Moody’s Earnings: Ratings Revenue Decline Less Than Expected, Intact 2023 Revenue Outlook

Though revenue declined 3% in the first quarter, wide-moat-rated Moody’s reported a better-than-expected start to 2023. Revenue of $1.47 billion, adjusted EBITDA of $656 million, and $2.72 of EPS beat the FactSet consensus estimates of $1.43 billion, $616 million, and $2.22, respectively. While the firm’s operating results beat expectations, we attribute the bulk of the earnings beat to an unusually low tax rate, something we don’t expect to reoccur. Overall, there was little that would alter our long-term view of Moody’s, and we are maintaining our fair value estimate of $315. We regard shares as approximately fairly valued.