Moody's Q2 2026 revenue rose 15% to $2.19B as ratings revenue jumped 25% on leveraged-finance and AI-related issuance; adjusted EPS rose 31% to $4.68 (GAAP $5.03 includes a divestiture gain).
Revenue
$2.2B
+15.1% YoY
Net income
$878M
+51.9% YoY
Diluted EPS
$5.03
+56.7% YoY
Operating margin
47.9%
Ratings revenue jumps 25% on AI-related borrowing and leveraged finance; guidance still assumes a much slower second half
Moody's revenue rose 15% to $2,185 million in the second quarter of 2026, and nearly all of the extra money came from one place: its credit-ratings arm, Moody's Investors Service (MIS). MIS revenue climbed 25% to $1,260 million, while the software-and-data arm, Moody's Analytics (MA), grew 4% to $925 million. Of the $287 million increase in total revenue, $250 million came from MIS.
Moody's has two very different businesses. MIS gets paid mainly when a company, bank or government issues new debt and pays to have it rated, so its revenue follows how much borrowing is happening in the bond and loan markets. MA sells subscriptions to software, data and research, so its revenue is steadier and moves more slowly. In this quarter the cyclical half was very strong.
Reported diluted EPS (earnings per share, i.e. profit divided by the number of shares) rose 57% to $5.03. That figure includes a one-off $181 million pre-tax gain from selling the MA Regulatory Solutions business. Moody's adjusted diluted EPS, which excludes the gain along with acquisition amortization and restructuring costs, rose 31% to $4.68. The 31% is the better guide to how the underlying business did.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$2,185M
$1,898M
+15.1%
Operating income
$1,046M
$818M
+28%
Operating margin
47.9%
Read 0 community reports on Moody's Corporation, or write your own.Write a report
Source: Form 10-Q for the quarter ended June 30, 2026, and the Q2 2026 earnings release (Exhibit 99.1 to the July 22, 2026 8-K). Adjusted figures and organic constant-currency growth are Moody's own non-GAAP measures.
Ratings: a busy quarter for new debt
When MIS rates a new bond or loan it earns a one-time fee, which Moody's calls "transaction revenue." That line rose 34% to $891 million. The rest of MIS revenue, mostly annual monitoring fees on debt Moody's already rates, grew about 6% (from $347 million to $369 million). Total rated issuance, meaning the dollar amount of new debt Moody's rated, was up 33%. So the extra revenue came from more debt being rated, not from higher prices.
All four rating lines grew:
MIS line of business
Q2 2026 revenue
YoY
Rated issuance volume YoY
Corporate finance (CFG)
$651M
+27%
+31%
Public, project & infrastructure (PPIF)
$224M
+38%
+44%
Financial institutions (FIG)
$222M
+16%
+29%
Structured finance (SFG)
$151M
+12%
+43%
The 10-Q identifies three main drivers:
Leveraged finance. Leveraged loans are loans to companies that already carry a lot of debt, and their rated volume rose 50%. High-yield (junk) bond volume rose 33%. The 10-Q attributes this to "strong investor demand and tight credit spreads throughout most of the quarter coupled with loan activity to finance M&A." A credit spread is the extra interest a risky borrower pays compared with the government. When spreads are tight, borrowing is cheap, and companies refinance and borrow more.
AI-related borrowing by hyperscalers. Investment-grade bond volume, meaning debt from the strongest borrowers, rose 31%. The 10-Q links this to "AI-related financing from hyperscalers in the technology sector," the large cloud companies that are borrowing to pay for data centers.
Data-center project finance. PPIF was the fastest-growing line at +38%. Its transaction revenue rose $59 million, which the filing puts down to "strong issuance in U.S. project and infrastructure finance related to data centers and broader build-out of technology infrastructure."
The growth was concentrated in the U.S. MIS revenue grew 32% in the U.S. and 13% outside it, and U.S. corporate finance grew 38%.
Operating leverage explains how revenue growth turned into profit growth. MIS revenue rose 25% while its compensation and non-compensation costs rose 10%, and most of that cost increase was higher incentive pay. As a result, MIS adjusted operating income rose 32% to $896 million and its margin reached 68.3%. This leverage also works in reverse: if issuance slows, most of these costs stay, and the margin falls quickly.
MA's 4% reported growth is held down by two businesses Moody's sold: Learning Solutions (sold in Q4 2025) and Regulatory Solutions (sold in Q2 2026). Organic constant-currency growth excludes sold or bought businesses and currency moves, and on that basis MA grew 8%. ARR, the yearly value of MA's active subscription contracts, rose 9% to $3.66 billion. Recurring revenue now makes up 99% of MA revenue, and one-time "transactional" revenue fell 72%, mainly because of the Learning Solutions sale.
MA ARR by business
June 30, 2026
YoY
Decision Solutions: Insurance
$723M
+9%
Decision Solutions: KYC
$478M
+13%
Decision Solutions: Banking
$420M
+10%
Research & Insights
$1,037M
+6%
Data & Information
$1,003M
+8%
Total MA ARR
$3,661M
+9%
The divestitures show up most in Decision Solutions. Its reported revenue grew only 2%, but it grew 12% on an organic constant-currency basis. Reported Banking revenue fell 14%, while organic Banking revenue rose 17%. There is one caveat on Banking: organic recurring revenue there grew 22% but ARR grew only 10%. The 10-Q says the gap "primarily reflects higher revenues resulting from the timing of revenue recognition for installed software subscriptions." Some of this quarter's Banking revenue was therefore recognized earlier than usual, and the 10% ARR growth is the more reliable run-rate.
Other lines:
KYC ("know your customer," compliance screening data) grew revenue 13%, or 11% in constant currency.
Insurance grew 9%, driven by subscriptions to catastrophe models.
Data & Information grew 9%, driven by ratings data feeds.
Research & Insights grew 3%. It is the slowest line, although its ARR grew 6%.
MA's adjusted operating margin rose 1.5 points to 33.6%. MA headcount was 9% lower than a year earlier, which the 10-Q mainly puts down to the divestitures.
Below the operating line
Divestiture gain. The $181 million "gain on business divestitures" is mostly the $179 million pre-tax gain on selling Regulatory Solutions. The deal also allows up to $119 million more in contingent payments in the second half of 2026 if certain conditions are met. Moody's will book that money only if the conditions are met, and its full-year guidance already includes a forecast gain from it. Without the Q2 gain, pre-tax income rose about 28% (from $772 million to $990 million), roughly the same rate as operating income.
Fewer shares. The diluted share count fell 3% to 174.5 million. Moody's bought back about $2.2 billion of stock in the first half and paid $365 million in dividends.
Restructuring. The restructuring program was expanded in July 2026. It now targets $300–350 million of annual savings and is expected to cost $285–330 million, mostly severance. Charges were $32 million this quarter. The program runs through 2027.
First half and cash flow
For the six months, revenue rose 12% to $4,264 million. Diluted EPS rose 31% to $8.75, and adjusted EPS rose 22% to $9.00. The operating margin was 46.2%, up 2.7 points. Operating cash flow was $1,718 million, up 32%. Free cash flow (operating cash flow minus capital spending) was $1,532 million, up 34%.
Takeaway: Moody's second quarter came mostly from a surge in debt issuance. Ratings produced $250 million of the $287 million revenue increase, and because ratings costs barely move with volume, about 68 cents of each ratings revenue dollar became adjusted operating profit. The steady, subscription-based analytics business grew about 8–9% underneath the effects of divestitures, which is useful but was not the main driver. The main risk for the rest of the year is that this depends on credit markets staying open, and Moody's own guidance assumes they cool.
Outlook
On July 22, Moody's kept its full-year 2026 revenue guidance at growth in the "high-single-digit percent range." It also:
Narrowed adjusted diluted EPS guidance to $16.50–$17.00. The previous range was $16.40–$17.00.
Trimmed GAAP guidance. Diluted EPS guidance is now $16.00–$16.50, down from $16.00–$16.60. GAAP operating margin guidance is 44–45%, down from about 45%.
Lowered cash flow guidance. Operating cash flow guidance fell to $3.15–$3.35 billion and free cash flow guidance to $2.7–$2.9 billion, each down $100 million.
Raised buyback guidance to up to $3.0 billion, from about $2.5 billion.
Kept MIS revenue guidance at high-single-digit growth, with an adjusted margin of about 65%. It raised its assumption for global rated issuance from a low-single-digit to a mid-single-digit percent increase.
The MIS guidance is the part to watch. MIS revenue grew 16% in the first half ($2,413 million vs. $2,075 million). Keeping full-year growth at "high-single-digit" therefore means management expects second-half ratings growth to be much slower, and possibly close to flat. The assumptions behind the outlook became more cautious on interest rates. Moody's now expects one Fed rate increase and a further ECB hike in 2026. Earlier it expected U.S. rate cuts to be pushed out, with a hike possible only if the Middle East conflict extended and raised inflation. It also lowered its euro-area GDP growth assumption to 0.5–1.5%. It does expect U.S. high-yield spreads to stay below their historical average, at about 330 bps.
Our read: The guidance looks conservative given how strong the first half was. Hyperscaler and data-center borrowing looks more like a multi-year funding need than a single burst, and it now shows up in two rating lines (CFG and PPIF). Still, if rates rise, M&A slows or spreads widen sharply, leveraged-loan and high-yield activity would weaken first, and those were among this quarter's strongest drivers. The more durable part of the story is MA: 9% ARR growth, a margin that is still rising, and a narrower focus after the divestitures. Moody's MA guidance calls for a 34–35% adjusted margin for the full year, slightly above Q2's 33.6%, so the second half should show whether restructuring savings are adding to margin as planned. Q3 results would typically arrive in late October.