Q3 2024 S&P Global Inc Earnings Call

Douglas Peterson

Thank You Mark. S&P Global delivered exceptional financial results and Total revenue increased 16% year over year, marking the third consecutive quarter of accelerating revenue growth. Our ratings division continues to contribute meaningfully to our outperformance with transaction revenue increasing more than 80% year over year. Revenue from subscription products across the Company increased 8% year over year as customers continue to turn to S&P Global to provide the benchmarks data thought leadership and tools they need to make crucial decisions in today’s macroeconomic landscape. We delivered 330 basis points of trailing 12-month margin expansion and 21% growth in EPS as we continue to invest prudently across the business and return capital to shareholders. Year to date, we have repurchased $2 billion in shares and plan to repurchase $1.3 billion lower through year end. In addition to our strong financial results, we continue to invest in innovation, particularly around generative AI. in our strategic initiatives, which will touch on shortly. We also continue the important work of optimizing our portfolio of products in order to create the most customer and shareholder value. We closed the divestiture of since centric during the third quarter and today announced the planned divestiture of prime or prime one sits within our market intelligence division and won’t have a material impact on either the delay vision or the Company’s financial results. That said, the divestiture further enables the Company to focus our efforts on the best opportunities to drive long-term profitable growth. Last week, we announced management changes in conjunction with our CEO transition. Martina will walk through that later in the call. Now turning to market and commercial conditions, the debt equity and commodities markets all continued to show improvement, benefiting our businesses with more than $1 trillion and build issuance. In the third quarter, we’ve surpassed $3 trillion year to date. It’s very encouraging to see how participants in the debt markets, both public and private consistently turned to S&P Global Ratings to help assess risk balance exposures across portfolios and assess credit conditions. The experience and expertise of our analysts, the breadth and depth of our coverage across credit, asset classes and geographies, fees and the relevance of our methodologies and thought leadership has all serve the markets very well thus far in 2024, we’ve also seen some improvement in equity markets is our flagship indices like the S & P. 500 have performed very well year to date. We continue to see gradual increases in IPO volumes, which benefit some of our volume driven businesses and M&A activity has also started to show early signs of recovery. The commodities markets have remained strong as well, especially in end markets like energy that are important to our business. We continue to see retention rates improve year over year and commodity insights, and we’re very pleased with both the exit solution and the market reception of the new products. That said, we’ve been calling out headwinds among our financial services customers for some time now, those have continued in the third quarter was elongated sales cycles as well as signs of increased price sensitivity. Engender constant historically been beneficial to S&P Global. Given the breadth and diverse the products that we offer, though the pricing environment has had an impact this year for the last few quarters, we have noted our expectation that retention rates and financial services would be slightly below last year. That said, cancellations among our smaller customers and market intelligence caused retention rates to dip below our expectations slightly in the third quarter, and we expect that to continue to impact the business in the fourth quarter. We’ll discuss the impact of all these moving pieces on our guidance in a moment. But the aggregate impact is that we are substantially increasing our outlook on revenue growth, operating margins and EPS for 2024. Now let’s turn to activity in the debt markets for build issuance. We saw a 76% increase year over year in the third quarter as we saw strong growth across all products. Refinancing activity remains very strong, including some pull forward out of 2025 and even out of 2026. But certainly it’s the normal range is what we would expect at this time of the year. We’re starting to see more activity beyond refinancing with some of the outperformance in the third quarter, driven by opportunistic issuance around dividend recapitalizations and the beginning of the recovery in M&A activity, market conditions. Specifically, the tight spreads and stability around the rate outlook have continued to be major drivers of issuance in the third quarter and inform our improved outlook for the remainder of 2020 before as well as we look to additional rate cuts over the next 12 to 18 months. We continue to expect strong demand among investors for public debt as the current yields are expected to moderate somewhat as rates come down. Turning to vitality, new or enhanced products generated $377 million in the third quarter. This represents 11% of our total revenue and is consistent with what we reported last quarter. Key contributors to our vitality index are updated from last quarter as we’ve seen strong demand for car fax list of things in the car effects banking insurance group. We also see strong growth in energy transition and climate and LNG price assessment products from recorded the insights division. We’re encouraged by the acceleration in the pace of innovation at S&P Global and look forward to maintaining our vitality index at or above the 10% target. Now turning to our latest initiatives around Generative AI, each quarter we’ve been highlighting just a few of the many ways we’ve been leveraging both traditionally AI and Generative AI. within S&P Global. In the third quarter, we had a number of new use cases within our products and services, but also within our own internal processes that are very exciting. Within market intelligence, we introduced new advanced analytics solutions and Gen-I functionality through Cap IQ Pro, which allows users to build predictive models, automate workflows and better identify patterns and data more quickly. Within commodity insights, we enabled cloud delivery of AI-Ready Data on clean energy technology. This is a great example of our efforts to make sure that the investments we’ve made to prepare datasets for ingestion in AI models directly translate into benefits for customers and economics for our business. Also in commodity insights, we have introduced our AI powered chat bot called ChatAI to improve the user experience, answer customer questions in real time and help users more quickly discover the valuable insights in our platform. Within mobility, we’re leveraging GenAI and animation automation to embed Car Fox directly within the vehicle history reports the customers use. Soon, the animated Fox will appear on additional products, including Car Care, user dashboards and our listings products, driving deeper customer engagement and enhancing brand affinity. Lastly, we continue to invest in our people so they can take full advantage of these incredible technologies as they emerge through our recently launched Spark AI Academy our employees receive meaningful training on prompt engineering and other insights into how they can best leverage AI in their own daily work. Not only does this make our employees more productive, but it allows us to cross pollinate new use cases across the organization. It’s been inspiring to see some of these early use cases emerge and co-development, document analysis, record keeping and process improvement and the way people are sharing their new skills across S&P Global. We’re confident a I will be a strong influence to improve efficiency, productivity, the quality of life for years to come in that over time, you’ll see these improvements in our growth and profitability. Turning to our financial results, with our consistent focus on innovation and execution, we’re pleased with the exceptional financial results across the enterprise this quarter by serving our customers effectively and efficiently. We delivered exceptional growth and profitability in the third quarter. Now let me turn to Chris Craig, our interim CFO, to review the financial results. Chris, over to you.

Christopher Craig

Thank you, Doug. We delivered strong performance in the third quarter of 2024 as revenue growth accelerated across three of five divisions, and we achieved solid margin expansion for the Company. Revenue grew by 16% year over year to a second concession quarterly record of $3.6 billion in the third quarter as we continue to see strength across our market driven businesses. As Doug noted earlier, we’re seeing variation in the relative strength of different end markets this year. We are benefiting significantly from the strength in debt and equity markets, while some softness in the financial services sector is tempering growth in pockets of the business year to date, outperformance of the market driven businesses is also leading to elevated incentive compensation across the Company. This is a great problem to have and will impact all of our divisions to varying degrees, which I’ll discuss in more detail momentarily. Adjusted diluted earnings per share increased 21% year-over-year to $3.89. This is driven by a combination of our strong revenue growth, margin expansion of 180 basis points and 2% reduction in fully diluted share count. Turning to expense growth, we saw total adjusted expenses increased by 12%. As I mentioned earlier, incentive compensation and commissions have been significant drivers to our expense growth this year. This was true in the third quarter, and we expect it to be even more pronounced in the fourth quarter. Overall, while incentives are driving expense growth across our divisions and the enterprise, it is also a critical component of our strategy to align employee performance with our growth and profitability. The year-over-year variance in these expenses is particularly pronounced in ratings and industry. These where we are seeing the largest increase in performance based incentives. It is important to note, however, that our consolidated results impact incentive competition in every division. We’ve also seen an increasing cloud costs throughout the year as we’ve moved many products to the cloud and have executed 15 data centers since the IHS Markit merger closed. This increase is reflected in the core and investment growth category along our strategic investments and the increase in certain operating expenses that come naturally as a business continues to. We also saw increased expenses associated with traditional compensation outside of incentives and commissions, reflecting the usual course of hiring in the annual merit increases across the Company. While important remain transparent about the drivers of expense growth is just as important to reinforce the fact that the majority of these increased expenses come as a result of strong growth and fantastic financial results today. Now turning to strategic investment areas where we continued to deliver on our initiatives supporting growth across various parts of the business. Sustainability and energy transition revenue grew 15% to $90 million in the quarter. Growth was driven primarily by strong demand for commodity insights, energy transition subscription offerings. In private market solutions revenue increased by 22% to $134 million. Growth was driven primarily by increased traction of our product offerings in the private market services of the S&P Global ratings. Revenues Synergies has exited the third quarter with an annualized run rate of $249 million. During the quarter, we recognized 72 million in revenue synergies, which came from a mix of cross-sell activity and revenue generated from new products. Turning to our divisions, Market Intelligence revenue increase 6% in the third quarter. Desktop grew 8% or 1% when excluding the impact from the visible alpha acquisition. We continue to see demand for our core products and desktop, but we also faced headwinds in the financial services end market. The elevated cancellations that we discussed in prior quarters continued to impact the organic desktop growth rate, and we expect that impact to continue through at least the end of the year. Data and advisory solutions grew 5%, driven by strong demand for high growth products such as alternative data from our Market Data valuations and analytics product suite. Enterprise Solutions grew 5% or 11% when excluding the impact of the fin centric divestiture. Growth was driven by strong levels of primary loan restructuring in a minute ago. Activity and several large multi-year software. Renewables, credit and risk solutions grew 4%, lapping a difficult comparison from the prior year. Growth was driven by solid subscription performance for Ratings Express across North America, along with new use cases emerging from content, externalization and digitization. Adjusted expenses increased 8% year over year due primarily to the growth drivers around compensation commissions and strategic investments that I previously discussed. Operating profit increased 2% and operating margin decreased 130 basis points to 32%. Importantly, market intelligence margins would have expanded year over year were not for incentives and commission accruals related to the Company’s overall overperformance, particularly driven by stellar results in our Ratings and Indices divisions. Trailing 12 month margins expanded 60 basis points to 32.9%. Now turning to ratings, where we saw revenue growth accelerated to 36%, materially exceeding our internal expectations. Transaction revenue grew by 83% in the third quarter, driven by strong activity, particularly in investment grade and high-yield bonds during what has historically been a seasonally quiet summer period. Non-transaction revenue increased 4%. As we highlighted in the third quarter of last year, there was a one-time $19 million benefit from a cumulative catch-up related to commercial paper in 2023. Excluding the impact of that item last year, growth in non-transaction revenue would have been 8% year over year as a result of strong annual fee revenue and an increase in new rating mandates. Adjusted expenses increased 20%, primarily due to increased incentive compensation. This resulted in a 48% increase in operating profit and a 510 basis point increase in operating margin to 61.7%. For the trailing 12 months, ratings margin expanded 650 basis points to 61.9%. And now turning to commodity insights, Revenue increased 9%, driven by strong performance across the division, including double digit growth from to have four business lines, price assessments and energy and resources. Data & Insights each grew 11%, driven by strength in our crude and refined product offerings. In addition, both business lines benefited from favorable commercial conditions across various regions, most notably Middle East, Africa and Asia. Advisory and Transaction Services revenue grew by 6% or 5% when excluding the impacts from the world hydrogen leaders acquisition. This was primarily driven by strong trading volumes across key sectors in Global Trading Services, upstream data and insights revenue grew by 4%, driven by strong demand for subscription-based software and analytics products as well as continued improvement in retention rates. Adjusted expenses increased 10%. Operating profit for commodity insights increased 8% and operating margin contracted by 60 basis points to 47.8%. Similar to market intelligence, commodity insights margins would have expanded were not for incentive fee and commission accruals related to the enterprises overperformance. Trailing 12-month margin increased by 50 basis points to 46.7%. Now turning to mobility, revenue increased 9% year over year, driven by double digit growth in two of three business lines. Dealer revenue increased 10% year over year, driven by strong subscription growth across CARFAX offerings. Manufacturing revenue growth accelerated to 2%, driven by a strong quarter of subscription sales. As expected, we continued to see lower transactional revenue related to our recon business, which can fluctuate based on the level recall activity in any given year. Financials and other increased 12% as a business line benefited from strong underwriting volumes and increased market penetration. Adjusted expenses increased 9%. This resulted in operating profit increasing by 8% for the quarter and an operating margin of 42.2%, which is unchanged compared to the prior year period. Trailing 12-month margin contracted by 20 basis points to 38.8%. Now turning to S&P, Dow Jones Indices, revenue increased 18%, primarily driven by strong growth in Asset-Linked Fees which benefited from higher AUM. Asset linked fees were up 22%, driven by market appreciation and inflows. For the third quarter, our global ETF AUM exceeded 4 trillion while we acquired a substantial portion of USETF equity flows. Exchange traded derivatives revenue grew 16%, primarily driven by strong volumes across our equity complex products. Data and customer subscriptions increased 5% year over year. The commercial initiatives we have previously discussed are beginning to benefit this business line as ACV in the largest product group, increased mid 10s in the third quarter. Adjusted expenses increased 15% year over year, primarily due to increased incentive compensation. Indices Operating profit increased 19% and operating margin expanded by 80 basis points to 70.2%. On a trailing 12 month basis indices operating margin expanded by 200 basis points to 70%. As an enterprise, we delivered an exceptional quarter with robust growth while managing expenses prudently. Our diverse product suite is contributing to our strong results and reinforcing the benefits we realized from having these incredible global brands together, I’m pleased with our team’s strong execution during this period and look forward to finishing the year on a high note. And with that, I will now turn the call to Martinez, provide an update on our leadership transition. Martina.

Martina Cheung

Thank you, Chris. Over the 14 years that I’ve been at S&P Global and under Doug’s leadership have come to appreciate how this company has gone from strength to strength that development and our consistent track record of strong performance has been built on trusted brands, exceptional talent and a disciplined focus on exceeding our clients’ expectations. Over the last few months, I’ve been deeply engaged with our Board of Directors and every internal and external stakeholder group to make sure we continue that legacy of growth and customer delight. I’ve met jointly with many of our largest customers to hear directly from them how best we can position S&P levels to meet their needs in the coming years. I’ve also met with strategic partners, shareholders, regulators and vendors to make sure that we, as a leadership team had a clear understanding of the varying needs of each group so we can prioritize our investments in both time and capital in the most effective ways had spent a significant amount of time with our internal product, commercial and analytical teams as well. While it had broad experience in my career, including the privilege of leading to have our largest divisions, it’s vital to me that I have a current and timely view of our products, our customer pain points, our innovation pipeline, our operations and the environment in which we’re currently operating has met with leaders across the organization to gain insights into all of these key areas. And this will remain an important part of how our leadership team maintains a customer centric innovative, and it will suspend hearing directly from our people on the topics that matter most to them at hosted nearly 40 town hall meeting. This roundtable discussions and deep dives sessions across the organization to discuss everything from culture to organizational design and to make sure that our leadership is accessible and transparent with our people around the world. These experiences have made it crystal clear to me how incredible this organization is. Our core products are strong. Our people are remarkable. There’s a real sense of pride, excitement and optimism as we look to expand our vision of what we can accomplish in the coming years. Now many of you saw last week, we announced several leadership changes to ensure we have the right team in place to deliver this expanded vision. We have a strong culture developing leaders at S&P Global, and it’s a testament to that culture that six of the seven leaders on this slide who are taking on new wells, our internal promotions, as we announced it last week, we are thrilled to welcome Eric Aboaf as our new CFO, and we expect into joined in February of 2025. Eric brings a wealth of experience as a CFO in the financial services sector and have very strong track record of exactly the type of disciplined execution that we hope to continue here at S&P Global. We also announced last week that we are making some changes in our division leadership, effective November one Saugata. So how will become the President of our market intelligence division having a previously led commodity insights? Yes, the public will become the President of S&P Global Ratings. Having most recently served as Global Head of rating services. We will have Co-Presidents of commodity insights marker, Renault, who is our current head of the fuels, chemicals and resource solutions business. And Dave earns Barker, who currently leads and market reporting and trading solutions business. S&p Global mobility will continue under the leadership of Edwards. Ernie and S&P Dow Jones Indices book continued to be led by Dan Draper. In addition to our division leadership, I also wanted to highlight two horizontals functions that we’ve introduced first, in addition to his role as President of market intelligence data. So how will also see serve as our Chief Enterprise Data Officer. In that role, Scott, I believe enterprise-wide efforts to expand and connect S&P Global SaaS data estate, harnessing the full potential of the company’s data capabilities for our customers. Lastly, selling more will be assuming the newly created role of Chief Client Officer given the immense breadth of the data products and services that S&P Global brings to the market as we often meet with customers who are buying several products from various divisions as current Head of Strategy, M&A and partnerships, Sally has a deep understanding of our capabilities and strong relationships across the industry. In her new role. She will lead our commercial initiatives across the Company to make sure that we are bringing the full power of S&P Global to our largest clients and shall establish an enterprise-wide capabilities to drive strategic account management at scale. With our executive leadership team in place, we are in a strong position to execute against well defined strategic initiatives, benchmarks, private markets, sustainability and energy transition. Enterprise Data and generated a high were all topics that we discussed at our Investor Day in 2022, and we plan to continue our strategic focus and investments in these areas. Back in July, we established teams that senior leaders from across the organization to do deep reviews in the key strategic areas that we believe are aligned to our core competencies, competitive advantages and market opportunities, and it was encouraging to see the work these teams delivered as we believe each of these areas remains an attractive investment, and we identified important opportunities to drive incremental growth beyond what we had previously considered. We will have more to say about the strategic initiatives over time, but I wanted to assure you all that we continue to see very strong on potential in each of these areas. We remain committed to transparency and accountability around the investments we’re making and the impact we’re seeing on our performance as a result. Now turning to our outlook for the remainder of 2024. Our financial guidance assumes global GDP growth of 3.2% , US inflation of 2.9% and an average price for Brent crude of $81 per barrel. These are all roughly in line with our previous expectations. While there’s some variation and market expectations around the pace of rate cuts through the end of the year, our base case assumption is that we see at least one more rate cuts this year in the U.S. one encouraging for various parts of our business. Going forward, we would not expect the number of rate cuts in the remainder of 2024 to drive much variation in our financial results for 2024, given stability in our macroeconomic outlook and the significant outperformance. Since we last provided guidance, we are increasing our outlook for 2024. We are increasing our build issuance forecast for 2020 for it by 25% points. Given the outperformance in Q3 and our expectation that Q4 will likely see positive growth in billed issuance, we are now expecting total build issuance to increase approximately 50% in 2024. These factors, combined with the exceptional results year to date, inform our decision to substantially increase our full year financial guidance for the Company once again This slide illustrates our current guidance for GAAP results. We are once again raising our enterprise outlook for the full year on all headline metrics. Given the strength of the third quarter and our improved outlook for the fourth quarter, we now expect revenue growth in the range of 11.5% to 12.5%, adjusted margin expansion of 200 to 250 basis points and adjusted diluted EPS in the range of $15.10 to $15.30, representing a 70% to 75% increase from our prior guidance. Additional details on our consolidated financial guidance can be found in our press release, but I also wanted to know we have increased our guidance for adjusted free cash flow to approximately $5.2 billion, up $500 million from our prior guidance. As I’ll discuss in a moment, we continue to balance near-term profitability with the need to invest for future growth, and we continue to prioritize long-term profitable growth for the Company as a whole. The strength of our market driven businesses so far in 2024 provides us with an opportunity to invest in our products, our people and our brands across today, visions, while still delivering significant outperformance at the enterprise level. And that will be reflected in our outlook today. Specifically, as Chris discussed earlier, the strong outperformance and thus far this year, it will increase incentive compensation across the company in 2024 and will also provide capital to pull forward some planned future investment in technology into this year. This is a good thing. And while it has the combined impact of tempering potential margin expansion in some divisions in 2024, we firmly believe that investing in our products and people will enhance our ability to deliver stronger enterprise financial results over the long term. Moving to our divisional outlook. Given the continued headwinds that Doug mentioned facing our financial services customers, we are tightening the range from Market Intelligence revenue growth in 2024. We now expect growth in the range of 6% to 6.5%. Following the very strong third quarter and the improved outlook for the fourth quarter, we are raising the guidance range for radiation is revenue growth by 12% points and now expect revenue in the range of 26% to 28% for the full year. While this represents an even more significant increase from the initial guidance we provided back in February, we remind investors that our guidance reflects our expectations based on the best information and estimates available at the time which is difficult to predict in the near term, the issuance environment in 2024 has progressed well beyond what we expected at the beginning of the year. And we have adjusted our guidance as we saw the market dynamics evolving throughout the year. We are pleased that our decisions to preserve and invest in capacity in prior years have allowed us to meet the elevated demand in 2024, and we look forward to finishing the year strong. In commodity insights, we are tightening the range and raising the low end to reflect the strength we’ve seen throughout the year. We now expect revenue growth in the range of 9% to 9.5%. In mobility, we are tightening the range as well, and we now expect revenue in the range of 8% to 8.5%. Lastly in the indices, the continued strength in AUM exchange traded derivatives and subscription ACV led to an improved outlook for the year. We are raising our guidance by three percentage points to a new the range of 13% to 15%. Turning to division margins, in Market Intelligence, we now expect margins in the range of 32.5% to 33% tightening and slightly lowering our prior range due to the updated revenue outlook and the elevated expenses associated with compensation that were discussed earlier. In ratings, we now expect higher revenue to improve margins as well and now expect full year margins in the range of 61% to 62%. In commodity insights, we are tightening the guidance to a range of 46.5% to 47%, reflecting the strong revenue growth, planned strategic investments and the end impact of compensation expenses. In mobility, we are tightening the guidance to a range of 38.5% to 39%, reflecting the performance year to date and the continued investments to drive future growth. In indices, we expect higher growth to drive improved margins, somewhat offset by incentive compensation and strategic investments. We now expect margins in the range of 69.5% to 70.5%. As we continue to prioritize enterprise growth and identify areas for incremental investment in both people and products, we are thrilled to be able to make those incremental investments while still passing on much of the revenue upside from this year to the margins. Compared to the initial guidance we provided at the beginning of the year, we now expect five to six percentage points more revenue growth, 100 to 150 basis points of further margin expansion and nearly 10% higher adjusted EPS. We believe that this enterprise mindset and focus on solving for the collective whole will drive strong, profitable growth and long-term shareholder value for years to come. With that, we will turn the call back to Mark for your questions.

Mark Grant

Thank you, Martina, for those on the line. If you would like to ask a question, please press star one and record your name, to cancel or withdraw your question. Simply press star two participants will be limited to one question in order to allow time for others during today’s Q&A session. Operator, we will now take our first question.

Operator

Thank you. Our first question comes from Ashish Sabadra with RBC Capital Markets. Your line is open.

Ashish Sabadra

Thanks for taking the question. I just wanted to drill down further on the MI segment, the execution that has been a bit choppy. And so just as we think about with the new leadership changes and some of the portfolio rationalization that we have seen, is there further opportunity for more rationalization there? Or how do we get there? That business on a more steady execution tax?

Martina Cheung

Hi, Ashish, it’s Martini here. Thank you very much for the question. Well in Market Intelligence. As we said during the prepared remarks, we’ve certainly seen a little bit of an uptick there and cancellations and some of our smaller customers, how we talked about some pricing pressure, tightening of budgets and some longer sales cycles. I think an important point here is that this is really around the end markets, Ashish and to some of the headwinds that we’re seeing with those end markets. Now as we move forward, we’re continuing to drive innovation in our products within market intelligence. We’re very focused on touch points with our customers and making sure we’re meeting their needs. And maybe I would say, while these are some cyclical headwinds and it’s a little bit difficult to call where a trough might be here. But we’re very confident that the value we’re creating for the customers will be evident as we move through a cycle recovery are cyclical recovery there as well. And perhaps to answer your question on the portfolio optimization piece of it, yes, we’ve announced two divestitures this year, but this is part of our ongoing model around portfolio optimization. We are always very disciplined and examining businesses and product lines across the Company to make sure there are fit for our strategy and that we are the right owners that those businesses. And so that’s something that will continue to do in the future.

Operator

Thank you. Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.

Toni Kaplan

Thanks so much. Martina, I wanted to ask you a bit of a broad question about where you see as the biggest areas of opportunity for investment in your mind. Just any I imagine AI is probably up there, but just any others you’ve identified where you feel like the opportunity is really there for the Company? Thanks.

Martina Cheung

Hi, Tony. Thanks for the question. I as we said in the opening remarks, we spent a lot of time in the last several months collectively, the team myself about meeting with customers and into. And quite frankly, this is a phenomenal business and one that we, as a new leadership team will have to make even better. I highlighted five secular trends in the presentation and in each of these five we had discussed during the investor day in 2022. And I’ll tell you the thing that got me most excited is not only is it was the work that we did in the last months of the reaffirmation of the strategy that we have. But we’ve also identified other areas within those five where we think we’ve got good opportunities for maybe new incremental growth. So those would be the things I would highlight there and a lot of excitement with the new leadership team to go after as.

Operator

Thank you. Our next question comes from Manav Patnaik with Barclays. Your line is open.

Manav Patnaik

Okay. Like you know. I was just wondering with all the I guess, work you’ve done leading up to taking overhead. You know, I think you ended with a question on the comment on solving for the collective whole in. It seems like with five big business as well as a whole lot going on. So I was just curious if the comment you made calculation and MI if you have any thoughts on the broader company and portfolio in homes have a stands today.

Martina Cheung

Hi, Manav and thanks so much for the question. Look, you’ve seen us be very disciplined around capital management and over the past several years and very specifically under Doug as CEO. And we’re going to remain committed to capital management and returns to our shareholders. So I’ll start by saying that with that, we will continue to look at whether it’s M&A, whether it’s portfolio management with the same level of discipline that we always do. And as I said in the last question, we’re going to test constantly, are we the right owners for businesses? Are we investing the right amount? Or should we be reprioritizing and redirecting investments? And those are all things that that will do is needed the leadership team going forward.

Operator

Thank you Manav. Our next question comes from Scott Wurtzel with Wolfe Research. Your line is open.

Scott Wurtzel

Good morning. Thanks for taking my question. I just wanted to hit on the synergy topic. I mean, I get to see that run on tremendous under the choppiness that we’re seeing and market intelligence and the outperformance in some of the other segments . Are we seeing any sort of change in geography in terms of where the synergies are impacting by division?

Douglas Peterson

Thanks, Scott. This is Doug. When we look at the synergy performance of the Company, we’re very pleased across the board. We’re ahead of us of what we’ve had with our expectations. We see in particular cross-sell as one of the areas that has done incredibly well. I want to talk about cross-selling talk about cross-sell. Intra division were also very excited about the new role that selling more is going to have, which is going to bring up a lot more opportunity across divisions for cross-sell. And then within the divisions on new products, new services, we’ve been quite successful, getting things out in it. For example, we’ve had 23 new products this year so far for Market Intelligence. Those products are all doing well and we continue to be on track to do deliver synergies. Thanks, Scott.

Operator

Thank you. Our next question comes from Faiza Alwy with Deutsche Bank. Your line is open.

Faiza Alwy

Yes, hi. Thank you. So I wanted to ask about ratings. I think, Doug, in your comments you mentioned from going forward from 2025 and even 2026 that they are, it’s certainly been a very strong year for issuance. And I’m curious if you have any early thoughts around 2025? And I know a few years ago, you talked about a 6% to 9% of the long-term growth rate over 25% to 26% growth rate. Do you think that is achievable? And what are some of the factors to consider?

Martina Cheung

Hi, Faiza, this is Martina. Thanks so much for the question. Yes, we have seen certainly a higher level of issuance than we anticipated earlier in the year. And this is the third time, I believe that we’ve seen that we’ve raised guidance for ratings, the business itself when it comes to refinancing and the levels that we’ve seen of pull-forward, etc. If we look at 2025 maturities and where they stand right now, how much was pulled forward into 2024, it’s not dramatically different from what we would have seen in the last couple of years. And so when we say as we usually do in our calls, that there is a healthy maturity wall anywhere from $2 to $2.8 trillion each year over the next five years. That is still very much the case for us. Now we always also say that we can’t predict with SAP with exact precision, the actual timing of refinancing and so much about this year, for example, has been related to spreads at. So, you know, to the extent that we see certain things continuing to move ahead, cellular couldn’t impact more pull forward or less move forward. Moreover, I would say for us, the biggest correlation in issuance overall is actually GDP growth. And so this is something that we would pay very close attention to over the next several years as we think about the ratings business and any of the other businesses that are impacted by GDP growth. And then finally, to your point on the 6% to 9% Investor Day, this was really a target from 2023 to 2025, 2026 for a multiyear target. And I would say for an enterprise for the enterprise as a whole, we are very much on track for reaching that target. And with that with right,

Operator

Thank you, Faiza. Our next question comes from David Motemaden with Evercore. Your line is open.

David Motemaden

Hi thanks. Good morning. I just wanted to follow up on the competition and market intelligence. It sounded like that the pricing competition picked up a little bit this quarter. I’m wondering if you could just elaborate on that. And maybe secondly, specifically within market intelligence, Martina, if you’re thinking about maybe incremental areas of investment that are needed to reach the 7% to 9% revenue growth target . Thank you.

Douglas Peterson

Great. Thanks, David. Let me start, as we’ve mentioned, there has been headwinds on this area for many, many quarters. This isn’t something new for us. We saw this when the investment banks and that both the buy side and the sell side, we’re pulling back when inflation has gone up quite dramatically. Interest rates were spiking. There were a lot of trends which have slowed down the environment. We’ve seen the slowdown of the sales cycle. So as opposed to business, certainly being pricing, we have seen some price sensitivity. This is just a residual impact of all of the changes and the expense management that we saw in the area. We have seen something that we discussed. We call vendor consolidation that historically has been very beneficial to us. We have the kind of data sets in a way that many organizations where we start talking with them. They don’t realize how many things we have. It gives us an opportunity to bring more and more capabilities where we have these discussions. So yes, we have seen some consolidation. We’ve seen some sales cycle slowdown. We’ve seen some pricing pressure overall, but it is is an incredibly strong business. The synergies have been coming along and the integration’s gone incredibly well, Martina over to you.

Martina Cheung

Thanks, Doug, and thanks for the question. I would say that as it relates to market intelligence growth rates going forward, as Doug commented, and so we’ve discussed in the earlier remarks as well. This is really a story of end markets, and we’re not we’re never going to be the one to call it trough. But we very firmly believe that with the increased touch points, the innovation that we’ve seen in the business as we come through the recovery, we’ll see the value come back into some of the areas that have been little challenge to out with the end market challenges that we’ve seen so far. Thanks for the question.

Operator

Thank you. Our next question comes from Craig Huber with Huber Research Partners. Your line is open.

Craig Huber

Thank you. Doug, I just want to say, and I thought you’ve done a great job running the Company here just for lost 11 years, but we showed us going forward. Here is a tough act to surf the web follow here. But Martina, my question to you is, as you think about what you want, your plans for the Company here, what do you play on potentially doing good? You’re going, for course, we don’t want to screw up anything. You’re number one thing, but what are your plans to potentially do something different here from enhanced shareholder value? Thank you.

Martina Cheung

Thanks for the question, Craig and I completely agree with you that Doug is very hard act to follow. I can tell you we are focused really here on this wonderful company as great as it is and how much better we can make it. And the new leadership team, as it’s been announced, you know, does have some some different functions and what we had before. And those are some areas where we plan to connect the dots a bit more across the divisions through the chief commercial officer and have really scales capability for strategic accounts. And through our enterprise data office, we’re looking at ways in which we can connect our data together so that it provides us with some really interesting and easier pathways to growth across the organization. As you know, we have one of the deepest and richest data states in the business, and we’re very excited about the potential for that. Thanks for the question.

Operator

Thank you. Our next question comes from Andrew Steinerman with J.P. Morgan. Your line is open.

Andrew Steinerman

Hi, this is Alex also called Andrew, on industry business, can you walk through some of what gives you conviction in that price actions falling from here? And I just touched on it, ACV number and how we should maybe think about the index data cost of piece parts of a challenging end market for financial services and versus one of your peers calling out some softness in their ETF business. So maybe help us understand your thoughts on the landscape in the next segment.

Christopher Craig

Sure. Hi, Alex. This is Chris. Thank you for your question. So first, we are solving for long-term customer relationship and growth at indices. Um, we will see some acceleration in the data and custom in line with what we expected next quarter. We want to take the necessary steps and time to make sure we preserve long-term relationships rather than sell even for short-term economics with our pricing. That said, data and customer did increase 5% year over year. The commercial initiatives we previously discussed earlier in the year are really starting to pick up now ACV in the largest group at the end of day data revenue. We see that going to mid 10s this quarter, and you really expect to see some some ACV acceleration later on in the year.

Operator

Thank you. Our next question comes from George Tong with Goldman Sachs. Your line is open.

George Tong

Hi Thanks, good morning. I wanted to dive a little bit deeper into market intelligence. Can you elaborate on what you would need to see with respect to external market conditions for our growth performance to improve and what the low watermark for MRO growth should be, including when you would expect to see growth the bottom out?

Martina Cheung

Hey, George, it’s Martina. Thanks for the question. Well, the low watermark in my parlance, as I mentioned, trough in response to all of the earlier questions that we’re not going to be the one to call a trough, but with very good conviction here, George, that with the innovation that’s going into the core products with the increased touch points that we have with the customers that as we emerge from this cycle out, we’ll see the recovery reflected in our financials as well as that with our customers. And you look at say it’s too early to tell, but a and it could differ by discrete sector within financial services. But we are hearing a little bit agreeing to tear and their continued pressure in other places. I would say we watch this very, very carefully, but we feel good that we have the products in place, the investments in new products that Doug mentioned, which were quite excited about and to continue to really engage as closely as possible with our customers. So the question.

Operator

Thank you. Our next question comes from Alex Kramm with UBS. Your line is open.

Alex Kramm

Yes. Hey, good morning, everyone. Can you can you talk a little bit more about what you’re seeing in commodity insights and your outlook here going forward? I mean, I think this year, you’re punching nicely above your kind of medium term Investor Day targets. I know the energy market backdrop is pretty pretty good, but I think things like energy transition are still early. So I think if you look at as you look going forward or do you think some of the cyclicality is going to get worse or another secular side? You see we’re just at the beginning a lot of maybe some some prolonged like upside. So maybe the cyclical versus secular? It’s really the heart of the question. Thanks.

Martina Cheung

Hi, Alex. It’s Martina. Thanks so much for the question out where we’re quite excited as we have been for several years now about commodity Insights business and the performance there. And one of the things that excites us as we go forward is the breadth. And if you like, sort of an embedded diversified station across the various different commodity pieces, whether it’s oil and gas power and some of the other areas we’ve been investing in, in particular, we see in addition to great performance for the larger core product areas. We’ve also seen really nice performance in some of the newer investment areas. So for example, we’re seeing rapid growth around some of our energy transition from products. In particular, we had our new clean energy at tech product that’s been launched. That’s been very well received in the market and lots of other stuff that the teams are doing there, whether it’s a voluntary carbon markets, low-carbon assessments, et cetera. So we think that we’re making the right investments here. We’re in the areas that will continue to grow going forward and sustaining very good positions and discipline around the core products in the business. And overall have we think a good story going forward here. Thanks to the question.

Operator

Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. Your line is open.

Hey, Good morning. This is Ryan here on behave of Jeff. Just on the private market solutions, it sounds like the revenues there were up 22% in 3Q and you’re seeing some strength from the buzz going on in private credit going on at the moment. I was just curious how you think your products are positioned to succeed and win share as the market itself and gets more competitive skateboard. Thank you.

Martina Cheung

Hi, Ryan. It’s Martina here. Thanks for the question. Where private markets is something that we’ve been investing in and growing very fast and over the last several years and it impacts us across the portfolio . We have phenomenal products and market intelligence, for example, level on Wall Street offer this and those two products have come up. And some of the conversations that Doug and I have been having, as we’ve said, that in our transition meetings with senior clients. We also, as you know, have been making great strides in the ratings division with our private markets, ratings and assessments as well as seeing some really interesting opportunities in the index. It’s also So overall, this is a transversal opportunity for us. We’re excited about it. We’re going to continue to invest and prioritize within this area because there are so many ways in which we can. We can play in this market and we’re going to be very disciplined and thoughtful about prioritizing within the private market opportunity, too, to put the money where we can get the best return, deliver the best value for our customers and an overall returns for our shareholders. But it’s a good story there for us. Thanks very much, Ryan.

Operator

Thank you. Our next question comes from Jeff Meuler with Baird. Your line is open.

Jeffrey Meuler

Yes, thank you. Good morning. Just can you address the mobility revenue guidance for the second quarter in a row? You’ve trimmed the higher end. There’s multiple positive callouts for vitality and subscription growth. What’s good. Is it still recall activity headwinds or just any other call-outs on mobility guidance? They give guidance.

Christopher Craig

Hey Jeff, Thanks for the question. This isChris again. So first Mobility’s sort of core subscription growth really did a terrific this quarter coming in at a little over double digits, low double digits. Even with the CDK. outage of still we see strong growth in the subscription business. So yes, the challenge continues to be recalled coming into next year. That will really have an easy lap when we look at 2025 mode because of the recall. So that does continue to be the headwind. And in that market.

Operator

Thank you, Jeff. Thank you. Our next question comes from Jason Haas with Wells Fargo. Your line is open.

Jason Haas

Hi, good morning and thanks for taking my question is if you could talk about where you’re seeing in terms of the pace of AI adoption among your customers, what, if anything, do you see holding them back from further adoption of some of the cars that are rolling out of? It is a budgetary that they are concerned about data accuracy. And then I don’t know if it’s relevant or not, but if you could talk about your own learning system rolled out a I am maybe what others can Martin that. Thank you.

Martina Cheung

Hi, Jason, it’s Martina. Thanks to the question. I think it goes without saying, but I suppose maybe I’ll make the point anyway, Alliance Data that it’s trained on and we have lots of high-quality data. And so we feel really good about how we are integrating generative AI into our products. I would say probably two areas I think about that one is how do we take existing products and make them better? And the second is the extent to which we see opportunities to create maybe new versions of products, different cuts of data using generative AI., and we have tremendous momentum. I would say you’ve seen a lot of that on one of the slides, for example, in our presentation that Doug highlighted. And to your point point, we have a lot of our customers because we had Kensho since 2018. And Kensho has been riding the wave of I know machine learning, natural language processing and and then all the way into to Gen-i And between that and just incredible the breadth and depth of data that we have. We have a lot of our clients actually saying, hey, could you come in and talk to us about how you’re thinking about using your data? What can we learn from that? And those have been some really interesting and fruitful conversations and a lot of engagement from our customers on a remedy data as well. So those are just some examples into. Finally, we, as Doug said, we’re making really, really incredible progress on the rollout of Spark assist. Both the training on G&A as well as the use of Spark is just as a tool internally. And I can say that we are all very excited about the uptake and adoption across our own employees and and the types of use cases that we’re seeing and we’re able to share those earnings with our clients to make the conversations are even more interesting. And what I would say that the Spark assist approach that we have taken out, we have not necessarily seen many other organizations doing the same things. We have a lot share in terms of our learnings with our culture summers and great, great dialogue. Thanks for the question.

Operator

Thank you to our next question comes from Owen Lau with Oppenheimer. Your line is open.

Owen Lau

Good morning and thank you for taking my question. Could you please give us more color on the sustainability products? What is the outlook there and how should we think about the new product launches? Thanks.

Martina Cheung

Hi Owen, this is Martina, Thanks, much for the question. Will this area. That said, we announced a change in when we did our leadership announcement last week as the plan forward here is to move the sustainable one business and combine it with the energy transition products and assets within commodity insights. And and that merged group will essentially So function as a horizontal from within commodity insights. Now this is very exciting for us. As I said earlier, the commodity insights division has some of the most unique and proprietary ways to think about and measure energy transition. It’s incredibly helpful, for example, for our financial services customers as they are thinking about whether or not their financing some of these new technologies, what their finances, patients are, et cetera. And so just pulling together of these capabilities, allows us to create some really unique and forward looking out ways in which we can help our clients as they’re navigating the transition. And I think, as importantly, will allow us to bring those really high value commodity insights products to multiple different sectors outside of the commodity sector. So we’re quite excited about it, and we’ll talk more about it next year. well, thanks for the question.

Operator

Thank you. Our next question comes from Russell Quelch with Redburn Atlantic. Your line is open.

Russell Quelch

Hi, I thought I mean I wouldn’t think about some market intelligence, please specifically the desktop business folks, you mentioned some cyclical headwind to sales and pricing has been a narrative for many quarters. Now of that, is this more a function of locker structural growth and financial service headcount sort of high competition in this area that permanently restrict growth opportunities in terms of time on pricing? I also wondered how S & P’s to win market share in desktops. And if I can give you can give us a flavor perhaps of what customer sets geo-targeting, what asset classes you’re talking about geographies you’re targeting targeting. Sorry, it’s that would be very helpful .

Martina Cheung

Hi Russell, it’s Martini here. Thanks, much for the question. Well, as we mentioned earlier, we do think this is Sam and end markets consideration. And we point that I would make on this a structural issue is that is something that can play to our strengths as much as anything else. And a good example of that is the growth in sponsor business, for example, with with private credit. And that’s an area where you’ll see us actually being able to pick up additional business as opposed to, let’s say, other parts of the financial services vertical that are a bit more constrained right now. But I also mentioned that we are seeing some green shoots in some of the additional area in the additional sectors, some good green shoots and some banking areas, for example, with some of our banking clients. All that being said, we have such an incredible breadth of offerings within market intelligence and say, when you think about visible alpha, which has performed really well this year on top of the desktop growth, these are all areas where we think we can continue to engage our clients at the highest levels. We’d also expect for our strategic accounts, selling more new function as the Chief Client Officer to be able to really connect the dots more effectively across divisions and increased due to higher levels of long term value with our customers. So that thanks for the question.

Operator

Thank you. We will now take our final question from Surinder Thind with Jefferies. Your line is open.

Surinder Thind

Thank you. Following up on the creation of the Chief Client Officer role. You’ve talked about connecting the dots with the client level. Can you provide a bit more color on the site, so that should at chanlleges that’s being addressed? Is the idea to have a more integrated approach to sales to customers? Or how should we think about that.

Martina Cheung

Hi Surinder, Thanks very much for the question. And so yes, we are. It is in fact, some of the things that you mentioned in your question around a bit more consistency in how we do things to the connecting the dots is an important point because our sales teams today, we are quite independent . So as we go across the entire book of business and the results that we can have is that we’ll have customers who are buying more products of our byproducts from more than one division, but maybe don’t even know at the full breadth and depth of the products that we actually have. And probably one of the most common things that Doug and I have heard as we’ve been going out with senior clients over the last several months, if I didn’t know you did that. So, you know, a good first point here for Sally and this team will be making sure that our customers understand the full breadth and depth of everything that we do. She will also be looking to bring some consistency around the overall go-to-market practices that we have and really bolstering the strategic relationships that we have with our clients going forward. Thanks to the question.

Douglas Peterson

Thanks, surrender. I want to thank everyone for joining the call today and especially your great questions. Over the past 11 years, I’ve had the honor of leading S&P Global through significant transformation that we’ve always strived to deliver exceptional value to our shareholders. And our customers is like 44th earnings call, and they’ve had hundreds of meetings with analysts, investors, and I’ve always appreciated the discussion in the dialogue and the tough questions. Even at the Company. They are the heart muscle in the brain of S&P Global and the reason for success, and I know they’re going to continue to deliver growth and innovation the years ahead. I want to state Martina and congratulate her on new role. I’m confident that she is going to be a great CEO who will be a fabulous addition to the company with the full support of our people and a great knowledge and commitment to our customers, the communities and our shareholders. I’m very excited about what lies ahead and that we have a world-class Board, a talented management team, and we’re very well positioned for the future. I can’t. Thank you. All know, this has been the best run of overhead.

Martina Cheung

Thank you so much, Doug. After those heartfelt words and for your remarkable leadership that has transformed S&P Global, you grew our market cap from $16 billion to $165 billion, whilst fundamentally strengthening our capabilities through the IT market acquisition. But beyond these impressive numbers, you’ve led with extraordinary entity and wisdom creating a legacy that I’m deeply honored to follow upon. So thank you to everyone who joined today’s call. I look forward to speaking with you on our next earnings call.

Operator

Thank you. That concludes this morning’s call. A PDF version of the presenter slides is available for downloading from investor.sp.global.com. Replays of the entire call will be available in about two hours. The webcast with audio and slides will be maintained on S&P Global’s website for one year. The audio only telephone replay will be maintained for one month. On behalf of S&P Global. We thank you for participating and wish you a good day.