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Moody’s Experiences Strong First Quarter for Data, Analytics and Risk Business

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In line with the relatively strong performance of the data and risk businesses of its peers this year so far, Moody’s indicates that its first quarter global revenue is up by 17% on the previous year’s figures for the period. Moreover, the vendor’s revenue from research, data and analytics increased by 3% from the prior year period to US$104.6 million and risk management software revenue grew 4% to US$33.3 million. This is a significant upturn for the vendor after a tough end of 2009 for the Moody’s Analytics business.

Moody’s overall global revenue of US$476.6 million for the three months ended 31 March 2010 therefore represents a 17% increase on the US$408.9 million for the first quarter of 2009. Operating income for the quarter was US$196.8 million, a 32% increase from US$148.9 million for the same period last year.

Raymond McDaniel, chairman and CEO of Moody’s, attributes the growth to strong activity in the markets in which the vendor is focused, although he notes some weakness in the structured finance markets. Growth was also stronger for the vendor in the US overall, with 22% growth in US revenue for the quarter versus 11% growth for its non-US business. Furthermore, revenue generated outside the US represented 47% of Moody’s total revenue for the quarter, down from 49% in the same period last year.

Overall, global revenue for its data, risk and analytics business was fairly strong, with Moody’s Analytics up by 2% from the first quarter of 2009, at US$141.1 million. Reflecting the realignment of revenue by product grouping in both periods, revenue from research, data and analytics of US$104.6 million increased by 3% from the prior year period and risk management software revenue of US$33.3 million grew 4%. Professional services revenue of US$3.2 million declined 30% from the prior year period.

In terms of geographic revenue distribution, Moody’s Analytics’ results reflect the vendor’s overall picture, with the US ahead of other markets. In the US, its revenue of US$65.4 million for the first quarter of 2010 increased 3% from the prior year period. Outside the US, revenue of US$75.7 million grew 1% compared to the same quarter of 2009.

Things were not so bright for Moody’s Analytics at the end of last year, with the research, data and analytics business revenue figures down for the quarter by 1%. At the time, the vendor attributed the decrease in Moody’s Analytics’ data business revenues to a realignment of revenue by product grouping. However, risk was performing well at that point with a 20% increase on the previous year’s figures.

It seems that the vendor is now back on track and is confident that the rest of this year will see continued growth for this business in the “mid-single-digit percent range”. McDaniel notes: “We continue to expect revenue growth in the low-single-digit percent range for research, data and analytics, while we now expect revenue growth in the high-single- to low-double-digit percent range for risk management software, and in the mid- to high-single-digit percent range for professional services. We continue to expect Moody’s Analytics revenue in the US to increase in the low-single-digit percent range and revenue outside the U.S. to grow in the mid-single-digit percent range.”

The strength of the data and risk business is proving to be a boost to many vendors’ incomes against a background of tough market conditions. Thomson Reuters, Interactive Data and SIX Telekurs have all experienced a similar uptick in this side of the business.

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