Q2 2025 Earnings Call Transcript

Good morning, and welcome to S&P Global's Second Quarter 2025 Earnings Conference Call. I'd like to inform you that this call is being recorded for broadcast. [Operator Instructions] To access the webcast and slides, go to investor.spglobal.com. [Operator Instructions] I would now like to introduce Mr. Mark Grant, Senior Vice President of Investor Relations for S&P Global. Sir, you may begin.

Good morning, and thank you for joining today's S&P Global Second Quarter 2025 Earnings Call. Presenting on today's call are Martina Cheung, President and Chief Executive Officer; and Eric Aboaf, Chief Financial Officer. We issued a press release with our results earlier today. In addition, we have posted a supplemental slide deck with additional information on our results and guidance.

If you need a copy of the release and financial schedules or the supplemental deck, they can be downloaded at investor.spglobal.com. The matters discussed in today's conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates and descriptions of future events. Any such statements are based on current expectations and current economic conditions and are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements.

Additional information concerning these risks and uncertainties can be found in our Forms 10-K and 10-Q filed with the U.S. Securities and Exchange Commission. In today's earnings release, and during the conference call, we are providing non-GAAP adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the company's operating performance between periods and to view the company's business from the same perspective as management.

The earnings release contains financial measures calculated in accordance with GAAP that corresponds to the non-GAAP measures we are providing, and the press release and the supplemental deck contain reconciliations of such GAAP and non-GAAP measures. The financial metrics we will be discussing today refer to non-GAAP adjusted metrics, unless explicitly noted otherwise. I would also like to call your attention to certain European regulations. Any investor who has or expects to obtain ownership of 5% or more of S&P Global should contact Investor Relations to better understand the potential impact of this legislation on the investor and the company.

We are aware that we have some media representatives with us on the call. However, this call is intended for investors, and we would ask that questions from the media be directed to our Media Relations team whose contact information can be found in the press release. At this time, I would like to turn the call over to Martina Cheung. Martina?

Thank you, Mark. We're pleased with the strong results we saw in the second quarter this year. Revenue increased 6% year-over-year, with subscription revenue increasing 7%. We are balancing important strategic investments with disciplined expense management, which allowed us to deliver 150 basis points of trailing 12-month margin expansion.

We continue our track record of very strong capital returns, returning nearly $950 million to shareholders in the second quarter through dividends and share repurchases. Impressive financial results like these are the result of consistent execution across our divisions, but we are particularly pleased with the results we're seeing from our Market Intelligence division, which saw an acceleration to 7% organic constant currency revenue growth and more than 200 basis points of margin expansion in the quarter. The new leadership team in Market Intelligence has made real progress on a revenue transformation effort, and we are seeing the impact across the global book of business.

They have also linked arms with our Chief Client Office and embrace the opportunity to help each other engage more deeply with large customers, as I'll discuss in more detail shortly. We also continue to see strong growth in private markets revenue, and we'll provide an update on our efforts in our Ratings business today as well. We are pushing forward in exciting ways to expand our leadership in artificial intelligence. In the last few months, we've introduced a number of exciting new products, but also reached meaningful milestones with hyperscale partners to expand distribution of our differentiated data and thought leadership content, while still preserving our intellectual property and direct customer relationships.

Before I move into the deeper discussion of our results, I wanted to provide a quick update on the Mobility separation we announced last quarter. We are excited to announce that Bill Eager, currently CEO of CARFAX, has been named the President of S&P Global Mobility and the CEO designate for the planned standalone public company. Bill is a tremendous leader with over 20 years of experience at CARFAX, and we look forward to introducing him to investors and analysts at the appropriate time. Edouard Tavernier will remain on as a strategic adviser through September 30 of this year.

Edouard has been a great partner in our executive leadership team since the merger with IHS Markit. We want to thank him for the incredible leadership and vision he has provided for the Mobility division over the years, and wish him all the best going forward. Shifting to what we're seeing in the markets and the business now. I want to begin with the momentum we've created in our commercial team so far this year.

We created the Chief Client Office as part of our leadership transition late last year, and we have seen a very promising first couple of quarters. The CCO is focused on making sure that our largest strategic customer accounts view S&P Global as an essential partner in their success. Currently, about 130 customers are part of our CCO initiative, and we will continue to add customers selectively over time. We're maintaining some flexibility as we continue to learn, but the ultimate goal will be to capture the largest and most strategic relationships we have, while making sure we can still provide individualized attention to these accounts and keep the team relatively small.

We've strengthened relationships at the C-suite with these customers, and we've established efficient communication channels with dedicated reps who can help address any subject across all divisions. We continue to focus on increasing awareness with these customers and making sure that they know everything that we can do for them. This is especially impactful when we can align our world-class products with the strategic priorities of our customers, like private markets, wealth management, AI and energy transition. In recent months, we've been able to demonstrate that value clearly to a number of customers, evidenced by a $20 million multiyear contract we signed for direct indexing in the wealth space and the multiyear strategic partnership we announced just last week with Barclays.

That contract includes a comprehensive suite of S&P Global products, data and solutions powered by Capital IQ Pro and will support Barclays businesses across the enterprise. I also wanted to provide an update on the transformation we're driving in our Market Intelligence division. With 7% organic constant currency revenue growth in the second quarter, it's clear our initiatives are already bearing fruit. Saugata and his team have led a remarkable effort to align the product and commercial teams and improve sales execution and customer engagement.

With new leadership across the commercial organization, we have already seen the results of the discipline, operational excellence and focus on execution. We simplified sales incentive programs to better align with our key priorities with respect to customer retention, new sales, pipeline performance and competitive wins. Beyond the headline financial metrics, we're also seeing further improvement in retention rates with our net renewal rate up more than 1 full percentage point year-over-year. Our deep engagement with customers is helping them to realize more value from S&P Global products and allowing us to better realize the economics of that value while still improving win rates.

Just to offer a few more examples in the second quarter alone, in addition to the deals I already mentioned, the team closed a multimillion dollar deal with a large global technology company that included a 20% increase in annual contract value; another multimillion dollar deal with a global investment bank that included a 25% increase in ACV; and a multimillion dollar expansion deal with a large European bank. This is nowhere near a comprehensive list of wins in the quarter, but highlight the clear trends that we're seeing that our largest customers are looking for ways to consolidate vendors, and they increasingly view S&P Global as a strategic partner that can help them do that.

We're excited about what we're seeing in the division and remain confident in our ability to continue accelerating the organic growth and deliver the financial results we've guided to. These results are even more impressive given the uncertainty we saw at the start of the second quarter. Billed Issuance declined 4% year-over-year in the second quarter. As noted in our last call, the issuance environment was negatively impacted by global trade and tariff uncertainty, especially in April.

We saw market concerns moderate as we progress through the quarter, leading to better-than-expected Billed Issuance. Bank loan Billed Issuance was materially below the levels we saw in the second quarter of last year. Recall last year's second quarter included a triple-digit increase in bank loan issuance, which we lapped this quarter. Importantly, we saw some recovery in June, which was the second highest June we've seen since at least 2019, coming in just shy of last year's high watermark.

Structured finance was strong in the second quarter, though we did see a modest decline as we lapped a 60% growth quarter from last year. Equity markets were also stronger than we expected in the second quarter, with U.S. equity markets rebounding quickly from the lows we saw in April. We also benefited from strong net inflows for our indices and strong volumes in our exchange traded derivatives. As Eric will discuss in a moment, our outlook for the rest of the year assumes flat Billed Issuance in the back half of the year and assumes that U.S. equity markets are flat from June 30. To touch briefly on the broader macroeconomic picture, we're expecting 1 to 2 rate cuts from the U.S.

Fed in the second half of the year, and we're expecting a slow but positive GDP growth across all major economic zones. We're also expecting oil prices to be slightly lower in the back half compared to the first half, with dated Brent crude expected to be in the mid-60s. Now turning to private credit. While private credit still represents a relatively small portion of our total Ratings revenue, our private credit strategy is an important part of our broader private market initiative.

Our total private markets revenue saw solid growth in the second quarter, with the private credit component being a major driver of that growth. For decades, S&P has brought transparency, credibility and objective assessment of risk to the public debt markets, and we are focused on creating that same value in private credit markets. We offer an array of products in private markets, including middle market CLO ratings, fund ratings, structured credit ratings, entity ratings, credit estimates and private credit analyses. Crucial to our and our customer success in this market is the fact that our criteria and methodologies are consistent across public and private markets.

When assessing private credit, we utilize the same risk factors that we use to assess public market debt. That consistency across public and private markets empowers us to create similar customer value and realize similar economics across those markets. That consistency is highly valued by the various important stakeholder groups we serve in private credit. We moved early several years ago to engage frequently and deeply with major private market participants to make sure we were well positioned to serve that market.

We have very strong relationships with sponsors, bankers, institutional investors and asset owners. These crucial stakeholders frequently reach out to S&P Global to leverage our expertise across the broad spectrum of risk, and we see incredible opportunities to further develop these relationships. We have taken a global approach over the last several years as well. Even before the spike in private credit that began in 2022, we were engaging with stakeholders, not just in the Americas, but also in Europe, the Middle East and in Asia.

Regions outside the U.S. and Europe have rapidly developing and evolving credit markets, and there is a growing interest in private markets. Now looking to the latest in our AI innovation. In the last few months, we've seen some incredible progress in our AI and data distribution strategy as we work with hyperscale partners across the ecosystem. Through the introduction of AI-ready data sets from all divisions, we're able to make our differentiated data available through hyperscale platforms around the world.

We've made our renowned thought leadership content from Commodity Insights available through Copilot, and we announced a collaboration with Anthropic to integrate S&P Global data sets with Claude through the Model Context Protocol, or MCP. Through MCP, Claude users can access our proprietary data sets in real time during conversations, but only for S&P Global subscribers. Our data is not part of Anthropics training data. These are just two examples of the many GenAI collaborations, leveraging our model agnostic Kensho LLM-ready API.

These integrations require customers to have subscriptions to these data sets from S&P Global, and we maintain both the intellectual property rights and the direct customer relationships. We're really excited about the growth opportunities these partnerships present as we look to give customers access to our data and products wherever they want to work. Ultimately, we may also see new customers accessing content over these channels. We also launched the GenAI powered CreditCompanion for RatingsDirect on Capital IQ Pro.

CreditCompanion has been fine-tuned by our Ratings analysts who use it in their own research work, and now RatingsDirect customers will have access to this powerful tool. CreditCompanion was designed to enhance credit analysis workflows and powers comparative credit risk analysis between peers. It also provides intelligent summaries and insights from the vast library of published research. We're confident that CreditCompanion can improve productivity and efficiency for our customers because we've seen it work for our own analysts already.

We're also very excited about the innovation in the digital wealth space with our Indices division. We've recently developed the SPICE index builder, which gives professionals access to over 400,000 indices and enables them to create custom indices. While we've enabled custom indices for some time, the launch of an AI-powered index builder can decrease the time to develop equity indices from an average of approximately 1 month down to 2 days. Lastly, our efforts to upskill and develop our people are showing incredible progress.

When we first started talking about Spark Assist, our internally developed AI assistance, we noted that in its first few months, we had seen 14,000 of our people start to use the tool, representing about 30% of our workforce. In the year since then, we've seen that increase to more than 65% of our people globally actively using Spark Assist. Our people continue to build out new use cases and publish those Sparks to our internal Spark store, so colleagues around the world can also use them. The number of Sparks on the store has more than doubled since February, with well over 3,000 published Sparks now available to our people.

These innovations are enhancing the productivity of our people in meaningful ways. This innovation is all part of a year's long strategy we've had in place to build out this functionality with the ultimate goal of powering agentic ecosystems and really unlocking the potential of the data and technology we have at S&P Global. Building on the foundation of differentiated data, we've built an embedded powerful AI enablement tools through Kensho, and we now see GenAI enhancements are becoming a standard across our product portfolio. The next evolution is true grounded agentic ecosystems, and we are looking forward to sharing the broader multiyear vision for S&P Global's agenetic AI strategy at our Investor Day in November.

Now turning to our financial results. Eric will walk through the second quarter results in more detail in a moment, but we had a great first half of the year. In the second quarter, we had revenue growth in every division, and our disciplined execution drove 150 basis points of margin expansion on a trailing 12-month basis. We're encouraged by the results so far and confident that we'll be able to deliver a strong second half as well.

Eric, over to you.

Thank you, Martina, and good morning, everyone. Starting with Slide 13, you'll see on the left panel that despite the challenging operating environment experienced earlier in the quarter, we achieved relatively strong growth across all divisions. Reported and organic constant currency revenue each grew 6%, and expenses grew 4%, allowing us to deliver 70 basis points of margin expansion year-over-year and adjusted diluted EPS growth of 10%. As Martina mentioned earlier, we're confidently moving forward in our commercial initiatives, and we're continuously innovating our products and services to meet the evolving needs of our customers.

This was evident in our second quarter results and provides us with great momentum as we move into the second half of 2025. Slide 14 illustrates the progress we are making in key strategic growth areas. Energy Transition and Sustainability revenue grew 7% to $93 million in the quarter, driven by demand for data and insights from Market Intelligence and sustainability products in our Indices division. Growth was partially offset by the softness in demand for our consulting services in Commodity Insights, mainly driven by some of the regulatory uncertainty around energy and energy transition. While this represents lower growth rate than we're used to in this product family, we remain confident in the long-term growth for noncarbon energy sources, and we expect that this growth to reaccelerate as we get more clarity around the regulatory environment and its impact on the energy mix.

Moving to Private Market. Revenue increased by 11% year-over-year to $148 million. As Martina mentioned, growth was driven by demand for middle market CLOs, ABS and project finance ratings as well as strength in Private Market solutions within Market Intelligence. We continue to pursue the many opportunities in private credit and expect the Ratings business to be the leading contributor to Private Markets revenue growth for the full year as well.

I'm pleased to report we've achieved 95% of our targeted revenue synergies. We exited the second quarter with run rate revenue synergies of $332 million and remain ahead of pace to achieve our target of $350 million by 2026. Finally, we delivered a Vitality Index at or above our 10% target. In the second quarter, we saw contributions from new and enhanced products in every division and are pleased to see the financial impact of the product investments we've made in recent years. Turning to our divisions.

Market Intelligence reported revenue increased 5% in the second quarter, but organic constant currency growth was a strong 7%. As Martina mentioned earlier, this is the result of significant improvements to execution and customer engagement in the division, and we're confident we'll be able to achieve the full year guidance we've reiterated today. Data, Analytics and Insights reported revenue growth of 6%, with organic revenue growth accelerating to 5% year-over-year. Second quarter revenue in the business line includes a net contribution from Visible Alpha, less the lost revenue from the PrimeOne divestiture.

Enterprise Solutions benefited from strong demand for our subscription-based offerings, including Wall Street Office and Notice Manager. Reported revenue growth of 2% includes the impact of $21 million in Fincentric revenue in the year ago period. Excluding that impact, organic growth accelerated to 10% year-over-year. Credit & Risk Solutions grew 7%, benefiting from demand for Ratings data feeds that are catering to client needs for digitization and automation.

Adjusted expenses increased 2% year-over-year, primarily driven by higher compensation and currency translation, but this was partially offset by the impact of the divestitures I mentioned earlier and productivity savings. This resulted in Market Intelligence's operating margin improving by 240 basis points to 35.3%. Finally, we anticipate that reported revenue growth will continue to accelerate in the second half of 2025, as Market Intelligence laps cancellations from 2024 and the division benefits from the broader revenue transformation. Now turning to Ratings on Slide 16. While tariff-related concerns brought about considerable volatility in the debt capital markets in early April, as the quarter progressed, we saw an improvement in financing conditions, which led to a resurgence in issuance volumes.

Ratings revenue increased 1% year-over-year, exceeding our internal expectations. However, there was mixed performance among our revenue categories. Transaction revenue decreased by 4% in the second quarter as we saw softer demand relating to bank loan and structured finance ratings. This was partially offset by moderate growth in revenue related to high yield and investment-grade issuance.

Non-transaction revenue increased 8%, primarily due to an increase in annual fee revenue. Our expectations for revenue growth in the back half of the year haven't materially changed, but flowing through the second quarter performance drives an increase in our full year financial guidance, and we now expect growth in the range of 2% to 5%. Adjusted expenses increased 2%, with investment spending mitigated by decreased performance-related incentives. And now turning to Commodity Insights.

Revenue increased 8% following the seventh consecutive quarter of double-digit growth in Energy & Resources Data & Insights, our two largest business lines. Price assessments in Energy & Resources Data & Insights each grew 10%. We continue to see commercial momentum as we transition more customers to enterprise contract relationships. We're approximately 1/3 of the way through the eligible customer base in that transition and expect to be nearly halfway through by year- end.

While we expect strong growth in both of these lines in the second half as well, we expect some modest headwinds in price assessments from incremental sanctions that have been introduced in recent weeks, which might cause a 1 to 2 percentage point headwind at most, just in price assessments in the back half. Advisory & Transactional Services revenue grew 5%. Once again, we had a record quarter in Global Trading Services that was fueled by market volatility. However, the complexity of the energy market, regulatory environment and uncertain spending for many of our customers led to a decline in our consulting revenue in the quarter, which mitigated some of that GTS growth.

Upstream Data & Insights revenue grew 1% year-over-year as growth was impacted by elevated cancellations due to the customer consolidation we've seen in the energy space. As we discussed last quarter, some softness in Upstream is likely to continue. We expect slight revenue declines in the second half, which could persist into early next year as well. We're actively engaged with clients in accelerating product innovation to stabilize growth in this line going forward.

Given the points around sanctions and upstream, we are modestly reducing our revenue guidance for Commodity Insights for the full year by 50 basis points. We expect to manage expenses in a way that will allow us to still deliver the margin guidance we've reiterated this morning. Adjusted expenses increased 5% due to higher compensation costs and ongoing investment in growth, offset by productivity initiatives. Operating profit for Commodity Insights increased 10%, and operating margin improved by 130 basis points to 48.6%.

Now turning to Mobility. Revenue increased 10% year-over-year. The strength of the business model and the essential nature of the Mobility products is increasingly evident, allowing us to raise our full year forecast despite some lingering uncertainty around tariffs and manufacturing. Dealer revenue increased 11% year-over-year, driven by new business growth in products such as CARFAX and automotiveMastermind.

Manufacturing revenue grew 3% year-over-year, impacted by the low recall transactional revenue and sensitivity to tariff-related uncertainty. Financials and other increased 12% as the business line continues to benefit from strong underwriting volumes and commercial momentum. Adjusted expenses increased 7%, driven by higher compensation and increased advertising and promotional investment we've called out previously. Margins for the segment improved 140 basis points year-over-year to 42.3%.

Finally, as we announced last quarter, we plan to separate the Mobility business from S&P Global. We are on track to meet our key milestones, and we'll keep investors updated on the progress of the separation. Now turning to S&P Dow Jones Indices. Revenue increased 15%, primarily due to strong growth in Asset-Linked Fees, which benefited from higher AUM and strength in Exchange-Traded Derivative revenue.

Revenue associated with Asset-Linked fees was up 17% in the second quarter. This was driven by higher ETF and mutual fund AUM, which benefited from both market appreciation and net inflows. Exchange-Traded Derivatives revenue grew 15%, primarily driven by a 12% increase in average daily volumes across our product suite, including SPX and VIX ETDs. Data & Custom Subscriptions increased 8% year-over-year, driven by new business growth in NFA contracts, which saw mid-teens growth for the second consecutive quarter and growth in our Custom Subscription offerings, partially offset by real-time offerings.

Adjusted expenses increased 12% year-over-year due to various factors, including a normalization of bad debt expense, strategic investments and compensation expense. Indices operating profit increased 16%, and operating margin improved 60 basis points to 71.3%. Our outlook for 2025 assumes U.S. equity markets are flat from June 30 through the end of the year, and we expect modest year-over-year growth in ETDs. Now turning to guidance.

Slide 20 outlines our enterprise guidance on a GAAP and adjusted basis. We are now expecting total revenue growth in the range of 5% to 7% and continue to expect adjusted margins in the range of 48.5% to 49.5%. We remain confident in our ability to deliver solid revenue growth, strong margins and growth in adjusted EPS this year. As I'll discuss on the next slide, we do expect slightly higher growth in Ratings, Indices and Mobility, partially offset by slightly lower growth in Commodity Insights.

We now expect adjusted diluted EPS in the range of $17 to $17.25, in line with the initial guidance we provided back in February and representing 10% growth year-over-year at the high end. Moving to our division outlook. Our revenue guidance for Market Intelligence is unchanged as we expect continued strong performance. For Ratings, based on the current expectation for flattish Billed Issuance in the second half, we expect revenue growth of 2% to 5%, which is slightly higher than previous guidance given the outperformance in 2Q.

For Indices, we've seen a strong recovery from the April equity market lows and now expect revenue growth back in line with our initial forecast of 8% to 10%. For Mobility, we are slightly raising our outlook for the full year, given the strength of our subscription business. While we do expect some impact on the trade uncertainty in the manufacturing line, which is more than made up by the strength we're seeing in the dealerships and financials, we are lowering outlook slightly for Commodity Insights based on the external factors I described previously. On the next slide, we are reiterating the margin outlook for all 5 of our divisions.

While we do expect somewhat higher revenue in Ratings, Mobility and Indices, we also expect margin impact from the OSTTRA divestiture and planned strategic investments that will drive future growth. With that, I'll turn the call back over to Mark for your questions.

Thank you, Eric. [Operator Instructions] Operator, we will now take the first question.

Our first question comes from Toni Kaplan with Morgan Stanley.

Really nice acceleration in the organic growth in MI this quarter, up to 7%, really the highest we've seen in a while. You talked about a number of the steps that you took to drive it like the sales execution and simplifying the incentives there and the customer engagement. I was wondering if you could just talk about your ability to sustain that level of growth. I notice you didn't raise the MI organic growth target for the year.

And also just wondering if AI contributed there and if you're able to share any sort of incremental revenue metrics or usage on AI.

Toni, it's Martina. Thanks so much for the question. Maybe just to start with some comments on, I will call it, the revenue transformation that Saugata and his leadership team have implemented in Market Intelligence. I'd break that down maybe into 3 areas.

Firstly, starting with the overall structure and operating model for the commercial teams, reducing silos, for example, having clear account ownership, those were some key changes that were implemented. On the incentive piece of it, the team actually took our incentive comp plans down from north of 60 to about 10, and this was after a lot of consideration around buying patterns of customers. So it really reduces the amount of friction, if you like, that the sales teams are handling as they deal with customers and engage with customers. And the last point I would make, and I think there's been a really strong partnership here between the finance team under Eric as well as Saugata leadership team, is really fine-tuning the metrics that we focus on across Market Intelligence, whether it's ACV growth, competitive wins, new sales, NRR, et cetera.

Now I think as it relates to the sustainability of this, we're certainly very encouraged by the strength of organic ACV growth in the quarter that was in line with both reported revenue and organic constant currency revenue, both of which accelerated. So we're quite comfortable with that. We feel that execution is very strong, and it was not just sort of a onetime thing or low-hanging fruit. It was a really fundamental transformation of the commercial teams, and I feel that that's going to win the day going forward.

Now I think in terms of the back half of the year, we've also said that we'd expect lapping cancels from the second half last year to have an impact on revenue growth as well. But we're really happy with the execution on this. Eric, is there anything you want to add before I touch on AI.

I'd just say, Toni, that as Martina described, we're pleased with the execution first quarter, second quarter, but there are 2 more quarters to go. And the performance that you've seen was in line with our budgets and plans on a quarterly basis. And that's why we've kept our guidance as is. We're comfortable with it, but 2 more quarters to go here.

And Toni, as it relates to GenAI, the MI team is extremely innovative in this area. In the quarter, they launched actually 6 enhancements to customers around generative AI. Now we don't disclose the numbers, but we do expect that to contribute to revenue over time. One thing that I was excited to see in the quarter from a GenAI perspective is we told you in the last call that the team had acquired ProntoNLP.

And in Q2, they were very quickly able to launch GenAI-driven filings analytics powered by ProntoNLP, which is already now available on Xpressfeed and on Snowflake. And so lots and lots of great innovation, very strong customer reception and adoption of the enhancements that the teams have launched both in Q1 and Q2. And I would say more to come in terms of how we think about scaling that going forward. Thanks for the question.

Our next question comes from Faiza Alwy with Deutsche Bank.

You've had really strong margin and expense management this quarter, particularly in Market Intelligence. And again, I understand you're not raising the margin guide, but wanted to ask about what you're doing to achieve these better expenses or if there was something onetime in the quarter that we should be mindful of.

Faiza, it's Eric. There are really 2 factors here. First, as we described in some of our prepared remarks, we continue on driving productivity across our various divisions. I mentioned that, in particular, in MI and CI.

It's true in Ratings. It's true in a number of different areas, and that's helping to control spend and create some room for investments. At the same time, there is a patterning of investment spending, in particular, in MI, which, just because of what we're launching on the product, region, sales side is more back-end loaded this year and are important for us to continue to drive growth on an ongoing basis. So a little bit of both cases -- or both drivers that you've seen here.

Our next question comes from Scott Wurtzel with Wolfe Research.

And appreciate the commentary on the Chief Client Office. Just wanted to talk about that a little bit more. I'm wondering if you can maybe share a little bit more about your criteria for moving strategic clients into the Chief Client Office.

Scott, it's Martina. Thanks so much for the question. Well, I've mentioned that we have around 130 clients in the Chief Client Office. And specifically, we would think about -- we would think very selectively is how we characterize it in terms of additional clients that we would add over a period of time.

This is a group of clients that's managed by a reasonably tight team. And our goal there is really to deliver the best possible experience and, of course, partner with those clients for value creation, and we do that with a tightly knit team that can provide deep -- independent and individualized attention to those clients. So if I was to maybe characterize this as saying, we'll be selective in how we add clients over time to this. We think there is a lot to be done.

We've learned a ton in the first couple of quarters here, and there's a lot more to be done. We think some of the deals that we talked about, including the Barclays deal, for example, are really emblematic of the type of engagements that we're working on with these clients and continuing to see really good and strong momentum in strategic areas like direct indexing. Thanks for the question.

Our next question comes from Ashish Sabadra with RBC Capital Markets.

Just wanted to follow up on Toni's question on MI. Obviously, pretty strong momentum. So just on the competitive wins, just wanted to better understand how these competitive displacement driven by also products, if those are resonating much better with customer, in addition to better execution. And then just maybe on Enterprise Solution, the 10% growth that we saw, really strong acceleration there.

Can you provide more color about the puts and takes going forward?

Ashish, this is Martina. Thanks for the question. I would say that we've seen pretty broad uptake from the competitive displacements across the full range of our products. And it is, I would say, coupled with the very strong execution from the sales teams.

And I think one of the things that's been quite remarkable was Saugata and the leadership team's ability to put in place a single account ownership across the entire book. And so we see that being a combination of these additional intention and engagement as well as the ability to really tell the story very, very strongly with the incredible breadth and depth that we have. I will say there have been a lot of enhancements and additions that are really resonating. Very proud again of the teams who were able to get the Visible Alpha integration onto Cap IQ Pro one quarter ahead, for example.

That's been very, very well received by our clients. And so it's broad-based, I would say, and execution-oriented and delivered as well. Let me hand over to Eric on the Enterprise Solutions performance.

Ashish, I'd just add, Enterprise Solution really showed good growth this quarter. Part of that was our workflow solution in Wall Street Office, which is well regarded and was one of the reinvestments over the last couple of years. And so that -- we're seeing a real significant product lift there. Notice Manager was another breakout.

And so it really shows as we reinvest in products, services, data functionality, the value we bring our clients and the take-up we're getting. So we're quite pleased with the performance.

Thanks, Ashish.

Our next question comes from Alex Kramm with UBS.

Just a lengthy discussion from you, Martina, on the Private Credit side. Just wondering if you can talk a little bit more about your traction, in particular, when it comes to competitive dynamics. Obviously, a lot of it is still white space, I think. So -- but also, we're hearing and seeing some of the smaller rating agencies a lot more active in that space so far.

So just wondering how you think you can find the same leadership position in that market that you have, for example, on the public corporate side.

Alex, thanks so much for the question. Maybe just to take a step back, there's maybe 2 framing responses. First, obviously, we don't compete on outcomes. We compete on quality from the perspective of our ratings.

So our view has always been we're raising, wherever it comes, whether it's public or private with a consistent methodology, which we believe is enhanced value for investors and other market participants, given the nature of allocations between public and private. The second point I would make is we've been extremely engaged over the last several years and made a lot of investments in areas that Private Credit has grown. And in particular, as you know, we've seen a lot of growth in ABS and other structured finance asset classes over the last couple of years, and we've been making sure that we have the talent and capacity to meet the demand.

I would also say that as part of the overall engagement that we've been doing, we hear from the larger sponsors that they want to do more with us. And so we'll continue to invest there. Generally, I would say we're very pleased with the strong growth from Private Credit. It's benefiting across the various different asset classes.

And maybe the only other point I would mention here is, from our perspective, consistent with the methodology being comparable between public and private, we've also made the point in the past that we would definitely see similar value and then also similar economics, whether we rate public or private. Maybe just one other characterization of the market that I think is sort of interesting here. We see issuers being more agile in moving between public and private. So as you know, the high-yield market had quite a challenged '22 and '23. And during '22 and '23, we saw more deals refinancing from public to private.

In '24 and year-to-date '25, we've seen more deals and deal volume migrate from private back to public. And so this is a very interesting thing. And it really, for us, reinforces the importance of an S&P Global rating and a comparable methodology for investors and market participants. Thanks for the question.

Our next question comes from Andrew Steinerman with JPMorgan.

Wanted just to ask about the second half Ratings revenue assumption. I surely saw and heard you say that you pushed up the '25 Rating revenue assumption really by just the second quarter outperformance. That does surprise me a little bit. Maybe I was just kind of asking you why did you keep the second half performance, assuming June was the strongest month of issuance in the second quarter.

And I'm assuming that, that issuance momentum continued into July.

Andrew, it's Martina. Thanks for the question. Look, I think the back half, there's a few things here. First and foremost, we're still looking at the market situation with the volatility and the uncertainty.

And while we think the volatility will be manageable in the second half, there's always a chance of a flare-up and something like what we saw with the April freeze. And so we're watching that very closely. A couple of other things that I would emphasize here. So from a refinancing perspective, the back half of this year is roughly flat compared to the back half of '24. And even though we see about 7% increase in the maturity walls through '26, we're not anticipating a huge amount of pull forward that we may have seen similar in last year.

And so that's on the refi side. On the opportunistic side, I think we've been pretty careful about making overly heroic assumptions on M&A. We know there's a lot of pent-up demand, but our view is generally kind of flat year-over-year, and that hasn't changed. Although we would expect that to hit -- if it doesn't hit this year, it will hit potentially in '26. So more of a function for '26. So generally, I would say those are the things.

Of course, it can always surprise to the upside or downside. At this point, it's possible that there is a potential for an upside surprise, but it's certainly very, very much dependent on the volatility in the markets. Thanks for the question, Andrew.

Our next question comes from Jeff Silber with BMO Capital Markets.

Actually, just wanted to circle back to Mobility. Can you just remind us what the milestones we should be tracking for the spin-off over the next year or so, what we should be expecting?

Jeff, it's Eric. There are a series of, I'll call it, internal and external milestones. As you know, we kicked this off at the earnings last quarter. We've been industriously beginning to work on carve-out, day 1 operations, and that's now in full mode and proceeding.

And that's primarily a set of internal milestones that we track, and we're tracking too nicely. There are then filings and various regulatory submissions that we typically would do in the fall time period, and those are typically private as well, but those are important milestones for us. There is the -- it's part of both of those. There's the naming of the CEO, and that we did in today's announcement.

And the management team now will follow over the next few months, so that we have the full team in place. And then into next year, as we get further along, we finalize the -- all the filings, answer questions. We'll naturally do some sort of Investor Day for Mobility, but that would be next year, not this year, and then proceed with a road show. What we will do is continue to keep you updated on a quarter-by-quarter basis.

We'll tell you how we're tracking. We still feel quite comfortable with our original time line of 12 to 18 months from date of announcement and are moving along well.

Thanks, Jeff.

Our next question comes from Owen Lau with Oppenheimer.

So let's continue with the Mobility conversation. You raised the revenue guidance, which is great. But there may be some pull forward for auto activities in the first half, which could normalize in the second half. Your revenue guidance also implies that your growth in the second half will be maybe slightly slower than the first half.

Is it pull forward the main reason for the slowdown? Or is there any other thing that you want to call out?

Owen, thanks for the question. It's Martina. Yes, we've been really pleased with the overall performance of the Mobility business with double digit in the dealer and financial parts of the business. I would say that the -- it would be a little bit hard to sort of characterize that as being mostly driven by pull forward.

It's possible there was a little bit of that in the financials to the extent that people were buying new cars ahead of the tariffs. But really, the CARFAX business has performed very, very strongly, and that's actually been really a key driver in the actual performance of the business as well. And so some of the bright spots there includes continued adoption and build towards the $100 million customer target for new car listings and for CARFAX Car Care for life. And so we see very strong performance there as well.

And as you know, that's a huge part of the overall book of business. Going into the back half, I think we've talked a little bit about some of the hesitancy with the manufacturing segment in terms of planning, forecasting, et cetera, but I will say that we're starting to engage with manufacturers. For the Mobility team, they're here whether it's a certainty in terms of the environment or uncertainty in the environment, and they're doing things like helping the OEMs to think about their EV inventories, they're helping OEMs to think about potentially tilting or rotating back to new ICE models in the U.S., for example.

And of course, they serve the top 40 OEMs globally by volume. So that team is very focused going into the back half. The only other point maybe to make on the back half of this year is it's a very tough comp, vis-a-vis the back half of last year. And so those are all the factors that contribute to that.

Thanks for the question, Owen.

Our next question comes from Manav Patnaik with Barclays.

I guess, I'll ask on Commodity Insights. Can you just provide a little bit more color on the sanctions you mentioned in terms of the revenue impact? And also, if I may, the Upstream business has been a very, very low growth business for many, many years now. So just curious on your thoughts on why that fits well in the portfolio.

Manav, it's Eric. Let me take those in turn. First, on sanctions, there's been a series of sanctions here over the last few years that have been building up. Those are across many, many different jurisdictions and in different forms and flavors.

What we have seen is there are some additional announcements out of the EU, out of the U.K. They're not dramatic, but every one of those has some impact on certain clients potentially and operations. So we think it's relatively contained, but it will affect one of our businesses there by just 1 to 2 percentage points, not more than that in the second half of the year. So I think it's quite manageable and something we just need to operate through.

In terms of Upstream, Upstream is an area of the commodities and energy space. It's gone through some real changes. If you look at the U.S. upstream producers, for example, and go through the top 20, something on the order of almost half of them have had and been involved in some sort of M&A. So there's just some real transition going on in the client base for us and, for that matter, for all providers to this space.

And so we're just signaling that we need to live through some amount of consolidation. Now, typically, when clients merge, it's not that they still need our services. But occasionally, what will happen is they'll move up in the rate card right on the different tiers. They may drop some small subset of products.

There's usually a list of 50 to 100 products that they each procure from us. And so you get a modest effect, and that's what we're signaling. In terms of the importance, Upstream is heavily integrated with the rest of our product, services and offerings, right. In a way, the upstream producers are served by that Data & Insights business.

They buy and are involved in the price assessments activity. A number of the offerings we have are actually packaged across the different products, including the Energy & Resources Data & Insights product family. And so it's really part of the full suite of -- that we offer. And so it's important, and that's why we've described in our prepared remarks how we're focused on the client set as it's evolving, which is really an external evolution, but really working through how do we serve them even more industriously, how do we roll out the next wave of products to them, how do we serve them at both the C-suite and throughout the different divisions that they operate in because that's what's going to pull us through this.

And as we go through the next couple of quarters, I think, put us in a positive and healthy position.

Thanks, Manav.

Our next question comes from George Tong with Goldman Sachs.

I wanted to go back to the MI segment. Can you talk about how much lapping cancellations will benefit growth in the second half, quantify that, if you can? And how much of the assumption of stronger growth in the second half depends on an improving external customer environment?

George, let me do that in reverse order. The customer environment, in our minds, has been relatively good over the last few quarters. You've seen banks, asset managers, the other client sets in MI doing well overall in their respective industries and operations. And so between that and their continued need for the data, the insights, the analytics, the workflow tools, the software and so forth that we provide, we feel that, that's -- there's good demand that we're seeing quarter-by-quarter here and in a consistent manner.

In terms of cancellations, they have a small -- lapping the cancellations provide a small benefit to us, and that's helpful. But the real driver of the revenue growth is primarily the upswing that we've seen in sales, in net renewals. Cancels have been well contained. There are always some amount in any business.

And so we're quite pleased with the trajectory. And we just want to work through every quarter, but we feel good about the business, and that's why we've reaffirmed our guidance for the year. And we'll take it from there.

Thanks, George.

Our next question comes from Craig Huber with Huber Research Partners.

We spend a lot of time talking about products and services, which is great. I wanted to ask, though, on a different subject about your sales force, the size of your sales force across your 5 segments here. Just is your internal investment spending around sales in terms of the quality and the quantity of salespeople you have in each of your segments, is it materially any different this year, the investment spending you guys are doing there? And what area, what segment are you spending the most on to help beef up the quality and size of the sales force this year?

Craig, it's Martina. Thanks so much for the question. I would say that we are definitely enhancing the capabilities for our quota carriers across divisions, but also for other teams that support them, whether it's the customer services teams or the specialist teams. We're integrating GenAI tools.

We're integrating those on top of our actual CRM and broader commercial applications. And so it's -- I would say it's a variety of things. We're working very hard on actually having greater consistency in how we track metrics, et cetera, with the help of Eric and his team. So a variety of things.

The -- we don't quantify the size of it externally, but we track the capacity and make sure we're making the appropriate investments across the divisions and regions, quite frankly. And with the CCO, as I've said, this is quite a small team covering a broad set of our largest and most strategic clients. And we intend to continue to have that team be a tight-knit team and may selectively add to it over a period of time. So it's a very big focus area for us.

And I'm glad you asked the question. Thank you.

Our next question comes from Andrew Nicholas with William Blair.

I was hoping you could speak a bit more to the strategic and/or economic considerations underlying your data partnerships with Copilot, with Anthropic. Just curious, do you envision more of your data being consumed that way via those channels over time? And how does that impact the go-to-market motion, if that's the case? And then maybe relatedly, is there a potential there for some cannibalization in your view, maybe relative to how you might monetize that same customer if he or she were within your ecosystem?

Any color there would be great.

Andrew, it's Martina. Thanks much for the question. The hyperscale partners are, I would say, a category that has emerged quite distinctly over the last year or so. And of course, we've mentioned Microsoft and Anthropic here.

We've also got other discussions and other partnerships that have already been executed on. I think of this in 2 ways. So the first is in the same way that our clients required us to be able to provide our data over Snowflake, for example, these are other channels through which our clients would like to interact with our data. And of course, we will always provide our data, our insights, et cetera, where our clients want to interact with it.

That's incredibly important. Key to these partnerships is that we require the clients to actually license the data to be able to get access through these channels. And also it is a distribution partnership in the sense that these LLMs are not given access to our data to train their own models. And so that's one way to make the point.

The second thing that I would say on this is that as we evolve here, we're going to have clients on the very sophisticated end of the spectrum that will want sort of, call it, like a multichannel access, whether it is Snowflake, whether it is LLMs, Desktop or own Xpressfeed, et cetera. And then we will have clients kind of middling levels of sophistication that may expect to see both use Desktop enhanced features as well as get data through Copilot or something like that, and others who will just expect us to integrate AI enhancements into the Desktop. And a lot of those clients who want all of it.

A lot of those clients will expect to see some form of agentic all the way through kind of a much more transformational agentic solution, and we're going to meet the clients where their needs are. We're very excited about the work that Kensho is doing. I do want to share a couple of things that I got extremely excited about in the quarter. So with Anthropic, for example, the Kensho team used the MCP, or model context protocol, server that they set up in Q2, and that's really allowing for kind of standard interoperability with any model.

And we saw it first in action with the Anthropic partnership. More importantly, or as importantly, is that the Kensho team is using in partnership with EDO a product called Kensho grounding, which allows for a trusted retrieval of S&P Global data that is searched for through LLMs, and that's incredibly important, obviously, for accuracy and for the integrity of using the LLMs of the channel. And then the last point I would make is the Kensho team just published a white paper on IP protection. And in there, they're exploring the use of watermarking, for example, in AI as a way to enhance IP protection.

And so we're thinking about this really holistically, and I'm very excited with the work that the teams are doing. Thanks for the question, Andrew.

Our next question comes from Jason Haas with Wells Fargo.

I wanted to follow up on the Indices margin since you now imply that there's going to be some pressure in the back half of the year. So I was curious if you could talk about if there's been some incremental expenses there, because I normally think about that as a relatively fixed expense base. And obviously, the revenue has been strong.

Jason, it's Eric. It's really a result of our investment planning and patterning over the course of this year. We've been reinvesting in the technology and operating infrastructure there, which is an important part of table stakes in this business and one that every few years you've got to do a refresh on. But it's also a set of products -- new products that we're launching.

And you know this business well in Indices. You've got to plant seeds in many different areas. The product rollout has a lot of time, workload, intensity to it, and the benefits come over multiple years. And then we have to prune the broad array of product offerings and then deepen some of the larger ones.

So it's really about our investment spending and support for growth that we think will really pay dividends over the next few years and drive the kind of inflows we've been seeing and the kinds of revenue growth that we've grown accustomed to.

Thanks, Jason.

Our next question comes from Jeff Meuler with Baird.

Yes. Private Credit question, I recognize it will be hard to precisely answer given there's a lot of pockets, but any perspective would be helpful. Just what is your hit rate in terms of what percentage of Private Credit activity you're monetizing and how that's evolved over time? Or just any types of activity where your monetization has been particularly good or other areas where maybe it's lagging, thus far, but you see a big opportunity?

Jeff, this is Martina. Thanks so much for the question. I would say, look, it's really hard without a clear denominator to be able to give you something that would be comparable and accurate in this area. What I would say is that we've seen the uptick in adoption across all parts of the S&P Global Ratings, for example.

So we see it in both the transaction and non-transaction lines. In the transaction line, very fast growth in structured finance. We've also seen debt ratings, and we see it now in infrastructure and other asset classes also in the transaction line. And of course, in the non- transaction line, you're going to see it in the surveillance piece of it for deals in prior years as well as with ICRs and res.

And so we see it hitting across the piece for Ratings continue to anticipate very strong growth there, as Eric had indicated. I would say outside of Ratings, we have some really interesting other opportunities here also with the collection of assets that we have and the fact that we see increased demand for, we'll call it, the democratization, if you like, in Private Credit. We see an uptick in demand for things like valuations. We also see the Index team really beginning to launch and innovate in this area.

And so off the back of, let's say, the very successful Cambridge Associates index we've just launched in Q2 with Cambridge Associates, a new interface for clients to allow for customization and benchmarking, so this is an area where we're investing and innovating both within Ratings as well as across the rest of the piece. And we're excited to tell the Private Credit and the broader private market story when we get to Investor Day. Thanks for the question, Jeff.

Our next question comes from Russell Quelch with Rothschild & Co./Redburn.

I wondered if we could get a bit more detail on the Barclays deal. Was that a competitive displacement? And exactly what products did that entail? I wanted to know, did you take like a bundled or enterprise approach when it came to pricing?

And is this a strategy that maybe you'll look to replicate with other clients in the Chief Client Office? And will this make sales a bit more lumpy in Market Intelligence going forward?

Russell, thanks for the question. Maybe to take a step back, what I'd first say is that the Barclays deal is emblematic of the types of true strategic partnerships that we're working on with our clients who are part of the CCO. This is a partnership that is anchored in a series of principles that 2 of the teams hammered out over the last several months. And so it really does allow Barclays to access a wide range of products and data over the Cap IQ Pro platform and also enables the Barclays team to submit their pricing data, for example, across a variety of financial instruments for inclusion in our pricing and reference data and valuations products.

And so it's a full 360 relationship that positions us very well to partner with Barclays in other areas. When it relates -- as it regards to -- or as it relates to lumpiness, I would say that we will -- across our CCO coverage, we're going to work really diligently with our clients to identify opportunities and convert opportunities. I wouldn't necessarily see this as being a contributor to revenue lumpiness. But at the same time, we're not necessarily -- we won't necessarily wait for renewal dates and things like that if we see opportunities to be more strategic with them.

So that's a flavor of it, I would say, Russell. Thanks for the question.

We will now take our final question from Surinder Thind with Jefferies.

Just focusing on the investments and just a big picture here, 2 related items. One is, should we get outperformance in the year, should that generally flow to margins? Or do you think you'll just reinvest it back in the business? And then philosophically, when we think about all of the change and all of the opportunity ahead, should we be entering a period of maybe elevated investment relative to historical?

Surinder, it's Eric. Let me start. Clearly, we have a need to continue to reinvest in our business. That's across products, across coverage and sales.

It's across technology and all the ways that Martina described, how we increasingly distribute our offerings through a variety of different channels. And that's important for us to do and is a way to both -- and in a balanced way, to be honest, drive revenue growth and margin because with those investments come higher revenues. Those we'd like to recapture in further investments in subsequent periods and then further revenues in subsequent periods to that. And at the same time, we do want to expand margins.

And I think you saw that in our -- effectively in our guide -- our full year guide this year, which was both around revenue growth, continued investment and then continued productivity that actually fund those investments in such a way that we can continue to grow while also widening our margins. So clearly, some of both, and it's balanced and important part of the business model. And I think this year, the guide and the first half performance shows it's working quite well.

Yes. And Surinder, the only other point I would add to that is we're obviously, between Eric, myself and the rest of the executive leadership team, working on the overall medium-term plan, which we look forward to sharing with you at Investor Day. And we're excited about the opportunities for the business overall going forward. Thanks, Surinder.

Well, I'll take it home here. Thank you all for joining us today. As we close out the second quarter, I want to take a moment to reflect on our performance and extend my gratitude to everybody who contributed to our success. I'm deeply proud of our team's execution this quarter.

We remain focused on generating long-term profitable growth and delivering consistent value to our shareholders. With our unique strength in industry benchmarks, data technology and combined with the incredible talent of our people, we're very well positioned for future success, and I look forward to sharing more with you in the future. Thank you once again for joining us on today's.

That concludes this morning's call. A PDF version of the presenter slides is available for downloading from investor.spglobal.com. Replays of the entire call will be available in about 2 hours. The webcast with audio and slides will be maintained on S&P Global's website for 1 year.

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