- Total Revenue: Increased 16% year-over-year, excluding the divestiture of engineering solutions.
- Subscription Product Revenue: Increased 8% year-over-year in the second quarter.
- Margin Expansion: 450 basis points year-over-year.
- Adjusted EPS: Increased 30% year-over-year.
- Ratings Division Revenue: More than 60% growth year-over-year.
- Annualized Run Rate Revenue Synergies: Nearly $200 million achieved in the second quarter.
- Adjusted Diluted EPS: Increased 30% year-over-year to $4.4.
- Reported Revenue: Grew by 14% year-over-year to a record $3.5 billion in the second quarter.
- Sustainability and Energy Transition Revenue: Grew to $87 million in the quarter.
- Private Market Solutions Revenue: Increased by 26% to $134 million.
- Ratings Transaction Revenue: Grew by 63% in the second quarter.
- Non-Transaction Revenue: Increased 9% year-over-year.
- Commodity Insights Revenue: Increased 12% year-over-year.
- Mobility Revenue: Increased 8% year-over-year.
- S&P Dow Jones Indices Revenue: Increased 12% year-over-year.
- Asset-Linked Fees: Up 16% year-over-year.
- Adjusted Free Cash Flow Guidance: Increased to approximately $4.6 billion.
- Revenue Guidance for Full Year: Increased to a range of 8% to 10% growth.
- Adjusted Operating Margin Expansion Guidance: 125 to 175 basis points.
- Adjusted Diluted EPS Guidance: Increased to a range of $14.35 to $14.60.
Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- S&P Global Inc (SPGI, Financial) reported a 16% increase in total revenue for Q2 2024, excluding the divestiture of engineering solutions.
- The company achieved a significant margin expansion of 450 basis points year-over-year.
- Adjusted EPS grew by 30%, marking the highest quarterly adjusted EPS in the company's history.
- Revenue from subscription products increased by 8% year-over-year.
- S&P Global Inc (SPGI) successfully launched new products and enhancements, including Cap IQ Pro and new benchmarks in commodity insights.
Negative Points
- The company experienced a slight decline in renewal rates for its market intelligence segment.
- There is uncertainty around the back half of the year due to potential pull-forward of debt issuance.
- The recall business in the mobility segment has been abnormally soft year-to-date.
- The financial services end market continues to show softness, impacting growth in the desktop business.
- The timing and likelihood of rate cuts in the US market remain uncertain, which could impact future issuance.
Q & A Highlights
Q: Can you discuss the pipeline for Market Intelligence and the impact of the sales cycle drag? How do you see the desktop business evolving?
A: Doug Peterson, President & CEO: The softness in Market Intelligence was expected due to the elimination of over 60,000 seats in banks and investment banks since COVID. We see some business returning with strong debt and equity capital markets and potential M&A activity. Vendor consolidation and contract negotiations are ongoing. Enhancements like the integration of Visible Alpha and new visualization tools are driving positive results.
Q: What is the annualized contribution from Visible Alpha and the impact of the Concentric divestiture? How do you plan to continue participating in vendor consolidation?
A: Doug Peterson, President & CEO: Capital allocation is crucial. We continuously review our portfolio to ensure alignment with our strategic goals. Visible Alpha has shown strong growth with over 200 contributing brokers, and we see opportunities to leverage our relationships and data to drive further penetration.
Q: Can you elaborate on the performance of the Ratings division and the outlook for the second half of the year?
A: Chris Craig, Interim CFO: Ratings saw exceptional revenue growth of 33%, driven by increased bank loan and bond issuance. We expect the second half to be softer due to seasonal factors and pull-forward activity. However, we have raised our margin guidance for Ratings by 100 basis points due to strong revenue performance.
Q: How is the Commodity Insights division performing, and what are the growth drivers?
A: Chris Craig, Interim CFO: Commodity Insights revenue increased 12%, with strong performance across all business lines. Price assessments and Energy & Resources data and insights both grew at double digits. We continue to see favorable commercial conditions and strong subscription sales in the Middle East, Africa, and Asia.
Q: What are the key contributors to the Vitality Index, and how do you plan to maintain it above the 10% target?
A: Doug Peterson, President & CEO: Key contributors include CareFax listings, energy transition climate products, and sustainable bonds. We are encouraged by the acceleration in innovation and plan to maintain the Vitality Index at or above 10% through continued product development and leveraging our enterprise expertise in AI.
Q: Can you provide more details on the integration of AI capabilities within your products?
A: Doug Peterson, President & CEO: We launched Chat AI on the Platts Connect platform, providing real-time responses to user queries. We also introduced transcript summarization within Cap IQ, which organizes topics and sentiment, allowing users to quickly find relevant data. These AI capabilities enhance user experience and decision-making.
Q: How is the Mobility division performing, and what are the expectations for the second half?
A: Chris Craig, Interim CFO: Mobility revenue increased 8%, driven by new business growth in products like new car listings and CareFax. However, the Recall business has been soft, and we expect this to continue. We have adjusted our revenue growth guidance to 8%-9% and expect margins to be slightly lower.
Q: What is the outlook for S&P Dow Jones Indices, and what are the growth drivers?
A: Chris Craig, Interim CFO: Indices revenue increased 12%, driven by higher AUM and growth in data and customer subscriptions. Asset-linked fees were up 16%, and exchange-traded derivatives revenue grew 4%. We have raised our revenue growth guidance to 10%-12%, assuming market levels remain flat.
Q: Can you discuss the financial guidance for the full year and the assumptions behind it?
A: Doug Peterson, President & CEO: We assume global GDP growth of 3.3%, US inflation of 3%, and an average Brent crude price of $84 per barrel. We expect one rate cut in the US in the second half. We have raised our revenue growth guidance to 8%-10%, adjusted operating margin expansion to 125-175 basis points, and adjusted diluted EPS to $14.35-$14.60.
Q: What are the key strategic initiatives for the second half of the year?
A: Doug Peterson, President & CEO: We will focus on delivering strong results, continuing product innovation, and leveraging AI capabilities. We also plan to ensure a smooth transition as Martina Cheung takes over as CEO in November. Our goal is to maintain our leadership position and drive long-term growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
