S&P Global(SPGI) - 2024 Q2 - Quarterly Report

Revenue Growth - Revenue increased by 14% to $3.549 billion for the three months ended June 30, 2024, driven by growth in Ratings, Market Intelligence, Commodity Insights, Indices, and Mobility[204] - Revenue increased 14% to$ 3,549 million in Q2 2024 compared to $3,101 million in Q2 2023, driven by growth in subscription and non-subscription revenue[214] - Revenue increased by 12% compared to the six months ended June 30, 2023, driven by growth in subscription revenue across multiple segments including Enterprise Solutions, Data and Advisory Solutions, and Market Intelligence[238] - Revenue increased by 33%, with transaction revenue growth driven by corporate bond ratings, bank loan ratings, and structured finance revenue, while non-transaction revenue increased due to surveillance and new entity credit ratings[264] - Revenue increased by 12% to$ 516 million for the three months ended June 30, 2024, and by 11% to $1,075 million for the six months ended June 30, 2024[296] - Revenue increased by 12% to$ 389 million for the three months ended June 30, 2024, and by 13% to $776 million for the six months ended June 30, 2024[308] - Revenue increased by 7% to$ 1,155 million in Q2 2024 compared to $1,079 million in Q2 2023, driven by growth in subscription, recurring variable, and non-subscription revenue[311][312] - Revenue at Indices increased by 12% in Q2 2024, driven by higher asset-linked fees and ETF AUM, which reached$ 3.777 trillion, a 29% increase from June 2023[334] - Revenue for the six months ended June 30, 2024, increased by 8% to $786 million compared to$ 727 million in the same period in 2023[358] - Revenue for the three months was $1,002 million and for six months was$ 1,961 million[375] Operating Profit and Margin - Operating profit increased by 59% to $1.452 billion for the three months ended June 30, 2024, primarily due to revenue growth and favorable foreign exchange impact[204] - Operating profit for the six months ended June 30, 2024 increased by 38% to$ 2.837 billion, excluding the impact of various one-time costs[208] - Operating profit increased by 4%, with a 9% increase excluding various impacts such as a gain on disposition, employee severance charges, and amortization of intangibles, driven by revenue growth and partially offset by higher compensation and technology costs[261] - Operating profit increased by 49%, with a 52% increase excluding legal costs and employee severance charges, driven by revenue growth and partially offset by higher compensation costs and incentives[264] - Operating profit increased by 32% to $206 million for the three months ended June 30, 2024, and by 26% to$ 432 million for the six months ended June 30, 2024[296] - Operating profit surged by 31% to $230 million in Q2 2024, with operating margin improving to 20% from 16% in Q2 2023[311] - Operating profit for the six months ended June 30, 2024, included$ 10 million in IHS Markit merger costs and $1 million in asset write-offs[324] - Operating profit for the three months was$ 650 million and for six months was $1,338 million[375] - Operating margin was 64% for both the three and six months ended June 30, 2024, compared to 57% for the same periods in 2023[289] Net Income and Earnings - Net income attributable to S&P Global Inc. increased by 98% to$ 1.011 billion for the three months ended June 30, 2024[196] - Net income for the three months was $423 million and for six months was$ 2,022 million[375] Segment Performance - Ratings segment revenue growth was driven by a 12% increase in transaction revenue and non-transaction revenue, including corporate bond ratings and bank loan ratings[190] - Market Intelligence segment revenue growth was primarily due to subscription revenue growth for workflow solutions and data feed products[190] - Commodity Insights segment revenue growth was driven by continued demand for market data and market insights products[190] - Indices segment revenue growth was primarily due to higher asset-linked fees revenue and exchange-traded derivative revenue[190] - Mobility segment revenue growth was driven by new business growth within the Dealer business and strong underwriting volumes in the Financial business[190] - Subscription revenue growth was primarily driven by increased demand for Commodity Insights market data, RatingsXpress®, RatingsDirect®, and strong underwriting volumes in the Financial business[238] - Asset-linked fees at Indices increased due to higher levels of AUM for ETFs and mutual funds, while sales-usage based royalties grew from licensing proprietary market data to commodity exchanges[238] - Segment operating profit increased by 35%, with significant growth in Market Intelligence (31%), Ratings (49%), and Commodity Insights (32%)[248] - The Market Intelligence segment's operating profit increased by 31%, with a 9% increase excluding various impacts such as a net acquisition-related benefit, employee severance charges, and asset impairment, driven by revenue growth and partially offset by higher compensation and technology costs[285] - Commodity Insights revenue grew by 12% in Q2 2024, supported by increased demand for market data and insights products, with unfavorable foreign exchange impact of less than 1 percentage point[325] Expenses and Costs - Selling and general expenses decreased 5% in 2024, but increased 4% excluding one-time items, primarily due to higher compensation and technology costs[218] - Operating-related expenses rose 6% in 2024, driven by higher compensation costs and incentives, partially offset by the sale of Engineering Solutions[220] - Depreciation and amortization increased 3% to $291 million in Q2 2024, primarily due to higher intangible asset amortization from the Visible Alpha acquisition[222] - Total operating-related expenses increased by 4%, primarily due to higher compensation costs, increased incentives, and higher technology costs, partially offset by the sale of Engineering Solutions[245] - Selling and general expenses decreased by 3%, excluding the impact of higher IHS Markit merger costs, lease impairments, and employee severance charges in 2023[246] - The company recorded a pre-tax loss of$ 120 million in Q2 2023 related to the sale of Engineering Solutions[228] Foreign Exchange Impact - Foreign exchange rates had an unfavorable impact of less than 1 percentage point on revenue for the three months ended June 30, 2024[190] - Foreign exchange rates had a favorable impact on operating profit of 5 percentage points, driven by constant currency comparisons and remeasurement of monetary assets and liabilities[271] Strategic Initiatives and Investments - The company is focusing on enhancing data management capabilities, utilizing advanced technologies to improve data processing efficiency and drive new insights[210] - The company is formulating an enterprise-wide AI strategy to accelerate innovation in product offerings and improve employee productivity[231] - The company aims to meet or exceed organic revenue growth and EBITA margin targets in 2024 while driving shareholder returns through effective execution and capital allocation[209] - The OSTTRA joint venture, formed with CME Group, aims to enhance trade processing and risk mitigation operations across OTC markets, contributing to Equity in Income on Unconsolidated Subsidiaries[251] - The acquisition of Visible Alpha on May 1, 2024, enhances the Market Intelligence segment's offering on the Capital IQ Pro platform, though it is not material to the consolidated financial statements[256] - The company entered into an agreement to sell Fincentric on July 26, 2024, with the transaction expected to close in Q3 2024, and it is not expected to be material to the consolidated financial statements[257] Financial Position and Cash Flow - Cash, cash equivalents, and restricted cash increased by $748 million to$ 2,039 million as of June 30, 2024, compared to December 31, 2023[338] - Net cash provided by operating activities rose by 84% to $2,504 million in the first six months of 2024, compared to$ 1,363 million in the same period of 2023[339] - Free cash flow increased by $1,151 million to$ 2,315 million for the six months ended June 30, 2024, compared to $1,164 million in 2023, primarily due to higher operating results and cash collections[365] - Cash provided by operating activities increased by$ 1,141 million to $2,504 million for the six months ended June 30, 2024, driven by higher operating results and cash collections[367] - The company purchased 1.2 million shares for$ 500 million in cash during the six months ended June 30, 2024, compared to 3.9 million shares for $1.5 billion in the same period in 2023[343] - The company has a$ 2.0 billion commercial paper program supported by a $2.0 billion five-year credit facility, with no commercial paper outstanding as of June 30, 2024[344] - The company's credit facility includes environmental sustainability performance indicators, with a commitment fee of 8 basis points[370] Debt and Capital Structure - Issued$ 750 million of 5.25% senior notes due in 2033 on September 12, 2023[373] - Exchanged $700 million of 4.75% Senior Notes due 2028,$ 921 million of 4.25% Senior Notes due 2029, $1,237 million of 2.45% Senior Notes due 2027,$ 1,227 million of 2.70% Sustainability-Linked Senior Notes due 2029, $1,492 million of 2.90% Senior Notes due 2032,$ 974 million of 3.70% Senior Notes due 2052, and $500 million of 3.90% Senior Notes due 2062 on March 1, 2023[373] - The company's senior notes are fully guaranteed by Standard & Poor's Financial Services LLC, a 100% owned subsidiary[372] Dividends and Shareholder Returns - The Board of Directors approved a quarterly common stock dividend of$ 0.91 per share on January 23, 2024[371] Tax and Interest - The effective income tax rate for the three and six months ended June 30, 2024, was 21.3% and 20.1%, respectively, compared to 31.1% and 23.8% for the same periods in 2023, due to tax charges on divestitures and changes in income mix by jurisdiction[278] - Interest expense, net decreased by $11 million (13%) for the three months and$ 18 million (11%) for the six months ended June 30, 2024, compared to the same periods in 2023, due to higher interest income from invested cash and a favorable interest rate environment[277] Assets and Liabilities - Current assets as of June 30, 2024, were $1,894 million compared to$ 1,303 million as of December 31, 2023[376] - Non-current assets as of June 30, 2024, were $857 million compared to$ 1,005 million as of December 31, 2023[376] - Current liabilities as of June 30, 2024, were $862 million compared to$ 1,184 million as of December 31, 2023[376] - Non-current liabilities as of June 30, 2024, were $11,740 million compared to$ 11,864 million as of December 31, 2023[376] - Intercompany payables to Non-Obligor Group as of June 30, 2024, were $14,985 million compared to$ 14,185 million as of December 31, 2023[376] Transaction and Non-Transaction Revenue - Transaction revenue includes fees for new issuance of corporate and government debt instruments, structured finance debt instruments, and bank loan ratings, while non-transaction revenue includes surveillance fees, annual fees, and royalties. Royalty revenue was $40 million and$ 79 million for the three and six months ended June 30, 2024, respectively[288] - Transaction revenue increased by 63% to $626 million in Q2 2024, driven by growth in corporate bond and bank loan ratings revenue[315][318] Issuance Volumes - Investment-grade billed issuance increased by 23% to$ 390 billion for the three months ended June 30, 2024, and by 27% to $847 billion for the six months ended June 30, 2024[292] - High-yield billed issuance increased by 81% to$ 135 billion for the three months ended June 30, 2024, and by 88% to $254 billion for the six months ended June 30, 2024[292] - Total billed issuance increased by 54% to$ 1,062 billion for the three months ended June 30, 2024, and by 50% to $2,055 billion for the six months ended June 30, 2024[292] Subscription Revenue - Subscription revenue grew 6% to$ 1,821 million, accounting for 51% of total revenue, while non-subscription/transaction revenue surged 48% to $777 million[214] - Subscription revenue accounted for 83% of total revenue, reaching$ 965 million in Q2 2024, a 6% increase from $910 million in Q2 2023[311] - Subscription revenue increased by 9% to$ 459 million for the three months ended June 30, 2024, and by 10% to $909 million for the six months ended June 30, 2024[296] - Subscription revenue grew by 11% to$ 635 million for the six months ended June 30, 2024, compared to $573 million in 2023[358] Sales Usage-Based Royalties - Sales usage-based royalties increased by 40% to$ 26 million for the three months ended June 30, 2024, and by 38% to $51 million for the six months ended June 30, 2024[296] Corporate Unallocated Expense - Corporate Unallocated expense decreased by 58%, primarily due to lower loss on dispositions, reduced IHS Markit merger costs, and lower lease impairments[253] Equity in Income on Unconsolidated Subsidiaries - Equity in Income on Unconsolidated Subsidiaries was$ 19 million for the six months ended June 30, 2024, compared to $25 million in the same period in 2023, reflecting a 24% decline[254] Contingent Payments - The company received a contingent payment of$ 46 million pre-tax ($34 million after-tax) in Q1 2023 related to the sale of Leveraged Commentary and Data (LCD), included in Loss on dispositions, net[269]