Moody's Corporation (MCO) Earnings Call Transcript & Summary

All right. Our next session is with Moody's. So first of all, thank you, everyone, for joining the session. For those of you who don't know me, my name is Owen Lau. I cover information services, exchanges and digital assets at Oppenheimer. So Moody's is well known to be a credit rating agency. But over the years, they have been building out the software business in Moody's Analytics. In the first half of this year, Moody's Analytics accounted for 45% of total revenue. Joining us today are Steve Tulenko, President of Moody's Analytics; and Shivani Kak, Head of IR. So first of all, thank you for your time, Steve and Shivani.

Thank you, Owen. Pleased to talk with you.

Thank you, Owen.

For the people who are listening to the webcast, please feel free to submit your questions online. We will do our best to address your questions at the end. But Steve, as a starting point, could you please talk about what kind of software business MA is today and where you want to be in 5 years?

Sure. That word software is an interesting word. I think we're a business that helps people understand the risks they deal with and maybe the corollary of those risks, the opportunities that are presented by understanding those risks better. And you can think of that from an investment perspective, maybe a lending perspective, insurance companies doing that literally every day. What does this risk look like? How do I dimension it? How do I understand it? And then is it a good one for me? And how should I price it? And then maybe even how do I think about it in my portfolio? So we use software as a chassis or a tool, a means to an end in many ways, where we're enabling our customers, enabling ourselves for that matter, by leveraging software tools to add value. The concept -- I mean, the basic recipe for us in terms of product strategy is you curate data that is very, very relevant to the task at hand. So you have expertise in, say, the world of credit or cyber risk or financial crime, understanding financial crime. You gather that data, you curate that data. And then you analyze it using models that have been trained over the years, and we have literally hundreds, maybe even thousands of models that we can offer to customers to help them understand and dimension risks and then software to bring that stack together so that the data feeds the analytics and the models. And then the software can be used to operate those models, inspect the data, understand why the risk is where it is, and then they'll be recorded and remember those decisions, and you can work with other groups in your company. So that solution stack is often using software to deliver value rather than thinking of us as a technology firm. I think of us as a firm that helps people understand risk. We talk a lot about in this world of exponential risk, where risks are rising exponentially and often are correlated, it's helpful to have some tools to understand those risks and maybe identify opportunities. So that's where we are today. Five years from today, I expect that same theme will be extremely appropriate. The pace of change in terms of technology and software development and engineering techniques, I think, is increasing and likely will increase over the next 5 years. So I'm not exactly sure what we'll look like in terms of software, but I'm sure that our efforts to support customers, knowledge workers, especially by leveraging software tools and leveraging technology, I think, will be very much part of our lives.

Got it. So Moody's reported results in late July. MA results were pretty good, and it was the seventh quarter of double-digit ARR growth.

Yes.

But we will see -- likely see moderation of the growth, and you lower the 2024 guidance a little bit. Could you please expand a little bit more on the three factors they cited on the earnings call?

Yes. Yes. So just a couple of factoids. I think you're right, 7 quarters in a row of around 10% ARR numbers, maybe a little bit below or a little bit above. The second quarter was our highest ARR number since we've been creating -- since we've been using that metric. So just to keep us grounded.

10.4%.

10.4% when you look at the decimal points, right? So strong performance in Q2. And the way your ARR numbers are calculated is you're looking at annualized recurring revenue going forward. So that is a estimate of what our revenue growth will be over the [ coming ] months based on the book of business that we have contracted at that moment in time when we snap the line. So that gives you a sense for sort of the health of the business. We did acknowledge that in the second half that there were a couple of forces at work that we thought we should acknowledge, and we expanded the guidance range as a result. I think Noemie actually acknowledged that on the earnings call that our spot estimate was in the high end of the high single digits there. So we did expand the range to just acknowledge some of these factors that we should probably talk about here. So one is partnership with MSCI. What that means is that there are some products and some revenue streams that will be replaced by the work that MSCI is doing, and we will be incorporating their capabilities into our products. So some of our customers undoubtedly bought the products that we were creating to support them with their ESG efforts. And then they did them either in addition to the things that they were purchasing from MSCI or instead of the things that they were purchasing from MSCI. So there's some contingent of customers that are going to go through some transition. Of course, there may be some disruption with some of those relationships just because -- not relationships but those sales just because there's a change and there was something about our capability that they liked, and that won't be there so much in the future. So we just want to acknowledge that as a dynamic. And we think that's significant enough to note. The other dynamic we talked about a couple of times is that the purchasing behavior, especially among banks and asset managers, is a little tighter than maybe we expected at this point in time. Last year with that banking, let's call it the banking challenges, the challenges we saw in banking, let's put it that way. They're pretty substantial. Many of you know that the merger with a couple of big banks actually happened at the beginning of this year, so that affects our results. But the pipeline development is looking very good, but we haven't seen the footing yet from that. So we're just being a bit conservative, and I would say prudent in the way that we are acknowledging our expectations coming from the banking sector. I should note, by the way, production in the first half from banks was better than it was last year in the first half. So among our customers that are banks, we produced more growth in this first half of '24 than we did in '23. So we see the right signs and the right trends, but we want to acknowledge that pipeline development is good, but we need to see that proof in the pudding before we're really excited about it. And then the other thing we did want to acknowledge is that with the election cycle happening here, we are at least cognizant of volatility and the way in which the government works is quite dependent on the administration, and budgets and timing in terms of commitments can be thrown into -- they can become, I guess, I need a good adjective for this. Trying to find a euphemism for -- a little bit less predictable, maybe that's the way to say it. So we're just acknowledging that. So you've got three factors there that we have talked about in the earnings call. I would say they're all a good indication of us: demonstrates prudence; widening the range, right; and then zeroing in on good growth from the ARR overall better than many of the others in this sector. So we're very happy about the health of the business overall.

Got it. So you talked about ARR has been growing at 10%, but we have also observed differences between the ARR calculation and then revenue, like the reported revenue number in several segments.

Yes.

For example, data information, for which ARR has been consistently growing in the low double digits over the past 4 quarters, but revenue declined from 13% in the first quarter to 7% in the second quarter. What was the driver of that?

Yes. Yes. So I think I would just encourage you and all of you who might be modeling the business to think of revenue in 1 quarter, or even margin for that matter, in 1 quarter as not being a great indicator of the overall story of the business. Instead, I'd use -- I'd look at your ARR numbers, and our expectations around margin production, for example, is probably your best bet in terms of modeling the future of the business. The -- if you look at any 1 quarter, you could have a big sale happen, which could drive revenue numbers up. You can have a sale that maybe we have an attrition event that would drive the numbers down. You have accounting vagaries, of course, that come into play once in a while. And even in the ARR number, just to give you some sense, there's some seasonality in that because your ARR growth rate is often -- is very much dependent on what you produced last year in the same month. So you've got some work that -- some details that can be challenging from time to time. The other thing I would say is that, just to spell it out for one more second, if you produce your sales at the beginning of the quarter versus the end of the quarter, you could see a difference between an ARR number and a revenue number, right? Because if you make the sales in the last day of the quarter, you had 1 day's worth of revenue, but you get the future of that revenue going forward, which would boost your ARR numbers. So these numbers can be out of sync from time to time. It's not something I would spend a lot of time trying to reconcile. If you look at the first half of the year numbers, those numbers are very tight. And if you look at trailing 12-month numbers, they are very tight. So ARR has been a very good predictor of the revenue production over that -- those, say, the trailing 12 revenue numbers. And if you look at ARR at the end of the second quarter, we're at 10.4%, 10.4%. So that's our best guesstimate of revenue growth over the next 12, given what we know now, right? That's, I think, the best way to keep your head on straight when it comes to those numbers.

Got it. So focus on ARR, not revenue. Got it. Got it.

Yes.

So MA has been on a SaaS transition journey over the last couple of years. Can you please update us on how far through the transition you are? And when do you anticipate the transition to be complete? I remember there was a slide a couple of years ago, but now...

Yes. Well, I mean, I think I started talking about this a lot in 2015. So that itself might tell you part of the story, right? These things do offer us great growth opportunities over the longer term. I think Rob talked about in some earnings call recently, 75% or 70-something percent of our revenues were coming from cloud or hosted solutions, just to give you a sense. So there's a big chunk -- virtually, all of our revenue is coming from -- well, 3/4 of our revenue is coming from hosted solutions or SaaS solutions. The thing that's nice about the SaaS business is once you get in, it's very easy or it's easier, I should say, to cross-sell other modules. So if you take the insurance business where many of you would be familiar with the acquisition of RMS from a couple of years ago and that we talked quite prominently about the SaaS transition there, that's still in the early stages. And while we have -- I think when we bought them, there were 30 or 40 customers, maybe 30 customers that were on their SaaS platform, the integrated risk platform, there are now over 200 that are on that platform, but they tend to buy in and then convert over time multiple modules. So many of these customers would be maybe using one model on that SaaS platform, whereas they have purchased 10 from us, and there might be another 8 or 9 left to go. So we see a really good -- we have a number we often report or talk about, call it, net expansion rate, right? We see a really good net expansion rate from these SaaS customers because they're -- it's almost like a net dollar retention concept. They're buying in, they're moving to the platform and then they convert their way through all of their existing work that they do with us. And then there's also other modules that they can add on over time. The other thing you've probably seen in some of our calls over the years is we've produced a couple of slides where we show how the addressable market that is before us, just by simply selling all the things that we could sell to a bank or all the things that we could sell to a corporation, right, and then looking at how many we have sold so far, we have a really nice runway ahead of us. So the SaaS -- the beauty of the SaaS models, that makes it easier for us to cross-sell those other modules along the way. So there's a long way to go.

Got it. Got it. So you just talked about your partnership with MSCI, and it looks like a great partnership. Last quarter, MSCI talked about the partnership, but this partnership in specific has already generated kind of a noticeable impact on the net new sales. Has there been any impact for MA as of yet? Can you please unpack how MA can monetize this partnership when MSCI leverage all this database and sell the product? Can -- I mean I just -- I think we want to understand how you monetize it. Are you going to share any revenue with MSCI?

Yes. So first of all, the -- let's just frame this for people who might not be aware of it. You've got MSCI, world-class provider of analytics to the asset management space and especially a world-class provider of ESG content that's used not just in asset management, but certainly in asset management. Then you've got Moody's, world-class provider of credit capabilities, whether that's on rated names or unrated names, private names, right? Moody's, of course, has a fantastic credit scoring franchise to help lenders score their credits. And we have a database, which many of you probably have heard of called Orbis, which has literally 525 million rows, right -- 525 million names that we can cover there. So you take the two combined, and you have a very interesting partnership here, right? Best-in-class in asset management, best-in-class with ESG, us best-in-class in credit, and we have tremendous relationships with banks and insurance companies especially. And so there's a nice dovetail there that I think we're looking forward to exploring. And the nature of this agreement, we are essentially buying ESG content from MSCI in order to feed our products, right? So you can imagine that part of that transaction is moving along nicely. We are in the throes of integrating as we speak. In the private credit space, we are exploring often. We had many, many meetings with the team there and are working together very nicely. I would say the team is -- the combined team is working together very nicely, exploring not just the ability to create proxy scores on private companies, so extending ESG scores into private company coverage for MSCI, which we then would be able to leverage as well. But we'll be able to also help them in many ways that are related to private assets, whether it's in terms of company credit, information on companies and then properties, too. We do so much in commercial real estate that dovetails well there, too. So we're looking forward to, I would say, a very symbiotic relationship between the two firms in -- with respect to these opportunities.

Got it. And then you kind of alluded to in previous question, but I want to make sure we understand this. So why was this partnership will impact your year-end renewal? And why would it potentially result in a reduction of the sales pipeline? Can you maybe dive a little bit deeper on that point?

Yes. I mean so first of all, this is probably not actually material, but enough to notice in the guidance, let's put it that way. You've got people who were buying content from us. We actually acquired a couple of companies and pulled together their capabilities along with built some other things in the ESG space. And we were scoring thousands of companies and providing details on underlying those scores as well as providing analytic tools to help people. But much of that content is being replaced by the MSCI capabilities here. So literally, it's just a replacement dynamic where we're not going to be able to -- if people are buying both, they don't need to now. And that's something that you just don't need to pay twice for the same content, right? So we're just acknowledging that will undoubtedly affect some of our customers here, and I want to make sure we're being careful and transparent about that.

Got it. So just a minor detail follow-up. Any part of your existing like Moody's ESG and climate business can survive like you talk about, MSCI will replace any part of that?

Yes. Sorry, yes, I should probably be careful here. The climate activities that we've undertaken are very much part of the plan. So all of the work we do around physical risk, right, where we're leveraging RMS models to help people understand how climate might affect their buildings and their strategies, their properties, their business going forward. In fact, we just had recently one of the utilities on the West Coast mentioned that they were using RMS models to determine where they should put the firebreaks to prevent disruptions in service in the future. They literally called that out on the earnings call. So that's a good example of us helping people understand climate risks to their business with banks that are now, of course, buying these models too, not just the insurance companies. And then the rating agency continues to do the work to score on the underlying credit implications from E, S, and G factors. So that business is definitely growing and continuing to -- sorry, going and continuing to add value to the Ratings business. The Second Party Opinion business within the Ratings business is another activity we are undertaking and continuing to do. And in fact, that business is growing nicely. So the climate, whether it's physical risk or in the rating agency where you need to understand climate to better understand credit or even with respect to transition risks and help people understand the impact of switching from a carbon-based fuel to some other fuel, those work -- that work is work that we will continue to do and continue to deliver to our customers. So we're really just talking about the scores themselves, the thing that MSCI is most famous for, right? We are leveraging as a matter of delivering best-in-class scores and content to explain those scores to our customers. Yes, I think it's [indiscernible].

Very clear. Yes, very clear. Yes, we do understand, okay, just the ESG score itself, but you have like some other energy transition and others and stuff you preset.

Yes, that's right.

Okay. Great. Fantastic.

Yes. I think we just drive, I think we have some very interesting things going on there, yes.

Got it. And then other than private company data for ESG, what are the data in Orbis database that MSCI can potentially leverage to create new products?

I mean I think the way to think of it would be the expertise that Moody's brings to the table in terms of credit is remarkable, right, the mix. And we can talk very extensively about rated companies, and we can talk very extensively about companies that you might lend to, and we can talk very extensively about companies that you might never have heard of, if only by proxy, right? Because I know what all of the plumbers in the state of New York look like in terms of the number of employees that might have some sense for sales, that might have some sense for some other statistics that you might be able to use to generate credit understanding. And sometimes it's intuition, but credit understanding that you can then leverage in other ways. So I think as we explore that relationship further, that credit expertise will be relevant. Orbis is often the backbone to the way in which we understand how to do that analysis if you think about it because the first thing you need to do is resolve the entity you're talking about, right? And if nothing else, right, Orbis can help you resolve the entity you're talking about as well as anyone and maybe better than anyone else in the world because we have, through Orbis, a tremendous understanding of the corporate hierarchies, the ownership structure throughout a corporate hierarchical -- or all the relationships within the hierarchy and then, of course, the beneficial owners. So that idea makes it possible to do entity resolution. And with entity resolution, you can with impunity, analyze a company because you're sure you're doing and working with the same thing. So I would say that's the world in which we think we'll add some value, but there's some work in the property space by analogy actually, where we'll be able to help in commercial real estate, we think. And you can imagine it's all the same stuff we often talk about when we talk about GenAI, right? We've got that data estate that is universally interesting and the facts that are resident in there, if you make them more discoverable, they can be very valuable with people, and then you can hang analytics off of those as you drive your -- drive forward.

Got it. So let's move to another like maybe one of the key segments within MA, which is the KYC segment. It has an ARR of 18%. And based on my math, I think it's probably the fastest-growing segment in MA.

Yes. Yes, that's true. Yes.

Could you please talk about, like unpack the drivers of the growth rate and how sustainable it is because this is one of the most common questions we got?

Yes. So it's true. It's definitely been our best grower over the last couple of years. We've seen high double and sometimes even 20% ARR numbers from the KYC space. This is a business that is -- I think your addressable market is expanding as people in banks are trying to do a better job of understanding who they're doing business with and knowing their customer. Also, this is -- this dynamic is happening with insurance companies. This dynamic is happening with corporations. And I would say that one of the key things that we got out of the COVID experience is an awareness of and appreciation of the importance of resiliency. And one fundamental thing you need to know before you do business with a customer, a supplier or whatever it might be, a borrower, an investment that you might be thinking about is you need to determine whether or not you're allowed to from a -- are there any sanctions against this entity or these people that work with this entity or work with that entity that you need to be aware of? So that binary test is something that is increasingly relevant across all of our customer segments. So it's not just within banks, it's throughout the rest of the universe. And of course, we do other scanning and screening for people, not just the sanctions, but other adverse media that might be useful to understand who you do business with. And I'll use this extreme example often. We have multiple ways of monitoring names of people and names of companies for human trafficking or other, I'll call it, labor abnormalities. And we saw some of this recently with some of the luxury brands in the news. That's the kind of thing that we do for people to help -- give them a heads up so they don't miss some of those things. So you have this tremendous story in terms of expanding addressable market, I think. And then we are increasingly able to deliver the data that I mentioned before, the analytic models to help make decisions and then software to coordinate that for you. And what that means is we're not just selling tools to provide the set of databases, but we're actually helping people with the investigations much more, and that's actually a tremendous growth driver for us as well. So if you think of this as maybe two circles, there's a circle which is the money spent on the products. And then there's the circle which is much bigger, which is the money spent on the people to do the investigations, right? Now that I've learned that there's something I better look at with respect to this company, do I want to do business with them? All right, let's go dive in. And searching around Google is one way to do this, right? But using all of our tools together and combined is a very effective way, especially now with GenAI, right? We're very excited about the opportunities here to really streamline that process and cut these investigation times literally not just in half, but probably by -- down to 1/10. So that's a good driver for us as well. There's some regulation in here. Some regulators are requiring checks. There's some recent regulation in Europe that requires some -- there's some anti-money laundering regulation that we're able to feed -- not feed but help address. But those are the big drivers, I think, in terms of growth.

Got it. So can you also talk about -- or even remind us the competitive dynamic and competitive landscape in the KYC? Like in this space, have you seen any change? Who are your major competitors right now? And what is the value proposition? Why people still use data?

I would say that there's the big players that you're probably very familiar with, people on this call are probably familiar with. The World-Check product is, I think, well established and well respected. LexisNexis has a product that's well established and well respected. And Dun & Bradstreet does some work in this space as well. They all -- I don't think any of them really talk about it quite as much as we do. We talk about it a little bit more. It's one of the big growth drivers for us. And I think the differentiating factors, we truly believe we have a better mousetrap here, right? We've got the data on the companies and the corporate hierarchies that you need to have in order to do this work. We have the best database in the world on that. We have the data on the people, the beneficial ownership data, of course, but the data on the people who have been in some way politically exposed, so sanctioned or identified as potentially, call it, a problem. And then we have a fantastic news aggregator, right? Many of you are familiar with a product called NewsEdge, but we have an ability to and we do process nearly 1 million stories. In any one day, it might be more than 1 million stories for sentiment. So we use natural language processing and AI tools that we've had for literally a decade to understand the news as it's coming in associated with those companies, associated with those people and then make it possible for you to make sure that you can say I'm actually up to date on all the information here. And then, of course, we bought a company along the way, which you probably remember called the PassFort, and this is providing a workflow capability for us. We've got the data coming in. You've got the models to help you decide if the profile of that person is good or bad, right? You've got software to remember your decisions and to process the workflow and to actually see and investigate. And then we also bought a company which is this tool that helps us -- this company rather that -- a company with a K, that helps us connect with all of the registration authorities around the world so you can definitively confirm that, that company actually exists and is a going concern with the Austrian authority or the New Jersey authority or whatever it might be. So these things combined, and we are making them available as a single solution literally form a better mousetrap. So I think there's other companies in this space that have been at it for a while. I probably missed a couple along the way, but we think we have a better answer. And we are investing to drive that answer so that we can be relevant for banks, insurance companies, asset managers now. We just released the product to help asset managers link KYC to securities, not just companies, but securities, right? In your portfolio, are any of the names or any of the entities associated with those names in any way sanctioned? Would you like to know? I can tell you, right? That kind of thing. So anyway you can tell I'm pretty excited about that. Sorry.

Yes.

Your portfolio [ in the last morning ], but this in your portfolio has been flat, and it's your decision on your risk tolerance [indiscernible] you want to touch it.

Exactly.

And it just makes your life simpler.

Yes. Just to give you a sense, in certain jurisdictions, 50% ownership by a Russian entity is a problem. In other jurisdictions, it's 25%. But wouldn't you like to know if there's any ownership at all in your portfolio that's associated with one of those people that might be sanctioned, right? This is the kind of thing we are now doing for customers across the board. So we're making investments in leveraging this throughout the customer base.

Got it. So we have like 8 minutes left. Again, if you have any questions, feel free to submit your questions online. I do want to cover a couple of more different topics, insurance, AI and also the margin guidance a little bit. So let's talk about RMS. You talked about RMS. We didn't talk about RMS in our last earnings call. I don't think we have talked about RMS for the last maybe 1 or 2 quarters. Maybe Steve, can you talk about -- like I think the growth has been quite well. I don't want to like ignore the whole thing. I think ARR for that segment was 6% last year, and then it accelerated to 14% last quarter. Just could you please talk about the driver of that acceleration? Do you expect it can accelerate further? Or how should we think about the trajectory from here?

Yes. I mean again, I'll just go back to what I said before. Any 1 quarter can kind of be a little bit crazy. There's some puts and takes on ARR just like there is in revenue. ARR is much more stable, much more predictive of the future. So you've got good revenue growth expected in light of the ARR number that you just quoted there, right? So that's the first intuition to gather. Second intuition, I think it's fair to say that we have officially made some improvements in the execution in terms of going to market in the RMS space with respect to RMS. We've integrated RMS with our larger -- with our insurance group to form a single group now. The products are -- more and more product development is coming through and rolling out now. So you're starting to see better cross-selling and better sales execution as a result. So RMS was running in the low single digits for years. In terms of growth rates, we're definitely getting closer to our expectations around high single, and you're starting to see ARR numbers in the double digits. I would say that in any 1 quarter, you could have a good or a bad event. I would expect we will continue to produce average or maybe slightly above average numbers for the insurance sector over the next several months. But I wouldn't expect to see an acceleration in ARR, for example, beyond where we are at the moment. The execution has been tremendous. Our sales team is working very, very well. Product development has been very good, and the rollout of that SaaS platform has been very good for us. So we're now north of -- I think I mentioned before, north of 200 customers on that platform with a lot of good growth before us here as the customers move to that and avail themselves of the richer capabilities that are available there. So it's a good story. I think we're well ahead of the acquisition targets certainly in terms of margin production. And I think we're on track in terms of growth as we had talked about when we bought the company [indiscernible].

Got it. I want to go back to the like MA segment margin. Again, like I know we shouldn't focus too much on revenue growth, but your first half revenue growth in MA was 7.9%. You expect the growth to accelerate or improve in the second half of this year, driven by I think two things: Research Assistant and CreditView. And correct me if I'm wrong on this, but could you please expand a little bit more on these two drivers?

Yes. So we've been pretty bullish on the launch of these AI products. The Research Assistant is the one that we've made the most progress on. I think we're 7 months in. And I think we would say that given our traditional sales motion, which is often to add products to existing relationships over time, and we often do that at the renewal cycle, we're seeing a launch here which is going faster than any other launch we've seen. So that's exciting. Usage is great. That's exciting, too. We see the pipeline developing very nicely. We have scores of customers of the Research Assistant, for example, in that 7-month period of time. And those numbers are, I think, very encouraging in terms of what we expect to see in terms of ARR and then ultimately, revenue numbers. We -- I think we declared we'd see an impact in the ARR numbers in the second half. So the Research & Insights number should be improving as we move through the year. Of course, there's some implications. We expanded our guidance range and maybe move that estimate to the higher end of the high single. I mean some of the other units might be drifting down just slightly. So you got some puts and takes in any 1 quarter or any 1 half. But we're very, I think, excited about the growth potential that we see in the pipeline. Timing in the next 5 months and 4 days might be different than 6 months and 4 days. So we're just acknowledging some of those dynamics. I have too much of a sales manager in me not to acknowledge that you need the contracts signed before you can be pretty sure you've made a sale. And I like to see some more pudding before I think we have proof.

Got it. So I think we have like 2 minutes left. I think final question for me on the margin. Again, like first half, 29.1% for MA. And I think you still guided to 30% to 31% for the full year. It implies a big jump in the second half. Could you please unpack a little bit what's the driver for that, that step up?

Yes. I mean again, first quarter, a little different from second quarter. You have some seasonality in the revenue production just because of the way the sales cycles work over time, the seasonality of sales cycles -- sorry, seasonality in the sales system. So you'll see bigger piles of money produced in the second half than maybe the first half. And we know where we're spending and where we're investing and what we think that trajectory will look like. So in any 1 quarter, you can see a movement up or down because of an accounting change or a charge that we took here or there. But over the course of the 12 months, we think that guidance number is a pretty solid number.

Got it. I think we are running out of time. Any final word for us, Steve and Shivani?

Well, we didn't talk very much about GenAI, and I'd feel remiss if I don't at least acknowledge the community here that this is something that we are very excited about. We have talked about this before, I think, a year ago. And we did a call like this, and we were jumping up and down. I'm jumping higher now than I was then. I think that the opportunities to support knowledge workers, whether they're inside Moody's or outside in our customers by leveraging not just CoPilot concepts, but really agentic concepts where we're leveraging GenAI agents to do work. Our experiments here are quite promising. We're very, I think, bullish on these technologies and looking forward to helping customers do their jobs faster and maybe even giving them a Moody's coworker to sit next to them as they're doing their jobs every day. And we see that as, I think, a tremendous part of the story here. I'd be remiss if we didn't mention it at least as we go into the second half.

I agree. Again, thanks a lot for your time, both of you. I hope you all have a good day.

Thanks, Owen. Thanks very much.

Thank you. Bye.

Thank you. Bye-bye.