Moody's Corp. · 10-Q · Item 2 MD&A

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 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 84 for a discussion of uncertainties, risks and other factors associated with these statements.

THE COMPANY

In a world shaped by increasingly interconnected risks, Moody's data, insights, and innovative technologies help customers develop a holistic view of their world and unlock opportunities. Moody’s offerings are distinguished by our vast proprietary and curated data and validated analytical models, which provide the trusted foundation that enables our customers to navigate an increasingly complex risk landscape. Moody’s solutions enable the transformation of information into decision-grade intelligence, which is deeply interconnected across risk domains. Moody's also offers valuable insights into financial stability and creditworthiness for organizations, debt instruments, and securities, serving a key role in bringing transparency to the global debt markets. With a rich history of experience in global markets and a diverse workforce of approximately 16,000 across more than 40 countries, Moody's gives customers the comprehensive perspective needed to act with confidence and thrive in a dynamic global environment. Moody’s has two reportable segments: MA and MIS.

Moody's Analytics

Moody's Investors Service

MA provides curated data, intelligence and analytical tools to help business and financial leaders make confident decisions.

For more than 115 years, MIS has been a leading provider of credit ratings, research, and risk analysis helping businesses, governments, and other entities around the globe.

MA comprises three interconnected businesses: i) Research & Insights, which provides credit research, economic analysis and scenario modeling used in investment, risk, and regulatory decisions; ii) Data & Information, which is powered by the world's largest database on companies and credit and serves as a critical input to financial analysis and AI model development/risk assessment; and iii) Decision Solutions, a set of cloud-based platforms embedding Moody's data and analytics directly into regulated banking, insurance, and KYC workflows. Together, these businesses benefit from deep customer integration, long-term subscription structures, and data assets that are proprietary in sourcing, breadth, and historical depth.

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.

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 GAAP. 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 goodwill and other acquired intangible assets, impairment of long-lived assets, pension and other retirement benefits, investments in non-consolidated affiliates, income taxes, and contingencies.

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, 2025, 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.

Reportable Segments

The Company is organized into two reportable segments as of June 30, 2026: MA and MIS, which are more fully described in the section entitled “The Company” above and in Note 16 to the consolidated financial statements.

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RESULTS OF OPERATIONS

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.

Executive Summary

The following table provides an executive summary of key operating results for the quarter ended June 30, 2026. 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.

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Three Months Ended

Financial measure:

% Change Favorable

(Unfavorable)

Insight and Key Drivers of Change Compared to Prior Year

Moody's total revenue

$

$

%

— reflects revenue growth in both segments

MA external revenue

$

$

4

%

— sustained demand for insurance offerings and cloud-based KYC and banking solutions within Decision Solutions; partially offset by

— T1the impacts of the MA Learning

Solutions and MA Regulatory Solutions divestitures

— continued demand for ratings data feeds, company data applications and credit research product offerings

— T2Organic constant currency recurring revenue(1) and ARR(2) both increased 9%

MIS external revenue

$

$

%

— T3strong CFG issuance activity, driven by:

— higher leveraged finance issuance, primarily in the U.S., supported by strong investor demand and tight credit spreads;

— T4investment-grade issuance related to continued AI-related financing by hyperscalers; and

— T5strong Project and Infrastructure Finance issuance activity related to data centers and broader build-out of technology infrastructure

Total operating and SG&A expenses

$

$

(5

%)

— higher incentive compensation which aligns with operational performance relative to targets; and

— increases in costs to support operating growth, including technology infrastructure costs

Depreciation and amortization

$

$

(5

%)

— higher amortization of internally developed software, primarily related to the development of MA cloud-based solutions

Restructuring

$

$

%)

— relates to the Company's restructuring program, more fully discussed in Note 9 to the consolidated financial statements

Total non-operating income (expense), net

$

$

%

— a gain on the divestiture of the MA Regulatory Solutions business as more fully discussed in Note 11 to the consolidated financial statements

Operating margin

%

%

BPS

— Operating margin and Adjusted Operating Margin(1) expansion reflects revenue growth coupled with disciplined cost management

Adjusted Operating Margin(1)

%

%

BPS

ETR

%

%

BPS)

— in line with the prior year

Diluted EPS

$

$

%

— increase in Diluted EPS reflects growth in operating income coupled with the gain on the divestiture of the MA Regulatory Solutions business

Adjusted Diluted EPS(1)

$

$

%

— increase in Adjusted Diluted EPS(1) reflects growth in Adjusted Operating Income(1)

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Moody's Corporation

Three Months Ended June 30,

% Change Favorable

(Unfavorable)

Revenue:

United States

$

$

%

Non-U.S.:

EMEA

6

%

Asia-Pacific

%

Americas

2

%

Total Non-U.S.

7

%

Total

%

Expenses:

Operating

(6

%)

SG&A

(5

%)

Depreciation and amortization

(5

%)

Restructuring

%)

Charges related to asset abandonment

—

1

%

Total

(5

%)

Operating income

$

$

%

Adjusted Operating Income(1)

$

$

%

Interest expense, net

$

$

5

%

Other non-operating income, net

2

%)

Gain on business divestitures

—

NM

Non-operating income (expense), net

$

$

%

Net income attributable to Moody's

$

$

%

Diluted weighted average shares outstanding

3

%

Diluted EPS attributable to Moody's common shareholders

$

$

%

Adjusted Diluted EPS(1)

$

$

%

Operating margin

%

%

Adjusted Operating Margin(1)

%

%

ETR

%

%

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The table below shows Moody’s global staffing by geographic area:

Change

%

MA

U.S.

(8

%)

Non-U.S.

(9

%)

Total(3)

(9

%)

MIS

U.S.

—

%

Non-U.S.

%

Total(4)

7

%

MSS

U.S.

(6

%)

Non-U.S.

3

%

Total

—

%

Total MCO

U.S.

(5

%)

Non-U.S.

—

%

Total

(2

%)

(3) Headcount decrease year over year is primarily due to business divestitures.

(4) Headcount increase year over year is primarily due to business acquisitions.

GLOBAL REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

Global revenue ⇑ $287 million

U.S. Revenue ⇑ $226 million

Non-U.S. Revenue ⇑ $61 million

The 15% increase in global revenue reflects growth of 25% in MIS and 4% in MA. On an organic constant currency basis, revenue(1) grew 16%. Refer to the section entitled “Segment Results” of this MD&A for a more comprehensive discussion of the Company’s segment revenue.

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Second Quarter Operating Expense ⇑ $29 million

Compensation expenses of $374 million increased $12 million, reflecting:

Non-compensation expenses of $144 million increased $17 million, reflecting:

— an increase in incentive compensation aligned with operational performance relative to targets

— increases in costs to support operating growth, including technology infrastructure costs

Second Quarter SG&A Expense ⇑ $20 million

Compensation expenses of $289 million increased $17 million, primarily reflecting:

Non-compensation expenses of $174 million increased $3 million, primarily reflecting:

— an increase in incentive compensation aligned with operational performance relative to targets; and

— non-compensation expenses were generally in line compared to the prior year

— growth in salaries and benefits primarily reflecting annual salary increases

Depreciation and amortization

The increase is primarily driven by amortization of internally developed software, which relates to the development of MA cloud-based solutions.

Restructuring

T6The amounts reflect charges and adjustments related to the Company's restructuring program, more fully discussed in Note 9 to the consolidated financial statements.

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Operating margin and Adjusted Operating Margin(1) expansion reflects the 15% increase in revenue, partially offset by growth of 5% in operating and SG&A expenses.

Interest Expense, net ⇓ $3 million

Other non-operating income ⇓ $13 million

Interest expense decrease is primarily due to:

Decrease in income is primarily due to:

— lower interest expense on borrowings of $7 million, reflecting favorable impacts from fixed-to-floating interest rate swaps due to a lower interest rate environment compared with the prior year, as well as the maturity of certain swaps in prior periods; partially offset by

— an increase in FX losses of $11 million

— a decrease in interest income of $4 million reflecting lower cash balances and lower interest rates

Gain on business divestitures ⇑ $181 million

Primarily reflects the gain on divestiture of the MA Regulatory Solutions business.

The ETR was in line with the prior year.

Adjusted Diluted EPS(1) ⇑ $1.12

The increase in Diluted EPS reflects growth in operating income coupled with the gain on the divestiture of the MA Regulatory Solutions business.

The increase in Adjusted Diluted EPS(1) reflects growth in Adjusted Operating Income(1).

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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 June 30,

% Change Favorable

(Unfavorable)

Revenue:

Decision Solutions (DS)

$

$

2

%

Research and Insights (R&I)

3

%

Data and Information (D&I)

9

%

Total external revenue

4

%

Intersegment revenue

3

3

—

%

Total MA revenue

4

%

Expenses:

Compensation expense

(1

%)

Non-compensation expense

(4

%)

Total compensation and non-compensation expense

(2

%)

Intersegment expense

(4

%)

Total

(2

%)

Adjusted Operating Income

$

$

9

%

Adjusted Operating Margin

%

%

Depreciation and amortization

(5

%)

Restructuring

%)

Charges related to asset abandonment

—

1

%

Reserve for international non-income tax obligation

2

—

NM

Duplicate Rent

1

—

NM

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MOODY'S ANALYTICS REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

MA: Global revenue ⇑ $37 million

U.S. Revenue ⇑ $28 million

Non-U.S. Revenue ⇑ $9 million

The 4% increase in global MA revenue reflects growth both in the U.S. (7%) and internationally (2%).

–Organic constant currency revenue(1) growth was 8%.

–Recurring revenue growth and organic constant currency recurring revenue(1) growth was 7% and 9%, respectively.

–ARR(2) increased 9%.

The increases are reflective of growth across all LOBs, as discussed in further detail below.

DECISION SOLUTIONS REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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DS: Global revenue ⇑ $10 million

U.S. Revenue ⇑ $16 million

Non-U.S. Revenue ⇓ $6 million

Global DS revenue for the three months ended June 30, 2026 and 2025 was comprised as follows:

Global DS revenue increased 2% compared to the second quarter of 2025 and reflects increases in the U.S. (10%), partially offset by a decline internationally (2%). DS recurring revenue grew 9%. Organic constant currency revenue(1) and organic constant currency recurring revenue(1) growth for DS was 12% and 14%, respectively, and ARR grew 10%.

The most notable drivers of the growth are as follows:

–Insurance revenue grew 9%

–recurring revenue growth of 11% was primarily attributable to continued demand for subscription-based revenue for catastrophe modeling tools

–ARR(2) grew 9% reflecting the continued demand for subscription-based catastrophe models

–KYC revenue grew 13%

–recurring revenue growth of 12% reflects continued demand and strong customer retention for KYC solutions, including expanded compliance data use cases, coupled with a favorable impact from foreign currency translation

–Constant currency revenue(1) growth and constant currency recurring revenue(1) growth in KYC were 11% and 10%, respectively

–ARR(2) grew 13%, reflecting the aforementioned strong demand for KYC solutions

–Banking revenue declined 14%, primarily reflecting the impact of both the MA Learning Solutions divestiture in the fourth quarter of 2025 and the divestiture of MA Regulatory Solutions in the second quarter of 2026. Organic constant currency revenue(1) growth for Banking was 17%

–recurring revenue growth was 3% within Banking, which was suppressed by the divestiture of the MA Regulatory Solutions business.

–Organic constant currency recurring revenue(1) grew 22%, reflecting:

–the expansion of existing customer relationships to cloud-based subscription banking offerings that enable customers' lending, risk management and finance workflows; and

–an increase resulting from the timing of revenue recognition for installed software subscriptions.

–Transaction revenue declined 88% reflecting the impact of the divestiture of the MA Learning Solutions business and MA's continued strategic shift to cloud-based subscription-based solutions.

–ARR(2) grew 10% reflecting the aforementioned expansion of existing customer relationships to cloud-based subscription banking offerings. The lower rate of ARR growth relative to organic constant currency recurring revenue growth primarily reflects higher revenues resulting from the timing of revenue recognition for installed software subscriptions.

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RESEARCH AND INSIGHTS REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

___________________________________________________ ________________________________________________

R&I: Global revenue ⇑ $7 million

U.S. Revenue ⇑ $2 million

Non-U.S. Revenue ⇑ $5 million

Global R&I revenue increased 3% compared to the second quarter of 2025 and reflects growth in both the U.S. (1%) and internationally (5%). Constant currency revenue(1) growth for R&I was 2%. Recurring revenue increased 3%.

The revenue increase was attributable to continued demand for credit research product offerings.

ARR(2) increased 6%.

DATA AND INFORMATION REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

________________________________________________________________________________________________________

D&I: Global revenue ⇑ $20 million

U.S. Revenue ⇑ $10 million

Non-U.S. Revenue ⇑ $10 million

Global D&I revenue increased 9% compared to the second quarter of 2025 and reflects growth in both the U.S. (13%) and internationally (7%). Constant currency revenue(1) growth for D&I was 8%.

This growth was primarily driven by continued strong demand for ratings data feeds and company data applications, which also contributed to an 8% increase in ARR(2).

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MA: Second Quarter Compensation and Non-Compensation Expense ⇑ $9 million

Compensation expenses of $357 million increased $2 million primarily reflecting:

Non-compensation expenses of $207 million increased $7 million reflecting:

— an increase in incentive compensation aligned with operational performance relative to targets; mostly offset by

— increases in costs to support operating growth, including technology infrastructure costs

— a decrease in salaries and benefits primarily attributable to the divestitures of MA Learning Solutions and MA Regulatory Solutions businesses, while the underlying expense was generally in line with the prior year

MA: Adjusted Operating Margin 33.6% ⇑ 150 BPS

Adjusted Operating Margin expansion primarily reflects the aforementioned 4% increase in global MA revenue, supported by operational efficiency/disciplined cost management.

Depreciation and amortization

The increase in depreciation and amortization expense reflects higher amortization of internally developed software relating to the development of cloud-based solutions.

Restructuring

The amounts reflect charges and adjustments related to the Company's restructuring program, more fully discussed in Note 9 to the consolidated financial statements.

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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:

Three Months Ended

% Change Favorable

(Unfavorable)

Revenue:

Corporate finance (CFG)

$

$

%

Structured finance (SFG)

%

Financial institutions (FIG)

%

Public, project and infrastructure finance (PPIF)

%

Total ratings revenue

%

MIS Other

%

Total external revenue

%

Intersegment revenue

4

%

Total MIS revenue

%

Expenses:

Compensation expense

(9

%)

Non-compensation expense

%)

Total compensation and non-compensation expense

%)

Intersegment expense

3

3

—

%

Total

(9

%)

Adjusted Operating Income

$

$

%

Adjusted Operating Margin

%

%

Depreciation and amortization

(4

%)

Restructuring

5

9

%

Duplicate Rent

1

—

NM

The following chart presents changes in rated issuance volumes compared to the second quarter of 2025. 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.

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MOODY'S INVESTORS SERVICE REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

MIS: Global revenue ⇑ $250 million

U.S. Revenue ⇑ $198 million

Non-U.S. Revenue ⇑ $52 million

The 25% increase in global MIS revenue reflects growth in the U.S. (32%) and internationally (13%).

–Organic constant currency revenue(1) growth was 24%.

The increase is reflective of growth across all ratings LOBs, as discussed in further detail below.

CFG REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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CFG: Global revenue ⇑ $139 million

U.S. Revenue ⇑ $119 million

Non-U.S. Revenue ⇑ $20 million

Global CFG revenue for the three months ended June 30, 2026 and 2025 was comprised as follows:

* Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.

The increase in CFG revenue of 27% reflects growth in the U.S. (38%) and internationally (10%).

–Organic constant currency revenue(1) growth for CFG was 26%.

Transaction revenue increased $129 million compared to the same period in the prior year, which primarily reflected:

–an increase in leveraged finance issuance activity, primarily in the U.S., reflecting strong investor demand and tight credit spreads throughout most of the quarter coupled with loan activity to finance M&A; and

–higher investment-grade revenue reflecting strong issuance supported by AI‑related financing from hyperscalers in the technology sector, and continued strong investor demand.

SFG REVENUE

Three months ended June 30,

2026---------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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SFG: Global revenue ⇑ $16 million

U.S. Revenue ⇑ $13 million

Non-U.S. Revenue ⇑ $3 million

Global SFG revenue for the three months ended June 30, 2026 and 2025 was comprised as follows:

The increase in SFG revenue of 12% reflects growth in the U.S. (14%) and internationally (7%).

–Organic constant currency revenue(1) growth for SFG was 10%.

Transaction revenue increased $14 million compared to the second quarter of 2025, mainly attributable to higher asset-backed securities and RMBS activity, supported by strong investor demand and favorable spread conditions.

FIG REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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FIG: Global revenue ⇑ $31 million

U.S. Revenue ⇑ $20 million

Non-U.S. Revenue ⇑ $11 million

Global FIG revenue for the three months ended June 30, 2026 and 2025 was comprised as follows:

The increase in FIG revenue of 16% reflects growth in the U.S. (20%) and internationally (12%).

Transaction revenue increased $27 million compared to the second quarter of 2025, primarily reflecting increased volumes from issuers in the banking sector supported by favorable spreads and strong investor demand.

PPIF REVENUE

Three months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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PPIF: Global revenue ⇑ $62 million

U.S. Revenue ⇑ $45 million

Non-U.S. Revenue ⇑ $17 million

Global PPIF revenue for the three months ended June 30, 2026 and 2025 was comprised as follows:

The increase in PPIF revenue of 38% reflects growth in the U.S. (42%) and internationally (31%).

–Constant currency revenue(1) increase for PPIF was 37%.

Transaction revenue increased $59 million compared to the second quarter of 2025, reflecting strong issuance in U.S. project and infrastructure finance related to data centers and broader build-out of technology infrastructure.

MIS: Second Quarter Compensation and Non-Compensation Expenses ⇑ $36 million

Compensation expenses of $306 million increased $26 million reflecting:

Non-compensation expenses of $107 million increased $10 million:

— an increase in incentive compensation aligned with operational performance relative to targets; and

— an increase in costs to support operating growth

— growth in salaries and benefits primarily reflecting annual salary increases

MIS: Adjusted Operating Margin 68.3% ⇑ 410 BPS

MIS Adjusted Operating Margin expansion primarily reflects the aforementioned 25% increase in revenue and operating leverage in the business.

Restructuring

The amounts reflect charges and adjustments related to the Company's restructuring program, more fully discussed in Note 9 to the consolidated financial statements.

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Executive Summary

The following table provides an executive summary of key operating results for the six months ended June 30, 2026. 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.

Six Months Ended June 30,

Financial measure:

% Change Favorable (Unfavorable)

Insight and Key Drivers of Change Compared to Prior Year

Moody's total revenue

$

$

%

— reflects revenue growth in both segments

MA external revenue

$

$

6

%

— sustained demand for insurance offerings and cloud-based KYC and banking solutions within Decision Solutions; partially offset by

— the impacts of the MA Learning Solutions and MA

Regulatory Solutions divestitures

— continued demand for ratings data feeds, credit research product offerings and company data applications

— Organic constant currency revenue(1) growth was 7%, and ARR(2) grew 9%

MIS external revenue

$

$

%

— strong CFG issuance activity, driven by:

— investment-grade issuance related to continued AI-related financing by hyperscalers; and

— higher leveraged finance issuance, primarily in the U.S., supported by strong investor demand and tight credit spreads; and

— strong Project and Infrastructure Finance issuance activity related to data centers and broader build-out of technology infrastructure

Total operating and SG&A expenses

$

$

(7

%)

— a reserve recorded for an international non-income tax obligation;

— higher incentive compensation which aligns with operational performance relative to targets;

— an increase in costs to support operating growth; and

— unfavorable foreign exchange impacts

Depreciation and amortization

$

$

(6

%)

— higher amortization of internally developed software, primarily related to the development of MA cloud-based solutions

Restructuring

$

$

2

%

— relates to the Company's restructuring programs. The Strategic and Operational Efficiency Restructuring Program is more fully discussed in Note 9 to the consolidated financial statements

Total non-operating income (expense), net

$

$

%

— a gain on the divestiture of the MA Regulatory Solutions business as more fully discussed in Note 11 to the consolidated financial statements

Operating margin

%

%

— Operating margin and Adjusted Operating Margin(1) expansion reflects revenue growth coupled with disciplined cost management

Adjusted Operating Margin(1)

%

%

ETR

%

%

— primarily reflects a decrease in Excess Tax Benefits related to stock-based compensation

Diluted EPS

$

$

%

— increase in Diluted EPS reflects growth in operating income coupled with the gain on the divestiture of the MA Regulatory Solutions business

Adjusted Diluted EPS(1)

$

$

%

— increase in Adjusted Diluted EPS(1) reflects growth in Adjusted Operating Income(1).

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Moody’s Corporation

Six Months Ended June 30,

% Change Favorable

(Unfavorable)

Revenue:

United States

$

$

%

Non-U.S.:

EMEA

7

%

Asia-Pacific

9

%

Americas

(6

%)

Total Non-U.S.

6

%

Total

%

Expenses:

Operating

(7

%)

SG&A

(7

%)

Depreciation and amortization

(6

%)

Restructuring

2

%

Charges related to asset abandonment

—

3

%

Total

(6

%)

Operating income

$

%

Adjusted Operating Income (1)

$

%

Interest expense, net

$

(2

%)

Other non-operating income, net

%)

Gain on business divestitures

$

—

NM

Non-operating income (expense), net

$

%

Net income attributable to Moody’s

$

$

%

Diluted weighted average shares outstanding

3

%

Diluted EPS attributable to Moody’s common shareholders

$

$

%

Adjusted Diluted EPS (1)

$

$

%

Operating margin

%

%

Adjusted Operating Margin (1)

%

%

Effective tax rate

%

%

GLOBAL REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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Global revenue ⇑ $442 million

U.S. Revenue ⇑ $341 million

Non-U.S. Revenue ⇑ $101 million

Growth in global revenue reflected increases in both MA and MIS, both in the U.S. and internationally. Refer to the section entitled “Segment Results” of this MD&A for a more comprehensive discussion of the Company’s segment revenue.

YTD Operating Expense ⇑ $69 million

Compensation expenses of $767 million increased $37 million, reflecting:

Non-compensation expenses of $282 million increased $32 million, reflecting:

— growth in salaries and benefits primarily reflecting:

— increases in costs to support operating growth, including technology infrastructure costs

— annual salary increases;

— unfavorable foreign exchange impacts; and

— an increase in incentive compensation aligned with operational performance relative to targets

YTD SG&A Expense ⇑ $58 million

Compensation expenses of $578 million increased $31 million, reflecting:

Non-compensation expenses of $362 million increased $27 million, reflecting:

— growth in salaries and benefits primarily reflecting:

— a reserve recorded in the first quarter of 2026 for an international non-income tax obligation

— annual salary increases; and

— unfavorable foreign exchange impacts

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Depreciation and amortization

The increase is primarily driven by amortization of internally developed software, which relates to the development of MA cloud-based solutions.

Restructuring

The amounts reflect charges and adjustments related to the Company's restructuring program, more fully discussed in Note 9 to the consolidated financial statements.

Operating margin and Adjusted Operating Margin(1) expansion reflects the 12% increase in revenue, partially offset by growth of 7% in operating and SG&A expenses.

Interest Expense, net ⇑ $2 million

Other non-operating income ⇓ $18 million

The increase in interest expense, net is primarily due to:

Decrease in income is primarily due to:

— lower interest income of $16 million reflecting lower cash balances resulting from higher share repurchase activity coupled with lower interest rates;

— an increase in FX losses of $12 million

— interest related to a reserve for an international non-income tax obligation of $14 million; partially offset by

— lower interest expense on borrowings of $24 million reflecting favorable impacts from fixed-to-floating interest rate swaps due to a lower interest rate environment compared with the prior year, coupled with the maturity of both debt and interest rate swaps

Gain on business divestitures ⇑ $181 million

Primarily reflects the gain on divestiture of the MA Regulatory Solutions business.

The increase primarily reflects lower Excess Tax Benefits related to stock-based compensation.

Adjusted Diluted EPS(1) ⇑ $1.62

The increase in Diluted EPS reflects growth in operating income coupled with the gain on the divestiture of the MA Regulatory Solutions business.

The increase in Adjusted Diluted EPS(1) reflects growth in Adjusted Operating Income(1).

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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:

Six Months Ended June 30,

% Change Favorable

(Unfavorable)

Revenue:

Decision Solutions (DS)

$

$

5

%

Research and Insights (R&I)

5

%

Data and Information (D&I)

9

%

Total external revenue

6

%

Intersegment revenue

6

6

—

%

Total MA Revenue

6

%

Expenses:

Compensation expense

(2

%)

Non-compensation expense

(4

%)

Total compensation and non-compensation expense

(3

%)

Intersegment expense

(4

%)

Total

(3

%)

Adjusted Operating Income

$

$

%

Adjusted Operating Margin

%

%

Depreciation and amortization

(6

%)

Restructuring

(7

%)

Charges related to asset abandonment

—

3

%

Reserve for international non-income tax obligation

—

NM

Duplicate Rent

1

—

NM

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MOODY'S ANALYTICS REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

MA: Global revenue ⇑ $104 million

U.S. Revenue ⇑ $52 million

Non-U.S. Revenue ⇑ $52 million

The 6% increase in global MA revenue reflects growth both in the U.S. (7%) and internationally (5%).

–Organic constant currency revenue(1) growth was 7%.

–Recurring revenue growth and organic constant currency recurring revenue(1) growth was 9% and 8%, respectively.

–ARR(2) increased 9%.

These increases are reflective of growth across all LOBs, as discussed in further detail below.

DECISION SOLUTIONS REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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DS: Global revenue ⇑ $37 million

U.S. Revenue ⇑ $24 million

Non-U.S. Revenue ⇑ $13 million

Global DS revenue for the six months ended June 30, 2026 and 2025 was comprised as follows:

Global DS revenue grew 5% compared to the first half of 2025 and reflects increases in both the U.S. (7%) and internationally (3%). Organic constant currency revenue(1) and organic constant currency recurring revenue(1) growth for DS was 10% and 12%, respectively. ARR(2) growth was 10%.

The most notable drivers of the growth are as follows:

–Insurance revenue grew 10%

–recurring revenue growth of 12% in Insurance was attributable to continued demand resulting in new sales for subscription-based revenue for catastrophe modeling tools

–Organic constant currency revenue(1) and organic constant currency recurring revenue(1) growth for Insurance was 9% and 11%, respectively

–ARR(2) grew 9%, reflecting the aforementioned continued demand for subscription-based catastrophe modeling tools

–KYC revenue grew 15%

–recurring revenue growth of 14% in KYC reflects strong demand and customer retention for KYC and compliance solutions reflecting increased customer and supplier risk data usage

–Both organic constant currency revenue(1) and organic constant currency recurring revenue(1) growth for KYC was 11%

–ARR(2) grew 13%, reflecting the aforementioned strong demand for KYC solutions

–Banking revenue declined 10%, primarily reflecting the impact of both the MA Learning Solutions divestiture in the fourth quarter of 2025 and the divestiture of MA Regulatory Solutions in the second quarter of 2026. Organic constant currency revenue(1) growth for Banking was 9%.

–recurring revenue growth of 7% within Banking reflected:

–expansion of existing customer relationships to cloud-based subscription banking offerings that enable customers' lending, risk management and finance workflows; and

–an increase resulting from the timing of revenue recognition for installed software subscriptions;

partially offset by:

– the divestiture of the MA Regulatory Solutions business.

–Organic constant currency recurring revenue(1) growth for Banking was 15%

–Transaction revenue declined by 82%, reflecting the impact of the divestiture of the MA Learning Solutions business and MA's continued strategic shift to cloud-based subscription offerings

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RESEARCH AND INSIGHTS REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

R&I: Global revenue ⇑ $26 million

U.S. Revenue ⇑ $12 million

Non-U.S. Revenue ⇑ $14 million

Global R&I revenue increased 5% compared to the first half of 2025 and reflects growth in both the U.S. (4%) and internationally (6%). Constant currency revenue(1) growth for R&I was 4%.

Recurring revenue growth and constant currency recurring revenue(1) growth were 6% and 5%, respectively.

The revenue increase was attributable to continued strong retention and demand for credit research product offerings, which contributed to ARR(2) growth of 6%.

DATA AND INFORMATION REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

D&I: Global revenue ⇑ $41 million

U.S. Revenue ⇑ $16 million

Non-U.S. Revenue ⇑ $25 million

Global D&I revenue increased 9% compared to the first half of 2025 and reflects growth in both the U.S. (10%) and internationally (9%).

This growth was mainly driven by continued strong demand for ratings data feeds and company data applications, coupled with a favorable impact from foreign currency translation.

Organic constant currency revenue(1) growth for D&I was 6%.

ARR(2) grew 8% for D&I.

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MA: YTD Compensation and Non-Compensation Expense ⇑ $31 million

Compensation expenses of $731 million increased $14 million reflecting:

Non-compensation expenses of $409 million increased $17 million reflecting:

— growth in salaries and benefits, largely driven by unfavorable changes in foreign exchange rates, partially offset by divestitures

— increases in costs to support operating growth, including technology infrastructure costs

MA: Adjusted Operating Margin 33.1% ⇑ 200 BPS

Adjusted Operating Margin expansion primarily reflects the aforementioned 6% increase in global MA revenue, supported by operational efficiency/disciplined cost management.

Depreciation and amortization

The increase in depreciation and amortization expense primarily reflects higher amortization of internally developed software relating to the development of cloud-based solutions as well as the amortization of recently acquired intangible assets.

Restructuring

The amounts reflect charges and adjustments related to the Company's restructuring program, more fully discussed in Note 9 to the consolidated financial statements.

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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:

Six Months Ended June 30,

% Change Favorable

(Unfavorable)

Revenue:

Corporate finance (CFG)

$

$

%

Structured finance (SFG)

5

%

Financial institutions (FIG)

9

%

Public, project and infrastructure finance (PPIF)

%

Total ratings revenue

%

MIS Other

%

Total external revenue

%

Intersegment royalty

4

%

Total

%

Expenses:

Compensation expense

(9

%)

Non-compensation expense

(3

%)

Total compensation and non-compensation expense

(8

%)

Intersegment expense

6

6

—

%

Total

(8

%)

Adjusted Operating Income

$

$

%

Adjusted Operating Margin

%

%

Depreciation and amortization

%)

Restructuring

%

Duplicate Rent

1

—

NM

The following chart presents changes in rated issuance volumes compared to the first half of 2025. To the extent that changes in rated issuance volumes had a material impact on MIS's revenue compared to the prior year, those impacts are discussed below.

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MOODY'S INVESTORS SERVICE REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

MIS: Global revenue ⇑ $338 million

U.S. Revenue ⇑ $289 million

Non-U.S. Revenue ⇑ $49 million

The 16% increase in global MIS revenue reflects growth in the U.S. (22%) and internationally (6%).

–Organic constant currency revenue(1) growth was 15%.

The increase is reflective of growth across all ratings LOBs, as discussed in further detail below.

CFG REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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CFG: Global revenue ⇑ $208 million

U.S. Revenue ⇑ $200 million

Non-U.S. Revenue ⇑ $8 million

Global CFG revenue for the six months ended June 30, 2026 and 2025 was comprised as follows:

* Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.

The increase in CFG revenue of 19% reflects growth in both the U.S. (28%) and internationally (2%).

–Organic constant currency revenue(1) growth for CFG was 18%.

Transaction revenue increased $186 million compared to the prior year, which primarily reflected:

–strong investment-grade issuance activity supported by AI‑related financing from hyperscalers in the technology sector, and continued strong investor demand; and

–an increase in leveraged finance issuance activity, primarily in the U.S., reflecting strong investor demand and tight credit spreads throughout most of the period coupled with loan activity to finance M&A.

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SFG REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

SFG: Global revenue ⇑ $15 million

U.S. Revenue ⇑ $7 million

Non-U.S. Revenue ⇑ $8 million

Global SFG revenue for the six months ended June 30, 2026 and 2025 was comprised as follows:

The increase in SFG revenue of 5% reflects growth in both the U.S. (4%) and internationally (10%).

–Organic constant currency revenue(1) growth for SFG was 4%.

The increase primarily reflects higher asset-backed securities and RMBS activity, supported by strong investor demand and tight spreads.

FIG REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

_______________________________________________________________________________________________________

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FIG: Global revenue ⇑ $34 million

U.S. Revenue ⇑ $27 million

Non-U.S. Revenue ⇑ $7 million

Global FIG revenue for the six months ended June 30, 2026 and 2025 was comprised as follows:

The increase in FIG revenue of 9% reflects growth both in the U.S. (14%) and internationally (4%).

–Organic constant currency revenue(1) growth for FIG was 7%.

Transaction revenue increased $23 million compared to the same period in the prior year, primarily due to higher banking activity in the U.S., supported by favorable spreads and strong investor demand.

Recurring revenue increased $11 million, primarily reflecting the impact of annual price increases and higher monitored credits.

PPIF REVENUE

Six months ended June 30,

2026-----------------------------------------------------------------------------------2025

______________________________________________________________________________________________________

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PPIF: Global revenue ⇑ $75 million

U.S. Revenue ⇑ $53 million

Non-U.S. Revenue ⇑ $22 million

Global PPIF revenue for the six months ended June 30, 2026 and 2025 was comprised as follows:

The 23% increase in PPIF revenue reflects growth in both the U.S. (25%) and internationally (19%).

–Constant currency revenue(1) growth for PPIF was 22%.

Transaction revenue increased $67 million compared to the same period in the prior year, reflecting strong issuance in U.S. project and infrastructure finance related to data centers and broader build-out of technology infrastructure.

MIS: YTD Compensation and Non-Compensation Expense ⇑ $58 million

Compensation expenses of $613 million increased $53 million, reflecting:

Non-compensation expenses of $198 million increased $5 million, reflecting:

— growth in salaries and benefits due to:

— an increase in costs to support operating growth

— annual salary increases; and

— unfavorable foreign exchange impacts; coupled with

— an increase in incentive compensation aligned with operational performance relative to targets

Adjusted Operating Margin of 67.5% ⇑ 240 BPS

MIS Adjusted Operating Margin expansion primarily reflects the aforementioned 16% increase in revenue and operating leverage in the business.

Restructuring Charges

The amounts reflect charges and adjustments related to the Company's restructuring programs. The Strategic and Operational Efficiency Restructuring Program is more fully discussed in Note 9 to the consolidated financial statements.

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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 following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes:

Six Months Ended June 30,

$ Change

Favorable (Unfavorable)

Net cash provided by operating activities

$

$

$

Net cash provided by investing activities

$

$

$

Net cash used in financing activities

$

$

$

Free Cash Flow (1)

$

$

$

(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 for the six months ended June 30, 2026 increased by $418 million compared to the same period in 2025, with the most notable drivers reflecting:

–growth in operating income of $304 million coupled with various changes in working capital; and

–approximately $70 million in lower incentive compensation payments in 2026 (based on full-year 2025 financial and operating results) compared to payments made in the prior year (based on full-year 2024 financial and operating results).

Net cash provided by investing activities

The $77 million decrease in cash provided by investing activities in the six months ended June 30, 2026 compared to the same period in 2025 was primarily due to:

–a $473 million decrease in sales and maturities of investments primarily due to the maturity of certificates of deposit in the first quarter of 2025, of which the proceeds were used to repay notes payable in the prior year;

partially offset by:

–cash received from the divestiture of businesses (net of cash transferred to the purchaser) of $200 million, primarily relating to the sale of the MA Regulatory Solutions business in the second quarter of 2026; and

–lower cash paid for acquisitions (net of cash acquired) of $200 million, primarily due to amounts paid for the acquisition of CAPE Analytics in the first quarter of 2025.

Net cash used in financing activities

The $849 million increase in cash used in financing activities in the six months ended June 30, 2026 compared to the same period in the prior year was primarily attributed to:

–T8higher cash paid for treasury share repurchases in 2026 of $1.5 billion compared to the same period in the prior year;

partially offset by:

–a $700 million repayment of notes payable in the prior year.

Cash and cash equivalents and short-term investments

The Company’s aggregate cash and cash equivalents and short-term investments of $1.5 billion at June 30, 2026 included approximately $1.1 billion located outside of the U.S. Approximately 21% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in euro and GBP. 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.

The Company regularly evaluates which entities 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 continues to repatriate a portion of its non-U.S. cash in these subsidiaries and will continue to repatriate certain of its offshore cash in a manner that addresses compliance with local statutory requirements, sufficient offshore working capital and any other factors that may be relevant in certain jurisdictions. 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.

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Material Cash Requirements

The Company's material cash requirements consist of the following contractual and other obligations:

Financing Arrangements

Indebtedness

At June 30, 2026, Moody’s had $7.1 billion of outstanding principal on debt and $1 billion of additional capacity available under the Company’s CP Program, which is backstopped by the $1.25 billion 2024 Facility.

The repayment schedule for the Company’s borrowings outstanding at June 30, 2026 is as follows:

For additional information on the Company's outstanding debt, refer to Note 13 to the consolidated financial statements.

Future interest payments and fees associated with the Company's debt and credit facility are expected to be $3.4 billion, of which approximately $200 million is expected to be paid in each of the next five years, and the remaining amount expected to be paid thereafter.

Management may consider pursuing additional long-term financing when it is appropriate in light of cash requirements for operations, share repurchases and other strategic opportunities, which could result in higher financing costs.

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 June 30, 2026, these purchase obligations totaled approximately $1.3 billion, of which approximately 35% is expected to be paid in the next twelve months and another approximate 45% is expected to be paid over the next two subsequent years, with the remainder to be paid thereafter.

Leases

The Company has remaining payments relating to its operating leases of $1.0 billion at June 30, 2026, primarily related to real estate leases, of which $100 million in payments are expected over the next twelve months. For more information on the expected cash flows relating to the Company's operating leases, refer to Note 14 to the 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 June 30, 2026, 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.

Dividends and share repurchases

On July 21, 2026, the Board approved the declaration of a quarterly dividend of $1.03 per share for Moody’s common stock, payable September 4, 2026 to shareholders of record at the close of business on August 14, 2026. The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board.

On October 21, 2025, the Board approved $4.0 billion in share repurchase authority. At June 30, 2026, the Company had approximately $1.8 billion of remaining authority under this authorization.

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Restructuring

As more fully discussed in Note 9 to the consolidated financial statements, the Company is currently in the process of executing the Strategic and Operational Efficiency Restructuring Program. Future cash outlays associated with this program are expected to be approximately $130 million to $175 million, which are expected to be paid out through 2028.

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 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:

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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; ii) restructuring charges/adjustments; iii) a reserve for an international non-income tax obligation; iv) Duplicate Rent expense incurred during the build-out and transition to the Company's new New York City headquarters; and v) charges related to asset abandonment. Depreciation and amortization are excluded because companies utilize productive assets of different estimated useful lives and use different methods of acquiring and depreciating productive assets. Restructuring charges/adjustments and charges related to asset abandonment, which the Company believes are not reflective of its ongoing operating cost structure, are excluded as the frequency and magnitude of these charges may vary widely across periods and companies.

The reserve for an international non-income tax obligation is excluded because the Company believes it is not indicative of its ongoing operating cost structure. Duplicate Rent expense incurred during the build-out and transition to the Company's new New York City headquarters is excluded because it relates to an infrequent corporate headquarters relocation and is not indicative of the Company's ongoing operating cost structure.

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 June 30,

Six Months Ended June 30,

Operating income

$

$

$

$

Adjustments:

Depreciation and amortization

Restructuring

Reserve for international non-income tax obligation

2

—

—

Duplicate Rent

2

—

2

—

Charges related to asset abandonment

—

1

—

3

Adjusted Operating Income

$

$

$

$

Operating margin

%

%

%

%

Adjusted Operating Margin

%

%

%

%

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; ii) restructuring charges/adjustments; iii) a reserve for an international non-income tax obligation and related interest and penalties; iv) charges related to asset abandonment; v) Duplicate Rent expense incurred during the build-out and transition to the Company's new New York City headquarters; and vi) gain on business divestitures.

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/adjustments and charges related to asset abandonment, which the Company believes are not reflective of its ongoing operating cost structure, are excluded as the frequency and magnitude of these items may vary widely across periods and companies. The reserve for an international non-income tax obligation and related interest and penalties are excluded because the Company believes they are not indicative of its ongoing operating cost structure. Duplicate Rent expense incurred during the build-out and transition to the Company's new New York City headquarters is excluded because it relates to an infrequent corporate headquarters relocation and is not indicative of the Company's ongoing operating cost structure. Gain on business divestitures are excluded due to their infrequent nature and because they do not reflect the Company's ongoing operations.

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.

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Three Months Ended June 30,

Six Months Ended June 30,

Amounts in millions

Net Income attributable to Moody's common shareholders

$

$

$

$

Pre-tax acquisition-related intangible amortization

$

$

$

$

Tax on acquisition-related intangible amortization

Net acquisition-related intangible amortization

Pre-tax restructuring

$

$

$

$

Tax on restructuring

(9)

(7)

Net restructuring

Pre-tax reserve for international non-income tax obligation and related interest and penalties

$

(1)

$

—

$

$

—

Tax on reserve for international non-income tax obligation and related interest and penalties

—

—

(8)

—

Net reserve for international non-income tax obligation and related interest and penalties

(1)

—

—

Pre-tax charges related to asset abandonment

$

—

$

1

$

—

$

3

Tax on charges related to asset abandonment

—

(1)

—

(1)

Net charges related to asset abandonment

—

—

—

2

Pre-tax Duplicate Rent

$

2

$

—

$

2

$

—

Tax on Duplicate Rent

—

—

—

—

Net charges related to Duplicate Rent

2

—

2

—

Pre-tax gain on divestiture of MA Regulatory Solutions

$

$

—

$

$

—

Pre-tax gain on divestiture of MA Learning Solutions

$

(2)

$

—

$

(2)

$

—

Tax on gain on business divestitures

—

—

Net gain on business divestitures

—

—

Adjusted Net Income

$

$

$

$

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Three Months Ended June 30,

Six Months Ended June 30,

Diluted earnings per share attributable to Moody's common shareholders

$

$

$

$

Pre-tax acquisition-related intangible amortization

$

$

$

$

Tax on acquisition-related intangible amortization

Net acquisition-related intangible amortization

Pre-tax restructuring

$

$

$

$

Tax on restructuring

Net restructuring

Pre-tax reserve for international non-income tax obligation and related interest and penalties

$

$

—

$

$

—

Tax on reserve for international non-income tax obligation and related interest and penalties

—

—

—

Net reserve for international non-income tax obligation and related interest and penalties

—

—

Pre-tax charges related to asset abandonment

$

—

$

$

—

$

Tax on charges related to asset abandonment

—

—

Net charges related to asset abandonment

—

—

—

Pre-tax Duplicate Rent

$

$

—

$

$

—

Tax on Duplicate Rent

—

—

—

—

Net charges related to Duplicate Rent

—

—

Pre-tax gain on divestiture of MA Regulatory Solutions

$

$

—

$

$

—

Pre-tax gain on divestiture of MA Learning Solutions

—

—

Tax on gain on business divestitures

—

—

Net gain on business divestitures

—

—

Adjusted Diluted EPS

$

$

$

$

Note: the tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates.

Free Cash Flow:

The Company defines Free Cash Flow as net cash provided by operating activities minus cash paid for capital additions. Management believes that Free Cash Flow is a useful metric in assessing the Company’s cash flows to service debt, pay dividends and to fund acquisitions and share repurchases. 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:

Six Months Ended June 30,

Net cash provided by operating activities

$

$

Capital additions

Free Cash Flow

$

$

Net cash provided by investing activities

$

$

Net cash used in financing activities

$

$

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Organic Constant Currency Revenue Growth (Decline):

The Company presents organic constant currency revenue growth as its non-GAAP measure of revenue growth. Management deems this measure to be useful in providing additional perspective in assessing the Company's revenue growth excluding both the inorganic revenue impacts from certain acquisition and divestiture activity completed within the last 12 months 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 period weighted average foreign exchange translation rates and current year reported results.

Below is a reconciliation of the Company's reported revenue and growth (decline) rates to its organic constant currency revenue growth (decline) measures:

Three Months Ended June 30,

Six Months Ended June 30,

Amounts in millions

Change

Growth

Change

Growth

MCO revenue

$

$

$

$

$