Business Description
SPGI is a company that operates through several key business lines, providing essential data, analytics, and insights to various industries. The company primarily engages in Market Intelligence, Mobility, and Indices, offering subscription-based services and solutions that cater to finance, automotive, and investment sectors . SPGI's revenue growth is largely driven by the demand for market data and insights, with a strong emphasis on subscription models across its divisions .
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Market Intelligence - Provides data, analytics, and third-party research for finance and corporate professionals through Desktop, Data & Advisory Solutions, Enterprise Solutions, and Credit & Risk Solutions. Subscription revenue is a major contributor to this segment.
- Desktop - Offers software access for financial data analysis.
- Data & Advisory Solutions - Delivers tailored data and advisory services.
- Enterprise Solutions - Supplies comprehensive data solutions for enterprises.
- Credit & Risk Solutions - Provides tools for credit assessment and risk management.
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Mobility - Serves the automotive value chain, including OEMs, suppliers, and finance companies, with critical information and insights through subscription and consulting services.
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Indices - Offers valuation and index benchmarks for investment advisors and institutional investors, generating revenue from asset-linked fees, exchange-traded derivatives, and data subscriptions.
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Q3 2024 Summary
What went well
- Strong Leadership Transition with Strategic Focus: Incoming CEO Martina Cheung plans to connect the dots across divisions through a new Chief Client Officer role, aiming to enhance cross-selling opportunities and unlock growth potential by leveraging SPGI's vast data assets.
- Commitment to Innovation and AI Adoption: SPGI is integrating Generative AI into products, leveraging its Kensho platform and extensive high-quality data to improve offerings and customer engagement. They've seen significant momentum in AI initiatives, both internally with the Spark Assist tool and externally with customers expressing strong interest.
- Disciplined Portfolio Optimization and Confidence in Value Creation: SPGI continues to optimize its portfolio, making strategic divestitures and focusing on areas with the highest potential for growth and value creation, demonstrating a disciplined approach to delivering shareholder value.
What went wrong
- Elevated cancellations in the Market Intelligence division, particularly among smaller customers, are negatively impacting growth, and this trend is expected to continue through at least the end of the year.
- Pricing pressure, tightening of budgets, and longer sales cycles in key end markets are causing challenges, making it difficult to predict when a recovery in the Market Intelligence segment might occur.
- Ongoing portfolio optimization and leadership changes, including recent divestitures, suggest challenges in achieving steady execution within the Market Intelligence business.
Q&A Summary
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Ratings Growth Outlook
Q: Is the 6–9% growth target for Ratings achievable after pull-forwards?
A: Martina affirmed that despite higher issuance levels and some pull-forward from future years, they are on track to achieve the 6% to 9% growth target for Ratings over the next several years, citing a healthy maturity wall of $2–2.8 trillion each year over the next five years and the strong correlation with GDP growth. -
Market Intelligence Challenges
Q: When will Market Intelligence growth improve, and what needs to change?
A: Martina noted that while they won't predict a trough, they have good conviction that innovation in core products and increased customer engagement will drive recovery as market conditions improve. She mentioned seeing some "green shoots" in certain sectors like banking. -
Synergy Realization
Q: Are synergies impacting divisions differently amid MI's challenges?
A: Doug stated that synergies from the merger are ahead of expectations, with cross-sell performing incredibly well. Integration has gone well, and they continue to deliver on synergy targets across all divisions. -
Strategy Under New Leadership
Q: What changes will Martina implement to enhance shareholder value?
A: Martina plans to connect the dots across divisions through new leadership functions like the Chief Commercial Officer and the enterprise data office, aiming to better leverage their data and create more growth opportunities. -
Commodity Insights Outlook
Q: Is Commodity Insights' strong performance sustainable amid cyclicality?
A: Martina is excited about the business due to its diversification across commodities and growth in areas like energy transition products, including a new clean energy tech product. They are investing in areas that are expected to continue growing. -
Competition in Market Intelligence
Q: Has pricing competition increased in Market Intelligence?
A: Doug acknowledged pricing pressure due to expense management in client firms, sales cycle slowdowns, and vendor consolidation. However, he emphasized that Market Intelligence remains an incredibly strong business with valuable data offerings. -
Indices Business Outlook
Q: How is the Indices business performing amid industry challenges?
A: Chris explained they are focusing on long-term customer relationships, expecting acceleration in Data & Custom revenue, which increased 5% year-over-year. They anticipate ACV acceleration later in the year. -
Adoption of AI Technologies
Q: What's the status of AI adoption among customers and internally?
A: Martina highlighted that their high-quality data positions them well for integrating generative AI into products. Clients are engaging with them on AI-ready data, and internally, the rollout of Spark Assist is progressing with high adoption and valuable use cases. -
Private Market Solutions Growth
Q: How is SPGI positioned in private markets amid industry growth?
A: Martina noted that they are investing and growing rapidly in private markets across the portfolio, with phenomenal products like iLEVEL and Wall Street Office performing well. They see opportunities in Ratings and Indices divisions too. -
Sustainability Products Strategy
Q: What is the outlook for sustainability products and new launches?
A: Martina announced plans to move the Sustainable1 business under Commodity Insights, combining it with energy transition products. This aims to leverage their unique capabilities to help clients navigate the energy transition and expand offerings to multiple sectors. -
Mobility Revenue Guidance
Q: Why was the Mobility revenue guidance trimmed again?
A: Chris stated that while core subscription growth was strong at low double digits, challenges continue in the recall business. They expect an easier comparison next year due to the recall headwinds easing. -
Chief Client Officer Role Creation
Q: What's the purpose of the new Chief Client Officer role?
A: Martina explained that the role aims to bring more consistency and connectivity across sales teams, ensuring customers understand the full breadth of SPGI's offerings and improving go-to-market practices. -
Market Intelligence Desktop Competition
Q: Is structural lack of growth in Financial Services impacting MI Desktop?
A: Martina believes market conditions play to their strengths, pointing to growth in areas like private credit. They have a broad offering, and products like Visible Alpha are performing well. Strategic accounts and new leadership roles are expected to enhance market share.
Key Metrics
Revenue by Segment - in Millions of USD | FY 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | FY 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | FY 2015 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | FY 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | FY 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | FY 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Market Intelligence | 1,071 | 1,079 | 1,099 | 1,127 | 4,376 | 1,142 | 1,155 | 1,162 | ||||||||||||||||||||||||||||||||||||||||||||||
- Subscription | 66 | - | - | - | - | 70 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
- Non-subscription | 77 | - | - | - | - | 75 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
- Recurring Variable | 125 | - | - | - | - | 141 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Ratings | 824 | 851 | 819 | 838 | 3,332 | 1,062 | 1,135 | 1,110 | ||||||||||||||||||||||||||||||||||||||||||||||
- Non-transaction | 445 | - | - | - | - | 480 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Commodity Insights | 508 | 462 | 479 | 497 | 1,946 | 559 | 516 | 522 | ||||||||||||||||||||||||||||||||||||||||||||||
- Sales Usage-based | 65 | - | - | - | - | 73 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Mobility | 358 | 369 | 379 | 378 | 1,484 | 386 | 400 | 412 | ||||||||||||||||||||||||||||||||||||||||||||||
Indices | 341 | 348 | 354 | 36 | 1,403 | 387 | 389 | 416 | ||||||||||||||||||||||||||||||||||||||||||||||
- Asset-linked Fees | 210 | - | - | - | - | 244 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Engineering Solutions | 100 | 33 | 0 | - | 133 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||
Intersegment Elimination | -42 | -41 | -46 | -48 | -177 | -45 | -46 | -47 | ||||||||||||||||||||||||||||||||||||||||||||||
Total Revenue | 3,160 | 3,101 | 3,084 | 3,152 | 12,497 | 3,491 | 3,549 | 3,575 | ||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Geography - in Millions of USD | FY 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | FY 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | FY 2015 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | FY 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | FY 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | FY 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | FY 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | FY 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
U.S. | 1,926 | 1,865 | 1,853 | 1,898 | 7,542 | 2,150 | 2,151 | 2,176 | ||||||||||||||||||||||||||||||||||||||||||||||
European region | 711 | 703 | 693 | 715 | 2,822 | 776 | 830 | 802 | ||||||||||||||||||||||||||||||||||||||||||||||
Asia | 337 | 342 | 344 | 352 | 1,375 | 356 | 368 | 388 | ||||||||||||||||||||||||||||||||||||||||||||||
Rest of the world | 186 | 191 | 194 | 187 | 758 | 209 | 200 | 209 | ||||||||||||||||||||||||||||||||||||||||||||||
- Domestic Revenue | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
- International Revenue | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Total Revenue | 3,160 | 3,101 | 3,084 | 3,152 | 12,497 | 3,491 | 3,549 | 3,575 |
Executive Team
Questions to Ask Management
- Martina, with the recent leadership changes and your emphasis on connecting the dots across divisions, what specific initiatives are you planning to implement differently from your predecessor to enhance shareholder value, and how will you ensure these changes don't disrupt the company's current success?
- Given the challenges in the Market Intelligence segment, including increased cancellations among smaller customers due to pricing pressure and longer sales cycles, what concrete steps are you taking to stabilize execution and improve performance in this segment?
- Mobility revenue guidance has been trimmed for the second consecutive quarter, partly due to recall activity headwinds. How do you plan to overcome these challenges, and what strategies are in place to restore growth and confidence in this segment moving forward?
- While Commodity Insights is performing well above medium-term targets, how do you plan to mitigate potential cyclicality in this business, and can you elaborate on how investments in energy transition products will contribute to sustained growth despite market fluctuations?
- With several leadership changes announced, including new division presidents and a new CFO expected in 2025, how will you ensure that this transition maintains the company's growth trajectory, and what measures are in place to address any potential disruptions or challenges arising from these changes?
Past Guidance
Q3 2024 Earnings Call
- Issued Period: Q3 2024
- Guided Period: FY 2024
- Guidance:
- Revenue Growth: 11.5% to 12.5% .
- Adjusted Margin Expansion: 200 to 250 basis points .
- Adjusted Diluted EPS: $15.10 to $15.30 .
- Adjusted Free Cash Flow: Approximately $5.2 billion .
- Market Intelligence Revenue Growth: 6% to 6.5% .
- Ratings Revenue Growth: 26% to 28% .
- Commodity Insights Revenue Growth: 9% to 9.5% .
- Mobility Revenue Growth: 8% to 8.5% .
- Indices Revenue Growth: 13% to 15% .
- Market Intelligence Margins: 32.5% to 33% .
- Ratings Margins: 61% to 62% .
- Commodity Insights Margins: 46.5% to 47% .
- Mobility Margins: 38.5% to 39% .
- Indices Margins: 69.5% to 70.5% .
- Global GDP Growth Assumption: 3.2% .
- U.S. Inflation Assumption: 2.9% .
- Average Price for Brent Crude Assumption: $81 per barrel .
- Billed Issuance Forecast: Increase approximately 50% .
Q2 2024 Earnings Call
- Issued Period: Q2 2024
- Guided Period: FY 2024
- Guidance:
- Revenue Growth: 8% to 10% .
- Adjusted Operating Margin Expansion: 125 to 175 basis points .
- Adjusted Diluted EPS: $14.35 to $14.60 .
- Adjusted Free Cash Flow: Approximately $4.7 billion .
- Market Intelligence Revenue Growth: 6% to 7.5% .
- Ratings Revenue Guidance: Raised substantially .
- Commodity Insights Revenue Guidance: Unchanged .
- Mobility Revenue Growth: 8% to 9% .
- Indices Revenue Growth: 10% to 12% .
- Market Intelligence Margin Guidance: 33% to 34% .
- Ratings Margin Guidance: Raised by 100 basis points .
- Mobility Margin Guidance: 38.5% to 39.5% .
- Indices Margin Expectations: Unchanged .
Q1 2024 Earnings Call
- Issued Period: Q1 2024
- Guided Period: FY 2024
- Guidance:
- Global GDP Growth: 3.2% .
- U.S. Inflation: 2.8% .
- Brent Crude Price: $85 per barrel .
- Interest Rate Cuts: Fewer than 3 .
- Billed Issuance Forecast: 6% to 10% .
- Revenue Growth: 6% to 8% .
- Margin Expansion: 100 to 150 basis points .
- Adjusted EPS: $13.85 to $14.10 .
- Adjusted Free Cash Flow: Increased by $100 million .
- Division Revenue Growth: Reiterated for Market Intelligence, Commodity Insights, and Mobility; increased for Ratings and Indices .
- Indices Margin Outlook: Raised .
- Ratings Division Margins: 150 basis points expansion .
Q4 2023 Earnings Call
- Issued Period: Q4 2023
- Guided Period: FY 2024
- Guidance:
- Revenue Growth: 5.5% to 7.5% .
- Organic Revenue Growth: 7% to 9% .
- Adjusted Operating Margin Expansion: At least 100 basis points .
- Adjusted EPS: $13.75 to $14 .
- Adjusted Tax Rate: Nearly 2 percentage points higher .
- Adjusted Free Cash Flow: Approximately $4.4 billion .
- Division-Specific Revenue Growth and Margins:
- Market Intelligence: Revenue growth 6% to 7.5%; margins 33.5% to 34.5% .
- Ratings: Revenue growth 6% to 8%; margins 57.5% to 58.5% .
- Commodity Insights: Revenue growth 8% to 9.5%; margins 46.5% to 47.5% .
- Mobility: Revenue growth 8.5% to 10%; margins 39% to 40% .
- S&P Dow Jones Indices: Revenue growth 7% to 9%; margins 68.5% to 69.5% .
- Billed Issuance Growth: 3% to 7% .
- Global GDP Growth Assumption: 2.8% .
- U.S. Inflation Assumption: 2.4% .
- Average Price for Brent Crude: $83 per barrel .
- Share Repurchase Authorization: Up to $2.4 billion .
Latest news
Recent developments and announcements about SPGI.
Corporate Leadership
CEO Change
Martina L. Cheung is set to become the President and CEO of S&P Global on November 1, 2024 .