 2023 increased $138 million compared to the same period in 2022, primarily due to approximately $140 million in higher incentive compensation payments in the first quarter 2022 (based on full-year 2021 primarily reflecting a decrease in net income (see section entitled “Resultsfinancial results) compared to the current year.
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Table of Operations” of this MD&A for further discussion).Contents
Net cash used in investing activities
The $1,989$98 million decrease in cash used in investing activities in the ninethree months ended September 30, 2022March 31, 2023 compared to the same period in 20212022 primarily reflects:
–reflects higher cash paid of $1,929$83 million in the prior year for acquisitions, primarily reflecting the acquisition of RMSkompany in 2021; and
–higher net cash receipts of $243 million in 2022 relating to the settlement of net investment hedges;
partially offset by:
–an increase in cash paid for capital additions of $127 million reflecting product development and investments relating to strategic initiatives to support business growth and to enhance technology infrastructure to enable automation, innovation and efficiency; and
–$56 million in higher net purchases of investments in 2022 compared to the same period in the prior year (refer to Note 7 and Note 13 to the condensed consolidated financial statements for further information on the Company's investments).2022.
Net cash (used in) provided byused in financing activities
The $1,092$136 million increasedecrease in cash used in financing activities in the ninethree months ended September 30, 2022March 31, 2023 compared to the same period in the prior year was primarily attributed to:
–higher net issuance (issuance, less repayment) of $690 million in long term debt in 2021;
–higher cash paid for treasury share repurchases in 2022 of $355$617 million, which includes payment for shares made under an ASR agreement executed in the first quarter of 2022; and
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partially offset by:
–higher dividend paymentslong-term debt issuance of $40$491 million in 2022.the first quarter 2022 that did not recur in 2023 (refer to the section "Material Cash Requirements" below for further discussion on the Company's financing arrangements).
Cash and cash equivalents and short-term investments
The Company’s aggregate cash and cash equivalents and short-term investments of $1.7$2.2 billion at September 30, 2022March 31, 2023 included approximately $1.6$1.7 billion located outside of the U.S. Approximately 29%42% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in euros and British pounds. The Company manages both its U.S. and non-U.S. cash flow to maintain sufficient liquidity in all regions to effectively meet its operating needs.
As a result of the Tax Act, all previously net undistributed foreign earnings have now been subject to U.S. tax. The Company continues to evaluate which entities it will indefinitely reinvest earnings outside the U.S. The Company has provided deferred taxes for those entities whose earnings are not considered indefinitely reinvested. 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. Notwithstanding the Tax Act, which generally eliminated federal income tax on future cash repatriation to the U.S., cash repatriation may be subject to state and local taxes or withholding or similar taxes.
Material Cash Requirements
The Company's material cash requirements consist of the following contractual and other obligations:
Financing Arrangements
Indebtedness
At September 30, 2022,March 31, 2023, Moody’s had $7.5 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.
The repayment schedule for the Company’s borrowings outstanding at September 30, 2022March 31, 2023 is as follows:
mco-20220930_g95.jpg454
For additional information on the Company's outstanding debt, refer to Note 1514 to the condensed consolidated financial statements.
Future interest payments and fees associated with the Company's debt and credit facility are expected to be $4.3$4.9 billion, of which approximately $271$334 million is expected to be paid over the next twelve months.
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 wouldcould result in higher financing costs.
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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 September 30, 2022,March 31, 2023, these purchase obligations totaled $236$244 million, of which $158$151 million is expected to be paid in the next twelve months.
Leases
The Company has remaining payments relating to its operating lease obligationsleases of $493$490 million at September 30, 2022,March 31, 2023, primarily related to real estate leases, of which $104$118 million in payments are expected over the next twelve months. For more information on the Company's operating leases, refer to Note 1615 to the condensed consolidated financial statements.
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 September 30, 2022,March 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.
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Dividends and share repurchases
On OctoberApril 24, 2022,2023, the Board approved the declaration of a quarterly dividend of $0.70$0.77 per share for Moody’s common stock, payable December 14, 2022June 9, 2023 to shareholders of record at the close of business on November 23, 2022.May 19, 2023. 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. At September 30, 2022,March 31, 2023, the Company had approximately $848$807 million of remaining authority. There is no established expiration date for the remaining authorizations.
Restructuring
As more fully discussed in Note 1110 to the condensed consolidated financial statements, the Company is currently in the process of executing the 2022 - 2023 Geolocation Restructuring Program. This program relates to the Company's post-COVID-19 geolocation strategy and includes the rationalization and exit of certain real estate leases and a reduction in staff, including the relocation of certain job functions from their current locations. Cashfunctions. Future cash outlays associated with this program, which will primarily consist of personnel-related costs, are expected to be $75approximately $40 million to $100$60 million, which are expected to be paid through 2024.
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 over the next twelve months. 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.
NON-GAAP FINANCIAL MEASURES
In addition to its reported results, Moody’s has included in this MD&A certain adjusted results that the SEC defines as “non-GAAP“Non-GAAP financial measures.” Management believes that such adjusted financial measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company’s performance, facilitate comparisons to competitors’ operating results and can provide greater transparency to investors of supplemental information used by management in its financial and operational decision-making. These adjusted measures, as defined by the Company, are not necessarily comparable to similarly defined measures of other companies. Furthermore, these adjusted measures should not be viewed in isolation or used as a substitute for other GAAP measures in assessing the operating performance or cash flows of the Company. Below are brief descriptions of the Company’s adjusted financial measures accompanied by a reconciliation of the adjusted measure to its most directly comparable GAAP measure:
Adjusted Operating Income and Adjusted Operating Margin:
The Company presents Adjusted Operating Income and Adjusted Operating Margin because management deems these metrics to be useful measures to provide additional perspective on Moody's operating performance. Adjusted Operating Income excludes the impact of: i) depreciation and amortization; and ii) restructuring charges/adjustments. Depreciation and amortization are excluded because companies utilize productive assets of different agesestimated useful lives and use different methods of acquiring and depreciating productive assets. Restructuring chargescharges/adjustments are excluded as the frequency and magnitude of these charges may vary widely across periods and companies.
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.
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Operating income$413 $676 $1,577 $2,330 
Adjustments:
Depreciation and amortization83 61 242 180 
Restructuring1 — 32 2 
Adjusted Operating Income$497 $737 $1,851 $2,512 
Operating margin32.4 %44.3 %37.7 %49.8 %
Adjusted Operating Margin39.0 %48.3 %44.3 %53.7 %
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Three Months Ended March 31,
20232022
Operating income$554 $656 
Adjustments:
Depreciation and amortization88 78 
Restructuring14 — 
Adjusted Operating Income$656 $734 
Operating margin37.7 %43.1 %
Adjusted Operating Margin44.6 %48.2 %
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. Adjusted Net Income and Adjusted Diluted EPS exclude the impact of: i) amortization of acquired intangible assets; and ii) restructuring charges; and iii) FX translation losses reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia.charges/adjustments.
The Company excludes the impact of amortization of acquired intangible assets as companies utilize intangible assets with different estimated useful lives and have different methods of acquiring and amortizing intangible assets. These intangible assets were recorded as part of acquisition accounting and contribute to revenue generation. The amortization of intangible assets related to acquisitions will recur in future periods until such intangible assets have been fully amortized. Furthermore, the timing and magnitude of business combination transactions are not predictable and the purchase price allocated to amortizable intangible assets and the related amortization period are unique to each acquisition and can vary significantly from period to period and across companies. Restructuring charges and FX translation losses resulting from the Company no longer conducting commercial operations in Russiacharges/adjustments are excluded as the frequency and magnitude of these items may vary widely across periods and companies.
The Company excludes the aforementioned items to provide additional perspective when comparing net income and diluted EPS from period to period and across companies as the frequency and magnitude of similar transactions may vary widely across periods.
Below is a reconciliation of these measures to their most directly comparable U.S. GAAP amounts:
Three Months Ended March 31,
Amounts in millions20232022
Net income attributable to Moody's common shareholders$501 $498 
Pre-Tax Acquisition-Related Intangible Amortization Expenses$51 $51 
Tax on Acquisition-Related Intangible Amortization Expenses(12)(12)
Net Acquisition-Related Intangible Amortization Expenses

39 

39 
Pre-Tax Restructuring$14 $— 
Tax on Restructuring(4)— 
Net Restructuring10 — 
Adjusted Net Income

$550 

$537 
Three Months Ended September 30,Nine Months Ended September 30,
Amounts in millions2022202120222021
Net income attributable to Moody's common shareholders$303 $474 $1,128 $1,787 
Pre-Tax Acquisition-Related Intangible Amortization Expenses$48 $37 $150 $108 
Tax on Acquisition-Related Intangible Amortization Expenses(11)(8)(35)(24)
Net Acquisition-Related Intangible Amortization Expenses

37 

29 

115 

84 
Pre-Tax Restructuring$1 $— $32 $2 
Tax on Restructuring(1)— (8)— 
Net Restructuring— — 24 2 
FX losses resulting from the Company no longer conducting commercial operations in Russia— — 20 — 
Adjusted Net Income

$340 

$503 

$1,287 

$1,873 
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202220212022202120232022
Diluted earnings per share attributable to Moody's common shareholdersDiluted earnings per share attributable to Moody's common shareholders$1.65 $2.53 $6.10 $9.51 Diluted earnings per share attributable to Moody's common shareholders$2.72 $2.68 
Pre-Tax Acquisition-Related Intangible Amortization ExpensesPre-Tax Acquisition-Related Intangible Amortization Expenses$0.26 $0.20 $0.81 $0.57 Pre-Tax Acquisition-Related Intangible Amortization Expenses$0.28 $0.27 
Tax on Acquisition-Related Intangible Amortization ExpensesTax on Acquisition-Related Intangible Amortization Expenses(0.06)(0.04)(0.19)(0.13)Tax on Acquisition-Related Intangible Amortization Expenses(0.06)(0.06)
Net Acquisition-Related Intangible Amortization ExpensesNet Acquisition-Related Intangible Amortization Expenses0.20 0.16 0.62 0.44 Net Acquisition-Related Intangible Amortization Expenses0.22 0.21 
Pre-Tax RestructuringPre-Tax Restructuring$0.01 $— $0.17 $0.01 Pre-Tax Restructuring$0.08 $— 
Tax on RestructuringTax on Restructuring(0.01)— (0.04)— Tax on Restructuring(0.03)— 
Net RestructuringNet Restructuring— — 0.13 0.01 Net Restructuring0.05 — 
FX losses resulting from the Company no longer conducting commercial operations in Russia— — 0.11 — 
Adjusted Diluted EPSAdjusted Diluted EPS$1.85 $2.69 $6.96 $9.96 Adjusted Diluted EPS$2.99 $2.89 
Note: the tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates.
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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. Management deems capital expenditures essential to the Company’s product and service innovations and maintenance of Moody’s operational capabilities. Accordingly, capital expenditures are deemed to be a recurring use of Moody’s cash flow. Below is a reconciliation of the Company’s net cash flows from operating activities to Free Cash Flow:
Nine Months Ended September 30,
20222021
Net cash flows provided by operating activities$1,097 $1,706 
Capital additions(204)(77)
Free Cash Flow$893 $1,629 
Net cash flows used in investing activities$(172)$(2,161)
Net cash flows (used in) provided by financing activities$(957)$135 
Three Months Ended March 31,
20232022
Net cash provided by operating activities$608 $470 
Capital additions(73)(59)
Free Cash Flow$535 $411 
Net cash used in investing activities$(63)$(161)
Net cash used in financing activities$(216)$(352)
Organic Constant Currency Revenue Growth (Decline)/
Constant Currency Revenue Growth (Decline):
Beginning in the second quarter of 2022, theThe Company began presenting organic constant currency revenue growth (decline) andpresents constant currency revenue growth (decline) as its non-GAAP measure of revenue growth (decline). Previously, the Company presented organic revenue growth (decline), which excluded only the impact of certain acquisition activity. Management deems this revised measure to be useful in providing additional perspective in assessing the Company's revenue growth (decline) excluding both the inorganic revenue impacts from certain acquisition activity and the impacts of changes in foreign exchange rates. The Company calculates the dollar impact of foreign exchange as the difference between the translation of its current period non-USD functional currency results using comparative prior comparative period weighted average foreign exchange translation rates and current year as reported results.
Below is a reconciliation of the Company's reported revenue and growth (decline) rates to its organic constant currency revenue growth (decline) and constant currency revenue growth (decline) measures:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
Amounts in millionsAmounts in millions20222021ChangeGrowth20222021ChangeGrowthAmounts in millions20232022ChangeGrowth
MA revenueMA revenue$685 $601 $84 14%$2,055 $1,738 $317 18%MA revenue$737 $695 $42 6%
FX impactFX impact41 — 41 81 — 81 FX impact18 — 18 
Inorganic revenue from acquisitions(70)— (70)(232)— (232)
Organic constant currency MA revenue$656 $601 $55 9%$1,904 $1,738 $166 10%
Constant currency MA revenueConstant currency MA revenue$755 $695 $60 9%
Decision Solutions revenueDecision Solutions revenue$325 $250 $75 30%$971 $697 $274 39%Decision Solutions revenue$354 $334 $20 6%
FX impactFX impact12 — 12 28 — 28 FX impact7 — 7 
Inorganic revenue from acquisitions(70)— (70)(230)— (230)
Organic constant currency Decision Solutions revenue$267 $250 $17 7%$769 $697 $72 10%
Constant currency Decision Solutions revenueConstant currency Decision Solutions revenue$361 $334 $27 8%
Research and Insights revenueResearch and Insights revenue$184 $177 $7 4%$552 $523 $29 6%Research and Insights revenue$195 $183 $12 7%
FX impactFX impact10 — 10 15 — 15 FX impact3 — 3 
Constant currency Research and Insights revenueConstant currency Research and Insights revenue$194 $177 $17 10%$567 $523 $44 8%Constant currency Research and Insights revenue$198 $183 $15 8%
Data and Information revenueData and Information revenue$176 $174 $2 1%$532 $518 $14 3%Data and Information revenue$188 $178 $10 6%
FX impactFX impact19 — 19 38 — 38 FX impact8 — 8 
Inorganic revenue from acquisitions— — — (2)— (2)
Organic constant currency Data and Information revenue$195 $174 $21 12%$568 $518 $50 10%
Constant currency Data and Information revenueConstant currency Data and Information revenue$196 $178 $18 10%
MCO revenueMCO revenue$1,470 $1,522 $(52)(3)%
FX impactFX impact28 — 28 
Constant currency MCO revenueConstant currency MCO revenue$1,498 $1,522 $(24)(2)%

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Three Months Ended September 30,Nine Months Ended September 30,
Amounts in millions20222021ChangeGrowth20222021ChangeGrowth
MCO revenue$1,275 $1,526 $(251)(16)%$4,178 $4,679 $(501)(11)%
FX impact67 — 67 142 — 142 
Inorganic revenue from acquisitions(70)— (70)(232)— (232)
Organic constant currency MCO revenue$1,272 $1,526 $(254)(17)%$4,088 $4,679 $(591)(13)%
Key Performance Metrics:
The Company presents Annualized Recurring Revenue (“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. The Company uses ARR to manage and monitor performance of its MA operating segment and believes that this metric is a key indicator of the trajectory of MA's recurring revenue base.
The Company calculates ARR by taking the total recurring contract value for each active renewable contract as of the reporting date, divided by the number of days in the contract and multiplied by 365 days to create an annualized value. The Company defines renewable contracts as subscriptions, term licenses, maintenance and renewable services. ARR excludes transaction sales including training, one-time services and perpetual licenses. In order to compare period-over-period ARR excluding the effects of foreign currency translation, the Company bases the calculation on currency rates utilized in its current year operating budget and holds these FX rates constant for the duration of all current and prior periods being reported. 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. GAAP.
Amounts in millionsAmounts in millionsSeptember 30, 2022September 30, 2021ChangeGrowthAmounts in millionsMarch 31, 2023March 31, 2022ChangeGrowth
ARR
MA ARRMA ARR
Decision SolutionsDecision Solutions$1,177 $1,071 $106 10%Decision Solutions$1,234 $1,108 $126 11%
Research and InsightsResearch and Insights740 688 52 8%Research and Insights770 708 62 9%
Data and InformationData and Information745 683 62 9%Data and Information748 685 63 9%
Total MA ARRTotal MA ARR$2,662 $2,442 $220 9%Total MA ARR$2,752 $2,501 $251 10%
RECENTLY ISSUED ACCOUNTING STANDARDS
Refer to Note 1 to the condensed consolidated financial statements located in Part I of this Form 10-Q for a discussion on the impact to the Company relating to recently issued accounting pronouncements.
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 Item 1 - "Financial Statements",Statements," Note 1716 "Contingencies” in this Form 10-Q.
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). 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. Existing and proposed laws and regulations can impact the Company’s operations, products and the markets in which the Company operates. Additional laws and regulations have been proposed or are being considered. Each of the existing, adopted, proposed and potential laws and regulations can increase the costs and legal risk associated with the Company’s operations, including the issuance of credit ratings, and may negatively impact the Company’s profitability and ability to compete, or result in changes in the demand for the Company’s products and services, in the manner in which the Company’s products and services are utilized and in the manner in which the Company operates.
The regulatory landscape continues to evolve. 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. The Dodd-Frank Act added additional provisions to Section 15E. Future government transitions, can bring potential changes in the laws affecting CRAs and/or the enforcement of any new or existing legislation, regulation or directives by government authorities.
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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 formal regulation and periodic inspection. From time to time, ESMA publishes interpretive guidance, or thematic reports regarding various aspects of the CRA regulation and, annually, sets out its work program for the forthcoming year. The Commission is moving forward with their sustainable finance strategy released in July 2021. This includes further assessments in respect of both CRAs and sustainability ratings and research, which might lead to legislative action.
On 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). Regulatory arrangements also came into effect in both the U.K. and the EU to allow credit ratings to be available for regulatory use in both the EU and the U.K. MIS has put arrangements in place to endorse its U.K. credit ratings into the EU and its EU credit ratings into the U.K. The U.K. Government is considering bringing ESG data and ratings firms within the scope of FCA authorization and regulation. The FCA has said that it sees a clear rationale for regulating them.
In light of the regulations that have gone into effect in both the EU and the U.S. (as well as many other countries), periodically and as a matter of course pursuant to their enabling legislation, regulatory authorities have, and will continue to, publish reports that describe their oversight activities. In addition, other legislation, regulation and/or interpretation of existing regulation relating to the Company’s operations, including credit rating, ancillary and research services has been or is being considered by local, national and multinational bodies and this type of activity is likely to continue in the future. Finally, in certain countries, governments may provide financial or other support to locally-based CRAs. If enacted, any such legislation, regulation or support could change the competitive landscape in which the Company operates. The legal status of CRAs has been addressed by courts in various jurisdictions and is likely to be considered and addressed in legal proceedings from time to time in the future. Management of the Company cannot predict whether these or any other proposals will be enacted, the outcome of any pending or possible future legal proceedings, or regulatory or legislative actions, or the ultimate impact of any such matters on the competitive position, financial position or results of operations of the Company.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this quarterly report on Form 10-Q are forward-looking statements and are based on future expectations, plans and prospects for the Company's business and operations that involve a number of risks and uncertainties. Such statements involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements. Those statements appear at various places throughout this quarterly report on Form 10-Q, including in the sections entitled “Contingencies” under Item 2, “MD&A”,&A,” commencing on page 4335 of this quarterly report on Form 10-Q, under “Legal Proceedings” in Part II, Item 1, of this Form 10-Q, 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. Stockholders and investors are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements and other information in this document are made as of the date of this quarterly report on Form 10-Q, and the Company undertakes no obligation (nor does it intend) to publicly supplement, update or revise such statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or otherwise, except as required by applicable law or regulation. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements.
Those factors, risks and uncertainties include, but are not limited to:
•the impact of generalcurrent economic conditions, including capital market disruptions, 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 its effectacquisitions, and their effects on the volume of debt and other securities issued in domestic and/or global capital markets;
•the globaluncertain 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 eachvolatility in financial and credit markets;
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•the global impact of the crisis inRussia - Ukraine and COVID-19military conflict on volatility in the U.S. and 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, credit quality concerns, changes in interest rates, inflationincreased utilization of technologies that have the potential to intensify competition and other volatilityaccelerate disruption and disintermediation in the financial markets;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 Russiancountries or entities within countries and of Moody’s no longer conducting commercial operations in Russia;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;
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•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;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.
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, 2021,2022, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein. Stockholders and investors are cautioned that the occurrence of any of these factors, risks and uncertainties may cause the Company’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements, which could have a material and adverse effect on the Company’s business, results of operations and financial condition. 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. Forward-looking and other statements in this document may also address our corporate responsibility progress, plans, and goals (including sustainability and environmental matters), and the inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be disclosed in the Company’s filings with the Securities and Exchange Commission. In addition, historical, current, and forward-lookingforward-
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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.
Item 3.         Quantitative and Qualitative Disclosures About Market Risk
InThere have been no material changes to the nineCompany's market risk during the three months ended September 30, 2022,March 31, 2023. For a discussion of the Company entered into new hedging transactions, which are disclosed in Note 9Company’s exposure to market risk, refer to the condensed consolidated financial statements. The sensitivity analyses disclosedCompany’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our Form 10-K for the year ended December 31, 2021 have been updated below to reflect the Company's derivative instrument portfolio as of September 30, 2022.
Foreign exchange risk:
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. 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. The following table shows the impact to the fair value of the forward contracts if currencies being purchased were to weaken by 10%:
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Foreign Currency Forwards (1)
Impact on fair value of contract
SellBuy
U.S. dollarEuro$19 million unfavorable impact
U.S. dollarBritish pound$13 million unfavorable impact
U.S. dollarCanadian dollar$12 million unfavorable impact
U.S. dollarSingapore dollar$5 million unfavorable impact
U.S. dollarIndian rupee$2 million unfavorable impact
U.S. dollarJapanese yen$1 million unfavorable impact
$52 million unfavorable impact
(1)Refer to Note 9 to the consolidated financial statements in this Form 10-Q for further detail on the forward contracts.
The change in fair value of the foreign exchange forward contracts would be offset by FX revaluation gains or losses on underlying assets and liabilities denominated in currencies other than a subsidiary’s functional currency.
Derivatives and non-derivatives designated as net investment hedges:
The Company designates derivative instruments and foreign currency-denominated debt as hedges of foreign currency risk of net investments in certain foreign subsidiaries (net investment hedges) under ASC Topic 815, Derivatives and Hedging.
Cross-currency swaps
The Company has cross-currency swaps designated as hedges of euro denominated net investments in subsidiaries. Refer to Note 9 of this Form 10-Q for further details regarding these derivative instruments as of September 30, 2022.
If the euro were to strengthen 10% relative to the U.S. dollar, there would be an approximate $284 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.
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. 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. 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. These swaps are adjusted to fair market value based on prevailing interest rates at the end of each reporting period and fluctuations are recorded as a reduction or addition to the carrying value of the borrowing, while net interest payments are recorded as interest expense/income in the Company’s consolidated statement of operations. A hypothetical change of 100 BPS in the LIBOR/SOFR-based swap rate would result in an approximate $114 million change to the fair value of the swaps, which would be offset by the change in fair value of the hedged item.
Additional information on these interest rate swaps is disclosed in Note 9 to the condensed consolidated financial statements of this Form 10-Q.
Item 4.         Controls and Procedures
Evaluation of Disclosure Controls and Procedures: The Company carried out an evaluation, as required by Rule 13a-15(b) under the Exchange Act, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the communication to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has determined that there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting during the three-month period ended September 30, 2022.
During the fiscal year ended DecemberMarch 31, 2021, the Company acquired RMS and during the nine months ended September 30, 2022, Moody's integrated the acquired entity into the Company’s financial reporting processes and procedures and internal controls over financial reporting.2023.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For information regarding legal proceedings, see Item 1 – “Financial Statements – Notes to Condensed Consolidated Financial Statements (Unaudited),” Note 1716 “Contingencies” in this Form 10-Q.
Item 1A. Risk Factors
There have been no material changes from the significant risk factors and uncertainties previously disclosed under the heading "Risk Factors" in the Company's annual report on Form 10-K for the year ended December 31, 2021,2022, that if they were to occur, could materially adversely affect the Company’s business, financial condition, operating results and/or cash flow. For a discussion of the Company’s risk factors, refer to Item 1A. “Risk Factors” contained in the Company’s annual report on Form 10-K for the year ended December 31, 2021.2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
MOODY'S PURCHASES OF EQUITY SECURITIES
For the three months ended September 30, 2022March 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)
July 1- 31395,958 $281.82 391,930 $850  million
August 1- 315,469 $301.87 5,411 $848  million
September 1- 301,083 $— — $848  million
Total402,510 $282.09 397,341 
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)
January 1- 311,421 $— — $848  million
February 1- 2853,039 $305.20 51,619 $832  million
March 1- 31298,949 $293.56 86,821 $807  million
Total353,409 $297.90 138,440 
(1) Includes surrender to the Company of 4,028; 58;1,421; 1,420; and 1,083212,128 shares of common stock in July, August,January, February, and September,March, respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.
(2) 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. At September 30, 2022March 31, 2023 there was approximately $848$807 million of combined share repurchase authority remaining. There is no established expiration date for the remaining authorization.
During the thirdfirst quarter of 2022,2023, Moody’s issued a net 36436 thousand shares under employee stock-based compensation plans.
Item 5. Other Information
For information regarding the expansion of the 2022 - 2023 Geolocation Restructuring Program, see Note 11 "Restructuring” in Part 1, Item 1 of this quarterly report on Form 10-Q.Not applicable.
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Item 6.    Exhibits
Exhibit NoDescription
3ARTICLES OF INCORPORATION AND BY-LAWS
.1
Restated Certificate of Incorporation of the Registrant, effective April 22, 2020 (incorporated by reference to Exhibit 3.3 to the Report on Form 8-K of the Registrant, file number 1-14037, filed April 27, 2020)
.2
Amended and Restated By-laws of Moody’s Corporation, effective December 14, 2020 (incorporated by reference to Exhibit 3.1 to the Report on Form 8-K of the Registrant, file number 1-14037, filed December 18, 2020)
410INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURESMaterial Contracts
.1.1†
31CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
.1*
Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
.2*
Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
32CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
.1*
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. The Company has furnished this certification and does not intend for it to be considered filed under the Securities Exchange Act of 1934 or incorporated by reference into future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.1934
.2*
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. The Company has furnished this certification and does not intend for it to be considered filed under the Securities Exchange Act of 1934 or incorporated by reference into future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.1934
101.INS*Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Definitions Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
* Filed herewith
† Management contract of compensatory plan or arrangement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MOODY’S CORPORATION
By:/ S / MARK KAYE
Mark Kaye
Executive Vice President and Chief Financial Officer
(principal financial officer)
By:/ S / CAROLINE SULLIVAN
Caroline Sullivan
Chief Accounting Officer and Corporate Controller
(principal accounting officer)
Date: OctoberApril 26, 20222023
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