Key Highlights

  • Moody's reported Q2 2026 adjusted EPS of $4.68, versus a $4.26 estimate, and revenue of $2.19 billion, up 15% year-over-year.
  • Moody's Investors Service revenue grew 25% as debt issuance rebounded above $2 trillion for a second straight quarter.
  • The company raised its full-year 2026 adjusted EPS guidance to $16.50-$17.00 and boosted its buyback authorization to up to $3 billion.
  • Shares are trading modestly lower despite the beat, as investors booked profits following a strong pre-earnings run-up.

Moody's (NYSE: MCO) reported strong Q2 2026 results, with adjusted EPS of $4.68 versus a $4.26 estimate and revenue of $2.19 billion, up 15% year-over-year, driven by a 25% surge in Moody's Investors Service revenue as debt issuance rebounded above $2 trillion for a second straight quarter.

What Happened

Moody's results were strong across the board: 15% revenue growth, adjusted operating income up 25%, adjusted operating margin expanded 440 basis points to 55.3%, and adjusted diluted EPS grew 31% to $4.68; the company rated over $2 trillion of debt for the second consecutive quarter.

Moody's Investors Service (MIS) delivered 25% revenue growth, with transaction revenue up 34%, adjusted operating margin of 68.3% (up 410 basis points), and first-time mandates up roughly 45%. Full-year issuance guidance was raised to mid-single-digit percent growth, from low-to-mid single digit, while revenue guidance remains high single-digit growth, with Q3 expected to show low single-digit revenue growth and Q4 roughly flat versus the prior year due to seasonality and a mix shift toward lower-yield data center and FIG issuance.

Moody's Analytics (MA) annualized recurring revenue reached approximately $3.7 billion, up nearly 9%, with trailing 12-month retention at 95% and adjusted operating margin expanding 150 basis points to 33.6%. Full-year MA guidance was maintained at high single-digit ARR growth with a margin target of 34%-35% for the year, progressing toward the mid-to-high 30s by year-end 2027.

Market Reaction

The company raised full-year 2026 adjusted diluted EPS guidance to $16.50-$17.00, a midpoint of $16.75 and roughly 12% growth, raised share repurchase guidance to up to $3 billion for 2026, adjusted free cash flow guidance to $2.7-$2.9 billion, and expanded its restructuring program by $100 million, extended through year-end 2027, expecting annualized savings of $300-$350 million.

Several analysts, including Baird, raised price targets, to $572 from $557, following the results. Despite the beat and raised guidance, shares are trading modestly lower as investors booked profits following a strong pre-earnings run-up and amid a cautious broader market grappling with rising oil prices tied to the U.S.-Iran conflict and a heavy week of Big Tech earnings.

Outlook

Key growth drivers highlighted include AI and data center financing, with hyperscaler debt issuance already exceeding 2026 forecasts and hyperscaler capital expenditure expected to approach $800 billion in 2026, private credit with 40%-plus growth in related transactions, digital finance and blockchain integrations including Solana and Canton, KYC and compliance solutions with a 50% reduction in false positive alerts, and expansion in insurance and banking, with new leadership under Christina Kosmowski driving Moody's Analytics go-to-market and product strategy improvements.

Why did Moody's shares fall despite beating estimates?

Shares fell as investors booked profits following a strong pre-earnings run-up, amid a cautious broader market tied to rising oil prices and a heavy week of Big Tech earnings.

What is Moody's updated full-year EPS guidance?

The company raised its full-year 2026 adjusted diluted EPS guidance to $16.50-$17.00.

What drove Moody's Investors Service revenue growth?

A 25% surge in revenue as debt issuance rebounded above $2 trillion for a second consecutive quarter, with transaction revenue up 34%.