SPGI - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to S&P Global Second Quarter 2018 Earnings Conference Call. I'd like to inform you that this call is being recorded for broadcast. All participants are in a listen-only mode.

We will open the conference to questions and answers after the presentation, and instructions will follow at that time. To access the webcast and slides, go to investor.spglobal.com, that is investor.spglobal.com and click on the link for the Quarterly Earnings Webcast. now introduce would I Instructions] like Mr. to [Operator Investor S&P Global. Merritt, Vice for of President Chip Relations Sir, begin. you may

Chip Merritt

Good morning. Peterson, XXXX Thank and a call. and Presenting news you Steenbergen, Chief for joining this Ewout our morning, call S&P Financial morning's release Officer. are we Vice with results. Doug Executive President This CEO; on and President Global's issued earnings quarter second

and copy they exhibits In performance provided a measures accordance make business periods, need perspective This of with The financial same the release the can that corporation's to view today's difference downloaded you and contains information. schedules, comparable in comparisons management's. between between the meaningful we're If financial to the call, investor.spglobal.com. be reconcile from operating and measures at earnings the non-GAAP financial to the U.S. the corporation's providing during calculated conference release of enable adjusted as the release investors GAAP. is and information earnings

Before the of forward-looking in and statements. Exchange Litigation to of other some call this statements. U.S. of Act periodic of materially we historical of our also that current in contained Securities of cautionary projections, subject the XX-Ks, remarks forward-looking including ownership potentially economic media the forward-looking more have results direct the conditions, may from discussed to are Commission. to or call for that obtain these future We're matters reports and we and to S&P results the Regulation. to company. we aware in about your better need legislation Private European investor attention I information, In me risks the a with based Any filed this differ call. to Any statements who expectations descriptions listeners would expects may statements and events. on within XX-Qs, actual cause are begin, the us give like Except contain such and Reform Global Securities anticipated on the and impact to statements meaning current regard, and do or certain estimates, should XXXX, representatives cautionary teleconference provide I the has on to with X% understand Form uncertainties investor

this call However, be for media we to Feuchtwanger questions directed at turn the over call and Doug? is XXX-XXX-XXXX. to to Jason intended time, this ask would Doug investors At would Peterson. from like the I that

Doug Peterson

data Chip. India, be call. you, tensions, welcome In strong quarter unwinding look and let EPS second to growth. however, Brexit, challenges. meantime today's Thank events. easing to of S&P begin present benchmarks, insights trade navigate and Good provide Global company analytics the everyone XX% me Global morning, uncertainty GDP to to But to the information with The continue highlights. market to flow the with continues call MiFID delivered and and trade companies the the adjusted quantitative

generated $XXX a reform. of we in cash certain the Our points million rate effective items. declined XX.X% basis adjusted result second XXX excluding U.S. to free flow tax In as quarter, tax

accelerated billion Our million and we share X repurchase dividends. in to returned continues $XXX program

the and look an at expanded unchanged revenue organic and EPS closer content growth financial a company new X% differentiated the we remains X% Taking Our we Crunchbase. our of acquisition XXXX reported on from guidance adjusted with customer datasets RateWatch the and results, basis. incorporated

impact increased however, foreign the revenue exchange, X%. of Excluding organic

structured structured debt X% Structured with declining an sovereign ABS. the primarily like excluding current investment in In option $X.XX quarter high delivered diluted from note these information moment. We adjusted What benefit basis provide to due yield second decreasing Yankee increasing XX%. Bonds points a in traction to strengthened from company. and from profit finance will be margin and issuance finance, the in of do declining in issuance stock decreased tracking issuance Please to color are high included in next favorable place, adjusted country decreased increasing growth. point second and takes are Bonds on XX%, more issued grade that by strength I'd issuance XX%, yield to finance issuance tax of bonds we U.S. of however, continued down issuance Geographically, always in quarter grade quarter XX% XX% small the U.S. that XX%, in finance which X% future is our covered the base. X%. from in Our with revenue also very But increased $X.XX EPS Reverse a Europe a size the EPS we out with XXX Ewout and more RMBS Global businesses. in Europe, increased XX% bond realize. the XX% operating a where quarter, strong. When our in drivers bonds public XX.X%. impacts the Yankee increased exercises. the ForEx make on deal difference the type investment Reverse in another the CLO. provide some getting of

local a lower currently beginning are issuance issuance, is offers than the is beginning vast bonds XXX basis to take majority of decreased Europe rated to B however, financing, advantage. that Europe issuers. debt average in June, Asian rate. offered Single cost U.S. points entice financing of issuers As up made In Asia, of we differential X%. cheaper China In U.S. This The don't

non-transaction is number between revenue never related you'll and see because and revenue. there later, of issuance issuer frequent perfect bank loans, a As pricing correlation of programs,

in decline to a continues leverage is despite increased. that fact, grow financing revenue of loans. bond One ratings area quarter, the issuance during In

U.S. first a loans inventory time. $X for It every outgrown surpassed year of the During has uninterrupted April, low leverage trillion the XXXX. hitting in since

the market loan utilize ratings leveraged loan conditions primarily to rated needs, XX% lower. or addition, increase loan meet speculative XXXX. can an warrant. market leverage choose now high than market Bank issued X,XXX B comprises typically In bond To are of on their more more companies as loans than the double issuers, since plus the whether financing or grade yield

ratings the bank of has the rate exceeded bank the market loan from revenue Our that increased. loans we of growth has as percentage growth

Our downside, revenue was over A XXX billion There June loan second has potential entered limiting $XXX The savings quarter new re-pricing a recorded market for paper however. spreads some secondary increase is exercises. most May year a XX% $XX ago. million. pushed in the higher sharp whopping bank loan rating supply million increase and issue in of the

only the on even is June of fact, in XX In billion year re-pricing a and the past July to monthly be lower. total volume lowest was pace

commodities money at end by $X.X our of we products assets chart to assets. $XX.X the indices Beta, This the in largest passive income, survey. year. third support Jones XX% second products delivery. past all that importantly, XX% and trillion managed released in includes Indices, indices with the S&P that Jones that XX% index category Dow derivatives with is assets survey $X.X of highlight in globally indices. historically indices which the trillion. invested June, XXX trillion Most is $X.X depicts benchmarked Clearly, This against annual fixed XX XXX physical to Smart X.X like was category S&P settled active in assets with of increase three and the calendar Dow up the billion assets in increased These S&P to or a Turning have of the assets. has trillion. the the trillion track XX%. in Indices is in is is that highlights billion in I'd been money there Agricultural categories. up Numerous

Ukrainian created. being Following the launched the derivatives and first on December, in benchmark success energy Russian increasingly are for futures agriculture Last Platts wheat in cash-settled cash-settled market price based corn. CME

a successful for futures traded this in success, CME option launch with see it's first chart, Sea Black week benchmark. can and you the months. linked contracts the over Based wheat very introduced last contracts on been As to same from X corn this XX,XXX

Turning intelligence; will of companies risk product analytics goal Nations XXXX Street Carbon to S&P XXXX companies S&P a of Trucost, that evaluation create Kensho. banking of the be prices. for development RateWatch companies has Price The companies than available is investors the value to custom risk to community products. carbon Index. private impact help constituent address loans, with opportunities and innovate, It sustainable was platform to addition in potential for data performance rather to bank quarter, acquired bank including at trillion United be of the became than STGs. leader contributors by Dow a assets specific specific offering. have on the existing In aligned the costs quantity founded or identify in It's to to Trucost business thousands other data. prices the launched into the S&P the at RateWatch the fees in emissions analytics more new our Over pledged Risk it data. measure will carbon a to to Indices continue almost XXX XXXX potential and on support company sector, developments tool for with re-weighted of in Jones In subscription purely emission. differentiated intelligence to company of future and Adjusting the designed XXX,XXX market great help account carbon valuations The XXXX. and the business stock and data June, provides Adjusted other integrated differentiated to their data tool. the was market on launched Crunchbase constituent X,XXX seeks risk XXX, looking crowdsource and carbon market account is in to a designed the on possible RateWatch. deposits, STG financial X STGs. of attributable data of and content environmental Crunchbase April, acquired expand utilizes reports with we

our Now, to on to results specifics call let for me quarter, the you. provide business thank turn over more Ewout the

Ewout Steenbergen

operating additional like on Doug, you, call. revenue would touch other I a growth results. This morning We Doug discussed adjusted to already like the everyone EPS. to few and I the and provide would solid morning, our color to good the diluted quarter items. around line reported second in and results increase Thank

in X New First, operating million York London. due loss increased in to adjusted estate a with $X $X million real and corporate excess unallocated associated Kensho reduction and million

that in projects, revenue in total we It that only Direct million, is and want to numerous important to control. technology Second, resolution our X% tax of outpaces the payments. a $XX on result we work the of resolution expense ensure tax rate. adjusted expense for dramatic penalties outstanding An expenses quarter. the with associated FINXX productivity quarter item first primarily Based in during Year growth. New our of increase was expense efforts tax reduction most due interest expense interest accruals the to our these incentives U.S. accrue lower in in and interest the growth decreased us resulted impactful Fourth; is reform of state I our a lower effective resulting to expense year-over-year their compliment requires in items, adjusted interest audits, employees improvement. potential were which

new and and the review to continuing Act. Tax are evaluate We Jobs the provisions Cuts of

the low $X recorded tax, second first-half quarter, for income tax for of intangible we a global a provision the During million XXXX. of all

We are the guidance continuing of regulatory monitor and legislation. new to interpretations

you well, Finally, matter. I want update financial impact on doesn't statements. another it tax our to

for recall XXXX company's discussed approximately IRS by XX-day increase this second of to The settle tax that quarter the proposed increase of disagreed or last time district IRS's certain amounts in that a the tax related that our in and Colombia. states to paid vigorously reserved. Some are by million. with year fully suits the tax we deductions the to have a law to federal you of million claimed in for report in $XXX issued call settlement the the We was April allowance IRS the we that income XXXX primarily reached conference proportion adjustment may proposed stated with year letter we at XX the pleased that that $XX

grand depending $X.XX price of that tax also impact benefit estimate will the price. expense. adjustment EPS impacted the stock-based SPGI's tax is to The EPS in and market the with EPS compensation from by XXXX as $X.XX continue increase stock on is recorded associated activity. reports accessing to employee grants an the share fair exercise option impact whenever from We value

a EPS tax quarter adjusted second quarter, reduction expenses improvement we recorded the that in During $X.XX. second the

Euro positive was this quarter. and Foreign ratings $XX operating million operating the revenues rating the revenue adjustments second the $XX by positive and impact on the share were bulk million $X.XX in impact about three profit quarter. in There primarily impacted profit exchange a have the The per segment, rates impact company's adjusted British to on was a of the or Pound.

settlement legal to The related first was reserve. our

crisis company As significant we settled May, litigation. financial the back stated final in the

our meet We to by are settlement quarter this reserve $XX increasing the obligation. million

that segment the related item for certain amortization employees. retention be the pretax new related ongoing And Second years Kensho was is for there truly expenses finally, operating each expense. the operating adjusted of segments. in a an business will second profit next every In was and three revenue, $XX contributed in business to to million by quarter, adjusted this performance profit of margin, quarter operating our solid gains

segments, Now, to business let's turning the with individual start ratings.

primarily basis points productivity was X% ratings XX.X%. favorable due recall quarter lower revenue ratings Adjusted year improvement. comparison, operating XX% second ForEx. against you decline of X% revenue and grew a accruals profit impact quarter this expenses As operating while excluding the strong to XXX from the incentive in XX% may increased in increased to The XXXX prior adjusted margin this or increased

As we basis basis on we service that associated in revenue. see ratings the said rating due surveillance, decline in Loan entity and rolling transaction X%, managed a as basis points. XX% increased margin fourth revenue evaluation the increased fees increase a on you in rating revenue operating and in X% bonds past, can new business increased the Transaction with loan slightly XXX fees. primarily ratings adjusted to bank growth was quarter's revenue ratings,

and increased hedged due RMBS at If to the decline due where for quarters. the greatest were Corporate only revenue mentioned. CLO declined straight in The category you primarily was public its finance in decline to Ratings increased in finance, revenue can structured a that despite Structured you five issuance. finance by a look Doug strong governance, activity. XX% gains see markets, various U.S. issuance revenue indication

funds, derivatives $XXX with contract renewed We declined in increase in not change strong increase AUM, This and passive industry in of in indices; and adjusted to as strong operating later growth margin principally AUM. The in X% setting assets record inflows mutual exchange operating driven activity. OTC a exchange-traded moving and derived XX% due profit products certain into profit investments a Subscription to the transactions experienced totaled continued versus ending quarter. of Turning derivatives, revenue of to revenue XX funds at the XX% increased second be higher asset-linked healthy quarter to are XX% net revenue in in will XX% ETF the basis points to near average delay trillion, volume in OTC led growth this a second but contracts up ETF XXXX. result tied greater the with The and $X.XXX the these first indices a quarter quarter trend rate XX%, revenue year. prophecies. Exchange-traded believe mutual increase rose ETF ETFs, adjusted derivative billion. renewals AUM reaching which administrative our fees, XX.X%, increased XX%, by from a of

net over shows, and of the of market XX months. the the billion last was of $XXX As $XXX result billion appreciation inflows this chart

average quarter activity, than derivatives AUM This indices increased grew XX% mixed volume fixed during options second for which include XXX XX%. the futures second is proxy Options, revenue year-over-year. our a Index the increased end The Exchange-traded with and quarter. figures. which XX%, better S&P contracts Key changes quarter associated was

XX%. increased Complex Equity CME the at activity Lastly,

revenue rate operating turn acquisitions now the increased is newly improved of quarter, and me for profit the X%, Let which in In X% to increasingly data a revenue Panjiva, voice. Market the flow sited second X%. Adjusted straight increased Intelligence. acquired media organic excludes

some operating first margin investors profit XX reported elate will to the during hope increased of those XX.X% We quarter improvement points. margin the that There adjusted we operating among adjusted an XX.X%. concern when concerns. was basis Our

and data deeply delivered and credit XX%, more Looking Market analytics Risk other role revenue Intelligence RatingsDirect, RatingsXpress, Intelligence. solid with solutions components in for at growth. Market X% revenue, Services X%, Desktop credit three all grew leading increased growth risk products growth solutions. management grew

briefly for that desktop business second desktop approximately XX% of already. sold been understand Market desktop to quarter, commercial converted. a versus commercial instituting by want of desktop customers Also some periods. IQ on which our Capital agreements the emphasis the enterprise-wide products movement during the commercial our we in realized business, to the products, highlights, important outside agreement the prior at have I our review end essentially to wide all had enterprise enterprise business increase we desktop former Intelligence active quarter, for were is the agreements Here wide discussed With XX% users

Market continues. new progress the platform, for As Intelligence

offering content. building different banking screening know see rolling and because to is systematically analyst than platform the we we and work interfaces with enhance search been with threshold on to have out clients capabilities customer the wants Kensho, IQ wants tailored new to additional functionality equity and way see. investment to different conjunction rounding unique Capital the are corporate the In We for types user with in is to what the

to changes rollout between to offer back enhancements. to we platform forth well comfort future productions new and flexibility for platform and gain switch with clients releases test As preview as as

derivative services over fuel Turning growth first oil quarter business increase the of this that by coincidentally experienced second in revenue. it adjusted second The of was of second the about the our margins adjusted subscription revenue quarter After year X% generally an to core than Revenue in timing in to revenue. In XX% products. one declines XX.X% quarter diluted global to continued Platts a weakness reporting point first trading XXXX XX% trading quarter, single-digit points year. of be Platts, mid-single-digit this including in growth of the second services related. represent rebounded in as quarter growth the the weak high a expenses. in was increased Global X% XXX margin less percentage in the certain outpaced trading and silver profit basis increase quarter operating of

at its the growth revenue growth that petroleum four and and during All of the by power gas ag, and respectively. delivered markets, XX% four the business. leading and way If look and Platts with revenue with primary majority up you XX% the make can see you petrochemicals metals categories quarter

the from to that cash was our position; first to XXXX due billion approximately quarter. the repurchase balance initiated turning $X Now our share agreement accelerated by reduced the in end of capital we

$XXX increased XX-year million Our approximately million $XXX debt we $XXX maturing debt. in to million redeem a bonds as issued

coverage adjusted adjusted excluding certain first free leverage net measured income Year-to-date increase was lower as was X.X working versus debt million to Our million. was remains cash tax due to higher growth well revenue and of rate improved half of flow as This from EBITDA $XXX times. capital. an items XXXX $XXX as the growth,

return ASR initiated capital, for the quarter first $X the billion As in of continues.

In paid quarter. the during we in addition, dividends million $XXX second

in potential headcount provide Unallocated. While X% businesses support. quarterly, in grew while do might divestitures and and headcount allocated plan and first costs information like headcount and to out from centers not business are corporate included in employees recruiting to The of increased with the of corporate. to organic additions acquisition to increased the and are increase the excellence, in we of in in-sourcing information due excluding In was past XX% these X% the thought half transfers accounting X% certain primarily and increased useful. acquisitions we you of associated category not most revenue Corporate XXXX This businesses functions find year that The our largest this half, XXXX.

rates. the The our GAAP we $XX guidance guidance The reflects $XX our I Please our expect takes lowering guidance. our income expense we end million, shows our that to low-tax by spot EPS our tax only our remains GAAP that unchanged XXXX mind highlighted change global unchanged. this guidance we to is by diluted guidance are million. the remains guidance This interest Now, ForEx diluted rate previous guidance lowering in on adjusted are difference guidance our EPS slide. previous is expense of is push review market and keep as change The from guidance. new the high only current intangible slide will slide guidance. This on tax guidance. Adjusted that our interest

While third benefit. XX% we XX.X%, our fest, decline the that stock-based rate tax rate, similar compensation quarter tax in the a then stock be tax when creating rate quarter to fourth to tax quarter to grants annual second expect and the guidance respected remains

In the a the model benefit year. that of we of quarter a of addition, third occur quarter We that this the will high can't third of as level as exceptionally again in remember third option recorded you XXXX this XXXX, exercises. $X.XX of quarter EPS stock expect to result

call continued are for me will to our your with over We XXXX and be year our that that, reflects quarter pleased very strong our back expectation company. results questions. let second With a Chip turn for guidance the the

Chip Merritt

question, ask now, indicate just couple To or press in record I your please participants, questions; * simply for questions, you. during you press And session. two name. today's Q&A other of you instructions that's X. question your phone that our would allow callers Thank time to for a to withdraw to cancel limit and a to yourself wish ask X order kindly two *

X sound handset until question. This but If ask speakerphone would you the first handset listening Operator, answered. we better lift question, now your on you've a and to through has we'll pressing been your * been our remain now will like prior take ask ensure quality. to that a handset

Operator

you. question comes Macquarie from Thank Hamzah This Mazari from Capital.

your ask may You question.

Hamzah Mazari

it Is question -- needs morning, think and double I you on just grow. is And mentioned of down of issuance the Maybe could us sort for not business. sensitivity any cyclicality to to issuance what offsets and at about if business? double-digit to just thank terms is good you if digits, first issuance issuance can Ratings of decline of My frame the of Ratings how does that of still sort Doug, you. business Ratings in sort Hey, grow? level think declines

Doug Peterson

know the different and dynamics the exactly and welcome be. you always give just I And the project that as very would quarter, structured in first let saw States except Hamzah, what weak I us. look don't the was you that So question you for important for issuance the we finance. call. if at. thank me to pieces United the But all, issuance point Clearly, can for is very of during

financials XX% On down finance overall. corporates public and with the corporate side and it was

a it But quite quarter. So was of weak two we that remember components have revenue.

have includes be also are fees, market, by things get also new fees and fees, but which the transaction come it have issuers new-issuer to that we like could We directly fees cetera. to RES, which this, impacted includes we non-transaction get et able it we're includes for when to surveillance;

in look X%. we for revenues weak all so And despite entire at issuance to saw components. total, quarter, you X% as our able the market, were we this the increase overall, the down a And total

I flexibility our your think we that we is, bit a specifically, you do I to but we analysis, really also number don't of downturn. question that large sensitivity a haven't of run see what that none answering number, some would to expenses have So to more a have a if us have flex get were

Hamzah Mazari

thinking question, I'll Maybe strategy about over-levered you're how if Market it just the just segment could helpful. that to and to talk seems segment, is And you. globally over, my second turn that? then Thank like it's you Very on Intelligence business that U.S. grow the about and

Doug Peterson

of their one their to markets at Yes, to it's globally different something markets capital sophisticated, us, markets more for that's whether growth banking become the and not single important our Market respond markets, just how every businesses for or the cetera. of as or look they that's et Intelligence opportunities pension their really of but

I'll businesses the Market and to more bit a We have specifically across our board, two components little of comment Intelligence.

And mention traditionally U.S.-sourced billing the traditionally done here, their that the wanted our world. maybe looking dollars markets that over able of of one I up They're Intelligence, of and in U.S. there. the you In the largest, that example the M&A, and always our there's markets, and as in And international. places the end Asia. transactions, how more the of the banking lot of sophisticated, largest tend would time markets where client of have all, IQ but is and out was cetera, of seeing identifying Intelligence the Market in ensure world, as especially growth talking M&A a growth gravity right, the whether capital in in of the Market most U.S. for it's in much combination the up being so the we're to high the et businesses and we components more exactly and and that's around most services markets to size and the that it's the U.S. are get SNL, billed we're States, the always the of more are explain can the to equity we with of do not show sophisticated. see ends of world. overseas -- because MI out larger number business than income. the would be from to capital it investing the that more easy take-up two But rest center markets the see always source first we they you're so have with aspect think the especially markets, banking Some a to Western it's of business we be customers, markets, all increasingly have United we index we're where But of Cap here Europe those and are Those

Operator

Alex question comes next from from The UBS. Kramm

is open. Your line now

Alex Kramm

Hey, good everyone. morning

on? the the were also the a very bit is efficiency what you already talk can from helpful. that comments think comp margin you But Thanks. So, left about then, about more. side, think increase side. on parse mean for numbers the do it Ratings versus employee year-over-year a focused know you impacted for have from may much little an on gains love really how still the to to, I you favorably you much guess, that mix efficiency Ewout are I made there's some of And perspective, accruals how I the And course, and maybe you opportunities margin. if of out

Ewout Steenbergen

morning. around To perspective, the XX-month Alex, good in basis trailing XX%. quarter, Hey, on margins the put Ratings XX% result the for

day investor direction is our we high-XXs. margins During have our indicated that for aspirational Ratings

little you have growth we seen, on pretty of basis in go quarter that, see step nice to but bit some terms is very And up there, margins revenue XXX particularly quarter significant in trailing XX-month to a a we're as a where points. a this So have light. pleased basis, way

it expenses but So fact, exclude revenue was down. excluding were was FX And up X.X%. up X.X%, down, X.X% X.X%, but FX if in you

So growth decline see, a still a taken impact Ratings? You down a there for some Why for of of are actions last positive and year. have between FX expense going the the we of restructuring that very are development. impacts so gap on excluding X point, X% basis expenses revenue

You in explained we that organization, the analytical organization. in might the recall the restructuring commercial actions

of So to also are from reductions investments, previous year helping incentive benefit clearly And the lower efficiency seeing We're we year. some headcount that the opportunities. start there. than the technology are compensation see accruals this

handle to volume a adding more able without we're So headcounts. lot of

margin the that expect those we future, future. the Ratings. we we will the of are hence see drives aspirational those targets drivers high-XXs overall, So main in the And continue in with in

Operator

from Kaplan The next Morgan Toni comes from question Stanley.

may your question. ask You

Toni Kaplan

enterprise slight with shift revenue Desktop that, the good there to a into and to anything that'd order any less Hi, a read revenue quarter higher pricing, Just that drive dollars in be helpful. slower. Is the in little morning. to on upfront usage? maybe bit Intelligence had taking thoughts from Market deceleration

Doug Peterson

anything have left of our of be convenience clients Most Doug. set in into that the hi, a I moving engaged there. a contracts We're ones will the to largest now period you enterprise-wide to pricing were progress as had were clearly morning. know, think should between you good expiring. to the the was contracts This the ones that Toni, moved This and making good we we don't or But pricing. that enterprise read we contracts getting where fortunate XXXX. that the there's been, is it.

larger are negotiation we contacts contracts, those of not left have place yet multiple are in go going to as some Some we sort in now had or before upside to where dates able on the expire. cases multiyear that already we're those they multiple into there -- any where of that in be gone have

XX%, the that everyone getting So into that over of us leading the didn't end we're the indicator think a read at of for to leading contracts the us. to anything toward your of I build models. We users, leading as But -- XX%. a I'm you not saying that is indicator into to time. up it's that, positive we growth it. about And continue enterprise that's should we're move indicator good

place. XX% We have in those XX% that to those about ones to longer are are be to go go. of But going get some harder the to

Toni Kaplan

around turn Okay, wanted were services foreseeable in X% if quarter, that is see sort in level upside that's growth could single I given the to global Platts. then a you just of And subscription my business? the on for just And Thanks. this the mix. kind With mid-to-high trading helpful. ask future to what you'd follow-up of growth high expect digits

Ewout Steenbergen

good Toni, Ewout. This is morning.

in subscription for As in the was the prepared revenue. revenues more X% about catch-up growth some there was I on X% of increase Platts was some remarks, one-time There during mentioned that nature. of

that declining see in mostly a high oil see in to trading where has do prohibition oil if So X% that products business. near-term. marine the not will Services, one-time to nature that we we out of respect about Trading future do the in expect with Global has certain this to we of into think Also, the account marine the specific with you you rebound on That should in take products the more fuel don't that that to with modeling fuel, high-sulfur derivative revenue. fuel XXXX

over So near-term. And already is time sulfur products derivative we coming derivatives low come expect to trading down. in the fuel up, not but trading oil

overall and would growth. of in be that that solid very core is expectation. pleased benchmarking So Platts the our Platts, steady we we're the and price doing business, well see business very subscription But there core really

Toni Kaplan

Thanks.

Operator

The Manav comes from Patnaik question Barclays. next from

You question. may your ask

Manav Patnaik

Desktop Thank morning gentlemen. the can follow-up Cap IQ Maybe piece. you. on Good just I

the So us mean seeing on color impacts, X.X missed it and pressures give stuff transitioning maybe some has to some think of I hoping it the the outside I are you and I decelerated, client of last three costs, more cutting you guess could now that. enterprise, like was friction there. quarters just of side, was people X, I

Doug Peterson

to relationship hear always as -- saying we when we to negotiating people be higher see, hear they is building to downsize. these are also is we're of related our their there's those that businesses take might we and pricing increasing we talk a clients two obviously contracts There growth. lead think of strong is fundamental remember But off about costs, see or sorts higher their you going to to you that the And the clients. when them And seams very overall we come topics, we the of different of the size can usage long-term that on do But circumstances approach give-and-take and contracts. how to the of the about enterprise-wide these overall, coming as users. that some

bit the of little the some is products. is have still There's this it's our interest that also that -- growing. quarters. on do of a high But some and quarter-on-quarter comparable see difficult So in business year-on-year we high demand been

moving into data we of that feeds the is made some that's and the to services also And of see services customers sometimes you -- if data on modeling able Desktop over on the we're substitute some can from are up as our the case and away the products. analysts there pricing to

Ewout Steenbergen

I the And build I perspective at Asian on should Doug's answer, look may of Manav, whole think the you if industry. also

player in industry. far I the think other exceeding reporting we any are the numbers thus are growth

market of clearly winner in are a at time. net So we the this share still point

conversion had is perspective come up multi-year course happening is terms, the in basis, slowly and and in to contracts what additional those future. up contract come wanted past been when contracts will had of on to normal multi-year the we in the are the other also future out we at that be will But expiring in more contracts. share converted annual calendar a the to had enterprise-wide have that calendar set those The that we the because see again agreements, natural enterprise-wide an now I the that were those

from to little reason we there XXX%, to XX% should expect, XX% the So more contracts besides more to that current slowdown now underlying are but the that's the that officially that's specific what takes bit why need a is that these multi-year time. you no convert, and

Manav Patnaik

that end, that's that talked there process the your guess just and that I look helpful. changes, make I fees, about in growth to does which administrative but fourth then Got on subscription And will second question index you be about a on my slowdown it, the due normal? imagine mean will third quarter the is catch-up,

Ewout Steenbergen

processes, our another early Hey, is and of here made also administrative we the profile billing year those and moved of and we new administrative out other There one happening signed Manav, contracting they're what this only changes backlog some contracts the is some it's contracts out on is and sending in to we new bit are administrator, bills. contracts, partners. when the send a can

we year. purely revenue. accounting the perspective, recognize a is matter, see again that technical an catch-up in So cannot this expect But we this of administrative second-half from and therefore, that to

commercial and normalize, matter to commercial is it's administrative. behind no or disagreement this expect we purely it, there yes, So

Manav Patnaik

All right, you thank guys.

Doug Peterson

you. Thank

Operator

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

your may question. You ask

Jeff Silber

Thank you so much.

in guess between margins what Just in quarter or we versus circle the the going quarter. the that mentioned there going and and had that should to again, you wanted have intelligence went second Were forward? lower market first XQ, XQ highlighted on Thanks. to margins fact differently expect you I something the back saw you up year-over-year

Ewout Steenbergen

that recur there expected of other always during that Jeff, And quarter margin certain overall expect first whole were XXXX We quarters. of we more of the or a quarters assessed a that our what intelligence highlighted timing-related during for be earnings the would reverse during XXXX at improve market we XXXX. should on market Therefore, we next the course specific than Ewout. expense improvement call this that year-over-year is intelligence margin last basis. few as items quarter were should during margins was not XXXX better should

we quarters. the that continue to and our the promise So basically this investors few quarter that for with are to expect in next and we line commitments that delivering space

overall, So remains. that commitment

Jeff Silber

right, All that -- And great. then reminder. I appreciate

except us overall despite mean item bit year, conservative, I being really the In guidance outperformed year. we little you Are of fact highlighted, the terms for in you didn't appreciate color it. Thanks. slowdown a the the expenses of should second-half of we the first-half overly that give you really your a if on change you can the interest expect that

Ewout Steenbergen

Yes.

of conservative. is road, course guidance of middle Our aggressive neither always the nor

that offsetting a and interpret go opposite always but to So this. should in each indeed that's is basically elements direction, of a how There negative other. you are couple a

tax interest to have the as to little at before. be of that expect more the At we time, have indicated. We expect be a lower line we range indicated we the that the same rate high-end

So the this offsetting, guidance we less affirm to to continue EPS morning. raise and still we our as two comfortable are therefore very are or therefore done more

Jeff Silber

Okay. Thank you so much.

Operator

question comes Piper Appert with Peter Jaffray. next Our from

your ask question. may You

Peter Appert

Doug, in if I mentioned just that your even for more late issuance wonder second-half little weaker activity you or for give any morning. you the second-half. about implications the continuing has Good outlook Thank you. that quarter. thoughts the market a in if bit bank loan broadly got the could

Doug Peterson

Okay, good.

bank issuance a to is those high-yield had two to be et bank That's there see of little is mark bit either activity. glad to where you trillion that the been weak is have asked the And re-pricing. is of we period issued could some getting same fee, question. that's that to as back where to fact volume. The coming market the a cetera. refinancing, small There many the was was and so or I and market. the last you When as I so you it's was you bank kind initial a In you sorry, loans get cases, There tap a that's market; part strong. market bank But And two lot little loan That crowding weak. the three as crossing and little get There oh, had ability in -- is reason of basically weak are a had the the been to rates we re-pricing; market activity out or that issuance strong, transaction. the that of re-pricing years the tighter re-prices, an of there are the of go many loans, loan bank see a outstanding see continues going because component But it's bit go tighter. the $X loans. of mentioned refinancing. been could that's one of for the is not the the fee initial inventory and issuer, the the bond it's those prior issuers bank incredibly and the M&A confusion; they go components market very their loan is the not said a where refinancing, to there and strong you when the is is that spreads

Peter Appert

about talked there it. be? incentive in then, Ewout thank And terms Got update the of Kensho you. seeing quantify transaction payments, can and maybe momentum years Excellent, you I just an you are what think on of you will those three

Ewout Steenbergen

Yes, Peter.

the that results were shares me that are we kept shareholders. amortized if a on in part look our non-GAAP basis. normal for in consideration deliberately and equity should be incentive basis. to Let normal on are And operating performance more normal and in over alignments question results Kensho, out with And you compensation With get so a our equity you performance are that answer any was over grants the a time. transaction are is paid shares. asked the employee was course -- compensation, cash first. part doing at what particularly being the pulled all and in grants as correction in answer expenses a respect And maximum a the part a and are take second to What above those considered we first assumed

with those $XX because what million accounting. methods. at accelerating That's -- of come look We equity time. Kensho the more expenses that number over related of you accounting expense to down Kensho if pulled were that out, related should excess basically the use So grants,

we years a revenues of then quarter. from that course that's results as should next and should So years, the $XX But approximately down over disappear. that that in expenses the now completely as three about well million for of have our normal have Kensho particular we you see that slow had three come non-GAAP million itself the item line $X expense

Doug Peterson

On your how is step me first about let going, Kensho the and little transaction question in a bit. implementation

as We market. the as have an incredible amount the of excitement company from in well both internally

have. projects to market workflow linking, the value, that at So with of thorough tools, purchased call insuring we integration, instituted of we it do delivery our Kensho of have has know are since we are what and the that progress. even ingestion, bringing And a has would middle then with we analytics that very involves data and I the products to though it the approach we so intelligence, beginning visualization front-end, work end you adding not systematic part with very with our to integrating against resources the company, most other Kensho of enhancing businesses division the the going work data kind do the of the at search opportunities can the company. the and also where that it's begins of deployed across of creating analytics That pleased means are best some every that they in add has type in probably on, value

you XXX,XXX on from market products, of of something We where a from the a private And can have Kensho about It You on or were see can the different you but are I saw would that them guess when the Kensho. products accelerated a you intelligence that added are able it were pilot Kensho Crunchbase. weeks. well, utilizing Those yet, which that two have things at to we call a during not the was put can some demo. couple has there taken a lab quarter do information platform tab recently things to six Technology. they do months couple of we company

is analyzing alternative commercial estate for One credit market. is for indicators the other the real and them of

come, question. thank very pleased and more So to much with progress, the we're you for the

Doug Peterson

this will year add setting to I we later with do just come year from one of Thank up your value colleagues we back other from get about expect we and those more may enhancement so will economic benefit that we're so all value projects the really you methodology, get that specifics investors capture the that, element course you those this what later of of to have a all about and to back of out you. If and projects.

Peter Appert

thanks. All right,

Operator

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

your You may question. ask

Craig Huber

thoughts in little you market earlier this can are bank are Thank there's you. appreciate the of on thinking just further us my guys bank bit give loans sensing can ideally but Doug, where for happen? first you you just the you your back-half terms an year question, loan the of on

Doug Peterson

right market is with we banking we're what in market environment. the on environment and just obviously But sensing where current based bank now financial loan the are

more and negotiate mean would indicators see to that but U.S. some in capital. activity that lot my to funds community seen get of reverse of underlying truth Europe well of moving and to all interesting, conditions. don't more with clearly to points much there's of it are to any loan as the Europe. that some of the negative of we for invest sometimes very the go now carefully linked was basis things the to looking in year high driver are as terms the funds I activity in which is obviously one which any key have the differences as volatility XXX hope as wars spreads raising China is the investments encouraging like bonds that rate M&A, the watching from and the of bond can rest we yield the Investment table trend there first carefully The more some factors market where with and X.X% that the lot funds, but trade, etcetera. be we're only the high would I is at a comments XX growth prepared factories be E.U. from means well yield as the it will exogenous to we've yesterday German very XX but very see to so where place activity factor impact going are mentioned I market point seen global like raise watching yield shift that outlook X% on Yankee of more year around companies very and we're market key the year the you almost The is still to differential market we a might just people factors loans. to loan X.X% the yield to of U.S. more bank it XXX do some same have banks we strong raising Europe going in bank replaces robust conditions change starting they're that but have have meantime your the and in in specific there

Craig Huber

be think you when And in U.S.? fully then the of that process do the for in IQ will out you here deployed platform also have the new the bit little outside U.S. rolling Capital a

Ewout Steenbergen

data together market important they it's step hand-holding intelligence we days do whole confront transition. a years next them our it step, because lot who lot of by will needs group, Craig, we day and very can lost, so customer that's that way step the of with support in sales that might it new or a so over by that one probably our persona are for so because customers platform with organizations, our find some take support by a group another the don't two and important explanation our needs step persona place go only along be a we force is to want by that customer therefore so in from customers basis because

Doug Peterson

is have that we've of it entire beneficial risk whether a in that customers so approach years this or then is of S&L from to and a expertise systematic thing technology that we're and other I us Ewout the the itself the ability understand an that going of with IQ include platform to the said the over name would encouraged success company. plants next conversion the platform One or and products is was and getting as conversion will S&P gives products over certain the what kind way along the platform the the it rescanned in global to the it's the we're product what very and seen need were mention couple like my users of to the the be for cap etcetera the also to continues of my

Operator

The with Cantor is Fitzgerald. Joseph next Foresi question from

may your ask question. Your

Mike Reid

I was wondering Hi guys, or think Joe. was more this derivative probably to up volatile is spike back growth you normal period traded Reid for just Mike to or on this the tell? if for exchange going too

Ewout Steenbergen

say that is they and say are are in that lot you've very actually so as because market groups some but their tell a world some this fixed of Mike, down of in are in could we fix some down quite that volume, period-over-period. to an there categories three different seen you situation hard could productivity the still is trading up came volume contracts terms fact volatility in the fact interesting in is

very more hard So think tell with to volumes. quarter definitely exception it's the high we was first an very

be walls would predict. really see that would heightened in hard we to it's but high only otherwise you're expect the So to what tension to recurring very if

Doug Peterson

popping you the that Mike, major in more a is the to going the for VIX when likely up the good revenues I is into been indicator that are into myself there a an anecdote and that kind this coming indicator level And is couple XXs see so had just volatility there ETD begin how is it that's VIX of highs go XX very up, volatility back of trading the there that I more VIX, again ETD if weeks it the and personally the is many think leading the revenue one below going market to got watch be its watch year last the typically over the the low market, of more out. was started then is, but of is ETDs Doug, I a for quarters. I with think to this second locked

Mike Reid

watch? Okay, then all the color this do on to thanks numbers impact think rate and from for quickly, the at be just any you year that,

Doug Peterson

will revenue to year acquisition. be and full we some I expenses be there course it benefits say would that of integration a be so as will time, synergies will year take modest that some be able would with relatively normally to help off to and that well of economic impact to achieve some about over but will able this

about particularly U.S. the are We We think very enthusiastic acquisition. new helps customers banks of a in community this it set with

so added we're expectation. the expect over intelligence slowly that set that's probably coming And the market benefits in but we best to the that that to customers very to two of happy years next year see

Mike Reid

All thanks guys. right,

Doug Peterson

Thanks.

Operator

Next Tim from McHugh from William Blair question is Company. and

You may ask your question.

Trevor Romeo

Romeo on Tim. questions. for taking for Trevor Hi, Thanks this is the

you some products will next get as going level the five economy First regulatory of lately is digits forward the to positive changes had global products all, structured sustainable revenue of as quarters? been has structured we've double stronger the that start for for few growing a for and straight strength quarters comparison think but bit in tougher mentioned, particularly now

Doug Peterson

Just clear you are about ratings? be structured talking in finance to

Trevor Romeo

Yes.

Doug Peterson

project It's of see that I receivables, for of which be strength structured Okay, I to levels the management like markets we And this don't going and your been and from tap market one manage they've of kind managing the we've of been just is every don't of you they've going almost from quarter issuance exactly end lot there as coming banking going in well, the all the very of AFS been banks the other a but that where are in receivables at strength of where it structured to is wanting related been towards credit in the the card capital the you this think typically to has been growth other different balance want but and areas CMBS around the tool. is coming purpose coming know, it to seen drawn finance. the where a things to and securitization as carefully I changes lot finance quarter sheet, when the were other don't it markets to can access I a period is taking but sectors capital in sector product forward that obviously one components every balance vehicles definitely then growing see quarter I continuously do special capital what but world was the thing at I sources issuance quarter-to-quarter. tell and from advantage

Trevor Romeo

U.S., you're thanks. then strong this just international is kind but in to on touch digits differences internationally, growth flattish didn't wanted grew the the so U.S? happen for out trail that was Okay, you anything any in quarter of in And plats, geographic the point of double necessarily revenue seeing there

Doug Peterson

happy overall Yes, fact in a Asia well also strong. general very we most in very very they doing in business or in and Europe sales Asia headquartered business see international to growth Europe is international their in is are but London in are plats fact in and particularly and

for benefit the I so in situation a the with the lot do think has activity see we of just clearly of earlier to question U.S. this our levels the of clearly actively is and plats grow expect our as more issue actually back taking we and of continuing part business to are Asia of, saturation economic markets coming outside to activities to overall an that our they're would that strategy

Trevor Romeo

much. very you Thank it. Got

Operator

The from Hung Vincent Autonomous. next is question with

Your is now open. line

Vincent Hung

anything the Hi, of can new converted on is those terms market Cap IQ uses? stickiness the usage trying for of to get you is in building intelligence, you're you pricing what there to with where a seeing trends with can sense enterprise already share just

Doug Peterson

back contracts if approach which so that start I to because to don't on us it's I a once of great future future in to enterprise give question would answer of you have think blended a mind right is we that an that some up enough to a we contract, calls. wide take those granular an let's kind get don't addition we for be move on view call. you on typically having a you now

Vincent Hung

of want income the itself And growing like to ETS Black on get on issue thoughts starting concerns is to indices get you? that fixed something it investigated indexing your just trend arena, in is Rock Noted. factorized

Doug Peterson

large really answer are those benchmark the be or we to don't at look not Overall, the more aim a change dishes that no. And those to the new because replace is a you trend ETS. for for if is markets will think categories big indices

of overall overall our that's overall indices, only not to our the for threat few business small compete don't model. markets a intention but So a that large with there we as very to see in the so part is benchmark any

Vincent Hung

Thanks.

Operator

UBS. our from Alex Kramm take now will from question We final

line open. Your is

Doug Peterson

Alex welcome back.

Alex Kramm

but side in bit as point I anything you thank organically so out sure you would Doug you've that I for there you business cover little in I and asked bonds business be actually Yes, I the a relative historically doing example the thought about rating would not quickly pointed there catching the talked helpful? well would an were what then opportunity that, CMBS there that investing pretty but lost try point are share maybe new cost earlier for to you're the just about can since actually and talk anything you ratings there happened revenue mean on up China, out know that you've about out you grow area we the competitor, of being primary on your you what are think that small to at I actually you strength I some

Doug Peterson

to well, China we're there as where like had ideas region and our in CMBS years over you market weak we don't our there as, class cover places team. some just we the investing is in have goal some in position every a give to domestic market world the every few examples a invested run last we've Yes, in in and asset the

we go market, are the Our participate in making technology the we effort looking in quarter deliver criteria, Asia. Transactions market. be out concerted the four support to structured continue XX growing fusion. finance in Southeast internationally able to conduit we're to were to more last China We're CMBS a in to ways at definitely our of

it is developing that it we're much across getting some analytical products more, and product developed, position is on to and we have ones whether we're area it are about globally board more we product at we're bond ESG which into the products about the other our larger in bond type bond market market that anyway some of promising have the excited if with ratings the green the all but do definitely see have China, misspoke Southeast back new the have maybe so we some I likely I or ready an ratings it's working we that much to position Asia, we're whether of necessarily finance have on go especially strong covered covered way somebody the covered of at about a those looking the or on think indicators you structured I at looking looking not high is related classes. looking in, being at are but Europe any and more talking We ESG. bonds, I ESG working our mentioned we're growth factors and in These I yield bonds asset was there, opportunities not business don't types

Alex Kramm

Thanks.

Doug Peterson

competitors on what basis, markets looking appreciate understanding quarter, with a at the future. at both as a future We've also quarter. the the power back see build all strategy scarce for so to we The the happening our a send allocate you can And earlier call deliver it quarterly everyone as our Global came markets that the we been leadership and the way competitive in be you've for of incorporating Day what's we I capital, to questions can the company our also the we back we with. S&P the Investor on shareholders, can of you the has seen that is landscape, you S&P consider invest and to developed and technology. today to presented around our our but as but that dynamics performance a thank team in Global. us here committed Well, from

their call, chance on in participation to the hope summer. a So the enjoy I also want I hemisphere support the thank get people to for everyone the their northern for you

you very everyone. thank So, much

Operator

site replay from this of A investor.spglobal.com. one hours. version day. behalf telephone Web morning's month available call. from the participating from Thank this of you will is we Global's available session, The including call, today. PDF for good the slide S&P A we for presenter of Global, you and on maintained by XX be today Q&A you for be On concludes thank months about in two and a wish downloading replay for will now S&P

S&P Global (SPGI) 26 Jul 182018 Q2 Earnings call transcript