Moody's (MCO) Q3 2026 Earnings Call: Q&A Summary

Q: George Tong with Goldman Sachs asked where Moody's is seeing the best evidence that AI adoption is generating incremental revenue and ARR rather than just supporting retention and engagement, and what is needed for AI to become a more meaningful growth contributor.

A: Robert Fauber explained that AI is monetized in multiple ways, including embedded app capabilities, workflows, and direct access via MCPs and APIs. Paid MCP access has more than doubled off a small base, half of the pipeline has been created since the end of the second quarter, and insurance and banking workflows are seeing strong user engagement.

Q: Owen Lau with Clear Street asked whether MA can get more revenue by entitling more users to get data through AI models and MCP or by selling data directly through its own channel without cannibalizing its own platform.

A: Robert Fauber noted that sophisticated institutions want content via MCPs to reach thousands of users, creating upsell opportunities and consumption-based pricing models, while Cristina Heuland will share more on moving up the value stack in early 2027 through embedded solutions and co-built agentic workflows.

Q: Andrew Steinerman with JPMorgan asked for a review of puts and takes on Moody's assumed fourth-quarter issuance, particularly regarding AI-associated and MA-associated financing and trading days.

A: Robert Fauber noted a healthy pipeline going into November with constructive markets, while assuming a mid-teens year-over-year decline in issuance for the fourth quarter due to tough prior-year comps from hyperscalers and bank loan repricings. Headwinds include headline risks, geopolitical conflicts, and potential U.S. midterm dynamics.

Q: Jason Haas with Wells Fargo asked to what extent recent high-profile fines for KYC and anti-money laundering lapses could be a positive driver for the KYC business.

A: Robert Fauber stated that recent fines serve as a stark reminder of the critical importance of getting compliance right, reinforcing the need for both efficiency and effectiveness. He also noted efforts to migrate customers to the Maxsight platform to capture monetization and agentic opportunities.

Q: Scott Wurtzel with Wolfe Research asked how Moody's plans to accelerate growth in more mature parts of the banking subsegment.

A: Robert Fauber explained that Moody's is cleaning up the banking portfolio by divesting non-core areas like learning and regulatory reporting to focus on high-growth areas like lending and risk and finance. The company is using a decision intelligence layer and working with lighthouse customers to co-build next-generation agentic lending workflows.

Q: Craig Huber with Huber Research Partners asked for estimates on rated debt issuance for hyperscalers in 2026, its percentage of global issuance, and expectations for 2027.

A: Robert Fauber stated that year-to-date AI-related issuance accounted for just over half of total issuance growth, with revenue contribution closer to 40%. Noting that capital expenditures are expected to grow from roughly $800 billion this year to north of $1 trillion next year, Moody's expects continued growth in hyperscaler issuance and AI infrastructure build-out.

Q: Alex Kramm with UBS asked about Moody's appetite and role in private credit given cross currents like rotation back into broadly syndicated markets and activity by smaller rating agencies.

A: Robert Fauber noted that Moody's utilizes the same analysts for public and private credit, ensuring rigorous methodologies. He highlighted partnerships like Allvue and MSCI that allow calibration of credit models, helping investors obtain independent probabilities of default and driving usage of Moody's credit language.

Q: David Motemaden from Evercore asked about third-party capital interest in casualty business and its impact on MA results.

A: Robert Fauber responded that casualty represents a large portion of U.S. gross written premiums but is immature in third-party analytics. Moody's casualty analytics business incorporates AI tools to scour law and medical journals for emerging mass torts, generating strong interest and traction alongside partnerships like Lloyd's of London.

Q: Peter Christiansen with Citigroup asked what trends are being seen in pricing across Moody's Analytics heading into the largest renewal quarter.

A: Robert Fauber noted that institutions have significant investment budgets for AI platforms and data, but demand proof of value. Moody's demonstrates clear ROI through time savings, efficiency, and accuracy, leading to positive customer engagement despite differing sales motions.