Good day, everyone, and welcome to the Moody's Corporation Fourth Quarter and Full Year 2024 Earnings Call. At this time, I would like to inform you that this conference is being recorded, and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers following the presentation. I will now turn the call over to Shivani Kak, Head of Investor Relations. Please go ahead. Thank you.

Good morning, and thank you for joining us today. I'm Shivani Kak, Head of Investor Relations. This morning, Moody's released its results for the fourth quarter and full year 2024, as well as our outlook for full year 2025 and updates to our medium-term guidance. The earnings press release and the presentation to accompany this teleconference are both available on our website, at ir.moodys.com. During this call, we will also be presenting non-GAAP or adjusted figures. Please refer to the tables at the end of our earnings press release filed this morning for reconciliations between all adjusted measures referenced during this call in US GAAP. I call your attention to the Safe Harbor language, which can be found towards the end of our earnings release. Today's remarks may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In accordance with the act, I also direct your attention to the management's discussion and analysis section and the risk factors discussed in our annual report on Form 10-K for the year ended December 31, 2023, and in other SEC filings made by the company. These, together with the Safe Harbor statement, set forth important factors that could cause actual results to differ materially from those contained in any such forward-looking statements. I would also like to point out that members of the media may be on call this morning in a listen-only mode. I'll now turn the call over to Rob.

Thanks, Shivani, and thanks very much everybody for joining today's call. After our prepared remarks, Steve Talinko, the president of Moody's Analytics, and Mike West, president of Moody's Investor Service, are going to join Noémie and me for the Q&A portion of the call, and that's something that we've done for a few years now. Before I get into our results, I just want to acknowledge that it's been a difficult few weeks for many members of our team following the tragic loss of our dear friends and Moody's colleagues Chris Collins and Melissa McCandry, in the Washington DC plane crash. They really were cherished members of our team and their loss leaves an immeasurable void and our thoughts are with their families during this incredibly difficult time. Now, on to our results. Moody's delivered a record year in 2024. We grew revenue by 20% to over $7 billion, with strong growth across both businesses. And through disciplined cost management, we expanded our adjusted operating margin by over 400 basis points, and that translated into a 26% adjusted diluted EPS growth. All while executing on strategic investments across both of our businesses. So MIS finished the year on a real high note, 18% total revenue growth, powered by 29% transactional revenue growth in the fourth quarter. And our ratings teams were really active, and it wasn't just in the fourth quarter, but throughout the year. Delivering 33% revenue growth for ratings and over 500 basis points of adjusted operating margin expansion for the full year. Moody's Analytics also had a strong finish to the year with 10% recurring revenue growth in the fourth quarter and 9% ARR growth. Decision solutions continue to lead the way with $1.4 billion in ARR growing at 12%. And as we look to the future,…

Thank you. If you would like to ask a question, please dial. If you are on a speakerphone, please pick up your handset and make sure that your mute function is turned off so that your signal reaches our equipment. We ask that you please limit yourself to one question. The option to rejoin the queue will be unavailable. Again, that is star one to ask a question. Monifin Nayak with Barclays. Please go ahead.

Thank you. I just wanted to ask you about the medium-term guide. I just wanted to confirm if those were organic numbers, particularly on the MA side, and just maybe just some of the moving pieces in there. It sounds like, Noémie, from your last comment, maybe there's less M&A than what you initially thought. Is that correct? Noémie Heuland: So we're in the third year of the medium-term target. As I said, I'm almost a year in the CFO seat, so it's a good time to take stock and look at how we did, how we're tracking. As I said, we're tracking ahead on MCO revenue and adjusted diluted EPS metrics. And MIS operating margin is already up 60%. So we've delivered strong organic growth in MA. We had reported growth consistently in the 9% to 10% range over the last two years, and I think that's what you should expect us to deliver over the medium term. What's to your point, what's to note, we had a bit lower contribution from M&A than what we initially envisioned when we published those medium-term targets initially. We had a different rates environment back then. So, again, we're committed to deliver 9% to 10% ARR growth, as I said, over the medium term, and that's mostly organic. We may do a bit of tuck, that's really what's driving the main change here.

Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please go ahead.

Yeah. I just wanted to follow-up on that midterm question, particularly on margin. So the MIS margins are already at low 60%. So just wanted to better understand if there's not much room for margin expansion on with issuance just given the high incremental margins there. But also, what does it imply for earnings growth in the midterm? Are we implying a much more modest earnings growth profile? Any color that would be helpful. Thanks. Noémie Heuland: So on MIS margin for 2025, just to kind of give you a little bit more color on what's on our guidance. You gotta remember we had higher incentive compensation accruals in 2024 as a result of the extraordinary performance. We rebaseline that at the beginning of each year. So, obviously, that gives us a bit of tailwind in margin for 2025. And then in terms of further out in the medium term, we're continuing to make investments in our ratings business. I mean, we mentioned the workflows, the rating workflows, the analytical tool so that we can make our analysts more efficient and really focus on what they do best, which is talking to our customers, our issuance, and doing some research. And we're continuing to invest in our risk and resiliency program as you know, we are regulated, and so we continue to improve and enhance our internal controls with automation there. And we're investing in a lot of areas that are going to fuel the growth of the ratings business in the long term, like private credit, sustainable finance, and I'm sure Mike and Rob can give some color on that as well.

Our next question comes from the line of Toni Kaplan with Morgan Stanley. Please go ahead.

Thanks so much. I wanted to ask about MA margins. Really great quarter and higher than expected guide. You talked about the efficiency plan which was very helpful. Are you pulling back on investment at all? And just any additional color on simplification or the efficiency plan and maybe embedded in the whole thing is sort of AI. And if how you're thinking about investment there and cost savings from it. Thanks. Noémie Heuland: Yeah. Thanks. I'll start, and I'll have Steve provide some color as well. As I said, we said, I think, in the last earnings call, we're mostly through our large investment cycles. We were redeploying now capital internally. We're self-funding some major investments around sales to go after the corporate segment. We've made we're making some investments there. We're continuing to invest in our platform. And our data estate as well. The efficiency is really coming from you know, that's the we're at the point where we've integrated, for the most part, the acquired entities. We're shifting a little bit our go-to-market to focus more end-to-end solutions towards our customer segment. That gives us some opportunity to simplify the organization and Steve can talk about some of the things he's doing. We've also, to your point, invested in Gen AI, that's delivered some very nice efficiency gains in engineering, as well as in our customer success group. So, obviously, we're starting to reap the benefits of that as well.

Everything you said there makes good sense. I would say the simplification dynamic is a rich one and I think a very valuable way to think about this. Maybe most importantly, we're concentrating on those use cases and those areas where we perceive the demand to be the richest among our customers. Rob talked about drivers of growth in the future and we're making investments in those concentrating on those, and redeploying toward those sometimes redeploying out of some areas that aren't going to be as fast growing. So that's probably the other big change there. Just to reinforce, Gen AI really is making a difference internally. We're pretty excited about the productivity gains we're seeing in engineering especially. And starting to see some on the sales side as well already seeing some in customer service, so pretty excited about that.

Our next question comes from the line of Alex Kramm with UBS. Please go ahead.

Yes. Hey. Morning, everyone. I guess a good afternoon now. But very quickly on the rating sites, obviously, laid out kinda some of your expectations, but maybe you can dig a little bit deeper for 2025, the puts and takes. On the range, where do you think some upside can come from, for example, M&A? And what do you see as the biggest risk for the outlook here?

Hey, Alex. It's Rob. Thanks for the question. So let me give you a little insight into maybe a few of the, you know, some of the key assumptions here in the outlook. I mean, first of all, you know, economic growth, we think, is gonna support broader market activity. Spreads are tight. They may widen a little bit. During the balance of the year, but we'll still be well below historical levels we expect. And we think we're gonna see continued strong investor demand. Refinancing and improved M&A activity are gonna be key drivers. In regards to refi, there's a fairly wide range of assumptions about refi. Volumes for leveraged loans in particular for 2025 when you look across all the banks. And it ranges from, you know, leveraged loan issuance being substantially down to being up, and you could see in our webcast deck, we're kinda somewhere in between you know, down mid-single digits. So that's one. And the second is the second key variable is M&A activity. And we've assumed something like a 50% increase in M&A for 2025 meaning that M&A will be an increasing percent of the use of proceeds and that is favorable to revenue mix. And just to give you a sense of the sensitivity there, if it was something like 20% to 25% increase, that might be you know, two to three percentage points of revenue growth. We also haven't assumed any you know, any risk-off periods, you know, when you've got you know, a forecast that calls for more than $6 trillion of issuance. You know, we've assumed virtually all Blue Sky days. So there are a lot of things obviously that go into issuance. It's not just one assumption. But taken together, Alex, that explains our guidance range for revenues that spans mid to high single digits on low single-digit issuance growth.

Our next question comes from the line of Scott Wurtzel with Wolfe Research. Please go ahead.

Hey. Good morning, guys. Thank you for taking my question. I wanted to go back to Moody's Analytics. I'm wondering if you can speak to just the sort of broader demand environment that you're seeing and how sales cycles are trending. I know, you know, go back a quarter or two, maybe on the Gen AI side, there were some longer sales cycles. So wondering if we can get an update on that and just demand more broadly. Thanks.

Yeah. So maybe I'll take that. Thanks, Scott, for the question. So I think, first of all, the length of the sales cycle has not changed materially. Over the last eighteen to twenty-four months. I would say that's been a question we've heard a couple of times. And I think in general, we're seeing patterns that are consistent with the patterns we've seen in the last couple of years. I'd say we're very encouraged by the pipeline our new business production has actually been very good in 2024. Across the board and across segments. Retention strong in 2024 as well. We held, in fact, at the same level, actually slightly higher than what we saw in 2023. So retention about the same, maybe a little bit better. New business production in general, better across the board, and I would say pipeline going to 2025 is very strong as well. So very encouraging. Noémie Heuland: And if I just ask so just gonna add on the new business growth. That was really an encouraging sign that we saw in research and insights. And across all the businesses, actually, where we had a new business growth going faster than ARR, and we had some very interesting use cases on Gen AI on research assistant and that gives us confidence on the outlook.

Our next question comes from the line of Owen Lau with Oppenheimer. Please go ahead.

Hi. Good afternoon, and thank you for taking my question. So again, I'm sorry for multiple questions here, but you expect your revenue to grow high single digit even though your ARR is expected to grow high single to low double digit. Should we expect this dynamic that is still, like, I don't know, maybe two, three percent gap between the two? Like, this dynamic to continue in the near to medium term, when and what does it take for revenue to actually accelerate to low double digit? And, also, how much have you baked in some of the new initiatives such as AI, MSCI partnership, and other new product launch in your guidance. Thanks a lot. Noémie Heuland: So just a couple of things on revenue, first of all. There that can include some M&A, FX, and so ARR is an organic constant currency growth number. So that's just one clarification. In terms of the best way to look at it, ARR and recurring revenue over a trailing twelve months period should be pretty consistent. If you look at 2024, for example, our recurring revenue was in 9%, and that's very consistent with ARR. What's really driving the difference is this transactional revenue is going down and provides a bit of a headwind. Continue to see that in the foreseeable future as we have still that outside of the US in banking and insurance. But we expect that to continue to narrow as we migrate those customers over in the platform. Think that's the best way to look at it.

How about guidance? Have you taken any AI and MSCI all these into your guidance?

We incorporate those into our plans. I would say the sales pipeline's big enough that they are contributors to the pipeline, but they're not major contributors or material contributors. Across the whole business. Yeah. I would say, though, that so it's all baked in, but Research Assistant has been very helpful to sales in research and insights. And 25% of the growth in research and insight ARR is from customers who subscribed to Research Assistant. And the weighted sales pipeline for Research Assistant is double the total sales for fiscal 2024. So we've got larger opportunities around workflow automation, and we're seeing good momentum. So it's an important contributor to growth even though it's modest in terms of the overall base of revenues.

Got it. Thanks a lot.

Our next question comes from the line of Jeffrey Silber with BMO Capital Markets. Please go ahead.

Thank you so much. With all the discussion coming out of Washington, DC, I was wondering if you could talk a little bit about first year of your exposure to the federal government as a customer. And then more broadly, in terms of some of the expected policy changes, what the impact on your business might be? Thanks. Noémie Heuland: In terms of the overall impact, it's pretty small. We have an overall MCO level. It's less than 1% of our consolidated revenue, and maybe that Rob talk a little bit about some of his policy changes and how we're looking at that.

Yeah. So I think it's important to kinda zoom out for a moment. And just think about what the world's been through over the last five years and we've had a pandemic. We had a huge negative shock to GDP and employment. Then we had a huge monetary and fiscal stimulus in response. Then that led to record inflation and an interest rate shock. And as the pandemic subsided, we had two military conflicts in key energy-producing regions. But through all of this, the global economy has been surprisingly resilient and it's been able to adapt. I think it's important just to keep that backdrop because, you know, obviously, there's a large volume of executive orders and policy directives that span a number of different issues, but the headlines don't, you know, tell all the story. You know, I think we'll see some impact you know, in certain sectors based on what happens with tariffs, and you can imagine sectors like autos and retail and steel and aluminum, immigration, sectors like agriculture and hospitality and construction. You could see on fossil fuel producers, so they're gonna be, you know, I think some again, some puts and takes here. We may see you know, more broadly a stronger economic environment that's gonna be good for issuance in general. So I think you know, from a also from a rating agency perspective, we're really gonna anchor on the credit impacts of all this and know, we're putting out a lot of research about know, what those impacts could be.

Our next question comes from the line of David Motemaden with Evercore ISI. Please go ahead.

Hey. Good morning. I had a question just on the higher medium-term outlook for MIS revenue, the high single to low double-digit growth now. Versus mid to high growth when you guys last updated these medium-term targets. Could you help me think through what's driving that uptick? Were there any big movements in the long-term building blocks that you've given in the past? Or is it just M&A coming back that's driving that? And maybe also if you could just talk about how we should think about the third-party private credit rating assessments contributing to that as well would be helpful.

Yeah. So I think maybe the first thing just to anchor on is you know, this is we're still anchoring off of the base year of 2022 and the medium-term targets that we put out. So we're now a couple of years into that. We've got guidance out for the third year, and we're kinda looking out to now where do we think we're gonna be five years out in 2027? So we've got two years in the books. We've got a year of guidance. And two years of unknown. And so what you're seeing is us now just updating, and an important part of that is the performance that we've already achieved. So, you know, that hopefully, that gives you a sense. But, Mike, maybe just talk a little bit about some of the you know, the demand drivers for issuing because I think that also gives some insight into the durability of growth in ratings.

Yeah. Thanks. Thanks, Rob. As Rob mentioned earlier, what you've got is a lower rate of M&A over the last few years that we do anticipate to come back because there's large pent-up demand. But if I move away from some of those traditional M&A refunding studies and think a little bit more broadly, about the growth of private credit, whether that is in direct lending, whether that's in securitization, whether that's in fund finance, or whether it's in the broader reallocation of capital into the private market away from the banks. Then on top of that, got to think about some of the drivers in that sustainable and transition finance area. There are clean energy commitments around 93% of global GDP, which is expected to translate in investment needs of about two and a half times by 2030. And Rob also talked about digitalization and digital infrastructure, which again is another multitrillion-dollar market that needs long-term financing for long-term assets, and that could be project financing, could be corporate finance, or it could be some form of securitization. So when we think of that third building block the evolution of the debt capital markets. These are some of the things that we're investing in, are engaging in with market participants and feel very good as part of that medium-term story.

Our next question comes from the line of George Tong with Goldman Sachs. Please go ahead.

Hi. Thanks. Good afternoon. With respect to the MA segment and your medium-term target of high single, low double-digit growth, how are you thinking about growth by subsegments? So decision solutions, research and insights, and data and information, and what do you see as driving the differences in growth? Between those segments?

Maybe I'll take a I'll talk to that, George. Thanks for the question. It's Steve. First of all, if you just think about the core franchises, these franchises have been around literally for decades. The data information business, the research and insights business. These businesses have, you know, demonstrated a good track record of solid growth, maybe above average for the industry or above average for a peer group. With ARR numbers in the high single digits, we think that's gonna continue very reliably into the future. You've got continued investments in terms of data quality, data coverage, and as well as tools like the Gen AI tools we've talked about as well. So we believe these to be strong solid performers in the future delivering good retention and good new business numbers. The decision solutions unit where you have some of the higher growing businesses most notably, KYC and third-party risk management work that we do to help people understand who they do business with, that you know, that's put up some really nice numbers in terms of ARR numbers in the recent past and continues to do so. We think, in the future. So you should see higher growth in the decision solutions segment, maybe high single-digit growth in these core franchises that have been around for a long time. High growth in decision solutions driven by a lot of innovation, and a lot of work to make our customers' jobs easier leveraging our data, our analytics, and our software together to solve problems and to help them do their jobs. So I think you'll see a differentiation that way.

Very helpful. Thank you.

Our next question comes from the line of Peter Christiansen with Citigroup. Please go ahead.

Thank you. Good afternoon. Great to be a part of the call. Really nice execution here. I wanna get back on the M&A side. You know, you've had some really good speed to market on some new products, some enhancements. I was just talking just like to hear any color on your ability to pass on value-based pricing across a number of your products and segments subsegments there. Then lastly, just curious how you're thinking about headcount for MIS and growth there potentially. Thanks.

Maybe I'll start with the questions about MA. Welcome to the call there. Nice to have you on board, by the way. Nice. You know, the value-based philosophy is, I think, one that we have long talked about and long maintained. We think it's really important to the process, you know, inflation is not as important as the value we create for customers. For example, in MA, we actually provide some statistics. I'm sure Shivani will have this in our investor deck. Where we dimension the contributions that come from upgrades and price. And you'll see those are contributions that are very stable and continue over the course of the last couple of years and we expect it to continue in the future. I think that number was around 7% in 2024, just to give you a benchmark. So the contributions from pricing, I think, are stable and we expect them to continue going forward. Noémie Heuland: Do you wanna talk about the staffing question? For MIS, I think we we've talked about earlier and that actually drove our part of our performance in the fourth quarter and the full year. We're invested significantly in automation and rating workflow to make our analysts more efficient, and we expect us to you can expect us to continue to do that. We'll obviously continue to invest in our skill set. We have the best analysts that will continue to invest and grow, but probably less than the pace of revenue growth given the investments we've made in automation.

Yeah. The one other thing I'd add, you know, double-clicking on Steve's point about you know, the value prop. It's really interesting. You have so many customers who are focusing on efficiency and digitization and automation and all of these things. And I think we've talked a little bit about you know, the example of what's going on with our CreditView offering with research assistant where the value prop itself is changing. So CreditView with no Gen AI enablement is a research subscription product. And CreditView with Gen AI enablement, research assistant, custom AI workflows, those kinds of things, is actually something where people can start to say, how do I change the leverage model for labor in my you know, whether it's my investment team or my research team or whatever it may be, that's a very different conversation and a very different value proposition. Now the cycle time to have those conversations is different, but that's a pretty exciting evolution of that particular product.

Thank you. Compelling narrative. Thank you.

Our next question comes from the line of Craig Huber with Huber Research. Please go ahead.

Thank you. Rob or Mike, can you just talk further about private credit, the I'm curious what if you're willing to give this, what percent of your ratings revenue came from private credit last year? How do you see the market growing here to add your ratings growth rates in the coming years here? And then, Noémie, if you could just throw in there what the what's the incentive comp number in the fourth quarter and for the full year, how that changed year over year? Thank you.

Craig, yeah, let me give you so we don't know, we don't break out exactly like you're asking, but we can give you some data points to give you an insight into the traction that private credit is getting within the franchise. So I mentioned in my prepared remarks that you know, we had nearly 400 private credit mandates across all of ratings. Now that includes things like ratings on, you know, BDCs, sub-lines, closed-end funds, you know, the suite of fund finance, but also asset-backed finance and middle market CLOs, private ratings for investors. So you know, and that has grown very significantly in the course of one year. And also just to give you a sense, because Fund Finance is certainly a growing area and I think it's gonna continue to grow for a number of years. And fund finance is in our FIG we address that through our FIG rating franchise, in 2024, 30% of our first-time mandates in FIG were private credit related. So again, this goes back to the when you look at it in the total base, it's still modest, but when you look at it as a percent of growth, you can see that this is starting to make a difference. Do you have anything you wanna add just in terms of how we're addressing private credit?

Yeah. And thanks for your question, Craig. I mean, as Rob said, we definitely see private credit as a tailwind. It's a rapidly evolving space across all those asset classes. And it's very important when you think about the originator the transparency around the credit quality there, they're looking to move on to the buyer, and then many of the buyers again, want to know their credit quality and an independent view of that credit quality because many of these buyers are sensitive. With regard to regulation and their own capital allocation. So, again, there's many trends that support why independent opinion is very important in a growing asset class. And the way that we've organized ourselves is because it's across all of these different franchises that at the very highest level, we have to organize around leadership so we can engage with all these players that may be touching in these different franchises. And, therefore, we have dedicated commercial people, dedicated analytical teams. But the very good thing is that we have depth and we have experience in each of our lines of business and the appropriate methodologies. So as they start to develop as individual areas of asset class, we are able and available to discuss at a very early stage, and that's what's very important when you have an evolving market like this. So I feel very good about going into 2025 and over the medium term.

Our next question comes from the line of Jeff Meuler with Baird. Go ahead.

Yeah. Thank you. The medium-term growth guidance, obviously, really good. But as Rob said, a lot's updating for performance already achieved. I think, mathematically, it implies lower growth in 2026 and 2027 relative to what I'd consider your longer-term structural growth, especially in MIS. Are there any specific callouts there? Should we just not read too much into that? I think Rob said there's kinda blue sky assumptions for issuance in 2025. But 2025 MIS doesn't look overly inflated. Any means relative to the long-term trend, and Mike sounded positive on structural growth. If you could just help us reconcile what's implied for 2026 and 2027. Thank you.

Maybe the fundamental takeaway for me is you know, we're not downgrading our growth assumption for ratings. And hopefully, what you're hearing is some real confidence about the medium-term drivers of issuance. So that may be the math. Remember, we've got ranges and other things in here that we're expressing it in ranges. But I don't want you to take away that we think somehow the growth outlook has been dampened for the ratings business. Noémie Heuland: Yeah. One other thing I would add is you look at the overall picture is we're really reflecting the MA growth rates that we've observed across our different businesses. Steve talked about the nuances between our mature franchises and decision and, data and information, research and insights, and the faster-growing businesses in decision solutions. So that's one element. And the other piece that I really wanna point out is we're focusing on increased profitability, especially in MA. And that's something that's driving increased profitability going forward, and that's what's behind partially the increase in the adjusted diluted EPS rate.

Hear you loud and clear. Thank you.

Our next question comes from the line of Andrew Steinerman with JPMorgan. Please go ahead.

Hi, Noémie. I just wanted to talk about the contribution of M&A in the quarter for both MA and MIS and also going forward is the Cape acquisition and the guide. I'm not sure if that closed. Noémie Heuland: Yeah. So it was really small for the fiscal 2024, Andrew. We had maybe 25 bps of revenue growth for MA. And then for the full year 2025, what's embedded in our guide you have a little bit of tailwind from M&A, but you also have some FX headwinds. So net-net the net of two is really not material to our fiscal year 2025 guidance.

I think Cape is it. Noémie Heuland: Cape is it. Yes.

Okay. Thank you.

Our next question comes from the line of Russell Quelch with Redburn Atlantic. Please go ahead.

Yeah. Hi. Thanks for having me on. In respect of ARR growth, within KYC. Sorry. Had been some expectations that I would mature after the booms post the pandemic and the Ukraine Gaza conflict. Can you talk about what's driving a reacceleration of growth in that area and how sustainable is in the high teens range? And then separately, MSCI said on its conference call, it was having further conversations with you about expanding your partnership, which is currently in ESG. It's perhaps other areas including private credit. Can you provide an update perhaps on that from your perspective?

It's the KYC. Yeah. So we are believers that we have a better mousetrap when it comes to KYC and third-party risk management. Whether you're talking about knowing who you're doing business with as a customer or a supplier, and we've made investments across the board, really, in terms of data, in terms of models that would help you make decisions on whether or not you should do business with this customer. As well as software to organize coordinate your thoughts and remember why you decided to work with that customer. So we're releasing those features and those products literally all the time. Those investments we think are gonna be very worthwhile and contribute to this growth rate. This has been a good grower for us, and we could expect it to continue.

And I would say the other thing I'd note here is that we are increasingly helping people with the labor associated with doing this work. So not just but helping and maybe coordinating and helping make things more efficient in that respect once they identify someone they want to investigate and learn more about, we're helping to do that much more quickly. So the number of people required to do this work can go down when they become a customer of ours. And to be clear, it's not by us providing bodies to do that. It's providing software, data, and analytics and AI enablement. Just a couple of things I'd add. To what Steve said. You know, we had some nice growth in the quarter. We had some very large expansions of our relationships with several of the largest banks in the world. And I think that that really is validation of the value of the Orbis dataset and the other analytics that go along with it. The other thing is and, you know, we talked about this on last year's call that we were developing a platform to address a variety of use cases for corporates all drawing on you know, this massive company data and then other datasets to support things like customer onboarding and monitoring supplier risk and so on. Well, we've now launched that. And so we're excited about that because we think that's gonna give us a good entree into the large corporate market and provide support for the growth in our KYC segment. Noémie Heuland: Hey. Before we go to the next question, I just wanna go back to Craig's question of incentive comp. I realized we passed that. So on the for 2024 incentive comp total was $507 million, Craig, with $133 million in Q4. And we're projecting around $420 to $440 for 2025.

Our next question comes from the line of Shlomo Rosenbaum with Stifel. Please go ahead.

Hi. Thank you for taking my question. Hey, Rob. It seems like some of the early slowness that we saw in adoption in research assistant has turned around, and it looks like things are really starting to pick up well there. I was wondering if you could update us and some of the other capabilities that you added, like the, you know, the automated credit memo, the early warning system. What are you seeing over there in terms of traction? And do you expect a similar type of adoption path as what you're seeing for research assistance, or do you think that those things could take a little bit longer because the customers might need to do a little bit more on their side in terms of process?

Yeah. Maybe a couple of things, and I'm also gonna ask Steve to add on here. First, we have Gen AI enabled a number of our products now through the course of the year. I think we talked about last year, you know, this concept of navigators which helps our customers use AI and as an interface and get more out of our applications. We've done that across eight primary solutions. And that is not an a la carte offering that we sold. That's included in the solution, but that's gonna go to really helping with the overall value prop and retention and pricing opportunity for us. And we know that to be true because we have some really encouraging data points from research assistant where we see customer satisfaction is considerably higher. We see the usage on the platform is considerably higher. So that gives us confidence there. And, you know, you're right. We have launched several other, what I would call, a la carte products. They're early days and anything that, again, is selling into the banks, so there's lots of really good conversation particularly about, you know, early warning. But like research assistant, these sales cycles take time with the bank. Steve, anything you wanna add to that?

Well, number one, we have people meeting with some of your colleagues, not you, Shlomo, but some of the people on this call literally today talking about these things. I would say the big institutions are increasingly talking about this as a transformational moment. And we're starting to hear quotes like, Steve, can you help us save one million hours of work by leveraging your tools? Right? Is there a way for us to can we literally have a proposal that is literally intended to displace a knowledge-based outsourcer by using some of these more refined workflows and persona-based Gen AI tools? So the prompt engineering that we're able to do now is progressing to the level where we're able to help people literally do their job and replace some of the labor and we're starting to see that in the pipeline. Starting to see the adoption curve a change in tenure from I need to meet regulations to I'm starting to get confidence that we can let's see if we can develop a business case to do that. So I think there's some pretty exciting green shoots in that respect.

Thank you.

Our final question will come from the line of Jason Haas with Wells Fargo.

Hey. Good afternoon, and thanks for taking my question. I wanted to follow-up on the MIS revenue growth in Q4. It looks like I was looking specifically at the MIS transaction revenue growth. It was up 29% in Q4, but the issuance growth was up 42%. So I was curious what drove that delta like it was maybe on the corporate finance side, but, yeah, maybe you can help explain a little bit better why the revenue is weaker relative to issuance.

Yeah. It really relates to bank loans. So there was very robust bank loan issuance by our definition. We include repricings as issuance volume. And so in the fourth quarter, something like 55% bank loan volume was repricings. And that's the highest that we've seen in any quarter for a long time. And the, you know, the economics on repricings are much different for us. So, actually, if you strip out essentially, if you just take out bank loans out of issuance and take bank loans out of transaction revenues, you know, we would have had you know, by our definition issuance of, you know, something like mid-teens percent growth, but we would have had, you know, call it, you know, 30% transaction revenue growth. So that I think that's primarily what was going on there. One other thing I'd add is we do see a lot of repricing activity in January. So strong loan volume, but repricing activities, so keep that in mind.

And I will now turn the call back to Rob for any closing remarks.

Okay. Well, thanks, everybody, for your time and your questions and we look forward to talking to you in the first quarter. Goodbye.

This concludes Moody's Corporation fourth quarter 2024 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 the Moody's IR website. Thank you.