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S&P Global Inc Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- Total revenue increased by 14%, or 15% excluding the impact of Engineering Solutions.
- Revenue increased by 9% in Q4, driven by demand for the CARFAX product suite and strong performance from insurance-related products.
- Growth in Financials & Other accelerated to 18% as the business line benefited from strong underwriting volumes and market share growth.
- Data & Custom Subscriptions increased by 5% YoY.
- Market-driven businesses, Ratings and Indices grew by over 20% in Q4 as the company capitalized on favorable conditions in both the debt and equity markets.
- The company expects the growth rate to be the lowest in Q1 and margins to be the lowest in Q1 due to the timing of revenue recognition, the lapping of acquisitions and divestitures, and the phasing of investments.
- The company acknowledges the degree of macro and geopolitical uncertainty that exists and the range of potential outcomes beyond its base case assumptions.
- The company saw that in its financial results and it creates a more difficult compare this year.
- The company continues to see conditions in the financial services end market below what it would consider normal.
- Market Intelligence division expects revenue growth in the range of 5% to 6.5%.
- The company expects the growth rate to be the lowest in Q1 and improve as the year progresses.
- Margins are expected to be the lowest in Q1 due to the timing of revenue recognition, the lapping of acquisitions and divestitures, and the phasing of investments.
- The company expects variability in exchange rates that could impact revenue, but has natural hedges and an active hedging program to mitigate EPS risk from foreign exchange rates.
- The company expects the mix of issuance to shift slightly in favor of investment grade compared to 2024.
Q&A Highlights from S&P Global Inc Earnings Call Q4 2024
- Analyst asked about the ACV growth in Market Intelligence and how it contributed to revenue growth.
- ACV growth contributed to a point or two of additional revenue growth for the company.
- ACV growth contributed to a point or two of additional revenue growth for the company.
- Analyst asked about S&P Global Inc's exposure to US Federal Government contracts, specifically in relation to the impact of DOGE.
- S&P Global Inc's exposure to US Federal Government contracts is less than 1% of its consolidated revenue. The company has natural hedges in place from the geographic disruption of its people and an active hedging program to mitigate any EPS risk from foreign exchange rates. The company's guidance assumes foreign exchange rates as of mid-January.
- S&P Global Inc's exposure to US Federal Government contracts is less than 1% of its consolidated revenue. The company has natural hedges in place from the geographic disruption of its people and an active hedging program to mitigate any EPS risk from foreign exchange rates. The company's guidance assumes foreign exchange rates as of mid-January.
- Analyst asked about the impact of tariffs on S&P Global Inc's businesses, specifically in relation to a potential protracted trade war.
- S&P Global Inc does not expect a protracted trade war, but it does see a potential for a small impact across its divisions. The company has been working with its Division Presidents to assess the potential impact of tariffs on its businesses and has taken this into consideration when providing guidance.
- S&P Global Inc does not expect a protracted trade war, but it does see a potential for a small impact across its divisions. The company has been working with its Division Presidents to assess the potential impact of tariffs on its businesses and has taken this into consideration when providing guidance.
- Analyst asked about the Ratings revenue market and its potential for more regular growth over the next few years.
- S&P Global Inc has seen higher than 2021 levels of Ratings revenue in 2024, which is higher than pre-pandemic levels. The company sees the market volumes as being back to expected levels, informed by its views on billed issuance guidance and overall guidance for 2025. The company has modest expectations from M&A volumes and opportunistic issuance in 2025, and it always looks at this with the facts and information available at a given point in time.
- S&P Global Inc has seen higher than 2021 levels of Ratings revenue in 2024, which is higher than pre-pandemic levels. The company sees the market volumes as being back to expected levels, informed by its views on billed issuance guidance and overall guidance for 2025. The company has modest expectations from M&A volumes and opportunistic issuance in 2025, and it always looks at this with the facts and information available at a given point in time.
- Analyst asked about the company's thoughts on generative AI opportunities, threats, and investment requirements, and how it will impact the company's top line in 2025.
- Martina L. Cheung, President and CEO of S&P Global, explained that the company has been investing in generative AI for the past two years and believes it is a fundamentally transformational technology. While the company continues to believe in the potential of generative AI, it has not yet been able to separate out the specific details of its impact on the top line in 2025. However, they plan to continue investing in generative AI and are confident that it will lead to both efficiency gains and revenue generation in the future.
- Martina L. Cheung, President and CEO of S&P Global, explained that the company has been investing in generative AI for the past two years and believes it is a fundamentally transformational technology. While the company continues to believe in the potential of generative AI, it has not yet been able to separate out the specific details of its impact on the top line in 2025. However, they plan to continue investing in generative AI and are confident that it will lead to both efficiency gains and revenue generation in the future.
- Analyst asked about what the company has learned from its conversations with customers and partners that it could do differently to enhance the value of its products in the future.
- Martina L. Cheung, President and CEO of S&P Global, mentioned that the company has learned a lot from its conversations with customers and partners, and has picked up on three main categories of feedback. Firstly, the company is looking for indications on how customers are progressing in their businesses, which is a critical point of reference for them. Secondly, there is a high enthusiasm amongst strategic accounts for the Chief Client Office, which is a concept of having a single point contact, and the team has already done hundreds of meetings and top-to-top management meetings to showcase the value they are creating. Finally, the company sees all of its division teams leaning in and stepping up, which is exciting to see and they plan to continue this activity going forward.
- Martina L. Cheung, President and CEO of S&P Global, mentioned that the company has learned a lot from its conversations with customers and partners, and has picked up on three main categories of feedback. Firstly, the company is looking for indications on how customers are progressing in their businesses, which is a critical point of reference for them. Secondly, there is a high enthusiasm amongst strategic accounts for the Chief Client Office, which is a concept of having a single point contact, and the team has already done hundreds of meetings and top-to-top management meetings to showcase the value they are creating. Finally, the company sees all of its division teams leaning in and stepping up, which is exciting to see and they plan to continue this activity going forward.
- Analyst asked about the company's visibility into the debt issuance environment and how it compares to previous years.
- The company's ability to predict market movements is informed by customer feedback and analysis of factors such as interest rates, spreads, and maturity walls. The company's guidance range for debt issuance is broader than for subscription businesses, allowing for more flexibility due to the inherent difficulty in predicting market movements. The company expects ongoing momentum in sub-asset classes such as infrastructure, data center, and ABS issuance, as well as private credit.
- The company's ability to predict market movements is informed by customer feedback and analysis of factors such as interest rates, spreads, and maturity walls. The company's guidance range for debt issuance is broader than for subscription businesses, allowing for more flexibility due to the inherent difficulty in predicting market movements. The company expects ongoing momentum in sub-asset classes such as infrastructure, data center, and ABS issuance, as well as private credit.
- Analyst asked about productivity opportunities and the company's margin target.
- The company has achieved its IR Day targets substantially in 2024 and at the enterprise level for 2025, and continues to maintain its focus on those targets.
- The company has achieved its IR Day targets substantially in 2024 and at the enterprise level for 2025, and continues to maintain its focus on those targets.
- Analyst asked about the company's engagement with customers and the sentiment they are hearing in the market, specifically regarding the policies of the Trump administration.
- Martina L. Cheung, CEO of S&P Global, replied that the company has seen a lot of optimism in the private markets, M&A deal flow, and financials reporting in the US, with consistent interest in the company's products. However, she noted that feedback varies by region, with more neutral outlooks in Europe and Asia. The company is committed to helping its customers make informed decisions and provides research and information to assist them.
- Martina L. Cheung, CEO of S&P Global, replied that the company has seen a lot of optimism in the private markets, M&A deal flow, and financials reporting in the US, with consistent interest in the company's products. However, she noted that feedback varies by region, with more neutral outlooks in Europe and Asia. The company is committed to helping its customers make informed decisions and provides research and information to assist them.
