Moody's Financial Model
Capital Markets Company Financials Example (Free Excel Download)
Moody's Corporation is a global integrated risk assessment firm that provides credit ratings, research, data, and analytical tools to financial markets.
professionals from Deloitte
Used by professionals from
About this model
This model provides a comprehensive equity valuation and scenario planning tool for an equity research analyst covering Moody's Corporation, designed to forecast the cyclicality of debt issuance volumes against the steady growth of recurring analytics subscriptions.
Moody's Corporation is a global integrated risk assessment firm that provides credit ratings, research, data, and analytical tools to financial markets. The business operates through two primary segments: Moody's Investors Service (MIS), which provides credit ratings and assessment services, and Moody's Analytics (MA), which offers software, data, and decision solutions for risk management.
- Business segments: Moody's Investors Service (MIS) accounts for approximately 53% of total revenue, while Moody's Analytics (MA) accounts for approximately 47%.
- Key geographies: The United States generates roughly 50% of total revenue, with EMEA and Asia-Pacific contributing the remainder.
- Business model type: Asset-light, high-margin information services model. MIS is highly transactional and tied to capital markets activity, whereas MA is predominantly subscription-based (97% recurring revenue).
- Competitive position: Operates in a global duopoly for credit ratings alongside S&P Global, commanding immense pricing power and high barriers to entry.
- Recent major events: Continued shift towards recurring revenue in MA, integration of recent bolt-on acquisitions (Praedicat, CAPE Analytics) to bolster the Decision Solutions segment, and significant margin expansion in 2024 and 2025 driven by cost efficiency programmes.
The downloadable Moody's financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsMoody's financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $6.22B | $5.47B | $5.92B | $7.09B | $7.72B |
| Gross profit | $4.58B | $3.85B | $4.23B | $5.14B | $5.75B |
| Operating income | $2.84B | $1.88B | $2.14B | $2.88B | $3.35B |
| Net income | $2.21B | $1.37B | $1.61B | $2.06B | $2.46B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
See 8 moreSee less
How to build a detailed financial model for Moody's
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Moody's Investors Service (MIS)
- Segment name: Moody's Investors Service (MIS)
- Revenue driver formula: (Global Debt Issuance Volume x Market Share) x Average Fee per Rating + Recurring Monitoring Fees
- Historical growth rate: Highly cyclical, ranging from negative mid-single digits during capital market freezes to +9% to +15% during strong issuance years (e.g., 2024 and 2025).
- Key growth levers and headwinds: Driven by corporate refinancing needs, M&A activity, interest rate environments, and the expansion of private credit. Headwinds include rising interest rates or macroeconomic shocks that stall debt issuance.
- Pricing dynamics: Strong pricing power; typically implements annual price increases of 3% to 5% on recurring monitoring fees and transaction fees.
- Revenue recognition notes: Transaction revenue is recognised when the rating is issued; recurring monitoring fees are recognised rateably over the contract period.
- Seasonality: Generally stronger in the first and second quarters when corporate debt issuance is typically highest.
Moody's Analytics (MA)
- Segment name: Moody's Analytics (MA)
- Revenue driver formula: Annualised Recurring Revenue (ARR) x Net Retention Rate + New Sales
- Historical growth rate: Steady high-single-digit to low-double-digit growth (8% to 11% CAGR).
- Key growth levers and headwinds: Driven by regulatory compliance needs (KYC/AML), demand for climate and catastrophe modelling, and banking sector risk management. Headwinds include enterprise IT budget constraints and foreign exchange volatility.
- Pricing dynamics: Contractual subscription pricing with built-in annual escalators.
- Revenue recognition notes: Subscription revenue is deferred and recognised rateably over the life of the contract (typically 1 to 3 years).
- Seasonality: Q4 is typically the strongest quarter for new bookings and renewals, leading to a build-up of deferred revenue at year-end.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Moody's does not report a traditional COGS line. Operating expenses are split into "Operating, data and personnel" and "Selling, general and administrative".
- Gross margin range: Not applicable in traditional terms, but operating margins are exceptionally high.
- Key input costs and commodity exposures: Primarily human capital (analysts, data scientists) and cloud computing/data hosting costs. No commodity exposure.
- How COGS scales with revenue: High operating leverage. Incremental MIS transaction revenue flows through to operating income at very high margins (often exceeding 70%).
Operating Expenses
- R&D: Not explicitly broken out; software development costs are largely capitalised and amortised, while research analyst compensation sits in operating expenses.
- SG&A: Heavily headcount-driven, including sales commissions for the MA segment, marketing, and corporate overhead.
- Depreciation & Amortisation: Typically runs at 4% to 5% of revenue, heavily weighted towards the amortisation of acquired intangible assets and capitalised software.
- Stock-Based Compensation: Significant, running at approximately 2% to 3% of revenue, used to retain key analytical and technical talent.
- Restructuring / one-time charges: Occasional charges related to strategic real estate consolidation and severance, such as the 2022/2023 Geolocation and Restructuring Programme.
Margin Profile
- Gross margin, EBITDA margin, operating margin, net margin: Adjusted operating margin typically ranges from 48% to 52% (51.1% in 2025). Net margin typically ranges from 28% to 32%.
- Margin trend: Expanding. Management has successfully driven adjusted operating margins from the mid-40s to over 51% through cost discipline and the scaling of the MA segment.
- Segment-level margins: MIS adjusted operating margin is exceptionally high (63.6% in 2025). MA adjusted operating margin is lower but expanding (33.1% in 2025).
Balance Sheet Structure
- Total assets: Approximately $14 billion to $15 billion.
- Key asset categories: Goodwill and intangible assets dominate the balance sheet due to historical acquisitions (e.g., Bureau van Dijk, RMS).
- Goodwill & intangibles as % of total assets: Typically 60% to 70% of total assets.
- Working capital profile:
- Days Sales Outstanding (DSO): 60 to 70 days.
- Days Inventory Outstanding (DIO): 0 days (not applicable).
- Days Payable Outstanding (DPO): 30 to 40 days.
- Net working capital as % of revenue: Structurally negative or very low due to high deferred revenue balances from MA subscriptions.
- Is working capital positive or negative?: The company benefits from negative working capital dynamics, collecting cash upfront for MA subscriptions and funding growth internally.
- PP&E: Minimal (less than 5% of assets), consisting mostly of leasehold improvements and computer equipment.
- Right-of-use assets / operating leases: Material, representing global office space, typically around $400 million to $500 million.
Capital Expenditure & Investment
- Capex as % of revenue: 4% to 5% ($350 million to $400 million annually).
- Maintenance capex vs. growth capex: Heavily skewed towards growth, specifically capitalised software development for new MA products and AI integration.
- Major capex programmes underway or planned: Investments in GenAI and Agentic AI offerings, cloud infrastructure migration, and data centre consolidation.
- Capitalised software / development costs if material: Highly material; represents the majority of the capex spend.
- M&A pattern: Serial bolt-on acquirer focusing on data and analytics assets to expand the MA segment's capabilities (e.g., KYC, climate risk).
- Typical acquisition multiple paid: High multiples (often 15x to 20x EBITDA) reflecting the premium nature of data assets.
Debt & Capital Structure
- Total debt: Approximately $7.0 billion to $7.2 billion.
- Debt/EBITDA ratio: Current leverage is approximately 1.3x. Target is to remain below 2.0x.
- Credit rating: A- (S&P) / Baa1 (Moody's internal, though technically unrated by itself for conflict reasons, peers rate it).
- Key debt instruments: Senior unsecured notes with staggered maturities, supported by a $1.25 billion revolving credit facility.
- Maturity profile: Well-laddered, with average maturity exceeding 5 years.
- Interest rate profile: Predominantly fixed-rate bonds; weighted average cost of debt is approximately 3.5% to 4.5%.
- Covenants: Standard investment-grade covenants; no restrictive financial maintenance covenants that are currently at risk.
- Share repurchase programme: Highly active. The company repurchases $1.3 billion to $1.5 billion annually and recently authorised an additional $4.0 billion programme.
- Dividend policy: Progressive dividend policy. Yield is typically around 0.8% to 1.0%, with a payout ratio of roughly 25% to 30% of net income.
Cash Flow Characteristics
- Operating cash flow conversion: Exceptionally strong, typically 1.1x to 1.2x of Net Income.
- Free cash flow margin: 35% to 40% of revenue (approximately $2.8 billion to $3.0 billion in FCF on $7.7 billion in revenue).
- Major non-cash items that bridge net income to OCF: Depreciation and amortisation (especially of acquired intangibles), stock-based compensation, and deferred tax provisions.
- Working capital cash flow impact: Positive source of cash during growth periods due to increases in deferred revenue.
- Capex intensity: Very low, allowing for massive free cash flow generation.
- Cash tax rate vs. GAAP effective tax rate: Cash taxes are generally aligned with the GAAP effective tax rate (22% to 24%), though timing differences arise from stock-based compensation tax benefits.
Sheet Structure
- Assumptions: Hardcoded inputs for macroeconomic drivers, segment growth rates, margins, tax rates, and capital allocation policies.
- Revenue Build: Detailed build for MIS (Corporate, Structured, Financial Institutions, Public/Project) and MA (Decision Solutions, Research & Insights, Data & Information).
- Income Statement: Consolidated P&L mirroring the 10-K format (Revenue, Operating and data expenses, SG&A, D&A, Operating Income, Interest, Taxes, Net Income).
- Balance Sheet: Assets (Cash, Accounts Receivable, Intangibles, Goodwill) and Liabilities (Accounts Payable, Deferred Revenue, Long-Term Debt, Equity).
- Cash Flow Statement: OCF (Net Income, D&A, SBC, Working Capital changes), CFI (Capex, M&A), CFF (Debt issuance/repayment, Dividends, Share Repurchases).
- Debt Schedule: Tranche-by-tranche breakdown of senior notes, interest expense calculation, and maturity schedule.
- Working Capital Schedule: DSO, DPO, and Deferred Revenue calculations driven by segment revenue.
- Depreciation & Amortisation: Waterfall schedule for existing PP&E, capitalised software, and acquired intangibles.
- DCF Valuation: Unlevered free cash flow calculation, WACC assumptions, terminal value, and implied share price.
- Segment Margins: Reconciliation of segment-level adjusted operating income to consolidated operating income.
Key Financial Relationships
- `MIS Corporate Finance Revenue = Prior Year Corporate Finance Revenue x (1 + Corporate Debt Issuance Growth Rate + Pricing Increase)`
- `MA Decision Solutions Revenue = Prior Year Decision Solutions ARR x Net Retention Rate + New Sales`
- `Total MA Revenue = Decision Solutions Revenue + Research & Insights Revenue + Data & Information Revenue`
- `MIS Adjusted Operating Income = Total MIS Revenue x MIS Adjusted Operating Margin (historically 58% to 64%)`
- `MA Adjusted Operating Income = Total MA Revenue x MA Adjusted Operating Margin (historically 30% to 34%)`
- `Consolidated Adjusted Operating Income = MIS Adjusted Operating Income + MA Adjusted Operating Income - Corporate Unallocated Expenses`
- `Deferred Revenue Ending Balance = Beginning Balance + MA Billings - MA Revenue Recognised`
- `Accounts Receivable = (Total Revenue / 365) x DSO`
- `Free Cash Flow = Cash Flow from Operations - Capital Expenditures - Capitalised Software Development Costs`
- `Interest Expense = Average Long-Term Debt Balance x Weighted Average Interest Rate`
- `Share Count = Prior Period Share Count - (Share Repurchase Amount / Average Share Price) + Shares Issued for SBC`
- `Dividends Paid = Shares Outstanding x Annual Dividend Per Share`
Cross-Sheet Dependencies
- The Revenue Build feeds the top line of the Income Statement and drives the Accounts Receivable and Deferred Revenue calculations on the Working Capital Schedule.
- The Segment Margins sheet calculates operating expenses, which feed into the Income Statement.
- The Income Statement generates Net Income, which is the starting point for the Cash Flow Statement.
- The Cash Flow Statement determines the ending cash balance and debt paydown capacity, feeding the Balance Sheet and Debt Schedule.
- The Debt Schedule calculates interest expense, creating a circular reference with the Income Statement and Cash Flow Statement (requires an iterative calculation toggle).
- The DCF Valuation pulls Unlevered Free Cash Flow from the Cash Flow Statement and tax data from the Income Statement.
Sign Convention
- Revenues and Assets: Positive.
- Expenses and Liabilities: Positive on their respective schedules, but subtracted in aggregation formulas (e.g., `Gross Profit = Revenue - COGS`).
- Cash Flow Statement: Cash inflows are positive; cash outflows (capex, dividends, share repurchases, debt repayment) are negative.
- Contra-accounts: Accumulated depreciation and treasury stock are represented as negative numbers on the balance sheet.
Things Most Likely to Go Wrong
- Failing to separate MIS transaction revenue from recurring monitoring fees; transaction revenue is highly volatile, while monitoring fees are stable.
- Overestimating MA margins by applying the consolidated margin; MA structurally operates at a lower margin (~33%) than MIS (~64%).
- Ignoring the impact of capitalised software development costs, which flatters operating cash flow but must be deducted to calculate true free cash flow.
- Mismodelling deferred revenue; MA growth requires a corresponding build in deferred revenue on the balance sheet, which is a major source of working capital cash flow.
- Forgetting to deduct unallocated corporate expenses when reconciling segment adjusted operating income to consolidated operating income.
- Miscalculating the share count reduction; Moody's aggressive buyback programme significantly boosts EPS growth beyond net income growth.
- Foreign currency translation can swing reported MA revenue by 1% to 3% YoY; the model should ideally include a constant-currency toggle for historical analysis.
- Treating all debt as floating rate; the vast majority of Moody's debt is fixed-rate senior notes, so interest expense does not scale linearly with SOFR/LIBOR changes.
Validation Checks
- "Consolidated Adjusted Operating Margin should be in the 48% to 52% range; flag if outside this band."
- "MIS Adjusted Operating Margin should not exceed 65% based on historical ceilings."
- "Capex as a % of revenue should remain between 4.0% and 5.0%."
- "Free Cash Flow conversion (FCF / Net Income) should consistently be > 1.0x."
- "Net Debt / EBITDA should remain below 2.0x per management's stated financial policy."
- "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
- "MA recurring revenue should represent > 95% of total MA segment revenue."
- "Effective tax rate should remain between 22% and 24%."
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| MIS Revenue Growth | 7.0 | % | Normalised growth rate assuming stable debt issuance environment (2025 actual was 9%). |
| MA Revenue Growth | 9.0 | % | Consistent with historical high-single-digit organic growth and recent 2025 performance. |
| MIS Adjusted Operating Margin | 63.6 | % | Based on actual full-year 2025 reported segment margin. |
| MA Adjusted Operating Margin | 33.1 | % | Based on actual full-year 2025 reported segment margin. |
| Corporate Unallocated Expenses | 5.0 | % of Rev | Historical average for corporate overhead not allocated to segments. |
| Effective Tax Rate | 23.0 | % | Midpoint of management's historical guidance range. |
| Days Sales Outstanding (DSO) | 65 | Days | Calculated from historical accounts receivable and revenue trends. |
| Days Payable Outstanding (DPO) | 35 | Days | Calculated from historical accounts payable and operating expenses. |
| Capex as % of Revenue | 4.5 | % | Aligns with management guidance of $350M-$400M on ~$7.7B revenue. |
| Annual Share Repurchases | 1,400 | $ Millions | Midpoint of management's $1.3B to $1.5B annual target. |
| Annual Dividend Per Share | 3.76 | $ | Based on the Q4 2025 declared quarterly dividend of $0.94. |
| Weighted Average Interest Rate | 4.0 | % | Blended rate of existing fixed-rate senior unsecured notes. |
| WACC | 8.5 | % | Standard discount rate for a high-quality, wide-moat financial data provider. |
| Terminal Growth Rate | 3.0 | % | Reflects long-term GDP growth plus pricing power. |
Data Sources & Benchmarks
- Filings: SEC EDGAR (Form 10-K, 10-Q, 8-K) and the Moody's Investor Relations website.
- Key peers for benchmarking: S&P Global (SPGI), MSCI Inc. (MSCI), FactSet Research Systems (FDS), Morningstar (MORN).
- Industry data sources: SIFMA (Securities Industry and Financial Markets Association) for global debt issuance volumes and trends.
- Consensus estimates: Bloomberg or FactSet for forward-looking EPS and revenue estimates.
- Proprietary data: Dealogic (for real-time tracking of debt capital markets issuance volumes to forecast MIS transaction revenue).
Sources
- Moody's Corporation Q4 and Full Year 2025 Earnings Release (https://ir.moodys.com)
- S&P Global Ratings Research Update on Moody's Corp (https://www.spglobal.com)
- SEC Form 10-K for Moody's Corporation (https://www.sec.gov/edgar)
- Seeking Alpha Analysis on Moody's Corporation (https://seekingalpha.com)
- The Motley Fool Earnings Call Transcripts (https://www.fool.com)
Do more with the Moody's model
Frequently asked
What does Moody's Corporation do and what are its main business segments?+
Moody's Corporation is a global integrated risk assessment firm that provides credit ratings, research, data, and analytical tools to financial markets. It operates through two primary segments: Moody's Investors Service (MIS), which provides credit ratings, and Moody's Analytics (MA), which offers software, data, and decision solutions.
How does Moody's Corporation generate revenue across its segments?+
Moody's Investors Service (MIS) revenue is highly transactional and tied to capital markets activity, accounting for approximately 53% of total revenue. Moody's Analytics (MA) revenue is predominantly subscription-based, with 97% recurring revenue, contributing approximately 47% of the total.
What is a key assumption for Moody's Corporation's capital expenditure in financial models?+
A key assumption for Moody's Corporation's capital expenditure is approximately 4% to 5% of revenue, or $350 million to $400 million annually. This capex is heavily skewed towards growth, specifically capitalized software development for new MA products and AI integration.
What is Moody's Corporation's working capital profile and how does it impact its financial model?+
Moody's Corporation benefits from negative working capital dynamics, primarily due to high deferred revenue balances from MA subscriptions. This allows the company to collect cash upfront, funding growth internally, and results in structurally negative or very low net working capital as a percentage of revenue.
What are the primary drivers of goodwill and intangible assets on Moody's Corporation's balance sheet?+
Goodwill and intangible assets dominate Moody's Corporation's balance sheet, typically representing 60% to 70% of total assets. These assets primarily result from historical acquisitions, such as Bureau van Dijk and RMS, reflecting the company's strategy of serial bolt-on acquisitions of data and analytics assets.
Can I download an Excel financial model for Moody's Corporation, and what is its forecast horizon?+
Yes, an Excel financial model for Moody's Corporation is available for download, designed as a comprehensive equity valuation and scenario planning tool. This model provides a forecast horizon extending from FY2026 through FY2030.
Have more financial modelling questions? Contact us
Created by ex-finance professionals
Hey, I’m Alex and I created Finamodel.
Over my years in the finance industry I kept building the same models over and over again. Same structure, same assumptions, different logo. So I started building frameworks to turn them into clean, reusable templates.
Every model here is one I’d actually use for a client, and I personally vet each one before it goes up.
I’m not an expert in every industry, but I’ve built enough models to know what belongs in one. And when something is completely foreign to me, I reach out to my network for experts to work on our models with us.
Having a template library on hand cuts a first build from hours to minutes.
Need help finding your model? You’ll find me in the Finamodel app!
Other Capital Markets Company Financial Models
Browse another company in the same sector.
Cboe Global Markets
Cboe Global Markets is a leading provider of market infrastructure and tradable products, operating derivatives and securities exchange networks globally.
CME Group
CME Group operates the world's leading derivatives marketplace, enabling clients to trade futures, options, cash, and over-the-counter products through an electronic trading platform and central clearing house.
Coinbase
Coinbase operates a financial technology platform providing end-to-end financial infrastructure for the cryptoeconomy, allowing retail users, institutions, and ecosystem partners to trade, stake, store, and transfer crypto assets.
FactSet
FactSet provides financial data, analytics, and open technology platforms to global investment professionals, including asset managers, wealth managers, and investment banks.
Robinhood Markets
Robinhood Markets operates a financial services platform that pioneered commission-free stock, options, and cryptocurrency trading for retail investors, generating revenue from order flow, net interest, and subscriptions.
Interactive Brokers
Interactive Brokers Group, Inc.
Intercontinental Exchange
Intercontinental Exchange (ICE) is a leading global provider of market infrastructure, data services, and technology solutions to a broad range of customers including financial institutions, corporations, and government entities.
MSCI
MSCI is a leading global provider of critical decision support tools and services for the investment community, offering indexes, portfolio construction and risk management tools, and sustainability data.
Explore more Financial Services financial model templates.
