REVENUES

12 Months Ended

Dec. 31, 2018

NOTE 3 REVENUES

Revenue by Category

The following table presents the Company’s revenues disaggregated by LOB:

		Year Ended December 31,
		2018		2017 ⁽¹⁾		2016 ⁽¹⁾
MIS:
Corporate finance (CFG)
	Investment-grade	$	253.3	$	301.0	$	262.3
	High-yield		175.4		254.0		181.3
	Bank loans		371.7		349.3		246.2
	Other accounts ⁽²⁾		533.7		488.4		432.5
Total CFG			1,334.1		1,392.7		1,122.3
Structured finance (SFG)
	Asset-backed securities		106.3		96.6		94.3
	Residential mortgage backed securities		98.0		89.5		85.0
	Commercial real estate finance		123.5		142.7		133.3
	Structured credit		196.4		164.7		121.9
	Other accounts		2.3		2.0		2.3
Total SFG			526.5		495.5		436.8
Financial institutions (FIG)
	Banking		290.4		299.5		239.5
	Insurance		114.1		102.1		102.4
	Managed investments		24.1		21.6		16.7
	Other accounts		13.1		12.6		10.3
Total FIG			441.7		435.8		368.9
Public, project and infrastructure finance (PPIF)
	Public finance / sovereign		184.8		218.0		224.6
	Project and infrastructure		206.3		213.3		187.6
Total PPIF			391.1		431.3		412.2
	Total ratings revenue		2,693.4		2,755.3		2,340.2
MIS Other			19.0		18.5		30.6
	Total external revenue		2,712.4		2,773.8		2,370.8
Intersegment royalty			124.0		111.7		100.2
	Total MIS		2,836.4		2,885.5		2,471.0
MA:
Research, data and analytics (RD&A)			1,134.1		832.7		667.6
Enterprise risk solutions (ERS)			437.4		448.6		418.8
Professional services (PS)			158.8		149.0		147.0
	Total external revenue		1,730.3		1,430.3		1,233.4
Intersegment revenue			12.3		16.0		13.5
	Total MA		1,742.6		1,446.3		1,246.9
Eliminations			(136.3)		(127.7)		(113.7)
Total MCO		$	4,442.7	$	4,204.1	$	3,604.2
⁽¹⁾ Prior period amounts have not been adjusted under the modified retrospective method of adoption for the New Revenue Accounting Standard.
⁽²⁾ Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.

The following table presents the Company’s revenues disaggregated by LOB and geographic area:

		Year Ended December 31, 2018							Year Ended December 31, 2017 ⁽¹⁾
		U.S.		Non-U.S.			Total		U.S.		Non-U.S.			Total
MIS:
Corporate finance (CFG)		$	852.3		$	481.8	$	1,334.1	$	909.7		$	483.0	$	1,392.7
Structured finance (SFG)			342.9			183.6		526.5		340.1			155.4		495.5
Financial institutions (FIG)			194.6			247.1		441.7		186.1			249.7		435.8
Public, project and infrastructure finance (PPIF)			228.8			162.3		391.1		266.4			164.9		431.3
	Total ratings revenue		1,618.6			1,074.8		2,693.4		1,702.3			1,053.0		2,755.3
MIS Other			0.6			18.4		19.0		0.5			18.0		18.5
	Total MIS		1,619.2			1,093.2		2,712.4		1,702.8			1,071.0		2,773.8
MA:
Research, data and analytics (RD&A)			480.4			653.7		1,134.1		424.4			408.3		832.7
Enterprise risk solutions (ERS)			170.0			267.4		437.4		166.6			282.0		448.6
Professional services (PS)			60.0			98.8		158.8		54.6			94.4		149.0
	Total MA		710.4			1,019.9		1,730.3		645.6			784.7		1,430.3
Total MCO		$	2,329.6		$	2,113.1	$	4,442.7	$	2,348.4		$	1,855.7	$	4,204.1

									Year Ended December 31, 2016 ⁽¹⁾
									U.S.		Non-U.S.			Total
MIS:
Corporate finance (CFG)									$	762.9		$	359.4	$	1,122.3
Structured finance (SFG)										293.3			143.5		436.8
Financial institutions (FIG)										160.1			208.8		368.9
Public, project and infrastructure finance (PPIF)										276.2			136.0		412.2
	Total ratings revenue									1,492.5			847.7		2,340.2
MIS Other										9.4			21.2		30.6
	Total MIS									1,501.9			868.9		2,370.8
MA:
Research, data and analytics (RD&A)										389.3			278.3		667.6
Enterprise risk solutions (ERS)										162.9			255.9		418.8
Professional services (PS)										51.4			95.6		147.0
	Total MA									603.6			629.8		1,233.4
Total MCO									$	2,105.5		$	1,498.7	$	3,604.2
⁽¹⁾ Prior period amounts have not been adjusted under the modified retrospective method of adoption for the New Revenue Accounting Standard.

The tables below summarize the split between transaction and relationship revenue. In the MIS segment, excluding MIS Other, transaction revenue represents the initial rating of a new debt issuance as well as other one-time fees while relationship revenue represents the recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations, as well as revenue from programs such as commercial paper, medium-term notes and shelf registrations. In MIS Other, transaction revenue represents revenue from professional services and outsourcing engagements and relationship revenue represents subscription-based revenues. In the MA segment, relationship revenue represents subscription-based revenues and software maintenance revenue. Transaction revenue in MA represents perpetual software license fees and revenue from software implementation services, risk management advisory projects, training and certification services, and outsourced research and analytical engagements.

	Year Ended December 31,
	2018							2017 ⁽²⁾
	Transaction			Relationship		Total		Transaction		Relationship		Total
Corporate Finance	$	918.1		$	416.0	$	1,334.1	$	1,012.0	$	380.7	$	1,392.7
		69%			31%		100%		73%		27%		100%
Structured Finance	$	341.0		$	185.5	$	526.5	$	320.2	$	175.3	$	495.5
		65%			35%		100%		65%		35%		100%
Financial Institutions	$	187.2		$	254.5	$	441.7	$	194.7	$	241.1	$	435.8
		42%			58%		100%		45%		55%		100%
Public, Project and Infrastructure Finance	$	237.6		$	153.5	$	391.1	$	278.4	$	152.9	$	431.3
		61%			39%		100%		65%		35%		100%
MIS Other	$	2.2		$	16.8	$	19.0	$	2.5	$	16.0	$	18.5
		12%			88%		100%		14%		86%		100%
Total MIS	$	1,686.1		$	1,026.3	$	2,712.4	$	1,807.8	$	966.0	$	2,773.8
		62%			38%		100%		65%		35%		100%
Moody's Analytics	$	275.2	⁽¹⁾	$	1,455.1	$	1,730.3	$	312.7	$	1,117.6	$	1,430.3
		16%			84%		100%		22%		78%		100%
Total Moody's Corporation	$	1,961.3		$	2,481.4	$	4,442.7	$	2,120.5	$	2,083.6	$	4,204.1
		44%			56%		100%		50%		50%		100%

								Year Ended December 31,
								2016 ⁽²⁾
								Transaction		Relationship		Total
Corporate Finance								$	765.5	$	356.8	$	1,122.3
									68%		32%		100%
Structured Finance								$	269.4	$	167.4	$	436.8
									62%		38%		100%
Financial Institutions								$	137.3	$	231.6	$	368.9
									37%		63%		100%
Public, Project and Infrastructure Finance								$	257.9	$	154.3	$	412.2
									63%		37%		100%
MIS Other								$	10.9	$	19.7	$	30.6
									36%		64%		100%
Total MIS								$	1,441.0	$	929.8	$	2,370.8
									61%		39%		100%
Moody's Analytics								$	314.0	$	919.4	$	1,233.4
									25%		75%		100%
Total Moody's Corporation								$	1,755.0	$	1,849.2	$	3,604.2
									49%		51%		100%
⁽¹⁾Revenue from software implementation services and risk management advisory projects, while classified by management as transactional revenue, is recognized over time under the New Revenue Accounting Standard (please also refer to the table below).
⁽²⁾Prior period amounts have not been adjusted under the modified retrospective method of adoption for the New Revenue Accounting Standard.

The following table presents the timing of revenue recognition:

	Year Ended December 31, 2018
	MIS		MA			Total
Revenue recognized at a point in time	$	1,686.1	$	98.9	$	1,785.0
Revenue recognized over time		1,026.3		1,631.4		2,657.7
Total	$	2,712.4	$	1,730.3	$	4,442.7

Unbilled Receivables, Deferred Revenue and Remaining Performance Obligations

Unbilled receivables

At December 31, 2018, accounts receivable included approximately $311.8 million of unbilled receivables related to the MIS segment. Certain MIS arrangements contain contractual terms whereby the customers are billed in arrears for annual monitoring services and rating fees, requiring revenue to be accrued as an unbilled receivable as such services are provided.

In addition, for certain MA arrangements, the timing of when the Company has the unconditional right to consideration and recognizes revenue occurs prior to invoicing the customer. Consequently, at December 31, 2018, accounts receivable included approximately $59.5 million of unbilled receivables related to the MA segment.

Deferred revenue

The Company recognizes deferred revenue when a contract requires a customer to pay consideration to the Company in advance of when revenue is recognized. This deferred revenue is relieved when the Company satisfies the related performance obligation and revenue is recognized.

Significant changes in the deferred revenue balances during the year ended December 31, 2018 are as follows:

	Year Ended December 31, 2018
	MIS		MA		Total
Balance at January 1, 2018 (after New Revenue Accounting Standard transition adjustment)	$	334.7	$	611.6	$	946.3
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue balance at the beginning of the period		(218.1)		(589.6)		(807.7)
Increases due to amounts billable excluding amounts recognized as revenue during the period		215.7		730.1		945.8
Increases due to Reis and Omega acquisitions during the period		-		16.4		16.4
Effect of exchange rate changes		(6.9)		(18.2)		(25.1)
Total changes in deferred revenue		(9.3)		138.7		129.4
Balance at December 31, 2018	$	325.4	$	750.3	$	1,075.7
Deferred revenue - current	$	207.2	$	746.2	$	953.4
Deferred revenue - noncurrent	$	118.2	$	4.1	$	122.3

For the MA segment, for the twelve months ended December 31, 2018, the increase in the deferred revenue balance was primarily due to organic growth and the Reis acquisition in the fourth quarter of 2018.

Remaining performance obligations

The following tables include the expected recognition period for the remaining performance obligations for each reportable segment as of December 31, 2018:

MIS
Total			Less than 1 year	1 - 5 years		6 - 10 Years		11 - 15 years		16-20 years		Over 20 Years
$	149.6	$	23.2	$	68.6	$	41.3	$	6.8	$	4.1	$	5.6

The balances in the MIS table above largely reflect deferred revenue related to monitoring fees for certain structured finance products, primarily CMBS, where the issuers can elect to pay the monitoring fees for the life of the security in advance. With respect to the remaining performance obligations for the MIS segment, the Company has applied a practical expedient set forth in ASC Topic 606 permitting the omission from the table above for unsatisfied performance obligations relating to contracts with an original expected length of one year or less.

MA
Total		Less than 1 Year		1 - 2 Years		Over 2 Years
$	1,776.6	$	1,353.5	$	300.0	$	123.1

The balances in the MA table above include both amounts recorded as deferred revenue on the balance sheet as of December 31, 2018 as well as amounts not yet invoiced to customers as of December 31, 2018 largely reflecting future revenue related to signed multi-year arrangements for hosted and installed subscription based products.