Robert Fauber
President and Chief Executive Officer at Moody's
Thanks, Shivani, and good morning, everybody, and thanks for joining today's call. I'm going to begin by summarizing Moody's full year 2021 financial results, and then I'll provide an overview of our business and strategic direction. And following my commentary, Mark Kaye will provide some further details on our fourth quarter 2021 results and share our outlook for 2022 and also our new medium-term financial targets. And after our prepared remarks, as always, we'll be happy to take your questions. Our employees' resilience and commitment and hard work produced some exceptional results in 2021. And I'm proud to share that for the first time, we surpassed $6 billion in revenue with record revenues from both MIS and MA. And adjusted diluted EPS grew at 21% in 2021. Over the past several years, we've invested to build our businesses serving high-growth risk assessment markets.
And in 2021, in particular, to seize the really attractive growth opportunity in front of us, we made some substantial investments, particularly in the fourth quarter. Across the firm, we're introducing a range of new products and solutions to help customers identify, manage and measure risk and unlock opportunity and the pace is accelerating. We're balancing these investments with capital returns and seek to return approximately $2 billion to our stockholders this year in the form of dividends and share repurchases. For 2022, we project Moody's revenue to increase in the high single-digit percent range. That's driven by continued strong growth from MA and robust global debt issuance levels for MIS. And I'm also pleased to announce that in response to investor feedback, we're introducing new medium-term guidance, including Moody's Corporation's revenue to grow by at least 10% on an average annualized basis and adjusted operating margin to be in the low-50s percent range.
Recent acquisitions, combined with organic investments, put us in an excellent position to deliver on our integrated risk assessment strategy and achieve these targets. Finally, I want to remind you that Moody's will be hosting our next Investor Day on March 10th later this year, in New York City. And during the event, we're going to be showcasing key aspects of our business. And I look forward to meeting many of you in person. It's been a while. And for those who are unable to attend, there will also be a virtual option. Now, turning to full year results, both MIS and MA revenue grew by 16%. MIS rated over $6 trillion of issuance and generated over 1,100 new mandates. And that's equivalent to almost five new mandates every working day of the year. And this, combined with MA's 56th consecutive quarter of revenue growth, helped us achieve our second successive year of 20-plus percent adjusted EPS growth. 2021 was really a year where we accelerated our strategy to be the world's leading integrated risk assessment business and included investing for growth, purposeful innovation and delivering for our stakeholders.
During the year, we made a series of acquisitions to enhance our capabilities and further build out our offerings. The largest of these acquisitions, RMS gives us a world-class insurance data and analytics franchise as well as some sophisticated weather and disaster modelling capabilities. And this allows us to serve a wide spectrum of customers, helping them to better understand the physical risks posed by climate change. And that's an important part of our broader ESG offerings. We also made investments to build out our ratings presence in important international markets. And in 2021, we began offering local credit ratings in Brazil as part of the continued expansion of our Moody's Local business across Latin America. And just last week, we announced our intent to acquire a majority stake in GCR ratings, the leading credit rating agency in Africa, giving us an unmatched presence across the continent and really positioning us for the future. In 2021, we expanded our suite of award-winning offerings with more than 15 meaningful product launches.
This includes Portfolio Studio, our new cloud-native Software-as-a-Service credit portfolio management tool. It provides a single and powerful view of risk. As part of our broader ecosystem of risk finance and lending solutions, it enables our customers to identify and measure and manage portfolio risks and returns by combining best-in-class Moody's models, scenarios and other content with business applications for financial institutions. We also launched the next generation of supply chain catalysts, providing our customers with an enterprise view of their critical supply relationships. Supply chain catalyst combines our Orbis database with customers' internal data, to deliver an integrated view of risk across multiple tiers of their supply chain and taking into account factors like financial health and sustainability and reputational risk among others.
And finally, we continue to focus on serving our people, our customers and our communities. Our DE&I initiatives have received some great external recognition, helping to distinguish Moody's as an employer of choice. And that has never been more important than right now. In addition to the accolades that you see on this slide, we were just notified of our inclusion in the Bloomberg Gender Equality Index for the second year in a row. And for the 11th year running, we're very proud to have received a perfect score from the Corporate Equality Index. And on top of these awards, we've achieved recognition from customers for our products and services. And among many other awards, we were named the best credit rating agency by Institutional Investor for the 10th straight year and we're ranked number two overall in the Chartis RiskTech100.
Now switching to our segment results, beginning with MIS. Favorable market conditions contributed to our strongest year yet, in terms of both revenue and rated issuance. And investment-grade supply moderated off what was really a record 2020, but volumes were still substantial. Meanwhile, the leveraged loan market rebounded sharply, and it was bolstered by low default rates and an uptick in private equity buyout activity as well as increased investor appetite for floating rate debt amid higher inflation. Strong leveraged loan volumes also supported some very strong CLO growth. And more broadly, structured finance issuance rebounded, and that was due to ongoing favorable market conditions, including tight spreads, and that drove both new CLO as well as refinancing activity and CMBS and RMBS issuance in particular.
As we consider the issuance drivers and factors for the year ahead, broadly speaking, the economy has demonstrated resilience to the impact of Omicron. GDP is growing. Companies are performing well and job creation continues, all of which underpin business, investor and consumer confidence. But there are headwinds. Inflation remains elevated amidst supply chain constraints in tight labor markets, although we expect price pressures to abate over the course of the year, but still uncertainty around the future path of interest rates may invite some occasional bouts of market volatility. And we've certainly seen that in the start of the year. Historically, a rising interest rate environment, when associated with robust economic activity, has been a positive for MIS. And I think it's worth noting that even with the potential for interest rate increases this year, overall, financing rates will remain at very modest levels from a historical perspective.
We forecasted tight spreads, M&A transactions, ongoing refinancing needs and disintermediation will support global debt activity, above medium-term historical levels, but with issuance slightly moderating versus record levels in 2021. And Mark is going to provide some details on MIS 2022 issuance expectations later in the call. Now, moving to Moody's Analytics. In 2021, MA's revenue grew by 16%. We also meaningfully increased the mix of recurring revenue, which now represents 93% of MA's total revenue. And underpinning this performance, were 9% organic revenue growth, supported by a 95% retention rate, over 2,000 new customer accounts added through a combination of global sales execution and acquisitions and targeted investments in high-priority markets. And this momentum gives us the confidence to capitalize on the strong demand and market opportunities across MA by continuing to invest both organically and inorganically.
And we're doing just that. In 2021, with a purposeful acceleration in the fourth quarter, we invested to enhance and fast track the launch of several product offerings. For instance, in the fourth quarter, we acquired Passport and invested to accelerate our integration with the goal of significantly advancing the development of our customer screening and onboarding capabilities. By digitizing and automating the KYC and AML process for our customers, we're providing a streamlined workflow along with data from our Orbis and grid databases. And we're building an efficient and effective interconnected suite of tools that deliver a stronger value proposition for customers in what is still a relatively fragmented market. We also continue to build product capabilities in commercial real estate. I've previously talked about a product launch in the third quarter, credit lens for commercial real estate.
And that's our SaaS workflow platform built on the latest cloud technology and tailored to the specific needs of commercial real estate lenders. In the fourth quarter, we accelerated the road map for enhancements to the platform, including the overall user experience. We also expedited the launch of our portfolio monitoring solution for commercial real estate investors, integrating and building on the acquisition of RealX data in September. This solution -- commercial real estate portfolio manager was recently made available to customers in North America. And last, we invested in the ongoing SaaS conversion of our banking software products, which supports growth among our existing customers and will help deepen our penetration of the midsized financial institution sector.
And we expect that this conversion will raise our recurring revenue growth rate to low double digits in 2022 and low teens in 2023. With 24% overall sales growth, including 20% increase in our organic recurring sales, we demonstrated significant traction with customers in these three segments. This strong sales growth, along with our financial capacity, gave us the confidence to invest opportunistically in the fourth quarter in these areas. For the broader MA business, we're also making some foundational investments, which will support both revenue growth and operating efficiency. In the fourth quarter, we made investments in integrating RMS, which we'll touch on shortly, as well as fine-tuning our sales capabilities to deepen customer penetration, expand cross-selling and refine our go-to-market approach.
Now, as you can see on this slide, our organic recurring revenue growth rate has steadily improved, and we anticipate it's going to continue to do so and contribute towards our goal of achieving total revenue growth in the low to mid-teens percent range within five years. And this focus on organic recurring revenue expansion is at the core of our business strategy for MA. There are also some other drivers that underpin this medium-term outlook. We're redoubling our focus on customer satisfaction to support our strong retention rates and help us support recurring revenue growth. Our product enhancements enable us to increase revenue per customer from cross-selling upgrades and pricing opportunities. The continued transition to SaaS and our Enterprise Risk Solutions segment provides the opportunity for revenue uplift from existing customers, as well as the opportunity to add new customers.
And we're also prioritizing the development of products and solutions for existing and new customers to further tailor our solutions to their unique needs. Now last year on our fourth quarter earnings call, we talked about the use cases that we're serving across what was at the time a $35 billion addressable market opportunity. Now, we've since expanded that to $40 billion by adding RMS. And given the demand to assess a wider range of risks, many of these markets are growing quickly, which, as you can see on the right, translated into four areas in MA, where we generated over $100 million in organic recurring revenue, with double-digit growth rates. And this leads me to our acquisition of RMS. And though it's early in the integration process, in meeting with a number of C-suite executives at insurance and reinsurance companies, I got to tell you, I'm excited about the opportunity to serve the insurance industry with a broader array of risk assessment offerings, as well as leveraging RMS' world-class data and models and expertise to meet our customers' growing needs around disaster and climate risk.
We have aligned and cross-trained our sales teams, and the SaaS migration is ongoing at RMS. Most importantly, the feedback from RMS and Moody's insurance customers has been overwhelmingly positive. They're excited about us jointly providing more comprehensive offerings for both the asset and the liability side of the balance sheet, and we're identifying opportunities for new products that evaluate weather and climate risks to take to the broader Moody's customer base, particularly in commercial real estate, CMBS and banking. To bring this to life, I want to highlight a recent example of a large P&C insurer, which has been a customer of both RMS and to a lesser extent, MA, for years. I met with them recently to talk about how we can be even more of a strategic partner for them. And we discussed how they wanted to integrate ESG considerations into a range of processes that included underwriting, investment, regulatory compliance, scenario analysis, portfolio management.
And ultimately, the breadth of our offerings and our ability to integrate them in ways that provide a more consistent view of ESG risk across the enterprise, and especially for climate change, really differentiated our offerings. And this cross-sell was enabled by the very deep RMS relationship and combined with the broader Moody's ESG capabilities. And I think it's a great example of the kinds of conversations that we're having with many RMS and Moody's insurance customers about how we can enable a consistent view of risk to support profitable growth, lower insured losses and reduced volatility.
I'm now going to turn the call over to Mark to provide further details on Moody's fourth quarter results as well as our full year 2022 and medium-term outlook.
