S&P Global Inc. (SPGI) Earnings

Management highlights

### Post-Spin Strategic Realignment - Completed the spin of the former Mobility division into an independent public company on July 1, 2026, creating immediate shareholder value and simplifying the business to four core divisions. - Consolidated all supply chain assets into the Energy division, and implemented a new operating model and leadership for Market Intelligence, aligning teams around customer needs and more efficient execution. - Announced two acquisitions: Data Center Hawk (to be combined with 451 Research and energy forecasting assets to extend leadership in data center market intelligence) and a majority stake in Augusto & Company, a leading credit rating agency operating across West Africa, advancing geographic expansion strategy. Benchmark Business Leadership - Combined benchmark businesses (Ratings, Indices, Platts in Energy, and ratings content distribution through MI) account for nearly two-thirds of total revenue and more than 80% of operating profit, with high incremental margins driving overall margin expansion. - Ratings reported record revenue, with bond issuance up 25% YoY, driven by strong investment-grade issuance for AI infrastructure and data center CapEx, as well as M&A activity. Hyperscaler infrastructure issuance reached $169 billion in H1 2026, well ahead of initial full-year expectations of $200 billion. Approximately $11 trillion in rated debt is scheduled for refinancing over the next 4.5 years, supporting sustained multi-year growth. Indices remain the world's largest index provider by AUM, with ETF AUM reaching $6.35 trillion, and over $600 billion in net annual inflows. The first ever $1 trillion AUM ETF is linked to the S&P 500, and multiple asset managers switched to S&P indices in Q2, adding tens of billions in new benchmarked AUM. Artificial Intelligence (AI) Progress - AI-enabled customer ACV growth is 60% faster than average in MI and 3x faster in Energy, with the gap widening in Q2. The number of customers using Kensho LLM Ready APIs and MCP connected solutions now exceeds 500, growing more than 70% quarter-over-quarter, and Q2 API call volume was 5x higher than Q1 volume. - Internally, the Enterprise Data Office is on track to hit its full target of $100 million in annualized cost savings (equal to ~20% of its cost base) by the end of 2027, with nearly 60% of target savings already achieved through a mix of AI-driven efficiencies and traditional productivity initiatives. - Customers are increasingly focused on managing token costs for AI projects, and S&P is positioned to partner with customers building in-house AI solutions by providing ready-to-use proprietary data. Market Intelligence Strategic Priorities - MI is restructured into two core segments: Kensho Data and Platforms, and Enterprise Solutions. Kensho Data (half the size of Platforms by revenue) is growing 8-11% organically, focused on delivering differentiated proprietary data via flexible channels at strong incremental margins. Platforms (larger segment, growing low single digits organically) is focused on consolidating redundant systems, simplifying operations, and leveraging AI to improve profitability. - Enterprise Solutions holds market-leading positions in lending solutions, fixed income/equity origination software, and valuation services, benefiting from strong network effects. Management will prioritize investment in the highest-ROI, highest-growth MI opportunities, fund new investments via productivity savings to deliver margin expansion, and does not plan for transformational M&A, though small carve-outs of underperforming assets are possible.

Guidance

• Full-year 2026 organic constant currency revenue growth guidance is maintained at 6-8%: outperformance in high-margin Ratings and Indices offsets the removal of higher-growth, lower-margin Mobility from full-year results, leaving the overall range unchanged. • Consolidated operating margin is now expected to expand 75-100 bps in 2026, up from prior expectations, driven by better-than-anticipated performance from high-margin segments. • Adjusted diluted EPS guidance is set at 17.50 to 17.75, representing double-digit YoY growth. • Adjusted free cash flow guidance: $2.9 billion to $3.1 billion in H2 2026 (excluding Mobility), following $2.4 billion generated in H1 (including Mobility). • Segment guidance: Ratings revenue growth is raised to 5-8% (up 1pp from prior guidance); Indices revenue growth is raised to 12-14% (up 2pp from prior guidance); Market Intelligence guidance is unchanged at 5.5-7% revenue growth; Energy guidance is unchanged at 4.5-6% revenue growth. • 2026 share repurchase target is increased by nearly $3 billion to more than $7 billion for the full year, equal to more than 5% of current market capitalization. Proceeds from the $2 billion Mobility spin dividend will primarily fund buybacks, with ~$500 million used for debt retirement; an additional $2 billion in debt is expected to be issued in H2 to fund further buybacks, leaving 2026 end-of-year gross leverage at 2.7-2.8x EBITDA, modestly above the 2.0-2.5x target range.

Segment performance

1. **Ratings**: Revenue grew 17% year-over-year (YoY), with double-digit growth in bank loans, high yield, and structured finance. Private Markets Ratings revenue increased 60% YoY, and non-transaction revenue grew 8%. Adjusted expenses rose 6%, and operating margin expanded 310 basis points (bps) to 68.5%. This segment is now the largest by revenue and contributed ~38% of total consolidated revenue based on full-year guidance midpoints. 2. **Indices**: Revenue hit a 13th consecutive record quarterly high, with trailing 12-month revenue surpassing $2 billion. Exchange-traded derivatives revenue grew 22%, data and customs subscriptions increased 9%. Adjusted expenses rose 16%, operating profit grew 21%, and operating margin expanded 90 bps to 71.5%. This segment contributed ~24% of total consolidated revenue based on full-year guidance midpoints. 3. **Energy**: Overall revenue grew 3% YoY. Platts benchmark revenue grew 4%, driven by resilient demand for price assessments, partially offset by declines in Global Transaction Services (GTS) revenue. CIRA (supply chain, research, and content) revenue grew 1%, with strong growth in market insights offset by lower upstream and conference revenue (pressured by Middle East conflict attendance declines). Adjusted expenses grew only 1%, and operating margin expanded 70 bps to 47.5%. This segment contributed ~16% of total consolidated revenue based on full-year guidance midpoints. 4. **Market Intelligence (MI)**: Revenue grew 6% YoY on both reported and organic constant currency bases. Subscription revenue grew 6%, volume-driven revenue increased 9%, and one-time revenue declined 2%. Kensho Data and Platforms revenue grew 8% overall, with 4% organic growth. Adjusted expenses grew at a slower rate than revenue, partially offset by productivity programs, and operating margin expanded 120 bps to 36%. This segment contributed ~22% of total consolidated revenue based on full-year guidance midpoints. Total consolidated revenue grew 11% YoY, adjusted operating profit grew 15%, adjusted diluted EPS grew 23%, and consolidated margin reached 54.3% (200 bps YoY expansion overall, 270 bps excluding prior-year Astra impacts).

Risks & headwinds

• The Iran/Middle East conflict has complicated large customer contract renewals in the Energy segment, pressured conference attendance and event revenue, and created near-term cyclical headwinds that have impacted 2026 results. Extreme energy volatility from the conflict also dampened GTS revenue growth in Q2, as extreme volatility reduces trading activity in contrast to the typical benefit of moderate volatility. • Some smaller, subscale products in Market Intelligence (including certain consulting and sustainability offerings) are facing headwinds that have weighed on overall divisional growth. • Elongated sales and renewal cycles for large, sophisticated clients in Market Intelligence as customers negotiate new terms for AI data usage and IP protection, creating near-term impacts on revenue timing. • Macroeconomic risks including shifting interest rates, widening credit spreads, and potential pullbacks in hyperscaler CapEx and debt issuance create uncertainty around full-year issuance volumes, captured by the width of the full-year guidance range. • The high level of customer attention to AI token and investment costs may slow near-term adoption of new AI solutions, though management views this as a temporary, near-term dynamic that does not change long-term demand. • Sanctions related to geopolitical tensions negatively impacted Platts growth by 120 bps and CIRA growth by 30 bps in Q2 2026.

Analyst Q&A

• Q: How has S&P's approach to Kensho Data pricing and AI monetization evolved with the new MI structure, especially as clients adopt more modular data acquisition? /

  A: S&P maintains direct customer relationships and will continue flexible content distribution across its own platforms, third parties, and traditional data feeds. The MI realignment accelerates Kensho innovation, bringing the Kensho team and Kensho Labs (its custom AI capability) closer to MI's commercial team to scale development of new tools like adaptive retrieval and MCP applications. Monetization is multifaceted: client AI data usage is up 5x quarter-over-quarter, and the firm uses a mix of consumption-based pricing and incremental data set licensing to share in the value clients create, with rising retention and sales already supporting revenue growth.

• Q: Will the MI reorganization cause operational disruption, and what will S&P do with the smaller subscale products facing headwinds? /

  A: Management expects no disruption, and instead expects the reorganization to drive greater simplicity and better customer alignment. For example, moving pricing and reference data into Enterprise Solutions simplifies go-to-market for private market products, while bringing Kensho closer to customers accelerates innovation. The underperforming products are small and subscale; management may make strategic choices including potential divestiture, but the reorganization is a move from a position of strength to unlock full value of S&P's existing data and product portfolio.

• Q: What is driving elongated sales cycles for large MI clients, and what is the long-term impact? /

  A: Elongated cycles are driven by more complex negotiations around AI data usage and intellectual property protection, as clients look to expand their use of S&P data for AI projects. Management views this as a near-term baselining process to set clear long-term terms that protect S&P's IP, and does not expect it to have a material negative impact on medium or long-term growth. It actually signals strong client demand to do more business with S&P in AI.

• Q: How do you balance margin expansion with accelerated AI investment, and can the business absorb additional investment in the current market? /

  A: There is substantial unmet demand for new AI and data products from existing financial and new corporate clients, and all new investment is consistently funded via ongoing productivity programs across every division. Productivity savings free up people, technology, and capital to reinvest in new growth initiatives, creating a virtuous cycle that allows S&P to simultaneously invest for growth and deliver expanding margins.

• Q: What are your new product and growth catalysts for private markets, and how do you overcome monetization challenges? /

  A: S&P already has a $600 million annual revenue base in private markets across the company, with 60% YoY growth in Ratings private market revenue and strong momentum across the business. Rising AUM inflows into private market funds increase demand for transparency and benchmarks, supporting product innovation. Recent launches include new private credit and private equity indices, and new mapped private market data sets in MI in partnership with third parties. Management expects continued strong growth in this high-demand segment.