Q2 2023 Moody's Corp Earnings Call
Good day, everyone and welcome to the Moody's Corporation second quarter 2023 earnings Conference 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 Michele <unk> head of Investor Relations. Please go ahead.
Thank you good afternoon, and thank you for joining us today I'm sure Bonnie Coke head of Investor Relations. This morning, Moody's released its results.
Second quarter of 2023, as well as our revised outlook reflect metrics for full year 2023, the earnings press release and a 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 and U S. GAAP.
I call your attention to the Safe Harbor language, which can be found towards the end about earnings release. Today's remarks may contain forward looking statements within the meanings 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.
And the risk factors discussed in our annual report on Form 10-K for the year ended December 31, 2022 and in other SEC filings made by the company, which are available on our website and on the SEC's website.
Together with the Safe Harbor statements 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 the call. This morning in a listen only mode.
Rob Fauber, Moody's President and Chief Executive Officer will provide an overview of our results key business highlights and outlook after which we'll be joined by Mark Kaye Moody's Chief Financial Officer to answer your questions I'll now turn the call over to Rob.
Thanks, Giovanni good afternoon, and thanks to everybody for joining today's call.
As we typically do I'm going to touch on a few key takeaways from our second quarter results and provide some insights into what's supporting our growth outlook. I also want to continue to highlight some of the exciting growth opportunities within the decision solutions line of business and this quarter I'm going to spotlight our insurance business.
Then I'm going to talk about how we are positioning ourselves for what I tend to think of as a generational opportunity for us.
<unk> added by generative AI and as always Mark and I will be happy to take your questions.
We delivered strong performance across the firm this quarter.
Mr achieved its first quarter of revenue growth in six quarters amidst a steady improvement in issuance in fact revenue growth revenue grew 6% outpacing a 3% increase in issuance and the improvement in the issuance environment was led by a 54% increase in investment grade activity in this.
Combined with the ongoing gradual recovery in high yield bonds has led us to raise mis's revenue guidance for the full year to high single digit growth up from our prior guidance of low to mid single digit growth.
And we continue to sustain 10% AUR growth in EMEA is selling into strong demand for our suite of mission critical data analytics and workflow tools and this quarter, we're introducing some additional top line disclosures for our banking insurance and <unk> businesses. So that we can provide you with more insight into the robust performance of decision solutions.
The stronger than expected revenue growth in <unk> is driving the increase in our full year adjusted diluted EPS guidance of $9 75.
To $10 25.
And we continue to balance our expense control measures, while furthering our investment in the business. We're capitalizing on our unique ability to integrate proprietary datasets and advanced capabilities from across our businesses into tailored cloud based solutions and we're innovating and investing extensively across the company to build further on this.
Momentum with several key initiatives focused around generative AI technology turbocharged by our recent partnership with Microsoft.
Over the past several months as our businesses continue to scale. We've spent considerable time talking with investors about how to think about the Moody's up today and I want to share that with you because I think it's really useful context for understanding both our performance and our growth opportunity.
We've got several great crown jewel businesses and anchoring those businesses of course is M. I asked the global agency of choice for issuers and investors.
But and then we have one of the world's Premier subscription based fixed income and economics research businesses.
Data business powered by what we believe is the world's largest database on companies and credit and.
And three cloud based SaaS businesses, serving banking insurance and <unk> workflows and a high level. These businesses come together to help banks insurers corporates and public sector entities really do one of three things first to help them commence a relationship or an exposure.
To issue originates select or underwrite.
Second during the life of that relationship to help them measure monitor and manage risk.
And third on the backend helped them verify account comply plan and report and to do this we leverage a tremendous set of proprietary data analytics and domain expertise across a range of areas.
Company's properties Securities people economies, ESG, <unk> climate, and more and we think of that as our risk operating system and we thread that content through our solutions and that's what makes our customer value proposition for its sticky and differentiate it.
So with that backdrop, let me.
Such an M I asked for the quarter, so the headwinds in the first quarter.
Largely dissipated and that has led to more constructive market conditions and a surge in investment grade issuance. In fact may was one of the busiest months on record for investment grade activity as both corporate and infrastructure issuers.
Came to the market Opportunistically and Ive said previously that investment grade activity opens the door for issuance further down the rating scale and that's exactly what we've seen.
The ongoing recovery in high yield bonds, and we saw the strongest issuance quarter since the beginning of 2022.
In high yield and that drove an almost 50% increase in our high yield revenue versus the prior year period.
And so primarily based on the stronger than expected performance in both investment grade and high yield were raising our issuance and revenue guidance for Ms for the full year.
So the backdrop to the market recovery I would say still remains fragile and have our first time mandates signed in the second quarter, only 25% or so have issued.
Some of those corporate treasurers and Cfos wait on the sidelines for more market certainty around the path of inflation in rates and the economy.
And so muted M&A activity is also contributing to a limited supply of leveraged loans and that has negatively impacted CLO creation since over 60% of these loans typically go on to be securitized with and other structured finance asset classes, such as <unk> and RMB.
Higher all in funding costs are restricting asset creation, and thats, resulting in fewer deals and leading us to take down our structured finance issuance forecast for the year.
And while we've had softer issuance markets over the past year, we've been strengthening our position in the markets of the future to reinforce <unk> position as the agency of choice, we have strategically invested in our emerging markets footprint for many years and you've heard US talk about this at Investor Day is on earnings calls.
And thats, because although emerging markets account for something like 50% of global GDP, they represent less than 10% of cross border issuance. So we recognize this opportunity for long term growth and our investment includes thought leadership like our annual emerging markets summit that we held in the second quarter, we attracted participants.
Over 90 countries to that conference and in the second quarter. We also closed on our acquisition of SC <unk>, a domestic credit rating agency, serving Central America further strengthening our growing Moody's local franchise all across Latin America.
And as the Digitization of financial markets accelerates, we're positioning <unk> as a leader in assessing and decentralized finance digital bonds and asset <unk> and we've rated a number of firsts in this space and that includes <unk>.
Just this month, the European investment banks first ever digital Green bond.
And of course, we continue to grow our sustainable finance franchise within mis with good momentum and second party opinions.
You may recall, we relaunched our methodology in the fourth quarter of 2022, we have now completed over 92nd party opinions through the first half of this year and that includes for marquee issuers like Enel and the government of Mexico, and we have delivered 36% growth in spo volumes versus the same prior year periods.
Now moving to MAA.
Just a few minutes ago I described decision solutions is primarily three cloud based SaaS businesses, serving banking insurance and <unk> workflows and as these businesses scale, we want to offer some additional insights into their performance. So from this quarter onwards, we're going to be providing revenue and <unk> metrics for each of them and us.
As you can see here each of these businesses achieved double digit revenue growth in the second quarter and together they delivered 10% growth with <unk>, leading the way at nearly 20% IRR growth.
So last quarter, we provided a spotlight on our banking business within decision solutions than I thought.
This quarter that I would touch on our insurance business, we got some good feedback from from that spotlight last quarter.
Our insurance business brings together the legacy MAA insurance business, which mainly serves life insurers with RMS, which caters primarily to the P&C market and collectively our insurance business delivers workflow solutions for underwriting risk and capital management and financial and regulatory.
<unk> reporting and generates in the neighborhood of $500 million of <unk>. So it makes it a very significant component of the broader Ma portfolio.
Unlike banks insurers are undergoing a significant period of transformation.
They work to digitize and automate manual and fragmented workflows in order to be both more effective and more efficient in underwriting and risk management and capital planning and this opens new opportunities for us to establish and expand our presence offering new solutions and capabilities much in.
The same way that we have successfully done with banks.
And at the heart of our insurance offerings, our axis and RMS risk engines.
And access provides the core actuarial and finance cash flow modeling that is widely used by life insurers reinsurers and consulting firms for functions that include.
Pricing reserving asset liability management financial modeling capital calculations and hedging and access has proven to be a significant catalyst for growth in this quarter was no exception.
This quarter growth was fueled by increasing demand for our fully automated service, which enables insurers to send their actuarial modeling jobs to a cloud based infrastructure for very efficient processing.
Also contributing to growth in the second quarter is our risk integrity, offering, which seamlessly integrates with access and provides a highly automated solution for calculating financial statement information and compliance with ire for F 17 regulation regulations.
Now on the <unk>.
Property and casualty side.
In May we held our most successful global insurance conference ever called Exceedance.
I was there with about 500 of our customers from around the world and we made several very important new product announcements and I have to say I left.
The conference feeling very optimistic about the opportunities in front of us to serve the insurance industry. So first our cloud based what we call intelligent risk platform, where IOP that.
That is industrial strength and it is differentiated in the market. We now have well north of 100 customers on the intelligent risk platform in the cloud.
And this allows customers to run our new more granular what we call high definition models by leveraging cloud computing power on demand and that gives our customers a competitive advantage.
For those of our customers who are using this cloud solution.
We also announced that we're partnering with NASDAQ, enabling our customers to seamlessly access a wide array of cat models available on the NASDAQ platform. In addition to our customers' own internal models and this collaboration significantly enhances the value and capabilities of our ERP as a broader industry.
Workflow platform so.
With it.
A compelling set of capabilities and solutions across insurance now, let me talk a little bit about the customer expansion opportunity.
And we have over 900 insurance customers globally, and there is a significant opportunity for cross selling and growing revenue per customer we have very substantial relationships with our top 10 largest insurance customers, who purchase on average about 6% to seven product families from across all of EMEA.
Our next 90 largest insurers purchase on average about four to five product families and our remaining 800 customers by an average of just one to two products. So you can really see the extent of the cross sell opportunity and let me give you. An example of how we are growing our insurance relationships. So five years ago, one of the larger U S.
Insurers were spending about $15 million annually with us across products spanning risks.
Our risk and capital management Finance and report reporting workflow tools and also some other products, including our <unk> data feeds for risk management functions like risk adjusted capital calculations and portfolio construction.
After the acquisition of RMS This customer relationship grew substantially to north of $25 million.
This insurer is now a significant customer.
Both access and RMS and given the breadth of business activities out of a large insurer and that includes lending and investing in addition to two underwriting. They also subscribe to a number of our other solutions like our <unk>.
<unk> loan origination solution, our credit view, our research platform and our structured finance and commercial real estate data and analytics and even our <unk> tools and that has all together allowed us to expand the relationship to an IRR of over $30 million.
<unk> offers.
Another compelling cross sell opportunity.
With insurers as well as corporates and in fact in 2021.
Less than 10% of our insurance customers subscribe to a TWC product just two years later, we're up to about 20% and we are optimistic about further potential here.
Our ability to deliver unique and innovative solutions is also being recognized across the industry and of the awards that are listed on this slide have to say I'm, particularly proud of our recent recognition as the overall winner of charters as inaugural.
Insurance 25 award because it highlights our innovative market, leading solutions that span climate cat risk modeling and economic and financial analysis.
And speaking of innovation as you heard hopefully heard during our recent Gen. AI briefing artificial intelligence is fundamental to many of our products and frankly it has been for years.
I wanted to touch on three of those.
Start with quick spread.
Which is an AI machine learning tool that we have developed in house that Digitizes and spreads financial data and it's been integrated into a number of our products, including our credit lens loan origination offering and today, it's used by hundreds of customers, including banks around the world.
Our AI review product is really at the heart of our <unk> screening solutions. It's been trained on over 12 million actual cable I see analysts decisions and it's currently used by over 500 customers and.
And so far this year, it's processed over 110 million names and this all helps further train the artificial intelligence engine that powers. These insights and it reduces the likelihood of false positives by up to 80% and that eliminates countless hours of manual work and reduces the time to screen for.
Our customers from ours, so literally just seconds, so huge value prop for our customers.
And finally news edge, where we've been leveraging deep learning combined with natural language processing to enhance and optimize our data retrieval enrichment and sentiment generation over our multi domain datasets employing state of the art big data techniques and to.
To give you a sense of what this means in practical terms.
Our models are consuming categorizing and scoring nearly 1 million new stories from over 20000 sources, each and every day.
So these are just three of our over I'd say over a dozen AI enabled products, which bring a global team of engineers and product specialists with distinct and deep skill sets around natural language processing and artificial intelligence.
And our historical foundational AI experience uniquely positions us I think to capitalize on the immense opportunities presented by generative AI engine AI is going to revolutionize how individuals and companies derive insights how they participate in financial markets and how they navigate an increasingly complex world.
And Thats why we partnered with Microsoft combining Moody's vast proprietary data analytics and research with Microsoft industry, leading Gen AI technology and Azure open AI service.
To allow us to create new offerings that provide deeper richer insights into risk than ever before.
And by applying machine learning algorithms and deep neural networks to large collections of data and insights individuals and organizations will be able to drive greater efficiency accuracy insight and innovation and financial processes.
And earlier today, we published a I'd call. It a teaser demo of one of our first Gen AI innovations and we're calling it the Moody's research assistant it's an interactive chat feature that looks across Moody's vast datasets and research to provide customers with multifaceted and integrated perspectives of risks.
That few others can provide and the assistant will have the ability to access data and content across multiple domains.
Such as pharma graphic data, our credit indicators economic forecast.
And risk and reputation of profiles and deliver results to users based on their own personalized needs. So we're beginning to preview this innovation with customers to demonstrate the.
I think extraordinary value that it's going to bring powered by Microsoft technology and anchored by Moody's proprietary data so be sure to check it out on our IR website, and importantly, I do want to acknowledge that at Moodys <unk>.
A journey of.
Acuminate enablement and we have deployed this technology to all of our 14000 plus employees I call them. Our 14000 innovators. So that we can innovate at scale and pilot new ways to enrich our jobs with powerful new insights and improve productivity all at our fingertips and before.
Four I close I'd like to give a big shout out to our employees during the month of June .
Over 3000, Moody's teammates and I was with them.
And 150.
Volunteer projects across 32 countries and their efforts delivered over 8600 volunteer hours dedicated to making a difference in our communities. So our people are living our values and it's great stuff.
That concludes my prepared remarks, Mark and I would be very happy to take your questions operator.
Yes.
Thank you if you would like to ask a question. Please dial star one on your telephone keypad. If you are on speakerphone. Please pick up your handset and make sure. Your mute function is turned off so that youre signal reaches our equipment.
Could you please limit yourself to one question.
I'll have a chance to rejoin the queue for a follow up again that is star one to ask a question. Our first question comes from the line of Owen Lau with Oppenheimer. Please go ahead.
Good afternoon, and thank you for taking my question.
It looks like and May have more investments into our product development such as AI, a lot talk about but a track down to operating margin in the second quarter and also full year guidance. So I think it will be great that you can maybe give us an update on the seasonality of your P&L by segment and how we should think about that thanks.
Go ahead, Jay good afternoon, and thanks for the question so last quarter, we anticipated that near term capital markets and activity would be constrained before progressively improving in the second half and while issuance was indeed lowering certain asset classes than expected for example, structured.
We did observe and you heard disrupt higher than anticipated investment grade volumes, given strong investor demand for our high quality credits, so taking that into account and along with our expectation for relatively stable ish mark conditions for the remainder of the year. We are lifting our full year 2023 global Mis rated.
Issuance to the mid single digit range and our <unk> revenue growth to the high single digit percent range and this together with our better than expected year to date <unk> revenue at result, now implies <unk> revenue growth in the range of low to mid 20% on average.
<unk> for the remainder of the year versus the relatively.
Low year to date at 2022 comparable period, that's really given the market disruption that we had in the prior year from geopolitical concerns and the deterioration of some macroeconomic conditions.
And this also means that we anticipate our 2023 year to go at revenue in absolute dollars TV comparable to the pre pandemic levels that we observed in the second half of the 2019.
And on the MA side, our reaffirmed guidance for the full year of 2023, EMEA revenue to grow approximately 10% and together with our mid nineties.
<unk> retention rates, Dan implies the second half revenue will be in the low double digit percent range and thats going to reflect the strong ongoing demand for subscription based products and solutions.
It really as customers continue to look to <unk> to deliver the tools they need to incorporate risk resiliency evaluate exponential risk etcetera in the workflows and processes and that means that we forecast in the third quarter.
Adjusted operating margin to step up.
Compared to the second quarter, and then sequentially improve again in the fourth quarter very much in line with revenue and really as Emma and fully realize the benefits of our restructuring program and additional cost saving initiatives and then finally, our outlook for the full year 2023, total Moody's operating expense growth remain.
Within that mid single digit percent range, albeit at the higher end and this balances our expectation for higher incentive and stock based compensation costs with the improvement in our issuance outlook.
And the introduction of new initiatives to accelerate the development and deployment of some of our AI solutions and if that's going to translate that to that full year 2023 operating expense guidance and that really means along the lines of a low single digit percent decline in the mix and the higher end of high single digit <unk>.
Growth in EMEA, and <unk> and I apologize.
<unk> not for George.
No problem. Thanks, a lot very helpful Mark.
Your next question comes from the line of George Tong with Goldman Sachs. Please go ahead.
Hi, Thanks, good morning, so <unk> debt issuance and readings revenue performance was strong and led you to raise your full year guidance for.
That said debt issuance in July so far has been relatively weak how much of a pull forward and debt issuance into <unk> do you believe happened in and does your guidance reflect simply a flow through of <unk> outperformance or does it assume a stronger <unk> than you previously.
Yeah.
Hey, George it's Rob.
Yes. This is probably a question on the minds of many thinking about first half second half and then triangulating to our full year guide so.
We certainly saw a stronger investment grade issuance in the first half than we expected.
And yes, we do think that was likely due in part to some pull forward in advance of the debt ceiling and Theres. Just also some investor preference for really the higher end of the of the.
The rating spectrum.
The stress in the U S banking sector, I'd say, probably dissipated a little bit faster than we had expected.
And kind of a return of market confidence.
So as we're kind of looking at.
Going into the second half of the year when we look at.
Leveraged finance and I'm talking about high yield and leverage loans. Our general thinking is that the current run rate that we're seeing for high yield and leverage loans.
The sequential run rate, if you will that look sustainable and because we've got easier comps in the second half of the year that implies some higher percent growth rates for leveraged finance in particular and and also we expect will contribute to a positive revenue mix.
To put maybe a little bit finer point on it our issuance outlook.
Implies a low 20% increase in issuance for the second half of 2023 and that combined with what we saw in the first half gets us to this mid single digit for the year.
Got it very helpful. Thank you.
Your next question comes from the line of Manav Vinayak with Barclays. Please go ahead.
Thank you if I can just asking on around all these Jamie initiatives, it's asking highlighted so far like is that all in.
Incremental expenses or how youre thinking about in terms of.
And in budget versus what I guess, you are already doing deploy.
And as a good opportunity so we expect to realize meaningful productivity gains and efficiency as we progressive Lee incorporates Jane AI and Tom Moody's ecosystem from.
From technology and software development.
Organizations to our customer support shade service even research teams.
I think we would say it's too early to provide estimates around the extent of these efficiencies.
That initial pilots are promising so for example, the deployment of our coding assistant as to some of our software development teams has shown material productivity benefits through both error reduction and coding time acceleration. Another clear benefit is the opportunity that the technology brings to our rating analysts.
The use cases are vast for example, you could think about using G&A to transform in part of analytical workflow.
For example, analysts can shift their focus towards forming more valuable opinions and augmenting their capabilities.
For example, through foster data processing advanced data interpretation spreading et cetera.
And the point here is that in total if we step back for a minute you can think about G&A is it really just reinforcing and increasing our confidence in achieving our annual and a medium term.
<unk> and margin targets.
Manav, it's Rob I'd also say and I think you were asking specifically also about just the extent of investment is it incremental or is it a significant investment I would say that we're able to leverage a lot of the investment that we already have you think about we have.
Most of our solutions are on the cloud.
And it's one reason I highlighted on the call we've got a lot of expertise already across the firm around.
Around AI.
One of the costs and it's too early for us to know what this looks like we don't yet know exactly the pricing structure of our products.
But theres going to be incremental compute costs.
And running these models is not cheap so.
It's still a little early for us because we're just now manav going into a preview mode with customers getting feedback from customers thinking about then what the product pricing and packaging looks like and then what the cost side will look like so I think manav, we're going to have a much better sense for this.
Yeah.
In another quarter or so.
Got it thank you.
Your next question comes from the line of Kevin Mcveigh with Credit Suisse. Please go ahead.
Great. Thanks, so much just to follow up on the agenda and they are a little bit.
Is there any way to think about kind of where you are in the process and MAA versus mras.
If theres a way one thing that gives me a lot of optimism is the potential efficiencies.
From a delivery perspective, given how regulated the industry as it.
It keeps a lot of your footprint onshore is there any way to think about what the potential longer term impact is from a margin perspective, as maybe leverage the AI across both MAA and M. I asked in terms of.
Not necessarily next quarter, but how we should think about that a little bit longer term. Some of these efficiencies are brought to bear.
Yes, Kevin it's Rob and.
Look I would be remiss, if I, if I don't talk about both sides of the equation here because.
Promise you I will touch on the the efficiency opportunity but.
It's really as we think.
Compelling opportunity for us in terms of how we deliver our content and so we are very much approaching this in terms of opportunity first and what is the opportunity to deliver unique value to our customers.
And.
As you heard me say to Manav. We're early days here, if you want to get a sense of what it looks like I hope you get a chance to check out the video that is a very.
Easy way to understand how we're thinking about deploying this and what the opportunity.
We will be.
I would also say that.
We have approached this from a one Moody's perspective.
That is really really important because this this was an opportunity for us to set up a firm wide infrastructure.
A co pilot across the firm we have to obviously have to think about entitlements and controls and other things and risk management all of those things.
There is an opportunity to use one infrastructure across the firm and as we have innovations across the firm people able to deploy those innovations into our firm wide ecosystem now you mentioned.
Ms specifically.
The <unk> teams are very engaged around this and very engaged with our.
Our.
AI enablement team, we put together.
And looking at ways that they are going to be able to process more information to get new insights to be able to get through these things more quickly and I really think about it Kevin is essentially turbocharging, our people and we have always heard from our issuers that we have the most experienced analysts and they really value that.
And now I think about alright, now we have the most experienced analysts who were going to be armed with the capability of this co pilot and everything that it brings and being able to to work together on the team's collaboration platform. We're really turbocharging the capabilities of our analysts I'm sure there will be productivity gains.
There will also be some real improvements to just the insights that we're able to deliver to our customers.
Makes sense congratulations.
Your next question comes from the line of Alex Kramm with UBS. Please go ahead.
Yes, Hello, everyone.
I can't believe I'm, asking another question, but I will.
And it's really on the revenue side because Rob.
You, obviously highlighted do you actually have been utilizing some of these tools I guess already in some of your products. I think you had three on the slide and you said something about a dozen and so I guess the question really is can you already isolate some of the I guess AI enabled revenues that you're getting today, and obviously would be great too, which will have that number.
But then more importantly, like how long do you really think until this this can really scale and.
I guess any any any ideas about the Tam I mean is this just hey, we're going to make our products better and we're going to be better in the marketplace and we're going to sell better or do you actually think there's going to be a real unique revenue opportunity here that really wasn't there before.
Sure Alex.
You know what that first question is a great question and I have to have to be honest I was thinking about that coming into the call I'm thinking you know what somebody may ask that.
And I don't have that answer at my fingertips, but that's something I think that we can follow up on it's a really good question.
And it's a natural question given the fact that we're spotlighting those products, but let me let me talk for just a moment about how we're thinking about the monetization.
Opportunity and again, it's an early days so just to give you a sense of where we are we are just in the process of going into what I would call preview mode with a handful of our customers, who then can give us feedback on the product. We're thinking then about that as I said kind of the pricing and packaging, we're starting with what we're calling a research assistant.
That will serve our core.
Customer investor customer persona right. So this is the the investor that is using our credit view offering we will likely make the research assistant available and integrated into the credit view platform.
We may so in that case, you could imagine it being a.
As an add on to your credit view subscription.
We also have the ability to call the research assistant right and that would allow us to deploy it through for instance, a platform like Microsoft teams.
And.
Alex the exciting thing there is that is going to allow us I think to reach a whole new customer base.
People, who arent using credit view today may not have the.
Frequent.
Frequent need to use credit view, but want to get access to our insights and research. So we're thinking about how do we how do we price how.
How do we price that you can imagine that we go from that core investor persona to other core <unk>.
Personas that we serve so in banking it's.
It's credit officers and.
And commercial lenders.
In insurance, it might be chief risk officers and underwriting.
Staff and so we will be we will be creating assist.
Assistance that serve their those personas and so.
Those will be both integrated as you as I said with credit view likely integrated into our existing offerings.
And over time, we would also expect that.
People would look to have additional content sets entitled with their assistance. So you can imagine that our research assistant comes preloaded with certain content sets and then over time, if you want to add Sag climate, our ESG content set that may be an additional entitlement and additional revenue opportunities.
So.
Alex These are great questions. We're working through these as fast as we can.
And I think towards the end of this year, we'll probably have more insight into what this looks like what the size of the opportunity will be that would be then incorporated into our 2020 for outlook.
Very helpful. Thank you.
Your next question comes from the line of Ashish <unk> with RBC capital markets. Please go ahead.
Thanks for taking my question I, just wanted to focus on the free cash flow that guidance with six by almost $100 million, which was much better than the EPS guidance in each side was wondering if you could talk about that and also from a capital location.
<unk>.
Obviously, the share repurchase guidance back from.
From $2 $50 million to $500 million, but how should we think about that as to the cash.
And the focus on any particular focus on M&A. Thanks.
Ashish good good afternoon in the second quarter, our free cash flow results of $549 million was significantly higher to your point compared to the prior year period, and Thats, primarily due to an improvement in working capital and.
As the prior year included and Youll recall this a tax related working capital headwind.
And this quarter plus you also had stronger net income given the growth in mis combined with the solid execution and in.
And that means for the second quarter, our free cash flow to GAAP net income conversion was almost 150% compared to just 66% in the prior year and I would say we are forecasting that conversion rates really to moderate through the rest of the year as some of those first half working capital.
<unk> normalized.
We're also very pleased to increase our share repurchase guidance at $500 million and that means we're going to return over $1 billion to our shareholders. This year 500 million through that share repo and approximately $550 million through it through dividends, but the most important thing here is as a management team we continue to be committed to <unk>.
<unk>, our financial leverage around the Triple B plus rating and that's really because we believe that provides the appropriate balance between lowering the cost of capital and providing for ongoing financial flexibility.
Okay.
Yes.
Our next question comes from the line of Toni Kaplan with Morgan Stanley . Please go ahead.
Thank you I wanted to ask about slide nine. Thank you so much for the additional disclosures by customer type.
I guess, maybe one on the insurance part of the business are you seeing something in.
Mark current either pipeline or something that makes the IRR.
Only 6%, whereas the revenue growth is coming in at 12%, maybe it's timing.
And also if you could break down maybe a little bit of that.
<unk>, obviously very strong growth there.
Trying to figure out how much is like from new customers versus up selling versus pricing any any sort of granular.
Drivers would be helpful. Thanks.
Toni it's Rob.
The second part was on <unk> right.
Yes.
So.
As you know that's why you're asking the question. This has been a strong growth engine for us for some time now.
And.
There's a few things I think.
Going on.
We're adding both new logos and we are adding.
And up selling as well.
And.
An interesting couple of stats.
The.
Volume of what we call multi product deal. So if you think about the components of our <unk> solution. It's really the the company data. That's in orbit sits that people data and what we call our grid database.
We've got our adverse media and AI screening and then we wrap that in a workflow tool right. So those are all the components and you can buy the data separately from from the workflow or you can buy the data integrated into the workflow, so where our cloud workflow platform is sold with other <unk> products that's up now.
91%, so we're seeing a lot of customers wanting to opt in to the kind of full solution with workflow and data.
The volume of what we call multi product.
Sales. So we're I'm buying multiple components of this solution is up almost 50%.
And where we have what we call.
Sales, where we have something called <unk>.
Company registration verification. So you want to go back down to the source documents themselves. It's another important feature actually a company we acquired several years ago.
That's.
Sales of that as part of our broader suite is up 53% so.
That idea of packaging the content with the workflow is.
Has really proved to be quite compelling and.
Tony the other thing just in terms of what's driving overall demand.
In the space <unk> got ongoing changes to regulation.
Perpetual Ky C.
And you've also got a broadening of demand beyond just <unk> into companies, we want to understand more about who theyre doing business with and supply chain. So that's hopefully that gives you some insight into <unk>. The answer is really both new logos and Upsells and this bundling of product.
On insurance.
So remember that this.
This includes.
Our insurance unit now is as I said on the call as both our legacy MAA as well as RMS and what we don't reflect in that insurance <unk> number is the cross selling synergies that we've got with RMS, which are actually quite robust and mark you might even might even have a little bit of data on that yes, I would say <unk>.
<unk>, Tony you could think about robs remarks is leading us towards that high single digit.
<unk> insurance by year end and for a high teens or even low <unk> for the <unk> space.
Thanks, so much.
Your next question comes from the line of Andrew Nicholas with William Blair. Please go ahead.
Hi, good afternoon.
From what we can gather it seems like issuers.
Kelly within the high yield market are opting for shorter maturities in this environment and so my question is a two parter first is this something that youre seeing across that categories of late in <unk>.
How should we think about the impact of this on mis revenue.
I'm just curious if it's shorter maturities.
Ultimately results in issuers coming back to market more frequently which I would think drive stronger transactional revenue or if there is some offsetting component within your fee structure that that would offset this thank you.
Andrew I'll start with some numbers and then I'll turn it over to Rob for additional commentary.
Both investment grade and high yield just so we've got a complete picture here between 2020 and I call. It year to date 2023.
The average duration of the Mis rated.
Bond issuance at peak in 2020 at about 15 years, and then it steadily reduced to just under 12 years in June which is about where it was in the pre Covid 2018, 2019 year, so not a big move on the investment grade side.
On high yield.
Comparable numbers for the average duration for what we're rating with somewhere between seven 8% about eight three years and what we've seen to your point is that's been reduced to around six years.
Through the first half of 2023.
In fact, I mean, Mark you cited some of that data we were getting the opposite question a couple of years ago as the tenors, we're stretching out and people worried about whether that was going to lead to less frequent issuance. So this is a this is a happy issue to be contemplating and to answer your question.
I think it just means the issuers are going to be coming to market more frequently there is nothing in our commercial construct that I think would offset that it's unlikely that most of these issuers, especially in high yield are infrequent issuers. So so it's unlikely that they're going to be on a more of a relationship base.
Construction I think net net this is a modest positive.
Makes sense. Thank you.
Your next question comes from the line of Craig Huber with Huber Research partners. Please go ahead.
Thank you just talk a little bit further about your debt issuance outlook for full year 'twenty three that break it down further by category.
Yield and bank loans in structured finance in particular and also can I just get the incentive comp number for the quarter on the new basis, because accusing from what it was a year ago. Thank you.
Good day, good afternoon, I'll start with the incentive comps in the second quarter, the incentive comp was $99 million and that compared to a $66 million in the prior year period and that brings up year to date incentive comp accrual to $188 million, which is approximately $45 million above the first half.
For the full year, we're expecting incentive comp to be between $3 70, and $3 $19 million, which is higher about 25% higher than the comfort we accrued for last year, and that's really driven primarily by improved outlook for full year 2023 Mis revenue.
Yes.
Greg So just I think you had a couple of pieces to this one was.
Kind of leveraged finance.
And I would say that.
Starting with high yield would describe the environment as cautiously active in the first half of the year.
And we did see some oil and gas issuers come back in the market that's important because they historically have been big issuers and high yield.
The leveraged loan issuance was pretty.
Pretty soft we had.
Pretty muted.
Sponsor driven M&A, we did see some refinancing activity and saw at least some supply coming from autos and telcos. When you look at our full year outlook.
We've taken high yield bonds up 15 percentage points to up 40% for the year.
Off of obviously, what was a soft year last year, and we've made a modest adjustment to leveraged loans mid single digit up from flat in terms of kind of what we're seeing in the market right now Craig.
It was a July it was a holiday shortened week to start in July .
Things have picked up a little bit on the high yield market.
I would say the tone for both high yield and leveraged loans is constructive.
Constructive theirs.
Good by our risk appetite and demand.
And then just touching on structured finance.
Just the volatility and the rising funding costs have led to a slowdown in overall market activity.
And there's a lot going on I would say the weakest areas are <unk> not surprisingly given some of the concerns in the commercial real estate sector and Cielo is just given the lighter leveraged loan supply.
So we kind of looked at that what's going on in the space.
And have decided to revise our outlook for structured finance down to sorry to down mid teens percent for the year. So hopefully that gives you a little bit of a flavor.
Great. Thank you.
Yes.
Your next question comes from the line of Faiza <unk> with Deutsche Bank. Please go ahead.
Yes, hi, Thank you. So I wanted to follow up on that point that you just made Rob around structured finance I'm curious is the competitive environment is a little bit different.
Structured finance other areas where.
Maybe you're stronger in versus competition.
And is that is that an area of.
Desman focus for you in a while.
Yes, that's a great question.
Structured finance.
It has a number of agencies that are active in the market, it's a more transactional market than the.
The fundamental market, which is much more relationship driven so we do see a more active broader competitive landscape in structured finance.
I'd say in spaces like MBS excuse me of MBS ABS.
CMV assay as a number of active players.
Hello, a bit fewer just because.
We rate the underlying tend to rate the underlying securities within a CLO and so.
I would also note just when you kind of are looking at what's going on in terms of our structured finance results.
If you think about <unk> as a sector where.
Were quite strong we have quite a quite a quite a good presence there and theres been a pretty sharp decline in issuance volumes.
Again due to concerns about the office and retail sector. So that decline may be felt more acutely by us just given our.
Kind of a broader coverage of that space of issuance then perhaps with some other agencies.
The last thing I would say is.
Broadly our coverage has remained pretty consistent it does tend to ebb and flow between asset classes a bit from time to time, but broadly our coverage has remained pretty consistent over the last several years.
Great. Thank you so much.
Your next question comes from the line of Seth Weber with Wells Fargo. Please go ahead.
Hey, good afternoon, everybody. Thanks for taking the question I was wondering if you could just drill down a little bit more on the big revenue, 13% up 13% versus issuance up five just kind of give us some more details on what's going on there. Thank you.
Yeah, as we've broadened out the customer base for fig over over the years and that's included a number of what I would say are.
Alternative investment managers and investment managers.
We've gotten a little bit more volatility into the results than we have historically and for those who have been on this call for a long time, you probably remember me, saying I'll figures, primarily relationship based and it doesn't move around the revenue doesn't move around much as we broaden that base out it has.
And.
This quarter in particular, we saw some.
Opportunistic issuance from the insurance sector.
Folks who are not typically on these relationship based construct and that gave us a little bit higher.
Revenue takes than we might otherwise get on issuance in the fixed space.
Yes.
Makes sense. Thank you I appreciate it.
Your next question comes from the line of Heather <unk> with Bank of America. Please go ahead.
Hi, Thanks for taking my taking my question.
It's great to see the improvement in that math I'm, just curious, though as you kind of look out.
When you think about the dynamics in the environment.
Rates are.
Kind of where rates might go.
What do you what do you think is the biggest overhang right now do you think it's.
Actual rate itself, where do you think it's the uncertainty.
And do you think kind of incremental certainty this quarter helps with what you saw with regards to issuance.
Hey, Heather and welcome to the call first of all.
Good to have you on.
Yeah, Great question so.
I have.
Typically said that it's uncertainty that is the most challenging thing and we've said in the past that the market can absorb higher rates.
When they are one accompanied by economic growth and two when they are anticipated by the market. So the market does not well react well to surprises and it doesn't react well to uncertainty and volatility volatility in the markets, both the equity markets and fixed income markets.
Spreads makes creates really challenging issuance environment. So you've seen as the market is at least gotten certain more certainty around the trajectory of rate increases you've seen issuance firm up.
<unk>.
I think again.
Bill a little bit of headline risk in the remainder of the year, but but certainly we've seen some of the firming of the market.
And Heather if I just add some additional color to Rob's comments. There is few things we're watching.
Obviously feel that rates are likely approaching their peaks and we're expecting the state to pause.
Not to that.
And Lisa <unk>.
Sudden increase in unemployment or collapsing growth second thing, we're expecting is that the second half recession risks are likely to linger.
Amidst tighter financial conditions, and so we've incorporated a dip not a severe downturn into our outlook and that really means that we are expecting the global default rate to rise.
That's the long term average, but not FTC easy levels of the pandemic will even remotely close to the great financial crisis, and then thirdly, we're watching a couple of key questions on <unk> to medics.
Which could include things like we're going to see more stimulus from the Chinese authorities there.
Covid reopening growth I think pretty lackluster inflation there is low.
We're also watching the U S dollar exchange rate and then finally, we're also watching the emerging market versus developed market growth rates and the relative that differential there.
Great really appreciate it thank you.
Your next question comes from the line of Andrew Steinman with J P. Morgan. Please go ahead, hi, Mark could you just tell us the FX effect on second quarter revenues, both from MIF MAA in total and then if I can ask a second question looking at slide 19, which slide it seems like the first time.
<unk> projection, which is now 500 to 600 came down from the projections given in April and given the more positive view on issuance I was just hoping you could comment on that dynamic.
Absolutely and FX is a pretty pedestrian story this quarter. So the second quarter EMEA revenue was favorably impacted by zero, 3%.
The impact of foreign currency translation on NCO in Ams revenue was immaterial okay.
Andrew Hi on the first time mandates.
So.
First time mandates were down pretty meaningfully from the same period last year.
I'd say, we've seen relatively muted.
First time mandate.
Activity for probably the past four quarters or so.
And when.
When you look at it.
I'd call. It 2019, and maybe the first half of 2020, so kind of a pre pandemic period.
This quarter's first time mandates were.
Is something like two thirds of that average.
But this isn't really to me that's not surprising so despite the fact that yes, we are taking up the the issuance outlook. The majority of first time mandates tend to come from leveraged loans.
And so as that has been softer.
We have we just haven't seen the same.
The same activity around first time mandates I will say, though it's interesting Andrew we've seen a very meaningful uptick in our private engagements. So you may have heard us talk about in the past we have a suite of products private monitor ratings.
Private ratings for investors, we have a rating assessment service.
Those are up pretty meaningfully.
And you heard me mentioned a number of these issuers have not come to market. So again.
We're seeing some kind of pent up demand on people.
Waiting for the right time to come to come to market perfect. Okay. Thank you very much.
Okay.
Your next question comes from the line of Jeff Miller with Baird. Please go ahead.
Yes. Thank you hopefully not too much of a repeat of some prior questions, but as you think about the right pace of spend on.
AI and <unk> AI and the whole generational opportunity I guess, what's the framework for how you think about if youre going fast enough or not fast enough and to what extent does it tie back to just the business performance I guess, what I'm wondering is.
If there is upside our.
Our outperformance in the core.
To what extent, we should expect that to be reinvested in for you to go even faster on AI for the next couple of quarters. Thank you.
Yes, Jeff it's Rob.
I'm going to take this in two directions first directly to your question.
We're going to engage we're engaging we're starting to gauge right now with customers to understand the nature of customer demand.
With a prototype product or products.
And then we are going to think about how much investment do we need to make how much demand is there what is the pricing and packaging look like and how much investment do we need to make to support that and I mentioned I think a good bit of that investment actually wound up just being compute.
But let me let me take it back.
One.
Kind of pull the lens back for just a moment because I think there is a broader question here.
Round overall EMEA investment in Gen. AI is as a part of that because I'm the only part.
And.
I Hope you all get a very good sense from us that there are some very strong demand drivers for risk assessment and that also that we believe we're very well positioned to monetize that demand.
And I think you see that translate to the very strong topline growth rates that we have relative to our peer group.
And.
And thinking about what is best for the long term of the business as long as we see strong market demand and we have a leading set of.
Market, leading set of solutions, we're going to favour investment to drive topline growth and there are really three areas that I want to call out for you.
One is product development.
Increasingly this means the integration of our content and workflow solutions like you've heard us talk about <unk>.
Commercial real estate into our loan origination offering ESG under our underwriting offering orbis data into our <unk> offering.
It also includes Jeff these investments that we're making in Gen AI enabled.
Products, which.
We would expect to start delivering revenue growth in 'twenty, four and beyond but this point about investing in an ongoing product pipeline is very important because it is critical to how we get both new customer acquisition and also upsell of customers. That's one.
The second is sales deployment and we have made some big investments in our sales organization over the last couple of years.
That includes relationship managers that are now organized by customer segment and that is helping us with new logos and drive IRR growth. It also includes building out our functions like what we call our industry practice leaders, who can help us with <unk>.
More solutions based selling and building out our customer success team, who helps with retention and up sell so that's that's the second area of investment and the third is we are platforming MMA.
And we have appointed a chief architect.
With 20 plus years of experience at Microsoft who is developing.
And overall technology architectural blueprint and is who he is building out our platform engineering layer and if you join us on our call in September 14th I think you'll have an opportunity to.
To meet with him in the future.
But this positions us better for Gen AI enablement and commercialization it enables faster speed to market and a better experience for our customers.
Who use multiple products and it also gives us better insight into customer behavior, and again that is really important to cross selling and up selling so.
The Gen AI investments are one part of a broader set of investments that we're making to really drive and accelerate top line growth at MA and capture the opportunity that's in front of us.
Very helpful. Thanks, Rob.
Your next question comes from the line of Russell <unk> with Redburn. Please go ahead.
Yes, thanks Neil.
First question is on <unk> I was wondering if the revenues grow back to the levels. We saw in 2021 by 'twenty four 'twenty five as projected by consensus is there any reason why the adjusted operating margin for the business would move back up to the same that we've seen in that period two please.
Good day, good afternoon, and thanks for the question I think maybe in pluses and what Youre asking is.
Why is the mis margin.
Not higher than the 55% to 56% that we're guiding to at least for this year and the short answer here is the margin outlook includes the higher incentive compensation accruals, which obviously.
Italy going to flex depending on the performance.
Get to the targets, we set at the beginning of the year.
As well as any incremental investments that we put through for in flight initiatives.
The adoption of AI that we spoken about this morning, if I think about it more broadly, though the margin guide of 55% to 56 does imply around 370 basis points of uplift compared to our 2022 margin of 51, 8% and if I think about that that could be attributed to a route.
<unk> 350 bps associated with increased operating leverage and that's primarily tied to that first half issuance and that's the part that in theory could carry it carry forward at well beyond 2020.
<unk>.
Secondly, I'd say is approximately 400 bips related.
It related to some of the expense benefits from some of the actions we've taken to lower and control costs and for example, those associated with our restructuring program that we spoke about in prior quarters or additional efficiency initiatives and then those two are offset by around 380 bps from the incremental organic investments that we're putting through some of that relates to.
Generate of AI and some of it relates to really ensuring that we maintain at best in class.
Ratings quality as well as supporting.
Procreate hiring merit and promotion increases for our teams.
Okay. Okay. That's helpful. Thanks, Bob and just as a quick follow up in terms of.
Our research and insights and obviously saw strong step up in growth in recurring revenues there.
What drove that how much of that was pricing and is that new sales is that cross sell and up sell just to.
Any detail you could give to that would be appreciated. Thanks.
Yeah, sure Hey, Russell so.
So first of all we we continue to see very good retention.
And strong demand and interestingly when we had that period of particular stress in the U S banking sector, we saw utilization of our <unk>.
Solutions.
Really spike up.
I'd say there are probably three areas that I would point to that are driving growth.
One is that point around increased utilization.
And interestingly, we have a suite of predictive analytics.
Economic forecast and other kinds of models.
There has been an uptick in demand for that so that's one.
And that increased utilization it supports the retention rates.
It supports new sales and it also supports upgrades and price increases.
Second we've made some.
We continue to make.
Ongoing enhancements to credit view credit view as our as our web based research platform that includes something called ESG view. So we now have another.
Another.
View that we are able to either sell it and all the car basis or to price behind so we're including more and more content on credit view that we can use for pricing ESG as one example, the orbis content around.
Corporate structured data is another example, and third we've just we've seen some very.
Very good growth again for the.
The suite of analytics and in the research area.
Great. Thanks, Rob.
Really welcoming this switch to add any incremental color on product and strategy on these covenant school is rather than just sort of reading the results to us.
Yes, kudos for that and thanks very much.
Okay. Thanks, I appreciate that feedback.
We find that the most valuable way, we can spend our time with you.
Your next.
Comes from the line of Jeff Silber with BMO capital markets. Please go ahead.
Thanks, So much I know, it's late I apologize I've got a two part question on margins.
First one on M&A in order to hit your margin goal, you're expecting some pretty sizable expansion in the second half are there any timing issues, where they were expenses that you incurred in the first half or maybe some efficiencies that you are incurring in the second half. If you can comment on that and then on MFS margins.
Based on the mix issuance in terms of your new guidance is there any impact on margins is there a difference that you have in.
Debt versus structured finance, etc.
Yes. Good afternoon, let me take the margin from the perspective of a year to date and year to go answer because I think this will tie in with what you are looking for so the year to date EMEA. Adjusted operating margin was 28, 4% and that was about 280 bps lower than the prior year period and there are two primary.
Themes underlying this decrease and they should.
Should be consistent with what we spoke about in the April earnings call. So first we opportunistically accelerated investment in product technology innovation and sales deployment and that includes the reallocation of expense dollars in Ti will generate of AI initiatives and that really is.
He's done with the purpose of allowing us to maximize our ability to meet ongoing customer demand for our solutions.
And the second piece is really an element of seasonality and that relates to both the MA revenue and expenses and we really try to balance outstanding against our full year margin target, which for 2023.
Is still expanding albeit slightly so.
So if you take that into account what we are thinking of.
Second half of the year Israeli for margins to expand by on average at 250 to 350 basis points versus the comparable 2022 year to go period.
Then that means we're going to incrementally step up in the third quarter and then we'll have a pretty material step up again in the fourth quarter.
Yeah.
Yeah and then.
Maybe just some quick rules of thumb in terms of how to think about the.
Relative margin or kind.
Kind of economic profile of some of the issuance I would say that if.
If you are in the corporate sector.
The leveraged finance, we tend to get.
The.
More revenue take on leveraged finance and investment grade because investment grade issuers tend to be on more frequent issuer programs. That's typically the same with Fig you heard what I said about the infrequent.
Insurance issuance and then in structured.
The more complex transactions like <unk> and <unk> typically have more favorable economics, but then.
Ill take a one a different view on it which is if you look at new issuers versus existing issuers. So in terms of the work required.
There is more work that's required for a first time issuer. So first time issuers first time mandates are great because they build the stock of monitored ratings, but they do take more work.
Our rating and existing issuers are typically more margin friendly. So when you see a lot of refinancing activity.
That may be a little bit more margin friendly than a lot of first time instruments.
Alright, Thats very helpful. Thanks, so much.
Your next question comes from the line of Simon Collins with Atlantic Equities. Please go ahead.
Hi, guys. Thanks for squeezing me in here.
Rob I wanted to ask a question about the competitive environment.
<unk>.
In MAA actually and just conscious of NASDAQ and some of the consolidation that's going on down and.
And the number of different competitive sort of volume different nations of that kind of.
The market that MAA is playing in the various markets I was wondering if you could talk about.
What you're seeing from a competitive standpoint, who are you displacing how fragmented the market is and how you think that's going to develop over the next five years.
Sorry, I might have been on mute I think the way that we talk about and disclose our businesses is a good way to think about the competitive landscape.
Because in each of those businesses there are some different players. So for instance in our research business. We typically will compete against other rating agencies and a handful of.
<unk>.
Kind of more boutique research providers.
In the data space, we tend to compete against.
Players like Dun, <unk>, Bradstreet, and others, who have.
Big corporate datasets and then in our decision solutions there are different competitors. So we have different competitors in the banking versus insurance versus <unk>.
<unk> space I will say this though.
And while I think.
We compete with all of them.
There is a I think an element of secret sauce to the way that we compete.
And I think it's two things one.
It is an increasingly interoperable suite of cloud based solutions.
So think about what the bank you can buy our <unk> solution you can buy our.
Our loan origination solution, you can buy our regulatory reporting solution and guess what they all run on our connected data set.
And since they are cloud based they are easy to implement.
So that really makes it easier for us to kind of land and expand in these institutions and the second thing is when I talk about I mentioned it in my remarks. This idea of this risk operating system.
All of these.
These data sets and analytics and insights that we have that go way beyond credit now right. It's credit it's companies its people its ESG, it's climate, it's commercial properties and on and on.
And the reason that is so important.
Our customers say to us all the time, hey, I need to be able to integrate.
I need to be able to bring in property data economic forecasts credit data ESG scores physical risk scores related to climate and.
If a customer has to do that themselves, it's very very challenging collection.
Collection of point solutions, and disparate data and analytics provider. So this idea that we can provide a multifaceted view of risk and integrate that and deliver that into our solutions is a very powerful selling proposition with our customers. It allows us.
<unk> increasingly is allowing us to displace certain customers.
And it's also creating a wonderful pathway for us to grow existing revenue per customer. So that's why I tried to draw that out in our remarks, because it's a very important differentiator, we believe and and an important reason by the way.
I know sometimes people discount these awards, but it is the reason that we were ranked number one the charters risk Tech award. They think that is a winning strategy.
That's great color. Thank you.
This concludes Moody's second quarter 2023 earnings call as a reminder, immediately following this call the company will post the mis revenue breakdown.
<unk> historical revenue under the Investor resources section of the Moody's IR homepage. Additionally, a replay will be made available immediately after the call on the Moody's IR website. Thank you you may now disconnect.
Please wait the conference will begin shortly.
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