Hello, everyone. It's still morning. It's Andrew Steinerman, your Business Information Services Analyst here at JP Morgan, and welcome to the Ultimate Services Investor Conference. This is the Info Services Track. And just as a little quick announcement, we just put out our quarterly primer, our Information Services Data Book. You can pick one up. This is the S&P Global Fireside Chat. This is Martina Cheung, a newly appointed CEO, longtime leader in all the important key divisions to lead her up to this point. This is the first Wall Street venue to interview Martina, so we hope for it to be lively. And lively means, you know, I'll ask some questions and you'll ask some questions. And the clock's already 20 seconds in, so let's get going.
One of the things that I think a lot about, I don't know if you think a lot about, was kind of going back to the last Investor Day, which was a couple of days ago, where you were, it was Doug and the whole team. And I asked Doug, "Who should I hold accountable for all the revenue synergies of the IHS Markit merger with S&P?" And the cost synergies , it has been great. There's still revenue synergies to go. So my first question is, should we hold your whole team accountable for the revenue synergies to be realized and shared with the community?
Yeah, thanks for the question. So that was at the Investor Day in December of 2022, where we laid out our targets and, obviously, very excited to cover the revenue synergies as well from the deal as we worked through that throughout the course of that year. It's been an exciting time. We have a very strong leadership team. We had a very strong leadership team then. We are ahead of where we plan to be for the revenue synergies, so 50% through the timeframe, if you like, as of our Q3 call, but 70% around the revenue synergies. And of course, we closed out cost synergies. Today, we have a new team, many similar members, some with new roles. And I think we have the right team on the field to continue to grow, to continue to yield benefits there from the merger.
I think throughout the course of the last four-plus months of my transition, we've had working groups who've been working hard to identify new ways to grow and new opportunities, and that's exciting for all of us.
Right. So I think what I interpret from what you just said is you see more than one way to hit the revenue synergy targets, right?
Yeah, I would say so if you look at us today. What I can say is that we are at the enterprise level very much on track for delivering the revenue synergies. How we get there may vary a little bit from the initial pathways that we had set out in December of 2022. And at that point, we were presenting growth for 2025, 2026 that for us would have been a good indicator of what we'll characterize maybe as normal years in a cycle and how our businesses could grow at that point for a normal year. And this year, we've had very, very high growth in the Ratings business, for example, not a normal year, and maybe a little bit of softness in the MI business, also not a normal year for us.
But the good news about the overall commitment at the enterprise level is that we have enough diversity across the portfolio to be able to deliver the growth, notwithstanding if we have one or two areas where we have a little bit of softness, and so we feel very good about the enterprise target there for the Investor Day targets.
Right. I think kind of a theme that I've been listening to you carefully is operating more across the enterprise. And when I think about revenue synergies, I really think of two ways to get at revenue synergies. And I'm sure you're going to have more than two, but mine would be cross-selling across divisions. And then the second, which I think is more difficult, is joint product development across divisions. Maybe there's more. Do you feel like when you're looking at the remaining revenue synergies to be realized, that it's more about the first cross-selling across divisions, or are we going to see more joint product developments like you've already seen with IHS and Platts?
Yeah. It's going to be both. We have deployed quite a number of new products across the what we'll call merging divisions, that being Market Intelligence with that combination, the Commodity Insights combination, and then the somewhat smaller, but still combination within the Index business, and those product launches have contributed to the revenue synergies. I would say that cross-sell has been maybe a bigger driver, and we'd expect that to bounce over a period of time with the new products as the new products begin to gather steam, so we're pretty excited by some of the prospects here.
I think once we can do some additional things that we're looking to do between the divisions, I think there's a really intriguing set of opportunities that takes cross-sell outside of, let's say, I'm a customer of one part of Commodity Insights, and I get a cross-sell from another part of Commodity Insights. We're going to do, in addition to that, I'm a customer of Commodity Insights, and I get a cross-sell from Index or Market Intelligence. And so there's a lot of additional things that we're thinking of doing. But if I go back to where we are and how we tracked to 70% of the target on revenue synergies, it's been largely cross-sell, good momentum on new product, and we'll see that kind of bounce level out a little bit over a period of time.
Could you give me an example within MI with joint product development with one of the other divisions that is meaningful?
Yeah. So we're just at the beginning of that now, Andrew. I think so much of the focus has been on product development within the divisions. We have some great examples, including the launch of our Supply Chain Console for our non-financial corporates who were looking at any combination of supply chain risk, Scope 3 management, Scope 3 risk, operational risk, et cetera. That took data from across the entire Market Intelligence data universe to compile into that product. And just one example of sort of what I characterize as like an in-division product.
But if you look at the opportunities that we have to combine, let's say, across divisions, where we really are just at the beginning of the journey around that, there are plenty of ways for us to do that in all of the five categories that we talked about at the last earnings call, whether it's in benchmarks, energy transition, private markets, sustainability, etc. And it could be that we can, for example, tie together some of our assets around power in the Commodity Insights division with some of the assets that we have around data centers in the Market Intelligence division. And for that, we can then provide a way for our investor clients who are looking to make choices around which assets to invest in in that part of the infrastructure asset class.
And so we have some very, very unique capabilities that today are not joined up, and we're going to look to do a bit more of that joining up in the product arena as well as go-to-market through our new Chief Client Office going forward.
Okay. I've had a discussion about the elections and the ratings business. My question, I know we're only a week post-election with the Republican sweep. Is this simply Republicans are more pro-business, more pro-M&A? And so this will be good for the credit ratings cycle and credit ratings issuance, or is it really tempered by the potential of tariffs?
I think you answered the question beautifully, which is it's nuanced. We are certainly hearing from clients perhaps a little bit more energy and optimism and excitement around M&A, for example. We're also thinking very carefully ourselves around potential pathways to, let's say, a maximum version of what's been laid out during the campaigns around tariffs or some version of what's been laid out there. And that's going to take some time to think through in terms of the following implications, the timing through which those implications could hit inflation and potential impacts on interest rates. So I would say our teams right now are still very much a week on, so still very much thinking through this.
I think we have to wait to hear some more specificity about how some of the policy commitments that were made during the campaign will come to fruition and over what time period, and that will give us a much better level of appreciation, I guess, for the potential impact to issuance. Now, take a step back. That doesn't change the fact that we still have very robust maturity walls. We still have, even absent any changes in policy, we've still had the beginnings of green shoots around M&A, which continue to come off historical or continue to be not as high as what we would look for based on historical averages, and we're starting to see more IPOs, which for us is quite positive because it hits both the transaction and non-transaction lines.
These things are all things that we'll be thinking about as we look at the plan for 2025. In parallel, as you say, we'll be paying very close attention to how some of these policies may come to fruition as well.
So I didn't quite get it. Do you feel like we have to wait and see, or is there a more hopeful feeling amongst your team at this juncture?
Oh, I think we have to wait and see how these policies are going to play out.
I know we can. No problem.
Yeah.
Okay. So I love the press releases, by the way, of S&P, particularly watching CapIQ. Our team is a CapIQ user, in addition to Bloomberg, just in full disclosure.
Thank you.
So ChatIQ was an announcement this week. And my question is a real simple one. How do you see S&P commercializing generative AI capabilities? Do you feel like it's going to be enhanced capabilities on existing products, so it's innovation and leads to more pricing of existing products over time? Or do you feel like there's an opportunity to have separate pricing for generative AI products, either in the financial desktops and feed space or some other space that you're currently addressing?
Yeah. I think it's going to probably come in three or four forms. And by that, I mean the integration of generative AI into our products across the organization. So maybe the first is, what do we need to do to be table stakes? In other words, if we're going to keep pace with the innovation that perhaps not even just our peers or competitors, but also some of our clients are doing, we have to make sure that we're keeping pace with that. The second is enhancements that are economically opportunistic for us, and that could result in increases in value in our contracts with our clients.
The third is definitely new products and ways in which we can connect our IP in different ways and/or add capabilities through the power of generative AI to create new value, new product, new SKU, if you like, for our customers. And the fourth, I would say, is services in the sense that our customers are all going through a similar journey around the integration of generative AI. And it's simply a question of where you are in that journey. And some will need some support in doing that. And we've got various teams in different parts of our divisions who have been supporting some of our clients already, and I think we'll continue to that going forward. So if I go back to your question around, can we generate additional revenue, maybe hit a couple of examples here? So I think in the first case, we have ChatIQ.
To your point, we also have the ChatAI on Platts Connect. Those two are essentially variations of our in-house interface, which has been developed by Kensho and really phenomenal capabilities also used by all of our employees internally. And what those allow us to do is to create additional value for our users in navigating all of our content on Platts Connect as well as CapIQ Pro. That enhanced user experience can offer the potential for potential price increases over a period of time. Second is the announcements that you referenced. So in addition to that, we announced just in the last couple of days that Kensho has launched generative AI-ready datasets for six of our datasets, two of our financials datasets, market data, GICS, and some of our other datasets, which are escaping me right this second. But these are some of our highest demand datasets from our customers.
So the ones where they're most keen to see AI-ready versions so they can integrate those into either what they're building internally or versions of GPT or Mistral or Llama that they're using internally as well. And so our ability to get those into the market with a unique differentiation, which is that these APIs and AI-ready data have been structured to be ready to put into LLMs and with the ability to extract tabular information from financials, for example, with the highest degree of accuracy. So the reason why it's differentiated is that if you are looking for any of the models right now to return responses that require the models to go into tables, let's say, in a financial statement, the accuracy is really challenged. And we recognize that early on.
The Kensho team has been working on it for about six months, and we're able to find the solution and deploy that out. And one of the things that was kind of exciting to me was the day prior, I had met with a very large client, head of research, and that team had been describing to us the amount of effort that they put into training a model on their research, but saying that they were having a problem with getting the right responses back for data that was in tables in their research. And then the next day, we came out with our AI-ready dataset and the capability that Kensho has developed.
A little bit a way to just, I think, give you a window into the types of opportunities that we're able to create with the combination of Kensho and our data science and product teams and ways in which we can generate additional revenue.
Talk about change of leadership that you just implemented with Sagara, big successful president of the CI division, also previous CFO of MI. How long do you think it would take him to make a difference in MI?
I would say the leadership team, as it stands today more broadly, is six of the seven new appointments that we announced are internal leaders. And it's an important distinction to make because it should tell you that we are a leadership team that is focused on, I would say, evolution rather than revolution, right? So that's an important distinction, I think, to start out. The second point I would make is that it's a little bit early. Sagara was announced a couple of weeks ago. The conversations that he and I have been having are more along the lines of principles and ways in which to ensure the business performs regardless of where we are in a given cycle and developing a set of steps and pathways from that sort of core principle, if you like.
I will say there are two capabilities that we announced as part of that broader announcement around the organization, which will benefit Market Intelligence over a period of time. So the Chief Client Office is intended to bring the entire strength of S&P to our strategic clients, many of whom shop from more than one division, but almost all of whom don't have a strong enough appreciation for everything that we do. And we have an opportunity to make sure that we bring the full depth and breadth of the company, reduce some of the sort of silos and perhaps bureaucracy as we work between the divisions to present what we can do for clients and improve their experience and ultimately achieve some benefits from a revenue standpoint there as well. Obviously, Market Intelligence will be a beneficiary along with other divisions of that.
The second capability which Market Intelligence will benefit from is the Enterprise Data Office. So in the same way, if we're wanting to create an experience for our customers where they can actually benefit from looking at multiple datasets across divisions, for example, we actually need to have those datasets knit together in the background. And so the Enterprise Data Office, first and foremost, is charged with unsiloing the data so it can be connected. The next level of sophistication around that is connecting the data at levels that are discrete enough to create either new derived IP or new datasets. And again, market intelligence will benefit from that also. And then ultimately, of course, with all of the data operations under one roof, we would expect over a period of time, greater speeds, some efficiencies.
Too early to tell what that would look like, but of course, Market Intelligence will benefit from that as well. So I think without foreshadowing what Sagara will do in terms of his view, his strategy for the business, there's some ways in which you can, I think, begin to understand and appreciate how we're going to begin changing some of the metrics for all of the divisions, including MI.
Right. So if you look at the Information Services Data Book, all the financial desktops and feeds business growth has decelerated. Do you feel like Sagara has much of an opportunity to accelerate the MI book of business without an end user recovery, or do you think it really is tied to the kind of underlying kind of end user cycle, which does seem to be more of a headwind this year for the sector?
I think there are certainly opportunities to perform regardless of where we are in the cycle. And hopefully, you'll look at that page because it will show you that Market Intelligence has performed quite well relative to our peer set. And thank you for such solid analysis, Andrew. The other thing that I would say is, if you take the question, I think, for us really is, are we leaving money on the table even in the environment that we're in for certain segments of Market Intelligence , bearing in mind that Market Intelligence also has a massive non-financials business and is very global in nature, so benefits from regional trends as well. And in the immediate timeframe, some of the ways in which we're going to go after that will be through the Chief Client Office as well as by creating some opportunities and optionality within the Enterprise Data Office.
Beyond that, I think we'll give Sagara a minute to settle in and have probably more to say when we come back early next year.
I think you've said you've seen some green shoots, right?
We have.
What do you mean by that? Is that like do you mean like the end customers are adding headcount? What does green shoots mean? Is that your sales pipeline? I just don't know what the green shoots point to.
Yeah. It's a great question.
Or MI?
Yeah. Yeah. So anecdotally, a little bit less of a sense of pressure, I guess, in certain segments based on optimism over, will M&A come back in a bigger way? Will IPOs come back in a bigger way next year? I think the reason why I say green.
You're busy already.
Yes. Indeed. Well, and I think that is just more broadly given the conversations are a little bit more relaxed. Now, what does that mean? It's going to take a while to the extent that those materialize into better pricing, greater retention, etc. It's going to take a minute for that to materialize in the book because of the nature of the book with our multi-year agreements. But I think we may see opportunities for additional cross-sell as a result, even as we're waiting for renewals to come up throughout the course of the next one, two, three years. So green shoots, how it plays through the book may take a minute and something that we're thinking about as we craft a plan for 2025.
Okay. So we're going to switch gears. We're going to talk about private credit. So you guys have worked very hard on solutions around private markets, and you disclosed revenues that were up 22%, which is amazing, $134 million. When you look at your full effect of private credit, private markets, is it all additive, or is there still private credit and private market activity going on that's just not rated? So there's both the positive, the $134 million, but there's also still some negative because things are getting done without a rating.
Yeah. So our revenue line that we disclose includes revenues from Market Intelligence , ratings, and index. So the opportunity for us in private credit is truly kind of across the enterprise. There's a little bit in some of the other divisions as well. We have, within ratings specifically, as you know, we positioned ourselves in 2022 in three very critical ways. So the first was we preserved capacity because we saw what was happening in evolving investor preferences and the growth of sponsors and other trends that we were monitoring and knew that we were going to have comeback in CLOs and other parts of the market. And so as it happens, some of that bump in issuance that we've seen over the last, it started in 2023 and more throughout the course of 2024, has been driven by sponsors, particularly in structured finance, for example.
The first thing there in terms of preserving capacity was incredibly important for us being positioned to meet the needs of the sponsors as they grew and expanded throughout the course of the last two years. The second point I would make is we were quite deliberate in making sure we had the right commercial leaders to drive these opportunities and dialogue with the sponsors. We brought in, I would say, a select number of very senior folks who've been critical in developing relationships with sponsors. Any sponsor of consequence wants to work with us, which I think is incredibly positive, and we have the right people to engage with them. I think the third thing goes to that point that I made around the sponsors kind of working back to us.
That is, as investors increase their allocations, they actually are expecting that sponsors would have a rating from S&P Global. That has been, I think, a very important facet of how we've interacted with sponsors over the last couple of years. Now, all that to say, we will rate in the public or private market. If an investment-grade rating comes public or private, we'll rate it either way. We don't charge a different price, whether it's issued in the public market or the private market. Having said that, to your point, to the extent that something is unrated in the private market, of course, that is.
Are you able to track that well?
Very, very hard to track it. What I would say is increasingly, the credits that we don't rate, and in fact, I can say there isn't anything that I've seen certainly this year that we haven't rated that we would have rated had it been in the public market. In other words, the credit either didn't fit our methodology or the likely outcome from our rating was something that the issuer wasn't in favor of, and so I think the way that I think about it is we have an ecosystem within and a sort of a recipe within the ratings division right now that is very much along the lines of we rate both public and private. Both are equally important. In some ways, they're complementary with some of our largest banking clients, for example.
To the extent that there's something we can't rate, it is generally because of the methodology. But we've positioned ourselves to be in every conversation to at least take a crack. And that, I can say, for the sponsors of consequence. There's always going to be sponsors that we don't work with, the same way that there are issuers that we don't work with just because of the nature of the business.
There would be things that if they didn't go to private credit, it would have went to a bank loan that was unrated to begin with.
Exactly. Yeah.
Meaning the smaller stuff.
Smaller stuff. Yeah.
Questions from the audience? There must be questions here. Boy. Go ahead. Take somebody to be brave.
Let me give you the microphone.
I'm Ram from TD Asset Management. Can you talk about the elongated sales cycles? And are you seeing any sort of pushback from your customers on pricing when you're doing cross-selling or upselling opportunities?
In terms of the sales cycles, it's going to vary very much by division and within division. So I'm not sure that I could give you one complete trend. For example, the sales cycle has been much faster in ratings this year, for example, compared to maybe some prior years where issuance wasn't as high. So did you mean like in a particular division?
No, in general audience.
In general, yeah. It's hard to pinpoint. It's probably fair to say faster in the divisions that have had faster growth, which is pretty much all of the divisions, as well as even within Market Intelligence where we've had parts of the business that are growing faster, like some of the enterprise solutions pieces, for example. And then a tempering of those sales cycles where there's a little bit of that in-market softness that we've been talking about for some parts of Market Intelligence . And then the pushback on pricing for cross.
Are you seeing any sort of pushback on pricing?
For cross-sell across the divisions. So we're at the very early stages of that. This is the reason why we've put the Chief Client Office together. So a lot of opportunity to go after and some testing to do with a small cohort of clients in the next several months to make sure we've got the processes nailed. And then we will roll that out over a larger cohort of our strategic accounts throughout the course of the year.
All right. Thanks.
Okay. Last question. I could ask the last question if everyone's timid. Okay. Martina, of course, I'm going to invite you to come back, save the date for next November. My question is, when we're sitting here again in next November, what would have transpired that we're not really appreciating yet, but is on your agenda and really could start building momentum at S&P that we haven't yet discussed?
Yeah. I think if we're back here again, same time next year, thank you for the invitation. I would say that two things. I think one, I certainly would hope that there's a great appreciation for the overall strength of our business. Unfortunately, we've sort of had this incredible and unusual year in Ratings, which has dominated some aspects of the dialogue we've had with shareholders, and then some softness in Market Intelligence, which has dominated the other part of some dialogue we've had with shareholders. And then what's in between hasn't, I think, been as much appreciated, which is the incredible strength that we've had in Index, in Commodity Insights, and in Mobility. And all of those things together gives what we believe to be an incredibly exciting and high-quality portfolio with such great opportunity going forward. So that's one thing I would say.
The second thing I would say is that we're in a position, as we engage with all of you, to continue to highlight the ways in which the five areas that we highlighted from a strategic theme standpoint during our earnings call most recently, the ways in which we've been able to create additional opportunities for growth in those five areas as well, and a lot of that is on us to make sure that we're being as transparent and clear in our communications with you as possible.
Okay. Martina, thank you so much for the dialogue. If anyone wants to grab an Information Services Data Book, they're up here, and next year's date is Tuesday, November 18th. Mark your calendars.
Thanks, Andrew.
Thank you.