MCO · Q2 2026 Earnings

Cautious

Moody's Corporation

Reported July 22, 2026

30-second summary

Revenue grew 15% YoY to $2.185B and adjusted EPS of $4.68 crushed the $4.15–$4.30 prior-quarter guide by 11%, driven by MIS revenue up 25% (roughly 10 points above the low-to-mid teens Q2 guide) with Corporate Finance +27%. Despite that beat, management raised only the low end of FY adjusted EPS to $16.50–$17.00 (from $16.40–$17.00), cut the high end of FY GAAP diluted EPS to $16.00–$16.50 (from $16.00–$16.60), trimmed FY operating margin to 44–45% from ~45% (low end cut), and cut both FY OCF ($3.25–$3.45B → $3.15–$3.35B) and FCF ($2.8–$3.0B → $2.7–$2.9B) by $100M across each range. The tension is the story: MIS delivered an issuance-window print that a year ago would have driven a full guide raise, but management is signaling H2 caution — reaffirming MCO revenue at high-single-digit and leaving the adjusted FY EPS high end untouched.

Headline numbers

EPS

Q2 FY2026

$4.68

+11.4% vs est.

Revenue

Q2 FY2026

$2.19B

+15.0% YoY

+5.6% vs est.

Operating margin

Q2 FY2026

47.9%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$2.19B	$1.90B	+15.1%	$2.08B	+5.1%
EPS	$4.68	$3.56	+31.5%	$4.33	+8.1%
Operating margin	47.9%	43.1%	+480bps	44.3%	+360bps

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Adjusted Diluted EPS	Q2 FY2026	$4.15 to $4.30	$4.68	+$0.38-0.53 above guide	Beat
MIS Revenue Growth	Q2 FY2026	low-to-mid teens	25%	+7-12pts above guide	Beat

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted Diluted EPS	FY 2026	$16.40 to $17.00	$16.50 to $17.00	-$0.10 at low end	Lowered
Operating Margin	FY 2026	Approximately 45%	44% to 45%	-1pt at low end	Lowered
Operating Cash Flow	FY 2026	$3.25 to $3.45 billion	$3.15 to $3.35 billion	-$0.10 at both ends	Lowered
Free Cash Flow	FY 2026	$2.8 to $3.0 billion	$2.7 to $2.9 billion	-$0.1 at both ends	Lowered
Share Repurchases	FY 2026	Approximately $2.5 billion	Up to $3.0 billion	+$0.5 billion	Raised

Reaffirmed unchanged this quarter: Adjusted Operating Margin (52% to 53%), MCO Revenue Growth (high-single digit percent range), MA Revenue Growth (mid-single-digit percent range), MA Organic Constant Currency Revenue Growth (high-single-digit percent range), MA ARR Growth (high-single-digit percent range), MA Adjusted Operating Margin (34% to 35%)

Segment performance

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Moody's Analytics (MA)	$0.925B	$0.888B	+4.2%
Moody's Investors Service (MIS)	$1.26B	$1.01B	+24.8%
MA Decision Solutions	$0.423B	—	+2.0%
MA Research and Insights	$0.256B	—	+3.0%
MA Data and Information	$0.246B	—	+9.0%
MIS Corporate Finance	$0.651B	—	+27.0%
MIS Structured Finance	$0.151B	—	+12.0%
MIS Financial Institutions	$0.222B	—	+16.0%

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
MA Adjusted Operating Margin	33.6%	32.1%	—
MIS Adjusted Operating Margin	68.3%	64.2%	—
MCO Adjusted Operating Margin	55.3%	—	—
MA ARR	$3.661 billion	$3.297 billion	—
MA ARR Growth	9%	—	—
MA Recurring Revenue	$915 million	$852 million	—
MA Organic Constant Currency Revenue Growth	8%	—	—
MIS Transactional Revenue Growth	34%	—	—

Management tone

No earnings call transcript was available at brief time; tone analysis is drawn from the press release commentary only and is thinner than usual.

Narrative arc: Q2 FY25 "macro air pockets, narrowed EPS" → Q3 FY25 "broad-based raise, more tailwinds than headwinds" → Q4 FY25 "structural margin step-up baked into FY26 baseline" → Q1 FY26 "AI as operating model, digital assets as revenue" → Q2 FY26 "exceptional Q2 but H2 caution embedded in the guide."

The tone in the press release is celebratory on Q2 but the guide math is defensive. CEO Rob Fauber's quote — "Moody's delivered exceptional results in the second quarter, reflecting both strong execution and the growing importance of trusted, decision-grade intelligence" — is the strongest superlative Moody's has used in five quarters. But it sits alongside an adjusted FY EPS range that raised only the low end while leaving the high end at $17.00 — and a GAAP EPS range whose high end was actually trimmed by $0.10. In prior quarters (Q3 FY25 in particular), a print of this magnitude drove a $0.75–$1.00 midpoint raise. This time it drove $0.05.

The MIS narrative has shifted from "structural step-up" to "issuance window still open." Q4 FY25 framed MIS margin at ~65% as a new baseline; Q1 FY26 printed 66.7% and the FY guide was reaffirmed at ~65%; Q2 FY26 printed 68.3% and the FY guide is again reaffirmed at approximately 65%. Guiding H2 MIS margin to below 63% (required for the FY to land near ~65% given H1 has averaged ~67.5%) is either genuine H2 caution or persistent conservatism about a pull-forward reversal. Combined with reaffirming MCO and MIS revenue growth at high-single-digit despite an H1 that's already well above that pace, management is explicitly modeling material H2 deceleration.

Cash flow cuts without adjusted margin cuts is a new signal. Adjusted operating margin was reaffirmed at 52–53% while OCF and FCF were both cut $100M and GAAP operating margin's low end came down. The absence of a transcript makes this hard to diagnose, but the mechanical read is that either taxes, interest expense, or working capital assumptions have moved unfavorably — none of which appeared in prior quarters' framing. Watch for the 10-Q filing and the transcript when available.

Answers to last quarter's watch list

Q2 FY2026 MIS revenue against the low-to-mid teens guide — MIS printed +25%, roughly 10 points above the guide and validating the pull-forward thesis in the most emphatic way possible. Corporate Finance at +27% led. Despite this beat, the FY MIS guide was reaffirmed at high-single-digit, implying a sharp H2 deceleration rather than an FY raise. Status: Resolved positively

Pace of FY2026 share repurchases against the new ~$2.5B envelope — The envelope was raised again to up to $3.0B (a $500M step-up), suggesting Q2 repurchases ran ahead of the ~$300M/quarter benchmark and management is not reserving capacity for the back half. Specific Q2 repurchase dollars were not disclosed in the release. Status: Resolved positively

MIS Financial Institutions sub-line acceleration from +2% — Financial Institutions grew +16% in Q2, a 14-point acceleration from Q1's +2%. The Q1 softness was a comp/timing issue, not structural. Status: Resolved positively

Whether MA Decision Solutions ARR holds the +10% pace — Decision Solutions revenue decelerated to +2% (from +7%) — the gap versus underlying ARR trends is wider, not narrower. The MA Regulatory Solutions divestiture explains part of the deceleration mechanically, but the segment-level ARR figure was not disclosed in the release at the sub-line level. Status: Continue monitoring

Any quantification of digital-asset or MCP-driven revenue — No dollar figure or deal count was disclosed for digital-asset or MCP-driven revenue in the release. The qualitative-only framing persists. Status: Resolved negatively

MIS margin trajectory vs. the reaffirmed ~65% FY guide — MIS margin printed 68.3% (up from 66.7% in Q1), now running ~330bps above the FY guide. Management reaffirmed ~65% again, meaning H2 MIS margin is being modeled below 63% — either conservatism or genuine expectation of an issuance-window reversal. Status: Resolved positively on the H1 print; unresolved on the guide reconciliation

Confirmation that the MA Regulatory Solutions divestiture closes on April 30 — The divestiture closed on April 30, 2026 as planned. Reported MA revenue growth decelerated to +4% in Q2 (from +8% in Q1) reflecting the removal of Regulatory Solutions revenue; organic constant-currency growth held at +8%. Status: Resolved positively

What to watch into next quarter

Q3 FY26 MIS revenue growth against the H2 deceleration the FY guide requires — H1 MIS averaged ~+16% growth. For FY MIS to land at high-single-digit (say +8%), H2 MIS growth needs to average roughly flat YoY. A Q3 print anywhere above +10% will force an FY MIS raise; a print below +5% validates the pull-forward reversal thesis.

MA Decision Solutions revenue growth versus underlying ARR — Decision Solutions revenue decelerated to +2% in Q2. If Q3 revenue remains in the low-single-digits while ARR growth holds, the divestiture explanation stops being sufficient and the segment-level demand signal needs re-examination.

FCF trajectory versus the cut $2.7–$2.9B FY guide — H1 FCF was not disclosed as a subtotal in the release. If Q3 FCF continues to run soft, the working-capital or interest-expense driver behind the $100M cut needs to be identified explicitly.

MIS Q3 margin against the ~65% FY guide — a third consecutive 66%+ quarter forces the question of whether the ~65% guide gets raised at 3Q or whether management is genuinely modeling a 60%-ish Q4 print.

Share repurchase execution against the raised up-to-$3.0B envelope — Q1 repurchases ran ~$1.5B on a $2.5B envelope. If H2 repurchases fall meaningfully short of a $750M/quarter pace, the "up to" language means the raise was optical rather than committed.

Any refresh of AI-attached ARR or digital-asset/MCP revenue figures — five consecutive quarters of qualitative-only AI framing without a refreshed dollar disclosure is now a pattern. A dollar figure next quarter would materially change the disclosure regime; another qualitative-only quarter locks in the read that the contribution remains hard to isolate.

Sources

Moody's Corporation Q2 FY2026 earnings release — https://www.sec.gov/Archives/edgar/data/1059556/000162828026049104/a2q26earningsrelease.htm
Prior-quarter Tapebrief coverage of MCO (Q2 FY25 through Q1 FY26)

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