Good day, everyone, and welcome to the Moody's Corporation 1Q 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 1Q 2024, as well as our revised outlook for select metrics for full year 2024. 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 reconciliation between all adjusted measures referenced during this call in U.S. 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, which are available on our website and on the SEC's website. 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'd also like to point out that members of the media may be on the call this morning in a listen-only mode. I'll now turn the call over to Rob. Thanks, Shivani. Good morning, and thanks, everybody, for, excuse me, joining today's call. Before I touch on a few key takeaways from our 1Q results, I'm gonna start by saying how excited I am to be joined today by Noémie Heuland, who officially joined Moody's on April first. And as I mentioned on our last earnings call, Noémie brings almost 25 years of global financial and accounting leadership experience at some very large public companies, with a real depth of experience in technology and software as a service. And we're really fortunate to have her as our Chief Financial Officer, and I look forward to all of you getting to know her in the coming weeks and months. So with that, let me turn to our 1Q results. We delivered an impressive 21% revenue growth, capitalizing on a strong issuance environment and continued demand for our leading risk assessment solutions. We delivered strong top-line performance and margin expansion in both businesses, and that translated to adjusted diluted EPS of $3.37 for the quarter. Now, starting with MIS, obviously a great quarter. And over the last several years, you all have heard me talk about the investments that we've been making in analytical talent and technology enablement to ensure that we are the agency of choice for investors and issuers, and in turn, position us to capitalize on more robust issuance periods. And in the 1Q, we did exactly that, and we showed the tremendous operating leverage in our business, with the second highest quarterly revenue on record, up 35% year over year, and an adjusted operating margin of 64.6%. Meanwhile, MA reported another quarter of 10% ARR growth, growing across all lines of business, including double-digit ARR growth in both Decision Solutions and Data and Information. And during the quarter, we executed on our strategic investment roadmap across platforming, product innovation, and GenAI enablement. And this quarter highlights the unique strength of our business model. We're tracking to our medium-term EPS target of low double-digit growth while we are funding this investment program that will drive future growth, all while we expect to return over $1.6 billion to stockholders this year through share repurchases and dividends. That is the power of the Moody's compounding machine. We're also updating a few of our guidance metrics, and Noémie will give some details on that a little bit later in the call. We've got our eye on the ball, we're looking ahead, and we are focused on our mission to be the leading source of insights on exponential risk. With that, let's dive in a little bit more on the financial performance of our businesses this quarter and our latest expectations for the full year. As I've said before, MIS really is one of the world's great business franchises. It's widely recognized as best in the industry, with strong global coverage in cross-border and domestic debt markets, and it has a growing range of offerings to support growth areas like private credit and transition finance. Maintaining that leadership position really is critical in order to capitalize on the resurgence in opportunistic issuance that we experienced during the 1Q. That's what played out during the quarter. MIS delivered, as I said, growth of 35% in the quarter, including 57% growth in transactional revenue. A key driver of this growth in the quarter was the leveraged finance markets, a real strength for MIS, where revenue was up 144% versus the prior year quarter. That's quite a growth number. As I explained a few quarters ago, we established a dedicated private credit team in MIS, and that's starting to pay dividends as we're better positioned to service the continued growth of the private credit markets, as well as a wave of deals refinancing from the private credit markets into public markets. While it's early, we're encouraged by interest in our transition finance offerings, and that includes our second-party opinions and our new Net Zero Assessment, and we already have several major issuers, like Électricité de France, that have published our Net Zero Assessment. And with discipline around expenses, MIS delivered an adjusted operating margin of almost 65%, again, demonstrating the tremendous operating leverage in this business. Now, while the 1Q issuance was very robust, it is still early in the year, and there are some uncertainties. So we're a bit cautious in regards to changes to our full year outlook at this point in the year. Issuance in the 1Q benefited from pull forward, given the favorable market environment and questions about the back end of the year in regards to upcoming US elections, ongoing tensions in the Middle East, and uncertainty around US inflation and central bank rate cuts. Consequently, we have not changed our full year issuance and revenue growth guidance targets. However, our updated outlook now centers on the upper end of both ranges, and there are some things that we're watching to determine if we've got some upside to our current outlook. The global economy has certainly demonstrated resilience, and that's also gonna be reflected in declining high yield default rates, which are now projected to range between 3%-3.5% by year-end. We see some strong investor demand for riskier assets that's kept spreads tight. Notably, we're starting to see M&A activity pick up. Private equity funds are actively seeking exits and looking to deploy huge pools of capital. So again, there's some things that we're keeping a close eye on, and I'm sure we're gonna discuss that a little bit further in the Q&A. Now turning to Moody's Analytics. As we've seen over the years, MA continues to be a very consistent growth engine for us, achieving 65 consecutive quarters of revenue growth and now 6 consecutive quarters of double-digit ARR growth. Our retention rate has held steady at 94% for the last 2 years, and yet again for the 1Q of 2024. Now, that's a real testament to the stickiness of our solutions. As we look across our reported lines of business in MA, we can see our land and expand strategy in action. So starting with KYC, which I think you can see on the bottom far left of the webcast slide, about a quarter of our 18% ARR growth in the 1Q is from new customer acquisition, so a lot of new logos adopting our solutions in this space. On the other end of the spectrum, about 90% of our insurance ARR growth of 10% is from really strong execution of our cross-sell strategy across our existing customer base. Clearly, RMS is an important contributor to that, and it continues to deliver against the targets that we set back in 2021. I think a number of you will remember that at the time of the acquisition, RMS was growing at a low single-digit pace, and it's moved up very nicely as we've made progress on migrating customers to our SaaS platform and really activating our cross-selling strategies. And that includes things like climate models to banks and, conversely, selling data and analytics and other Moody's solutions to the RMS customer base. So when we take all of this into account, in 2024, the ARR for RMS, including synergies, is expected to grow at a low double-digit pace. Now, switching gears a little bit. Last year at this time, we were just starting to mobilize around Gen AI. In fact, we hadn't even deployed our internal copilot or announced our partnership with Microsoft at that point. And it is interesting to look back because what a difference a year makes. And we now have a framework for our suite of GenAI-enabled solutions that we're rolling out during 2024. It's no longer going to be just about research assistance. So we've categorized our capabilities into three primary buckets that we call Navigators, Skills, and Assistants. And really, each of these capabilities deliver increasing levels of value to our customers and are going to have some distinct economics. So Navigators leverage an AI-powered natural language user interface to help our customers really get the most out of our products. And I would expect that almost all of our solutions will have some form of AI navigator or chat, what you might think of as a chatbot. And these will be table stakes, I think, for both our offerings as well as competitor offerings, I would assume, in the relatively near future. Then we've got skills. Those are specialized Gen AI capabilities that connect to Moody's data and content and analytics. And we're designing these skills to deliver automation and provide the tools to drive productivity and insight for our customers. And that includes things like the planned release of our, what we call our Quick Memo, which is our automated credit memo, and our Quick Alert, which is our surveillance and early warning system. And then we're gonna have a set of assistants for a number of our major customer personas, which are going to be a combination of skills and prompt engineering that are most relevant to their jobs to be done. So this go-to-market framework, I think, is going to address the needs of our customers as they move up the spectrum of Gen AI adoption in their daily work processes. And while it is still too early to quantify, we now have a pipeline that is coming to market in the coming weeks and months, and we expect that to help drive our value proposition and retention rates... and open up opportunities to serve new users. So on that note, I am very happy to hand it over to Noémie to provide a little more color on our results. Thank you, Rob. Let me start by saying that, in my previous role as a CFO of a public company, which was also an issuer, I've been in the building a few times over the years, but being here as Moody's CFO is both an honor and a thrill. As we get to know each other, I thought I'd share, take this opportunity to share with you my Moody's thesis that drove my decision to join. Throughout the process, everyone I met has consistently told me what an exciting time it is to join the firm. Moody's has been a trusted source of financial insights through various economic cycles, and every actor in the global capital markets benefits from the value of Moody's products and services. Coming from the enterprise software ecosystem, I can tell you that this network effect, if you will, is one of the hardest competitive advantages to disrupt. Also, in my previous CFO role, I got the chance to interact with Moody's analysts and research teams frequently, and each time I left more impressed by the depth and rigor of their thinking. Moody's Ratings is a powerful franchise with sustainable growth prospects, unparalleled reputation, and an impressive industry knowledge and expertise. Now, in addition to that, Moody's built a great set of assets based on proprietary data that goes back over a hundred years. The value of that historical data is unmatched, and it is my strong belief that Moody's is well positioned to leverage GenAI capabilities as a result. Whether it's credit, KYC, climate, or many other use cases, Moody's have integrated and innovated with our customers' needs at the core. In truth, I spent the last 15+ years talking to my peers about having the right data and analytics tools to make smart decisions in support of the business, and so I can attest the many use cases for Moody's Analytics solution set. As you can tell, I'm, I'm really passionate about that. Also, as you would expect of a CFO, I spent some time studying Moody's financial profile before joining. Some obvious attributes, this is a very profitable business, which has delivered 13% of adjusted diluted EPS growth in Q1, with a high return on tangible assets and over 100% of free cash flow to net income conversion expected this year. This is an outstanding set of fundamentals, but they are also unique in that they provide flexibility for investing and innovating to fuel growth. Another CFO priority is execution on a disciplined capital allocation plan. I am very impressed with our focus and results. You saw us generate savings from resource redeployment and automation, and then redirect investment spending on areas that will enable us to deliver on our medium-term targets. We are doing that while aiming to return about 80% of free cash flow to our shareholders in the form of dividends and buybacks this fiscal year. In my experience, the operating leverage of this business and track record of long-term sustainable growth are simply remarkable. I conclude, before I get to the Q1 results and outlook, that as a CFO of a company that must abide by a large number of regulations and help its customers deal with an increased number of larger, more interconnected risks, I'm very proud to have joined a team that puts risk management at the center of what we do, with resilient operations and a fantastic culture. I've spent some time with Rob, his leadership team, the board, and many folks in finance and beyond. The culture, warmth, and sharp intellect of the people at Moody's, and the sense of belonging is very special. For all these reasons, I could not think of a better place to be. Now, turning to the 1Q results. As you heard from Rob, we started the year strong, with reported revenue growth of 21% and adjusted EPS growth of 13% over the 1Q last year, when, as you may recall, we saw a significant non-recurring tax benefit. Strong growth and inherent operating leverage, while making selected investments in strategic areas, led to an adjusted operating margin expansion of 610 basis points at about 51%, which translated into a free cash flow conversion to GAAP net income of over 120%. Our quarterly free cash flows of close to $700 million was the highest on record. Now, let me touch on segment results. As Rob said, the issuance rebound led to MIS delivering its second-highest quarter on record. We saw a strong start across all lines of business as tightening spreads and investor demand propelled opportunistic issuance. Corporate finance grew 49%, predominantly from issuance by leveraged loan issuers and pull forward activity. Financial institution issuance was the strongest since the financial crisis, with an elevated level of infrequent issuer activity, which then led to revenue growth of 37%. On the margin front, the operating leverage of our ratings business, coupled with our initiatives to drive operating efficiencies, has allowed us to capture the significant rebound in issuance and flow the upside through the bottom line, with a 780 basis points expansion of adjusted operating margin year-on-year. Turning to Moody's Analytics, 1Q revenue was up 8%. Growth was driven by strong demand in our data and information line of business, with revenue growing 13% year-on-year, and continued demand for our KYC and compliance solutions, with revenue growing 24%. As for Research and Insights, where revenue grew 3%, timing of revenue recognition of our on-premise software subscription and transaction revenue, even though these are a small share of the business of this segment, affected the growth rate a bit this quarter, as well as a modest but expected uptick in CreditView attrition from banks and asset managers. If you look at the revenue from hosted software solutions, though, the growth is trending closer to ARR growth. Overall, we expect Research and Insights ARR growth to tick up to the high single-digit range by year-end, particularly with pipeline momentum picking up around Research Assistant and unrated coverage expansion in recent months. Speaking of ARR, MA ended the 1Q with annualized recurring revenue of $3.1 billion, up 10% from the prior year. Of note, we saw a sequential acceleration of growth within two of our three lines of businesses. Decision Solutions ARR grew 12%, up from 11% in Q4 2023, and Data and Information grew 11%, up from 10%, supported by higher retention among banks and public sector customers. These two lines of business represent about 71% of total ARR, so we're really pleased to see the growth there accelerating. You heard earlier that our retention rate remains best in class at 94%, demonstrating the stickiness of our solutions. As communicated in February, we are actively balancing strategic investments that we believe will drive future growth, including in our cloud platform and product roadmap, with operating efficiency initiatives. That said, I'm pleased to report we delivered 29.7% adjusted operating margin in Moody's Analytics segments, an increase of 80 basis points year-over-year. Let me now turn to our assumptions around issuance that underpin our fiscal year outlook. As we said in February, our full-year issuance outlook of mid- to high-single-digit growth accounted for a stronger H1 of the year. Indeed, 1Q issuance was strong across all business lines, but mainly from corporate finance and financial institutions, driven by refinancing activities with a significant proportion of that activity being pulled forward. That said, we are making modest revisions to select asset classes to account for what we saw in the 1Q. Specifically, we now expect FIG issuance to increase in the low-single-digit% range, up from approximately flat, driven by the elevated infrequent issuer activity in the 1Q that I mentioned earlier. SFG to grow now in the high-single-digit% range as a combination of jumbo transactions and increased CLO refinancing activity fuel growth. Our guidance for first-time mandates in the range of 500-600 remains unchanged. I will conclude on issuance by saying it is early in the year, and although we like what we saw in the 1Q, our broader issuance outlook for full year 2024 remains largely unchanged. As such, we're maintaining our MIS revenue guidance of high single-digit to low double-digit growth for the full year. Our updated outlook incorporates various specific macroeconomic assumptions, which are detailed in our presentation. We are also adjusting our FX assumptions to reflect the appreciation of the U.S. dollar against the euro and the British pound. We now expect the euro to U.S. dollar exchange rate and the euro to GBP exchange rate to be 1.08 and 1.26, respectively, for the remainder of the year. With that background, we're making the following updates to our full year outlook. Moody's Analytics revenue is now expected to increase in the high single-digit% range, primarily reflecting the strengthening of the U.S. dollar I just mentioned. That said, our ARR growth expectation in the low double-digit range for fiscal year 2024 is unchanged from our prior guidance. Of note, we are maintaining our full-year operating margin outlook for Moody's Analytics in the range of 30%-31%, as there is a partial FX natural hedge on our expense pool, coupled with ongoing disciplined expense management. For MIS, we just went through the issuance assumptions, and we're maintaining our full-year revenue outlook of high single-digit to low double-digit% range. We demonstrated in Q1 that we can capture the increased volume of issuance in MIS, and at the same time expand our margins, which gives us confidence to raise MIS adjusted operating margin to a range of 56%-58%. Last, we told you in February that we would narrow the EPS guidance range with increased visibility, and that is precisely what we're doing. We are narrowing the adjusted diluted EPS range for the year to $10.40-$11. And that ends our prepared remarks. I'm happy to open the call to questions. Operator? Thank you. If you would like to ask a question, please dial star one on your telephone keypad. If you're on a speakerphone, please pick up your handset and make sure your mute function is turned off so that your signal reaches our equipment. We will ask that you please limit yourself to one question. You will have a chance to rejoin the queue for a follow-up. Again, that is star one to ask a question. We'll take our first question from Heather Balsky at Bank of America. Hi, thank you very much for taking my question. I really appreciate it. I was hoping you could dig in a little bit more on what you saw in MA during the quarter, particularly in terms of some of your customers, where you said you saw pressure, and how you're thinking about that and how you think that trends for the rest of the year. Is it one Q specific? Is it assuming that it continues, part of the reason you reduced the guide there? Appreciate it. Thanks. Yeah, Heather, maybe let me start with the Q1 revenue performance and what we're seeing for the rest of the year, and I'll pass it to Rob to provide some color on pipeline and sales. In the 1Q, we delivered revenue growth of 8% and ARR growth of 10%. We had strong demand for our data solutions and KYC. Those are the two that grew respectively, 13% and 24%. As I said in my prepared remarks, research and insight was a little unusual this quarter. We had revenue growth of 3%. That was affected by some of the mix between a low share of on-premise transaction and a shift into more SaaS subscription. But if you look at the ARR growth, we haven't changed our outlook for the full year. We still expect ARR growth to be in the high single digit growth and then low, low double digit growth, sorry. And then we have just adjusted the revenue outlook to account for a lower euro and GBP against the dollar. That's primarily what we're doing. There's a little bit of seasonality in sales as well, more towards the, the back half of the year, which drives a bit of the revenue upside updated outlook as well. But our retention rate remains very strong at 94%. And our ARR, again, which is an indicator of the strength of our underlying business, remains strong as well. Rob, anything you want to add? Yeah. Hey, Heather, you know, just to double-click a little bit, I mean, you asked about retention. I'd say we're seeing, obviously at the MA, portfolio level, very strong overall retention. I'd say we do see a little bit of pressure from, you know, banks and asset managers. We saw a little bit of an uptick, Noémie just mentioned it, in the research business, but some, you know, some improved retention in other areas. I would say, you know, kind of more broadly, you know, you asked about the, you know, kind of sales pipeline. I'd say the sales pipeline is quite healthy, at this point. We haven't seen any elongation of sales cycles. We continue to see some strong underlying drivers for our products around digitization and automation, and certainly GenAI has opened a whole new front in that, regulation, 360-degree view of risk. So, you know, the sales pipeline, again, healthy and supports our, you know, our comfort with the overall ARR guide for the year. Thank you very much. Really appreciate it. We'll move next to Manav Patnaik at Barclays. Thank you. I just wanted to follow up a little bit on that in terms of, you know, if you could help us with some of your end market exposures, maybe in MA in terms of, you know, the client pressures. We've seen, you know, a lot of the other financial information services companies obviously call out, you know, pressure from both the buy side and the sell side. So just, you know, if you could help us out there, you know, going forward, if we should be, you know, keeping an eye out on anything. Yeah, Manav, let me take that. I guess I would kind of come back and say, while certainly there are cost pressures at financial institutions, corporates, like the one on the phone at the moment, everybody focused on having discipline around expenses. I'm sure we can all understand that. There are also some really important drivers of demand, and I'm gonna double-click on what I just talked about there. So you've got, financial institutions in particular that are focused on these, on the digitization and automation across the entire enterprise. And institutions have gone from these transformation programs over the last, you know, call it decade, and now they're looking at GenAI as a way to really accelerate and in some ways, de-risk those transformation journeys. And so we're having some wonderful conversations around that, and I think the opportunity... Look at the value proposition of some of the solutions that we provide, Manav. You know, when you start to think about labor substitution and the time and efficiency that can be gained from our solutions, that is a very important tool for our financial institutions customers to really address those cost pressures. So I think while the adoption of GenAI technologies is going to take a little bit longer at regulated financial institutions, I think it's a very significant opportunity. And then the other thing I would go to, Manav, is because this is a discussion I have with literally every single customer I talk to, which is this desire to have a 360-degree view of who they're doing business with. I mean, this is everyone that we talk to, and you want to understand it so you know, to think about optimizing your sales and marketing efforts, you want to understand what customers you want to take on. You want to monitor those customers. You need to understand much more about your supplier network. So, institutions are really investing in that, and there are some regulatory drivers that are forcing them to invest in that. When I talk to the big banks, they all tell me that the regulators are very focused on the resilience of their suppliers. So you know, again, that's a place that with our data and analytics, we can actually help them and help them in a very cost-effective way. So again, I, I feel quite comfortable, Manav, despite the fact that, you know, we've got to face off with, you know, procurement departments from time to time. The value prop around our solutions, I think, is pretty compelling given what our, our customers are focused on. We'll go next to Toni Kaplan at Morgan Stanley. Thanks very much. You know, very strong 1Q issuance quarter. Obviously, that was expected. And you raised FIG and structured marginally, but kept corporate sort of the same, and you're calling out sort of improved M&A activity, and you're seeing, you know, the guide being towards the high end of the range. I guess, you know, what, what gives you sort of reservation not to fully raise the MIS guide? You know, I know you talk about sort of election uncertainty and rate uncertainty later in the year, and the comps get harder. But, you know, just talk through the, the factors, 'cause I feel like 1Q would have given a little bit of room for, for having cushion and, and doing that. Thanks. Yeah, Toni, thanks for the question. And I think, you know, part of this just comes back to it's one Q. Let me talk to you maybe, Toni, about, you know, kind of what we see in the year in terms of both what I think could be tailwinds for issuance, so where there could be some upside, as well as, you know, where we maybe have a little bit of uncertainty or caution. And first of all, I would just say that, you know, there has been a significant amount of pull forward. And there's two kinds of pull forward, right? There's pull forward of the issuance that issuers were planning to do in a calendar year, and we are certainly seeing that. In fact, when we engage with the banks, the banks are telling their clients that they should bring forward the issuance that they were anticipating doing in the H2 of the year, and they should bring that forward into the H1 of the year while the market is open, spreads are tight. So we're seeing that. The second kind of pull forward is really, you know, the pull forward of, you know, from, you know, maturity walls and refinancing. We are seeing, you know, some of that as well. In general, as we kind of step back, Toni, I guess as I think about, you know, where could there be upside? And you heard that, you know, we are kind of centering around the higher end of the guide at this point, so I think there is a bias to the upside. But, you know, stronger economic growth without inflation increasing, that's gonna be very positive, in particular for the leveraged finance markets. They're the ones most exposed to fluctuations and changes in economic growth. But a real place that I think we're looking at is around the M&A environment. And, you know, a lot of the financing that's been done in the 1Q was refinancing. And so if we see some, what I think of as new money transactions to support M&A, and in particular, sponsor-backed M&A, I think that could be, you know, an upside for issuance for the year. And that would... Not only would we see that come into leveraged loans, but I think you would also see that in terms of new CLO formation. So, you know, the commercial benefit of that will be meaningful. I think in terms of downside risks, you know, obviously there are more questions now about inflation, inflation prints and the timing and trajectory of Fed moves than there were at the beginning of the year. So I think people have started to kind of reset their expectations. And, you know, I think people are just looking at the not only the U.S. election, but We've talked about this before. Many countries are going to the polls, and particularly in the back half of the year. So, you know, I think we're seeing issuers who say, "I want to be able to get ahead of that," and any furthering of geopolitical tensions, you know, you can imagine a widening of a regional conflict in the Middle East, that kind of thing. And so we're hearing issuers get in front of that. So at this point, Toni, that has led us to, I'd say, probably be a little bit measured in terms of how we think about issuance. Still early, but some things to watch, and in particular, would be the, I think, the M&A environment. Super. Thank you. We'll go next to Ashish Sabadra at RBC Capital Markets. Thanks for taking my question. I just wanted to follow up on the pull forward comment. As we understand, the H2 pull forward in the H1, but I also wanted to better understand, the pull forward from 2025, 2026. How does the refi wall look now for 2025 and 2026, even with the pull forward? Is there still a much bigger refi wall in 2025, 2026 compared to what we are seeing in 2024? And then, as we think about the M&A, where are we trending or what's the assumption for M&A as a percentage of overall issuance this year, and how does that compare to an average year? Thanks. Yeah, Ashish, we'll have a little bit better insight, you know, later in the year when we publish our updated maturity, you know, refinancing study, as we always do. But I would say that, you know, certainly, you've seen issuers who are addressing upcoming maturities, particularly in loans. And there's still some maturities for 2024 that have got to get done. Not a lot, as you'd expect. It's possible that we start to see some additional pull forward from 2025, perhaps, and beyond, in the H2 of this year, if markets remain supportive. So we're gonna be looking out for that. But it's interesting. I think, you know, if you think about, I'm gonna take leveraged loans for just a moment. Let me maybe just zero in on that for a second. You know, there was a massive amount of pandemic-era issuance in leveraged loans, and that really does provide a very solid underpinning for future issuance. And when you kind of zero in on leveraged loans, there was something like $1.15 trillion of 2020 and 2021 maturities, and almost 70% of that matures in 2027 and beyond. And what that's telling me is that, you know, that money, that financing was done at very tight spreads and low rates. So I think that those are not great candidates to be pulled forward, right? Where you may see the pull forward is there was something like $1 trillion that was issued in 2022 and 2023. So some of that may be candidates, depending on, you know, what happens again a little bit later in the year. So we're keeping an eye on that. But in general, I would say that I, I see the... Just given the absolute amount of debt that's been issued over the last several years as a net positive. So I'm not concerned that all of this, you know, all of future years are being pulled into this year. Because the-- when we think about debt velocity, which is issuance, and I'm looking at the corporate markets, issuance over total debt outstanding, debt velocity as a, as, as a percent versus kind of the 15-year average, quite-- is still well under that 15-year average. So I, I think there's still a good bit of issuance. On M&A, we have not changed our outlook, but as I said, there are some green shoots. We've seen some strategic deals. We've seen some sponsor-backed deals. So all of that is encouraging. I talked about why sponsor-backed M&A is so important. So we're expecting, I would say, a modest recovery in 2024. That's what's built in, but this really is, I think, a wild card. The one other thing I would say is that our Rating Assessment Service, which gives us some visibility into the M&A pipeline, because that then comes into issuance, that we have seen a pickup, a very nice pickup in our Rating Assessment Service. So that does give us some confidence that the M&A market will continue to improve for the balance of the year. That's great. Thank you. Thanks, though. We'll move next to Andrew Nicholas at William Blair. Hi, thank you for taking my question. I wanted to ask about the AI frameworks that you outlined in, in the presentation or the webcast deck. And I think, Rob, you made mention of there being kind of different monetization strategies across each one of those buckets. So I was hoping you could expand on, on that comment and maybe on progress in terms of monetization or, or even, a better understanding of, of the type of impact that could have, whether it's in 2024 or in the out years. Thank you. Yep. So you know, the first thing we wanted to do was make sure we had a framework. We have a lot of innovation going on, and we wanted to make sure that we're able to be thoughtful about how we go to market with that innovation for our customers. And, I think you're gonna see us deploy across a spectrum with our customers. Because our customers, we're either going to deliver GenAI-enabled workflow software, right? So those are our customers who are using our software, and that's where we'll have GenAI enablement and our skills and our assistance on that. We will have our Navigators to help our customers get the most out of those offerings. Some of our customers are gonna wanna integrate either our Gen AI APIs or our RAG APIs into their own internal workflow, or just raw data feeds and other content with additional rights to be able to use in their own AI platform. So there will be different ways that we are going to be delivering our AI-enabled solutions. And of course, there's also third-party platforms. We're working to build out an even larger ecosystem of partners so that our customers can also access our content, you know, in systems where they're making decisions. So I think, you know, as I talk about kind of Navigators and skills and assistance, maybe a high-level way to think about this. The Navigators, again, I talked about that as probably being table stakes. This is making our solutions much easier to use. And I think that will support the value proposition and ultimately the pricing, but also the retention. Exactly. I think that's where that's gonna... And again, I think we're gonna see that'll be table stakes. Everybody's gonna have use chatbots and other things to make their solutions easier to use. It's the skills where we're taking the proprietary Moody's content and then delivering that into the workflow for our customers, and then aggregating those skills and prompt engineering into an assistant for people in banking, for people in insurance, for people in compliance. And I think you'll see us, you know, we're thinking about how we're gonna price for that, whether it's going to be... I think we'll have different models, but you can imagine in some cases it will be an increase to the overall subscription. In some cases, you can imagine an element of a consumption model, based on how much you are consuming across these skills and our various data and content sets. So it's still a little early, and I know everybody wants to get some visibility on that, but hopefully that gives you a little insight. Noémie, anything to add there? Yeah, the other thing I would add, you know, reflecting on the customer conversations we're having with customers, they want to partner with firms that can be trusted when it comes to data integrity, that have a strong reputation for robust analytics and modeling skills. They're still assessing their own framework when it comes to dealing with vendors on GenAI enabled solutions. And that's why I think we differentiate ourselves, given our reputation, our history, and all the work we've done to build that framework. So I just wanted to add that. That's helpful, and welcome, Noémie. Thank you. Our next question comes from Scott Wurtzel at Wolfe Research. Hey, good morning, and thanks for taking my question here. I just wanted to go on some margins and, you know, just given the outperformance in the 1Q and in the context of you sort of reiterating and holding the total company operating margins for the year, I was just wondering if there was any element of reinvestment planned from the upside that you saw in the 1Q that's sort of keeping that operating margin stable? Or is it really just more about kind of the implied deceleration in MIS revenue as we move throughout the year? Thanks. Thanks. So, I can take that. We've increased the MIS adjusted operating margin by 50 basis points for the full year. We've maintained our MA adjusted operating margin unchanged despite a bit of revenue headwind. That's because we are very mindful in our spend. We're investing strategically, but we're also building efficiencies into the system. So all in all, the outlook in terms of the consolidated level hasn't really changed. We've moved a little bit up in our range, but we've remained within the 44%-46% range that we've communicated before. Yeah, and I guess the double click on that is, you know, given what we've seen in the 1Q, we have not upsized our investment program. Got it. Thank you. We'll go next to Faiza Alwy at Deutsche Bank. Yes. Hi, thank you. I wanted to go back to MA and the change in the revenue guide. Just want to clarify, like, is the change entirely FX, or is there something else to keep in mind as it relates to, you know, just converting ARR to revenues? And I'm curious if you can talk about how much FX impacted MA this quarter. Yeah, I'll take that. On the 1Q, we didn't see any material impact on FX. It's really for the remainder of the year as we saw some strengthening of the U.S. dollar. The update in the outlook for MA revenue, it's primarily FX driven. There's also a little bit of sales linearity that's more geared towards the back half of the year than what we initially thought in February. But what, as Rob talked about, our pipeline is very strong. We have... Can you hear me? Yeah. We have a strong pipeline. Our meetings, our sales meetings are going very well. So it's primarily FX with a little bit of sales seasonality as well. Okay. So just to be clear, sorry, just to... There's no change. You're not sort of lowering the within the low double-digit range for ARR. ARR is still pretty much in line with how you- Yes, that's correct. The ARR is a forward-looking measure of the health of our recurring revenue business, and the underlying health of that business hasn't changed from what we said before. Thank you. Our next question comes from Jeff Silber at BMO Capital Markets. Thanks so much. Wanted to continue the discussion on MA, focus a little bit more on research and insight. You talked a little bit about the slowness in the quarter. I think you said there was some timing, and there were some other things. But if I can just clarify that, and then also, why do you expect growth to accelerate, specifically in research and insights in the back half of the year? Thanks. Yeah. So, you know, over the past year or so, we have seen a little bit of deceleration in ARR growth in Research and Insights. And, you know, obviously, fixed income research is a pretty mature market. And that's really one reason that we focused on these two new enhancements to CreditView that we have talked about over the last quarter or two. That's the Research Assistant and the unrated coverage expansion. It is gonna take a little time for us to see the benefits of that in ARR growth. We have seen some modest retention pressures with CreditView. Some of that has come from the recent banking consolidation. We had expected that, frankly. And we expect ARR to pick back up in the H2 of the year and accelerate towards high single digits, again, for a couple reasons. One, the CreditView coverage expansion, and we have a good sales pipeline there and have actually seen some particular interest in Europe, and also from those in the, you know, private credit market. And then second, Research Assistant. We've seen sales really start to pick up in the quarter. We're now at 37 sales. We expect that to, you know, we have a very nice pipeline. You know, what I mentioned earlier, the earlier adopters of Research Assistant tend to be smaller companies where there's less of a kind of regulatory, you know, risk and control environment that they have to contend with. So, you know, we're having some really encouraging discussions with some very large institutions, but those take a little bit more time. And so, you know, we've also seen a very nice uptick in user requests and also engagement, and those are really very good leading indicators for us in terms of the market's interest. And so, you know, when we've got people that we're turning on to Research Assistant, and we see very strong upticks in usage, that gives us a lot of confidence. I think together, these things we think are gonna help us, you know, pull that ARR growth back up in the back end of the year. Okay, thank you. Next, we'll go to George Tong at Goldman Sachs. Hi, thanks. Good morning. You mentioned seeing some pull forward in refinancing issuance, some from the H2 of 2024 and some from beyond 2024. Can you talk about how much opportunistic issuance may have been pulled forward into the quarter, and what that could mean for non-refinancing related issuance, in the back half of this year and beyond? I guess, George, maybe the best way I could quantify it is, still the meaningful majority of issuance in the quarter was refinancing. So the new money, there was a combination of... I do think there was some pull forward of new money transactions, but a lot of what was getting done was refinancing, you know, activity. Does that give you some, does that help? Yeah. Yeah, that, that helps. And I guess, what's the view on new money, over the next- Yeah - several quarters in the back half of the year? Yeah, George, so that's where I come back to. If for us to really have confidence that the 1Q is not a kind of a one-trick pony of pull forward of issuance, either in, you know, new opportunistic issuance from the H2 of the year or pull forward of maturity walls, what we really wanna see is the mix of refi and new money start to pick up, and that's why I go back to that M&A. I think that's gonna be an important driver because there is a mountain of money at these private equity firms that has got to get deployed. So there's actually two things going on. The private equity players have got to exit, and the last couple of years have been very difficult for sponsor exits because of, you know, a very, you know, soft IPO market and, and obviously a, a, a quiet M&A environment. So the sponsors are looking to exit, and you've also got sponsors with a huge amount of dry powder that has got to get deployed. And so we have started to see some of that in, towards the end of the 1Q. We started to see some of these multi-billion-dollar sponsor-backed transactions in the public markets. That's the kind of thing we're gonna look for. If that continues, you know, into the H2 of the year, that's going to give upside, I think, to our current issuance outlook. That's great. Thank you. We'll go next to Craig Huber at Huber Research. Thank you. Noémie, I'm curious, you're new CFO here, you're following roughly 20 years, a very strong, the prior two CFOs at your your company there and stuff. What are you thinking you can improve upon at the company that you're willing to talk about publicly here? Thanks for the question. I think, if I think about stepping back a bit about the company's priorities and, and where we're headed, I think my, my priorities are very much aligned, with where the company is going and what we're, focused on to accomplish our medium-term targets and beyond. The first thing I'd say is continuing to focus on a very thoughtful capital allocation, balancing the investment spend to drive future growth and really move from a legacy one at one-time revenue into full recurring, which will then, in turn, expand the margin. I think that's very important. I have worked with the, companies before who evolved their business model from on-premise, lower margin into, SaaS, recurring and scaled businesses, and I think that's, that's an area that really excites me. What I've seen so far really resonates with me, and that's really what I wanna focus on. And then obviously continuing to drive efficiencies, both internally as well as for our customers and talking to a lot of our customers. The other thing I wanna do as well, spend some time with you all to understand, you know, what are the things you're looking at, what things you think we're doing well, things where you'd like us to see do it differently, and I'm really much looking forward to that as well. Thank you. Yeah. Yeah, and Craig, I will add, I think Noémie is also gonna bring a wonderful perspective and I think help communicate to, to the market, the real, you know, value of this business and, and using the, the perspective that she's had from software and SaaS businesses in the past. So we're really excited about it. Great. Thank you. We'll take our next question from Jeff Meuler at Baird. Yeah, thank you. So great to hear the progress on RMS. On the revenue acceleration, does the revenue lift come as they do the platform upgrade, or is it that the platform upgrade enables follow-on sales? Just trying to understand the sequencing. And then, on the synergies bit, it sounds like, correct me if I'm wrong, but mostly two-way cross-sell synergies between Heritage, RMS, and Moody's products. Where are you on, I guess, net new product synergies that combine the capabilities from each of the firms? Thanks. Yeah, Jeff, great, great question. You know, RMS is really turning into a nice story for us, and I guess I would, you know, maybe I'll call it core RMS ARR. You know, that is now growing in line with MA ARR, and you know, that is a far cry from the quite low single-digit% growth when we acquired the business. And you know, there's a couple things going on there, just with the core business, excluding the synergies. One is, in fact, an acceleration of the migration of customers from on-prem to the Intelligent Risk Platform. And those of you who know the history of RMS know that, you know, we, RMS struggled with a prior SaaS rollout. The Intelligent Risk Platform is the real deal. It's industrial strength, and we're really seeing some very nice migration. And to your question, there are two things. So one, there are commercial benefits as we move customers over, and two, exactly as you said, Jeff, once you're there, it's much easier to adopt additional solutions because now you've got all the data in one spot. You can integrate, you know, your own models, third-party models. So there are a lot of benefits driving customers to migrate to the SaaS platform and to, you know, grow their relationship with RMS. The second thing is just good old-fashioned sales blocking and tackling. You know, we moved our, you know, one of our most experienced sales managers in to be the head of sales and, you know, really have even more discipline around the RMS sales program, and, and that has also paid dividends. And then the nature of the synergies, I mean, you're, you're exactly right. So, I'll give you one very exciting example of what I would call kind of outbound synergy. So this is RMS IP to other, Moody's customers. We just signed one of the world's largest banks as a customer of the Cat Models. So this isn't even, you know, kind of our climate on demand for banks. This is, this is literally the full Cat Models. So this is a bank who wanted to have a very sophisticated view of the impact of climate and extreme weather events on their portfolio, and to be able to do stress testing and all sorts of things. So that's really exciting, and we're seeing more and more demand from banks and asset managers and corporates around supply chain, who wanna do exactly that, the physical risk relating to climate and extreme weather. And then the other is the inbound cross-sell. Again, a very nice story. And a lot of that is around the KYC, know your third party, leveraging our master data in our data solutions team. So we have a very nice, you know, very nice momentum there. So all in all, you know, I feel quite good about what's going on at RMS. Thank you. We'll go next to Andrew Steinerman at JP Morgan. Hi, Rob. I just wanted to get with the current guide for credit issuance. Are you assuming that issuance on a transactional basis will be down in the 4Q this year? And also, I just wanted to check your pulse on if you thought we were in the midst of a multi-year issuance recovery, you know, following the pullback in 2022. Andrew, great questions. So you know, thinking about, I guess, year to go, you know, obviously we've held the issuance forecast range, and mentioned that we expect to be in the higher end of that range. And so obviously, that invites questions about, you know, okay, given the strong 1Q, what does that imply then about the H2? And it does, in fact, imply a... I'd say for year to go, so that's three quarters, a, you know, call it mid-single digit decline in issuance for the balance of the year. And to your point, Andrew, you know, I would say more focused on the 4Q, where we would think the issuance would be down more in the, you know, mid-teens range. And part of that, again, is because of some of the uncertainties I talk about and, you know, one of those being, you know, elections. And so we just assume that people are gonna pull out of the 4Q where they can. So for the most part, I'd say our forecast represents really just a change in the calendarization of issuance. But, you know, I talked earlier about, you know, some of the drivers that we're gonna be looking for. And then, you know, maybe, Andrew, to your second point about are we in the midst of a multi-year, well, I can't remember the term you used, issuance- Issuance recovery, given the massive pullback in 2022. ... Yeah. I do think we are, and I think that's consistent with, you know, we obviously updated our medium-term targets for MIS, and I think that's part of that. And I will go back to that point, Andrew, around one of the things that leads me to that conclusion is, and while we may have, you know, again a little volatility in the quarters here in the year, but I think the trend line is up. And again, I go back to that debt velocity. Just to give you a number, at least the numbers we work with, you know, when you go back to like, okay, let's say 2009, so just post-global financial crisis, corporate issuance over total corporate outstanding was, you know, all the way back to then, something like, you know, 14%. And, you know, we're well below that still. So that tells me we've got, you know, some room, just again, given the huge amount of issuance over the last few years. The one other thing I would say, Andrew, is, you know, I get asked, we've gotten asked a lot on these calls about private credit, and is this disintermediating the public markets? I actually have started to think of it almost as another form of maturity wall. Because look, look what went on in the quarter. We had 45 deals that got flipped from private markets to public markets. So you know, I had mentioned that I thought of this as a deferral of issuance- -not a cannibalization of issuance. In some cases, of course, there could be some cannibalization, but we're seeing there's a lot of just deferral because the private credit players are rational financial actors, and if they can get cheaper financing in public markets, they're going to do it, and they are doing it. So that, I actually think, is supported. I'm actually starting to think private credit is actually a tailwind for us- ... that will be supportive of this, you know, as you say, recovery in issuance. Excellent. Thanks for taking the time. We'll go next to Russell Quelch at Redburn. Yeah, hi, thanks for having me on. Wanted to ask a balance sheet-related question. I see that your gross leverage is now down at around 2.2, which is the lowest level we've seen from you guys in years. And you also slowed the pace of the buyback in Q1, such that cash on the balance sheet went up by about $300 million in the quarter. That actually was quite stable through 2023. So that's a break in trend there. Is there a change in how you're thinking about capital allocation or the cash you need to hold on the balance sheet? And are you perhaps making room for acquisitions here? Can you just give us a bit of color there? Thanks. Yeah. On capital allocation, we are maintaining our approach, and it's my intent to continue that. On the share buyback, which I think is where you're going, it's just been 1 quarter of execution. The pace isn't out of line with our planned cadence. We expect to catch up in the 2Q and the H2 to hit our target, so I wouldn't read anything into that. And then last year, we focused on deleveraging because we had ticked up in 2022. Good. Thank you. We'll move next to Owen Lau at Oppenheimer. Good afternoon, and thank you for taking my questions. So I have two housekeeping questions for modeling purpose. The first one is, I want to go back to the margin. Would you be able to provide more color on the seasonality for the margins of MIS and MA for the rest of this year? And then the second one is on the migration to cloud revenue. My understanding is it will impact your upfront revenue growth, but you'll be better off longer term. Should we expect your MA revenue growth to run below the ARR growth until you completed your migration in, like, RMS and also research? Thanks. Hey, Owen, this is Rob. I'm gonna take the first one. No, I don't think so. You know, I don't think you're gonna see us, you know, kind of have what I would call kind of a big valley as we're moving from, you know, customers from on-prem to to SaaS. So that's not something I would anticipate. And your first question was around the calendarization of MIS margins, I believe. Yeah. MIS margin, you know, we saw the top line, we expect this to be growing high single digit in the remainder of the year. For the margin for MIS, we're forecasting the expenses to decline slightly in the 2Q, in the low single digit, sequentially from the 1Q. Our 1Q MIS adjusted operating margin of 64.6. An expanded full year expectation implies an adjusted operating margin in the range of 53%-56% on average for the remainder of the year. Especially for your, for the 2Q, if you wanna use that for modeling purposes, we expect that to be slightly higher than the upper end of our fiscal year guidance, before then decreasing sequentially each quarter through the end of the year, which is pretty much in line with the MIS revenue cadence as well, which is expected to decline throughout the year. For MA, we again expect the margin to evolve in the same pattern as the revenue, with an uptick in the 30%-31% in the back half of the year. Got it. Thanks a lot. ... And we'll take a follow-up from Craig Huber at Huber Research. Thank you. You sort of touched on this, but can you just talk a little further about your expectations for the whole company, for your cost ramp for the remaining three quarters in light of your guidance for costs for the year? That's my first housekeeping question. The other thing I wanted to ask you, in the past, you guys have given us your incentive compensation that you booked in the quarter, and what's your outlook for the year there? Yeah. On, on incentive comp, first of all, we recorded $105.5 million for the 1Q. We expect, on average, $100 million for the second and 3Q, and slightly up in the 4Q. So that's for the incentive comp. And on the expense cadence, we expect the 2Q expense to be flat sequentially in the 2Q versus Q1, and then gradually increasing by about $20 million-$30 million between Q2 and Q3, and then by $15 million-$25 million in the 4Q. That reflects our strategic investment, some merit increase, as well as some other variable costs, which are in line with the business growth. Now, one more quick thing. Your private credit as a percentage of revenues and ratings right now, Rob or Noémie, where does that sit at right now? How small is that? You know, Craig, it's... That's an interesting question because I think we could get into a bit of a battle of definitions here. As I kind of step back and think about, you know, serving the alternative asset managers, you know, these are the Blackstones, the Apollos, you know, they're both in the public markets and the private markets. And we have, as you'd expect, you know, very significant relationships with a broad range of players in that market. In fact, when you, you know, going back to the, the FIG revenues, for the quarter, you know, part of that opportunistic issuance was coming from our funds and asset management, segment, sub-segment in FIG, and, and part of that was actually coming from, you know, BDCs and other folks who you would think of as being in the private credit market. So I guess, Craig, it's a little bit of a tough question for me to answer because I think of serving the Apollos and the Blackstones, and I think of that as public and private, and that's quite significant. We, as you know, we did roll out a dedicated private credit team. We do have an expanded offering for, you know, specifically for things that you would think of as private credit. So we've got, you know, credit estimates for BDCs. You know, we've got a number of different kinds of offerings to support fund finance. In fact, we just rolled out a subscription line methodology, and we have a very nice pipeline, and that I would think of as primarily private credit related. All of that stuff is growing quite significantly. So I would say, maybe to cap it off, our relationship with the big alt-- with the alternative asset management community in, and I'm saying just in MIS for the moment, is quite significant. As it relates to specifically private credit, yes, for now, considerably smaller, but growing quite quickly. I hope that gives you some sense. Yeah, thank you. You went a couple different ways I didn't think you were going to go, but yeah, that's, that's helpful. Thank you. We'll go next to Shlomo Rosenbaum with Stifel. Hi. Thank you for squeezing me in over here. Rob, can you talk a little bit about the KYC growth? It was 18% in Q3, 20% in Q4, 23% in this last quarter. You're kind of accelerating on a larger revenue base. If you can give us some idea as to what's driving that, and then also, you know, at the same time, you're seeing the revenue growth, but you're seeing the ARR kind of still around the 18%, 17%, 18%, and maybe you could talk about that in the context of the revenue growth. Shlomo, hey, thanks for the question. Yeah, this is, this is a powerful growth engine here, and it's, you know, there's a number of demand drivers. You've probably heard me talk about on the call before, that I've gotten to the point where I think KYC is not doing this justice in terms of the name, because it, it talks about know your customer, and you heard me earlier on the call say, a theme with literally every customer I talk to is know your, who you're doing business with and being able to connect the dots. So that is a big opportunity for us, and KYC is right in the middle of it, and we are broadening out our solution set, leveraging all of the content that supports KYC. So that's the massive company database, that we call Orbis. It's all of the people and PEPs information. It's the AI-curated news that supports what you would think of as traditional KYC. And then people want to understand, okay, well, I need to have that information about my suppliers plus other information. And so the demand for what you would think of as the KYC solutions just continues to broaden out, and we're selling into that. And that's one of the areas of investment for us, Shlomo. You know, we talked about really wanting to serve corporates, because historically this has been serving financial institutions, but this theme of know who you're doing business with is a big theme with large corporations, and we have some fantastic customer wins that really validate you know, our right to win in that space. The other thing, I may have mentioned this on some prior calls, is especially in the back half of last year, we had a lot of product innovation going on in that space. You may have even seen, like, you know, some articles about Moody's and the number of shell companies that we had identified around the world. It got a lot of press. Well, that Shell Company Indicators is one of the products we created. We also have something called an entity verification API, that pulls together a bunch of our different datasets and allows our customers to do real-time, you know, checks. So product innovation, broadening of demand, all of that together, Shlomo, is continuing to drive some very strong growth, I think, for the foreseeable future. Should we see the ARR kind of ticking up a little bit? We're seeing the revenue ticking up. Should we see ARR ticking up as well? I know it's pretty healthy as it is, but, revenue's moving ahead of that. Yeah, I mean, we don't guide on that, but I think- I'd really look at the ARR as the best indicator of the underlying trends in that business, as with every other line, by the way. I think that's the best way to look at it. But I'd say, Shlomo, we've got some positive momentum there in the ARR. ARR. I believe. Thank you. That does conclude the Q&A session. I'll turn the conference back over to Rob for any closing remarks. All right. Well, thank you everybody for your questions, and I appreciate you joining the call, and we'll talk to you next quarter. Have a great day. Thank you. This concludes Moody's Corporation 1Q 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.