管理層發言
Good day, everyone. Welcome to the Moody's Corporation second quarter 2026 Earnings Call. At this time, I would like to inform you that this conference is being recorded. At the request of the company, we will open the conference up for questions and answers following the presentation. This call is scheduled to last approximately one hour. I will now turn the call over to Shivani Kak, Head of Investor Relations. Shivani, please go ahead.
Thank you. Hello, and thank you for joining us today. I am Shivani Kak, Head of Investor Relations at Moody's. This morning, we reported our second quarter results. The press release and today's presentations are posted at ir.moodys.com. We will reference non-GAAP or adjusted measures. Please see the tables in our earnings release for reconciliations to US GAAP. Today's remarks may include forward-looking statements under the Private Securities Litigation Reform Act of 2000. Please see the safe harbor language in our earnings release and the risk factors in MD&A in our most recent Form 10-K and other SEC filings available on our website and the SEC's website. These factors could cause actual results to differ materially from those expressed or implied. Members of the media may be listening on a listen-only basis. With that, I will turn it over to Robert.
Thanks, Shivani, and hello, everybody. Thanks for joining us today. I have the dreaded summer cold, so pardon me if my voice sounds a little gravelly today, but today's earnings are certainly making me feel much better. One quick update before we get to the results. In late June, we welcomed Christine Kosmowski as CEO of Moody's Analytics. Christine brings three decades of experience scaling technology and analytics businesses, and I have to tell you, just five weeks in, she's already moving with the pace and focus that MA's next chapter demands. We are thrilled to have her, and I look forward to all of you connecting with her soon. So turning to our results. Moody's delivered a standout second quarter with strong performance across the board. At the enterprise level, we achieved 15% revenue growth. We grew adjusted operating income by 25%, expanded adjusted operating margin by 440 basis points to 55.3%, and we grew adjusted diluted EPS by 31% to $4.68.
That is a great progression from the top line to the bottom line. What is most encouraging is not just the strength of the quarter, but how broad-based it was. In Moody's Investor Service, transaction revenue grew 34%, and we rated more than $2 trillion of debt for the second consecutive quarter. That reflects both the rebound in market activity as well as the enduring value of Moody's ratings in large, complex financing markets that we have right now. MIS also delivered adjusted operating margin of 68.3%, up 410 basis points from last year. Moody's Analytics also continued to perform very well. ARR reached approximately $3.7 billion, up nearly 9% from the prior year with trailing 12-month retention remaining strong at 95%. MA also expanded adjusted operating margin by 150 basis points to 33.6%. These results reflect the continuing demand for our decision-grade intelligence to help customers manage risk, improve productivity, and make better decisions.
Taken together, I really think this was a quarter that demonstrated the power of the Moody's model: a franchise capable of capitalizing on strong issuance activity, durable recurring revenue growth in analytics, and disciplined execution across the company. Now we are raising select full year 2026 guidance metrics including our rated-issuance expectations and capital return guidance, and by narrowing our adjusted diluted EPS range, we are increasing the midpoint of our range to $16.75. I know we will talk about this more in the Q&A. More broadly, we continue to believe that the trends shaping our business reinforce our long-term opportunity. Capital markets are evolving, risks are becoming more interconnected, and AI is transforming workflows across industries. In that environment, customers are increasingly turning to Moody's intelligence—our ratings, analytics, and insights—to make consequential decisions with greater confidence.
That is creating meaningful opportunities across our business which we are translating into powerful operating leverage and earnings strength. So now let me turn to Moody's Investor Service. This past quarter, ratings delivered 25% revenue growth with broad-based strength across all asset classes. Global issuance was powered by the multiple funding deep currents that we have been highlighting over the last few years, and reflecting this, we upgraded our issuance growth outlook to mid-single digit percent growth for the full year. This quarter showcased a real breadth of funding drivers that included refinancing, AI-related investment, private credit, digital finance, energy transition, and emerging markets. Our comprehensive global coverage and very deep targeted sector expertise allowed us to capitalize on these drivers. I want to give you a few examples from the quarter to bring this to life.
Starting with AI and data center financing, this is a topic that is dominating the headlines but it is only one of several powerful drivers supporting issuance growth. Beacon Point DC is a very good example of the large data center transactions we are rating across the U.S. That was a roughly $4 billion financing for a 350-megawatt hyperscale campus developed by Hut 8. More importantly, it illustrates how AI is becoming one of the largest capital formation stories in the global economy. It is creating financing needs that extend well beyond data centers into power and infrastructure and other sectors and supporting what we believe is a sustained pipeline of issuance activity. In fact, hyperscalers have already exceeded our 2020 forecast for issuance and issued more debt this year than in the last three years combined. The opportunity extends well beyond hyperscalers to construction, power, hardware, chips, and the broader infrastructure required to support AI at scale.
Hyperscaler CapEx alone is expected to approach $800 billion in 2026 and grow meaningfully again in 2027. Even excluding AI data center and hyperscaler activity, issuance still grew double digits year to date. In the second quarter of the issuances of over $5 billion, approximately 20% were tied to AI-related investment and supporting infrastructure. That means the other 80% were diversified across a range of sectors. Now private credit is another important tailwind with more than 40% growth in private credit-related transactions, including structured finance mandates, versus the second quarter of last year, and more than 110 new first-time mandates this quarter as investors and issuers demand more analytical rigor, transparency, and independent insight. In digital finance, our leadership and trust earned Moody's ratings the distinction as best digital asset ratings and analytics provider this quarter.
We are the first rating agency to deliver ratings on chain and we extended our token integration engine to Solana through AlphaLedger, embedding our ratings directly into tokenized fixed income assets on a leading public blockchain. We have been building on our Canton deployment. This reinforces our network-agnostic design, bringing our independent credit insights to where the markets transact. We have rated double digit digital issuances globally this year. While it is early, we are encouraged by the green shoots as we have more transactions in the pipeline than we have rated year to date. Also recently rated BlackRock's tokenized money market fund. That is the world's largest at $2.6 billion market cap, and it is a cornerstone of the tokenized liquidity stack as a stablecoin reserve and on-chain cash entry point. We are also a critical rating partner to innovative transactions in emerging markets.
This quarter, we rated a second emerging market CLO from the International Finance Corporation, similar to the one that we called out on our third quarter 2025 call. We were again the sole agency on this unique transaction, which securitized corporate loans to borrowers in emerging markets. It is helping the IFC and other multilateral development banks broaden access to institutional capital and mobilize more private sector investment. I am also happy to share that we marked our reentry into the insurance-linked securities market in the second quarter, and we served as both credit rating agency and modeling agent on a €100 million flood risk cat bond in the quarter. This exemplifies our One Moody's strategy in action, combining ratings and catastrophe modeling expertise to play a critical role in addressing the insurance protection gap, which we recently estimated at $375 billion and by some estimates could be as high as $1 trillion.
We are building pipeline here as well. In Africa, where we own the largest rating agency on the continent, we were pleased to celebrate 30 years in the region this quarter, so a shout out to all of our colleagues there who are playing an important role in developing the growing debt capital markets. Taken together, these examples reinforce the same point: Moody's plays a critical role in global capital formation, and we continue to be exceptionally well positioned to monetize the massive funding deep currents around the world. Now turning to analytics. ARR grew nearly 9%, reflecting strong second quarter execution and we are maintaining our high single-digit ARR growth outlook for the year. We are embedding trusted decision-grade intelligence directly into high-stakes customer workflows—lending, underwriting, compliance, and more. That is our sweet spot at the intersection of speed, trust, explainability, and auditability.
During the second quarter, we made further progress in broadening how customers access Moody's intelligence and how deeply it is woven into their mission-critical day-to-day workflows. With Amazon, we brought Moody's Connected Intelligence directly into Amazon QuickSight, giving AWS customers access to our ratings and research and curated data on hundreds of millions of public and private entities without requiring users to leave Amazon's AI experience. This quarter, we announced our sunset timeline for our on-prem modeling solutions in insurance, which means we plan for our remaining customers to migrate to our cloud-based Intelligent Risk Platform over the next several years. To further support this migration, we partnered with AWS to add the IRP to the AWS Marketplace catalog and that enables our migrating customers to count their IRP spend toward their AWS cloud commitment. With Microsoft, we launched our first AI skill on Microsoft 365 Copilot.
That enables agents to apply Moody's analytical frameworks and subject matter expertise, not just retrieve content. Joint go-to-market activity is building momentum, with more than 20 engagements globally and initial customer trials underway. We now also have more than 100 MCPs and SmartAPI connections being used and trialed by our customers, which is an encouraging signal of demand for our trusted intelligence delivered through AI platforms. Together, these integrations let customers spend less time questioning output and more time acting on it while giving the industry the intelligence infrastructure to accelerate enterprise adoption. Our massive company data estate now covers more than 630 million entities, and our proprietary ownership linkages remain one of the most heavily used datasets in KYC and across the company. That data advantage is translating into growth in KYC and compliance use cases, helping customers reduce unnecessary screening alerts.
Our AI-powered screening solutions are helping drive an approximately 50% reduction in costly and time-consuming false positives. Our customers are making high-stakes decisions that have little to no margin for error, which is why good-enough data is not good enough for these kinds of use cases. A recent competitive win in EMEA shows our strategy at work. We had a global Fortune 500 home appliance maker where we displaced an established incumbent. It was not just with one point solution for credit decisioning; we brought together our company data, our credit models, and our intelligent screening for broader third-party risk management. In June, I attended Exceedance, our flagship insurance event, which drew record attendance of more than 600 leaders across the property and casualty insurance sector. We announced further enhancements to our cloud-based Intelligent Risk Platform including our risk data lake, more high-definition models, new agentic AI capabilities, plus the extension of our casualty solutions.
I came away feeling very encouraged by our position and opportunity with the global insurance industry. I want to share a few recent proof points. First, our new capabilities enabled us to grow ARR by nearly 60% with a top-three U.S. auto and property insurer. This win reflects strong demand for our geospatial AI integration into property underwriting and broader adoption across personal and business lines along with continued volume growth. It is a lighthouse customer that will support further expansion into the primary carrier market where historically we have had less penetration. Second, we expanded our relationship with one of the top insurers and reinsurers in the Lloyd's of London market and deepened our penetration into their workflows, including data preparation, pricing, and regulatory reporting, enabling us to grow ARR by 12% off a multimillion-dollar base. Third, in APAC, we more than doubled ARR with one of the world's largest life insurance and financial services groups.
This insurer now uses our credit value-at-risk framework as part of their investment and risk decisioning, supported by our credit models and economic scenarios. It is a great example of how we are helping leading insurers connect credit, macroeconomic, and portfolio risk intelligence across their institutions. Now turning to banking. I also recently joined more than 400 customers at our annual banking summit. One message came through clearly: banks are under pressure to make better decisions faster, but many remain constrained by fragmented data, disconnected systems, and increasingly complex risk environments. The conversations were less about AI itself and more about how AI can actually deliver and improve lending, strengthen risk management, and streamline compliance. Ultimately, as I hear from our banking customers all the time, help them operate more effectively and more efficiently.
That is exactly where we are focused, and it continues to create attractive opportunities across our banking franchise. A couple of examples from the quarter: with a top-three Southeast Asian bank, we moved from proof of concept to production on an enterprise-grade AI-enabled early warning solution spanning wholesale and commercial banking across 19 countries. What won the deal was governed, explainable workflow orchestration, combining our proprietary data, analytics, and AI-driven narratives so their bankers can spot and investigate counterparty risks earlier and with greater confidence. The result was 20% ARR growth with an already very important customer. Second, we expanded with a major regional bank in the Northwestern U.S., turning a two-bank merger integration into a meaningful growth opportunity. Through sustained executive engagement, we cleared implementation hurdles, replaced legacy tools, and helped the combined institution modernize credit risk assessment at scale.
Rather than becoming a cost synergy, we became a growth partner, lifting ARR by 8% with a clear path to broader AI-enabled workflow adoption. So some great examples from ratings and analytics from the quarter all contributing to exceptional second quarter results and further positioning us to capitalize on the opportunities ahead. With that, Noemie, I will turn it over to you.
Thank you, Rob. Hello, everyone. Echoing Rob, our second quarter results reflect impressive execution against the durable demand drivers we have been highlighting. Let's dive into the numbers, starting with analytics. MA delivered a very strong quarter, with healthy recurring growth, disciplined investment, and operating leverage. Over the past two years, adjusted operating margin has expanded by more than 500 basis points while we have continued to invest in our highest-priority growth opportunities. The story in MA is consistent: recurring revenue is growing; transactional revenue is shrinking by design; and ARR and margin expansion remain the clearest indicators of underlying business performance. MA revenue increased 4% reported, or 8% on an organic constant currency basis following our recent divestitures that closed in the second quarter, and reflecting robust demand across the franchise.
Recurring revenue grew 7% as reported or 9% on an organic constant currency basis, and now represents 99% of MA revenue. Transactional revenue declined 72% year over year to about $10 million, consistent with the deliberate portfolio repositioning we have discussed previously. ARR ended the quarter with nearly 9% year-over-year growth, and remains on track for high single-digit growth for the full year. The quarter reflected strong sales with proactive contract renewals, robust cross-sell and upsell activity across the portfolio, as well as new logo wins. Decision Solutions remains MA's primary growth engine, representing 44% of total MA ARR and delivering 10% ARR growth. Within Decision Solutions, KYC grew 13%, driven by deeper penetration within existing banking customers and expansion beyond financial services. A notable win this quarter was a new logo deployment of our investigation solution and company intelligence in a mission-critical government security application.
Banking ARR grew 10%, with lending an important contributor delivering mid-teens growth again this quarter. Customers are migrating to our new lending suite, PACKET. PACKET is generating meaningful uplift on renewal. As customers consolidate multiple workflows onto a common platform, we believe this deepens our role in their day-to-day decisioning processes, creating additional opportunities for cross-sell and long-term ARR growth. We anticipate the banking line of business exiting the year more aligned with the typical historical high single-digit ARR growth range. Insurance ARR grew 9%, supported by strong demand for catastrophic data models and underwriting solutions delivered through our Intelligent Risk Platform. A good example is a large specialty commercial insurer that historically utilized on-prem modeling and is now piloting the IRP platform. What began as a modeling relationship has the potential to evolve into a broader platform deployment, illustrating how we create value in insurance: one platform with integrated data, analytics, and workflows that increases customer value.
With less than half of our insurance customers fully transitioned to the IRP, and following sunset announcements at Exceedance, we see a clear runway for continued growth although the trajectory may not be linear. Research and Insights ARR grew 6%, supported by demand for CreditView and early momentum from Moody's OneView launched in April. OneView goes beyond just bringing together our data, research, and analytics; it now embeds Research Assistant as an agentic contextual chat available across every company page, giving customers deeper insight while working more efficiently. These migrations continue to generate attractive upsell opportunities while making it easier for customers to access a broader set of Moody's capabilities. Data and Information ARR grew 8% year over year, driven by continued demand for ratings data feeds and Orbis data in noncompliance workflows. In the second quarter, we expanded a long-standing relationship with the German government, embedding Moody's data and AI-enabled capabilities into core tax administration workflows, audits, investigations, transfer pricing, and risk assessment.
In governments, particularly in EMEA, we see double-digit growth within the Data and Information business, and the same dynamic is visible across our corporate customer base. The mega-cap e-commerce and technology company we first highlighted several quarters ago has more than doubled ARR since the end of 2024 and now is a more-than eight-figure relationship. What began as a targeted credit decisioning use case has expanded into a broader workflow deployment powered by company data, credit models, and predictive risk analytics. This is a powerful illustration of the MA model: establish a foothold in a high-value workflow, demonstrate measurable customer outcomes, and then expand as that workflow scales across business units, products, and geographies. Across banking, insurance, government, and corporate markets, we are seeing a trend toward embedding Moody's into critical workflows rather than purchasing standalone products.
Those relationships tend to be larger, stickier, and create greater opportunities for expansion over time, giving us confidence in both our ARR growth outlook and continued margin progression. Turning to profitability, MA continued to deliver adjusted operating margin expansion and remains on track for full-year margin guidance of 34% to 35%. As we simplify the portfolio and consolidate platforms, we are generating operating leverage while funding our top growth priorities—benefits that both build and support continued margin progression toward a mid-to-high 30s target by year-end 2027. Switching over to MIS, rated issuance exceeded $2 trillion for the second consecutive quarter, up 33% year over year and 20% year to date. Despite geopolitical volatility, issuers remained focused on accessing capital with constructive credit conditions, strong investor demand, and continued financing needs across both corporate and structured markets.
Importantly, future results were not driven by a single market dynamic—there was broad-based participation across asset classes. The diversity of issuance activity reflects the multiple secular and cyclical funding drivers we have discussed. Revenue growth outpaced issuance growth in several key areas, benefiting from favorable transaction mix and larger, more complex mandates. At the same time, recurring revenue grew 6% to $369 million, supported by our pricing initiatives, new mandates, and growth in monitored credit. First-time mandates increased by about 45% and are on pace for the 750 to 850 expected for the full year, reinforcing the health of our new business pipeline and supporting future recurring revenue growth. Looking across the portfolio, Corporate Finance and Public, Project, and Infrastructure Finance benefited from a number of jumbo AI- and infrastructure-related deals, while speculative-grade and bank loan activity remained robust with transaction revenue growth of 35% and 30%, respectively.
Structured Finance and Financial Institutions rounded out the quarter with steady ABS, RMBS, and frequent issuer activity. Taken together, these results demonstrate the breadth of opportunity available to MIS and the value of our global franchise, sector expertise, and market position. On profitability, MIS delivered impressive adjusted operating margin expansion that underscores the substantial operating leverage embedded in the business. We absorbed significantly higher transaction volumes while maintaining analytical rigor and without commensurate cost increases, aided by ongoing technology investments and disciplined resource management. As we continue investing in the franchise, we believe we remain well positioned to convert revenue growth into attractive earnings growth over time. We are raising our issuance outlook from low to mid-single digit percent growth while maintaining our MIS revenue outlook.
Markets proved resilient through the early-April volatility, supported by AI-related financing and infrastructure investment, and FIG activity. Hyperscaler and large transactions drove strong issuance in the first half and are already reflected in results. Our increased issuance forecast is concentrated in Public, Project, and Infrastructure Finance and banking, driven by more data center activity in Public, Project, and Infrastructure Finance and frequent banking issuers in FIG. Because these issuers can carry lower average revenue yields given their pricing programs, the higher issuance outlook does not change our full-year revenue expectations. As previously communicated, we are maintaining both MIS revenue and MA ARR guidance in the high single-digit range. For MIS, we expect low single-digit revenue growth in Q3 as market activity slows through the summer with Q4 revenue roughly flat versus prior year, consistent with normal seasonality.
We expect MIS margin will follow a similar seasonal pattern. For MA, we continue to expect ARR growth in the high single-digit range and margin expansion remains on track. For modeling purposes, we expect our tax rate for the full year to be toward the high end of the guidance range of 23% to 25%. On adjusted diluted EPS, we are raising the low end of the range by $0.10, bringing full-year guidance to $16.50 to $17.00, or 12% growth at the midpoint. We are also expanding our restructuring program envelope by $100 million and extending this program through year-end 2027. When completed, the full program is expected to result in annualized savings of $300 million to $350 million. This program extension expands our ongoing transformation agenda, driving further organizational health, capturing efficiencies from AI adoption across the enterprise, and creating additional capacity to reinvest in our highest-return growth opportunities.
Our capital priorities are unchanged: fund growth, expand margins, and return excess cash to shareholders. Year-to-date, we have executed approximately $2.2 billion in share repurchases and we are raising our full-year share repurchase guidance to be up to $3 billion in 2026. Free cash flow was $688 million in the quarter, up 47% year over year. We are adjusting full-year free cash flow guidance by about $100 million to $2.7 billion to $2.9 billion reflecting our latest working capital forecast and restructuring costs. We are now on track to return more than 130% of free cash flow to shareholders this year, supported by proceeds from recent portfolio actions while preserving balance sheet flexibility to continue investing in growth. The through line is consistent. We are converting revenue growth into margin expansion and durable cash generation while reinvesting with discipline in our people, AI, data, and workflow integration. With that, we will be happy to take your questions.
分析師問答
Thank you. We will now begin the question-and-answer session. We ask that you please limit yourself to one question. The option to rejoin the queue will not be available. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Manav Patnaik with Barclays. Manav, your line is open. Please go ahead.
Thank you. Good morning. I just wanted to understand the guidance assumptions for the second half, maybe some cadence commentary on third and fourth quarter. I think I understand the explanations of mix, but it feels like it is pretty conservative. I am just trying to appreciate where you have drawn those lines.
Yeah. Thanks, Manav. I would frame the second quarter as us catching up to where we always expected to be, just a bit sooner than we planned. If you remember our April guidance, we had assumed a meaningful portion of the March air pocket would get recovered in the third quarter against what was a tough year-ago comp. What actually happened is that recovery came through in the second quarter instead—a record June issuance pulled that activity forward. So at the halfway point of the year, we are sitting where our full-year plan always expected us to be. Now, what that means: we are raising our issuance outlook from low single digit to mid-single digit percent growth for the year. We are holding revenue guidance at high single-digit growth for the year. The issuance upside came with a mix that is a bit less rich than we would have expected. More of the growth is coming from data center and financial institution transactions, and these tend to carry lower average yields given deal size, and a bit less from areas like insurance issuers or CLOs or CMBS, which are typically more revenue accretive per dollar of issuance.
So the increase in volume does not translate one-for-one into incremental revenue, which is why we are not raising the revenue outlook. We continue to feel very good about where we are relative to what we told you at the beginning of the year in February. Q2 reflects the planned recovery landing earlier than we expected. It does de-risk the second half a bit. We can talk about the puts and takes as well. We are no longer leaning on an outside third quarter recovery against what was a difficult prior comp. We think that is a meaningfully better, lower-risk setup than what we were sitting on three months ago, even though the headline full-year revenue guidance has not moved.
Yeah, and I just want to double-click on that, Manav, because as Noemie said, we discussed this in April. We had some air pocket at the time and decided not to move guidance, and we have caught a bunch of that up. We are right where we thought we'd be for the year. Last year is instructive: we had a lost April, we adjusted guidance down, then brought it back up, and finished the year pretty much where we expected. That has informed us this year. We are where we thought we'd be halfway through the year, so we are holding guidance.
Fair enough. Thank you.
Yep.
Your next question comes from the line of Ashish Sabadra with RBC Capital Markets. Ashish, your line is open. Please go ahead.
Thanks for taking my question. I just wanted to follow up on issuance. Wanted to better understand the puts and takes going forward—what could provide upside. You obviously talked about some of the pull forward into Q2, but are you also assuming a more conservative approach given geopolitical uncertainty? And on the same line, how do you think about first-time mandates—you talked about that being up 45%—how could that provide upside to the numbers? Thanks.
Yeah, Ashish, happy to talk about puts and takes. There are variables in a complex operating environment, but a few things that could add upside: if we see a sustained pickup in M&A activity, that would be positive. We moderated our assumptions for hyperscaler and data center issuance through the second half—if it runs hotter than we have built into our issuance guidance, that would be upside. There is multiyear demand there. If inflation remains under control and we see a rate cut, that could trigger opportunistic refinancing. We have some very big maturity walls coming, not just in 2027 but into 2028. A couple of other items: we are watching high-yield spreads—our original assumption was modest widening into the second half. Spreads are still tight by historical averages, and our speculative-grade default rate outlook continues to decline, which could support tighter spreads and leveraged finance issuance.
Also, seasonality: issuance is historically skewed to the first half of the year. From 2015 to 2025, roughly 55% of full-year issuance came in the first half. This year we expect that mix to shift more to the first half—because of the pull forward of hyperscaler issuance and frequent FIG issuance—but if conditions hold and the split looks more like the historical pattern, that could provide upside for the second half. On the risk side: headline risk still exists and can trigger risk-off windows—we saw that in early July in the high-yield market. We are monitoring disruptions to global energy flows that could pressure inflation expectations and lead companies to defer M&A. And the second half of 2025 is a tough comp, which informs our guide. Net, I think we have a constructive environment heading into the second half.
Your next question comes from the line of Toni Kaplan with Morgan Stanley. Toni, your line is open. Please go ahead.
Thanks so much. I was wondering if you could talk about how much uplift you are seeing from MCP adoption right now and how we should think about it going forward. Should this continue to be a positive driver as more companies adopt MCP, or will lapping the initial uptake create tough comps? How should we think about the dynamics there going forward? Thanks.
Thanks, Toni. As you heard in our prepared remarks, we have good traction with customers both buying and trialing our intelligence through MCPs and Smart APIs. Some of the very big banks are among our early paid customers, which is encouraging. Five primary content sets are driving much of the demand: AI-ready research, entity data, news, economic data, and our credit models. We are seeing a real willingness to pay. Going forward, we will increasingly focus on agentic assembly and delivery of our connected intelligence, where we can be more integral to customer workflows than just through MCPs and Smart APIs—this is something Christine is focused on. Bottom line: good momentum, good runway, and an opportunity to go from early MCP adoption to connected, agentic intelligence that has real legs.
Thank you.
Your next question comes from the line of Jeff Meuler with Baird. Jeff, your line is open. Please go ahead.
Yes. Thank you. Good morning. Robert, could you talk through how you are thinking about the deep currents on a multiyear basis, especially private credit monetization and the broader infrastructure build-out? How do you think they build out on a multi-year basis, and what risks are you monitoring and managing? Thank you.
Thanks for the question. We first started talking about funding deep currents a couple years ago and we are really seeing them now. There is a relatively new deep current tied to AI infrastructure, but there is a lot more than that. Massive infrastructure financing needs exist beyond data centers—traditional infrastructure, AI-driven infrastructure, energy transition, military buildups, and private credit. Governments generally lack fiscal space, so public and private markets must play a major role in funding. BlackRock estimated something like $68 trillion of infrastructure funding needed by 2040. Private credit is a funding mechanism for much of this, and it's pushing into retailization, which will drive demand for greater transparency, a common language for risk assessment, and valuation consistency. The NAIC is engaged in some regulatory modernization to address the shift toward complex structured private assets in insurance portfolios. Those are tailwinds behind private credit. Private credit recently went through a correction, which likely tightened underwriting and structures and is healthy for long-term sustainability. Overall, we see durable multi-year demand across these funding currents and we are positioning to monetize them.
Your next question comes from the line of Jeffrey Silber with BMO Capital Markets. Jeffrey, your line is open. Please go ahead.
Thanks so much. Wanted to go back to MIS. You mentioned lower yield on some of the data center-related financing. Is that because it is moving more toward frequent issuers or are there different fee structures? Can you give us a little color on that?
Thanks, Jeffrey. These financings enter the rating agency through different channels: corporate finance, project and infrastructure finance, and sometimes structured finance and CMBS. Hyperscalers have become very frequent issuers—big frequent issuers doing large investment-grade bond deals tend to be revenue mix unfriendly because yield per dollar of issuance can be lower due to pricing programs. Conversely, complex structures in project finance and CMBS tend to be revenue mix friendly. We also provide rating assessment services where issuers seek views on proposed capital structures, which creates additional monetization opportunities for those transactions. So it depends on issuer type, structure complexity, and the specific service we provide on each deal.
Your next question comes from the line of Curtis Nagle with Bank of America. Curtis, your line is open. Please go ahead.
Great. Thanks so much. Maybe turning to MA: thinking about the organic growth—nice number in the quarter at 9%—for the remainder of the year and sequencing, is that a sustainable rate? Could we see acceleration as product roadmap picks up or easier comps? How should we think through that?
Rounding up to 9% for the quarter, we feel good about the momentum, but I would caution against extrapolating that acceleration. We did not change our guidance; we continue to call for high single-digit ARR growth. Analytics sales are typically weighted to the back half of the year, particularly Q4, due to enterprise budgeting and renewals. We are building a real pipeline of opportunities toward year-end. We also have a new leader of MA—Christine—who is in the seat five weeks and is taking a close look at go-to-market execution and sales productivity. Some drivers supporting growth: lending migration to our new AI-enabled lending suite, PACKET, which is generating uplift on renewals; the insurance migration from on-prem to the IRP with new high-definition models and extension into casualty, which has been underserved and where interest is building; continued demand for KYC onboarding and monitoring solutions for corporate customers; and migration of CreditView customers to Moody's OneView with embedded agentic capabilities. Together, these support MA's growth themes.
Your next question comes from the line of Surinder Thind with Jefferies. Surinder, your line is open. Please go ahead.
Thank you. Following up on MA, any color on key initiatives Christine might pursue at this point? You mentioned go-to-market execution and sales productivity—any revisiting of the tech stack and what that would mean for accelerated investment or changes in spending?
Welcome, Surinder. We are very excited about Christine joining us. She brings three decades of experience scaling technology and analytics businesses. Her early priorities align with our own thinking: simplify offerings and reduce selling friction to improve cross-sell and upsell, sharpen go-to-market motions including pricing and packaging of agentic solutions, strengthen our data layer which serves as the foundation for connected intelligence, accelerate building the intelligence layer for agentic integration, and enable us to up-level our solution suite. She is also focused on organizational clarity so MA's structure and operating model can move at the speed this AI-first moment demands. Early days—fifth week—but she is already driving these priorities.
Your next question comes from the line of Andrew Nicholas with William Blair. Andrew, your line is open. Please go ahead.
Hi. Good morning. Thanks for squeezing me in. A bigger-picture question. We have seen some lower-cost frontier models emerge recently, pointing to potential significant declines in token cost. How are you thinking about second-order impacts on Moody's? Does it affect client usage expectations, your internal efficiency efforts, and does a lower-cost model environment change the competitive dynamics or disruption risk in your view? Thank you.
Maybe I will take a crack at this first and let Robert chime in. On token cost, our internal AI token usage is actively governed. We provide engineers and back-office teams a variety of tools, and we have strict monitoring and training to ensure they use the best tools for the task at hand. Compared with some peers, we are not seeing token-cost explosion. Regarding lower-cost frontier models, it is early, but I tend to view cheaper tokens as a tailwind—cheaper tokens would likely expand usage more than depress price, which we would expect to benefit us as customers increase AI usage. Also, our customers, especially in regulated environments like banking, prioritize controls. They want us to partner with them to ensure proper controls around models, relying on proven market-leader providers. So while we experiment where appropriate, our deployments emphasize robustness, governance, and safety.
I'll add: this is evolving quickly. If token costs come down, they will come down for everyone, including AI-native players and for us. That enables faster and cheaper innovation. But our competitive advantage is decision-grade intelligence: we are not just an AI wrapper using somebody else's model. We have an intelligent system integral to financial markets, and we will continue to reinforce that advantage. Lower token costs help everyone innovate, but the durability of our advantage comes from our data, analytics, models, and our role in critical financial workflows.
We have reached the end of the Q&A session. I will now turn the call back to Robert for closing remarks.
All right. Thanks, everybody. Great quarter, constructive environment, good momentum. Let's go. Talk to you next quarter.
This concludes Moody's Corporation's second quarter 2026 earnings call. As a reminder, immediately following this call the company will post the MIS revenue breakdown under the Investor Resources section of the Moody's IR homepage. Additionally, a replay will be made available after the call on Moody's IR website. This concludes today's call. Thank you for attending. You may now disconnect.