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    SPGI
    Earnings call· Mar 2025(Q1 FY25)

    S&P Global Inc. SPGI

    Apr 29, 2025 Source

    Executive summary

    S&P Global Q1 FY25 — Strong Growth Across Divisions and Mobility Spin-off Announcement

    S&P Global delivered a solid Q1 FY25 with strong revenue and EPS growth across all divisions, driven by disciplined execution and robust customer engagement. The company announced its intent to spin off its Mobility division into a standalone public company, aiming to maximize shareholder value and enhance strategic focus for both entities. Despite market volatility and moderated issuance expectations, S&P Global maintains its full-year adjusted EPS guidance, leveraging expense discipline and capital allocation.

    Highlights

    5

    • Total revenue increased 8% year-over-year.

    • Adjusted diluted EPS grew 9% year-over-year.

    • Trailing 12-month margins improved 240 basis points to a record 49.3%.

    • Returned over $900 million to shareholders in Q1 through dividends and repurchases.

    • Billed Issuance increased 9% year-over-year in Q1.

    Concerns

    5

    • Expected Billed Issuance to moderate from Q1 levels for the remainder of 2025, with Q2 issuance expected to decline low double digits year-over-year.

    • M&A volumes now expected to be flat year-over-year, compared to prior assumptions of modest improvements.

    • Market Intelligence margins were below full-year guidance in Q1, though slightly better than expected.

    • Upstream Data & Insights revenue growth tempered by elevated cancellations due to customer consolidation in the energy space.

    • Indices revenue growth outlook lowered to 5%-7% due to market pullback in U.S. equities.

    Guidance & targets

    17
    CategoryTargetConfidence
    Mobility division separation
    12 to 18 months
    high materiality
    High
    OSTTRA joint venture divestiture
    close in the second half of this year
    medium materiality
    High
    Total revenue growth
    4% to 6%
    high materiality
    High
    Adjusted margins
    48.5% to 49.5%
    high materiality
    High
    Adjusted diluted EPS
    $16.75 to $17.25
    high materiality
    High
    Ratings revenue growth
    flat to up 4%
    high materiality
    Medium
    Indices revenue growth
    5% to 7%
    high materiality
    Medium
    Billed Issuance
    approximately flat year-over-year
    high materiality
    Medium
    Billed Issuance
    decline low double digits
    high materiality
    Medium
    Billed Issuance
    more or less flat growth
    high materiality
    Medium
    M&A volumes
    flat year-over-year
    medium materiality
    Medium
    S&P 500 performance assumption
    flat
    medium materiality
    Medium
    Ratings non-transaction revenue growth
    grow faster than transaction revenue
    medium materiality
    High
    Ratings non-transaction revenue growth
    mid-single-digit range
    medium materiality
    High
    Global GDP growth
    lower than that forecast
    medium materiality
    Medium
    U.S. inflation
    bit higher than originally assumed
    medium materiality
    Medium
    Crude oil prices
    average in the low 70s
    low materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Market Intelligence
    Net impact of acquisitions and divestitures created a 30 basis point headwind to growth. Margins improved slightly year-over-year. Strong sales pipeline and stable renewal rates.
    Data, Analytics and Insights revenue growth: 7% (reported)Data, Analytics and Insights revenue growth: 4% (organic)Enterprise Solutions organic growth: 8% (excluding Fincentric impact)Credit & Risk Solutions growth: 6%
    		—5%—32.8%
    Ratings
    Fifth consecutive quarter of over $1 billion in revenue. Positive growth across all revenue categories. Adjusted expenses increased only 4%.
    Transaction revenue growth: 7%Nontransaction revenue growth: 10%Issuer Credit Rating (ICR) revenue growth: elevated (driven by private market mandates)
    		$1B+8%——
    Commodity Insights
    Commercial momentum from transition to enterprise contract relationships. Record quarter in Global Trading Services and record attendance at CERAWeek. Upstream growth tempered by customer consolidation. Adjusted expenses increased 8%.
    Energy & Resources Data & Insights growth: double-digit (sixth consecutive quarter)Price assessments growth: 8%Data and insights growth: 10%Advisory & Transactional Services revenue growth: 19%Upstream Data & Insights revenue growth: 1%
    		—9%—48.1%
    Mobility
    Dealer revenue driven by new business in CARFAX and automotiveMastermind, benefiting from higher exposure to the used car market. Manufacturing growth impacted by decline in recall business. Adjusted expenses increased 8% due to increased advertising and promotional investment.
    Currency impact: 70 bps headwindDealer revenue growth: 11%Manufacturing revenue growth: 1%Financials & Other revenue growth: 11%
    		—9%—38.5%
    S&P Dow Jones Indices
    Asset-linked fees benefited from higher AUM, market appreciation, and net inflows. Adjusted expenses increased 15% due to strategic growth initiatives and compensation. Operating margin remained unchanged year-over-year.
    Asset-linked fees growth: 18%Exchange-Traded Derivatives revenue growth: 11%Data & Custom Subscriptions growth: 7%End-of-day contracts growth: mid-teens
    		—15%—72.9%

    Operational metrics

    20
    Total revenue growth
    8%YoY
    Q1 FY25

    Solid growth in all five divisions.

    Subscription revenue growth
    7%YoY
    Q1 FY25

    Revenue from subscription products.

    Adjusted diluted EPS growth
    9%YoY
    Q1 FY25

    Reflects disciplined execution.

    Adjusted operating margin
    49.3%up 240 bps YoY
    TTM Q1 FY25

    Record trailing 12-month margins.

    Adjusted operating margin expansion
    100YoY
    Q1 FY25

    Driven by revenue growth of 8% and expense growth of 6%.

    Capital returned to shareholders
    $900M+
    Q1 FY25

    Strong track record of capital allocation.

    Billed Issuance growth
    9%YoY
    Q1 FY25

    Driven by structured finance and bank loans.

    Active users growth across platforms
    23%YoY
    Q1 FY25

    Across Capital IQ platforms, Platts Connect, and AutomotiveMasterminds.

    Sustainability and energy transition revenue
    $93Mup 20% YoY
    Q1 FY25

    Driven by strong demand for Commodity Insights energy transition products and data and insights from Market Intelligence.

    Private Market revenue
    $140Mup 21% YoY
    Q1 FY25

    Growth driven by debt and bank loan ratings, iLEVEL, and other Private Market Solutions within Market Intelligence.

    Revenue synergies run rate (from IHS Markit acquisition)
    $311M
    Q1 FY25 exit

    Nearing the finish line, ahead of pace to achieve target.

    Vitality Index
    at or above 10%
    Q1 FY25

    Contributions from new and enhanced products in every division.

    Mobility revenue
    $1.6B
    FY24

    Financial profile of Mobility as a standalone entity.

    Adjusted operating margin
    nearly 40%
    FY24

    Financial profile of Mobility as a standalone entity.

    Core businesses revenue (ex-Mobility)
    nearly $13B
    FY24

    Financial profile of S&P Global's four core businesses.

    Adjusted operating margin
    approximately 50%
    FY24

    Financial profile of S&P Global's four core businesses.

    CARFAX Car Care users
    46Mnearly 65% increase since Investor Day 2022
    Q1 FY25

    Driven by increased advertising and promotional investment.

    Mobility revenue from used car market
    70%
    Q1 FY25

    Provides resilience through the cycle.

    Mobility revenue from subscription products
    80%
    Q1 FY25

    Provides stability despite end market challenges among automotive manufacturers.

    OSTTRA sale net proceeds
    $1.4B
    H2 FY25 (expected close)

    Expected to be used for additional buybacks.

    Product announcements

    4
    ProductTypeDetails
    Visible Alpha data integrationupdate
    iLEVEL automated data ingestionlaunch
    Fixed income index in Europelaunch
    New commodity benchmarks (Platts)launch

    Deals & partnerships

    2
    KKRSale of OSTTRA joint venture.

    Definitive agreement signed to divest the OSTTRA joint venture.

    Standalone public companyIntent to separate Mobility division into a standalone public company.

    Aims to maximize shareholder value by enhancing S&P Global's strategic focus and creating a scaled, independent Mobility business.

    Risks & headwinds

    7
    Unpredictable market movements, geopolitical risk, regulatory landscape fluiditynear term

    slowing pace of decision-making in the markets compared to our initial expectations

    Mitigation: Increased customer engagement; resilience of recurring revenue business mix (75% of total revenue); mission-critical products with annual/multiyear contracts.

    Tariff discussions and related market volatilitynear term

    likely leading to some pushback of issuance

    Mitigation: Increased demand for derivative products (ETD, Global Trading Services) for procurement, hedging.

    Lower global GDP growth and higher US inflationFY25

    GDP 'lower than that forecast' (previously 3%), inflation 'bit higher than originally assumed' (previously 2.3%)

    Mitigation: Base case assumptions underpinning outlook reflect these changes.

    Moderation in Billed Issuance volumesQ2 FY25, H2 FY25, FY25

    Q2 issuance 'decline low double digits', H2 'flattish', FY25 'approximately flat' (vs. prior 'low single-digit growth')

    Mitigation: Strong base of non-transaction revenue in Ratings (expected to grow faster than transaction revenue); expense discipline and modest adjustments to incentive compensation.

    M&A volumes flat year-over-yearFY25

    'flat year-over-year' (vs. prior 'modest improvements from 2024')

    Mitigation: Potential for opportunistic issuance; pent-up demand for 2026.

    Market pullback in U.S. equitiesFY25

    Impacts Indices revenue growth outlook (lowered to 5%-7%)

    Mitigation: Expense discipline and modest adjustments to incentive compensation.

    Customer consolidation in the energy spaceRemaining quarters of 2025

    'somewhat elevated cancellations' impacting Upstream Data & Insights revenue growth (1% in Q1)

    Mitigation: Contemplated in full-year guidance.

    What to watch in Q2 FY25

    5

    Market Intelligence revenue acceleration

    H2 FY25
    CurrentQ1 MI revenue growth 5%
    TargetStronger H2 growth

    Why it matters

    MI is a core subscription business; its acceleration is key to overall revenue growth and reflects customer engagement.

    That gives us a lot of confidence in acceleration, as we had indicated in our last call, for a stronger second half compared to first half of the year.

    Q&A highlights

    6

    Why now for the Mobility spin-off? Will there be data licensing agreements between RemainCo and the spun-off entity? Any initial thoughts on dissynergies?

    Martina stated the decision was a result of deep, rigorous analysis and Board alignment for long-term shareholder value. More details on data licensing will follow. Eric noted initial financial review suggests dissynergies/stranded costs are relatively immaterial.

    “We've done an incredibly deep and rigorous assessment, including multiple rounds of dialogue around this with our Board of Directors and consulting with external advisers on this also. So we've come to the conclusion that this is the best path to long-term shareholder value and that the tax-free spin here is the right path forward for us.”

    asked by Toni Kaplan · answered by Martina Cheung

    2 min read6 chapters

    Detailed Narrative

    01

    Portfolio Optimization & Mobility Spin-off

    S&P Global announced its intent to spin off its Mobility division into a standalone public company, a decision resulting from rigorous internal analysis and unanimous Board alignment. This separation, expected to be tax-free and completed in 12 to 18 months, aims to maximize shareholder value by enhancing S&P Global's strategic focus on its four core divisions (Market Intelligence, Ratings, Commodity Insights, S&P Dow Jones Indices) and creating a scaled, independent Mobility business with strong brands like CARFAX and AutomotiveMasterminds. Both entities are expected to be well-capitalized and continue their growth trajectories.

    02

    Market Dynamics & Customer Engagement

    Amidst unpredictable market movements, geopolitical risks, and regulatory fluidity, S&P Global observed a significant increase in customer engagement. Active users across Capital IQ platforms, Platts Connect, and AutomotiveMasterminds grew 23% year-over-year in Q1. The company's platforms and data are serving as a destination of choice for decision-makers navigating complex environments, as evidenced by record attendance at marquee conferences like CERAWeek and TPM25.

    03

    Innovation in Data & AI

    The company continues to drive innovation, integrating Visible Alpha data into Capital IQ Pro a quarter ahead of schedule. A significant launch was iLEVEL automated data ingestion, an AI-powered tool developed jointly by Market Intelligence and Kensho, designed to streamline portfolio management for private equity and credit clients by extracting and tagging data from diverse sources. New benchmarks were also introduced in fixed income indices and various commodity markets, including biofuels and metals.

    04

    Issuance Environment & Outlook

    Q1 FY25 saw strong Billed Issuance, up 9% year-over-year, driven by structured finance and bank loans as issuers took advantage of favorable market windows. However, the company expects moderation for the remainder of 2025, projecting a low double-digit decline in Q2 issuance and flattish growth in H2, leading to an approximately flat outlook for the full year. This moderation is attributed to market volatility🌐, tariff discussions, and a pull-forward📎 of some Q1 issuance, with M&A volumes now expected to be flat YoY.

    05

    Resilience of Business Mix

    S&P Global benefits from a resilient business mix, with approximately 75% of its total revenue being recurring, providing stability through market cycles. Market volatility🌐 can also create opportunities, as seen in the strong performance of the Exchange-Traded Derivatives (ETD) business in Indices and Global Trading Services in Commodity Insights. Furthermore, nearly half of the Ratings business revenue is non-transactional, offering a predictable and consistent growth component during volatile periods.

    06

    OSTTRA Divestiture & Capital Allocation

    S&P Global announced a definitive agreement to divest its OSTTRA joint venture to KKR, with the transaction expected to close in the second half of 2025. The company anticipates net proceeds of approximately $1.4 billion after tax from this sale, which are planned to be used for additional share repurchases. This capital allocation strategy is intended to offset much of the EPS impact from the sale and contributes to maintaining the high end of the adjusted EPS guidance.

    AI-generated summary of the company’s earnings call. Not investment advice.