S&P Global Inc. Q3 FY2026 earnings call

• Strategic Review: Announced review of Capital IQ (CapIQ) and associated data businesses (including Kensho Data/Platforms, SNL, Visible Alpha) for potential separation. Ratings Direct, Ratings Express, and Enterprise Solutions remain within S&P Global.
• AI Traction: AI products driving significant value; API calls up 4,000% YoY. ACV growth for AI customers is 1.8x non-AI in MI and 3x in Energy. Discrete AI contributions added ~50 bps to growth in both Energy and Kensho segments.
• Ratings Strength: Hyperscaler issuance remains strong ($240B YTD, expecting $250-300B full year). Investment grade issuance up 28% YTD. Closed Open Zeppelin acquisition to strengthen DeFi position.
• Indices Leadership: S&P 500 options agreement extended with CBOE through 2051. New record ETF AUM of $6.5 trillion. Exploring partnerships in prediction markets (e.g., Calshi).
• Operational Efficiency: Delivered 60 bps margin expansion in Q3. Headcount held flat while investing in growth areas via productivity gains. Repurchased $4B YTD, targeting >$7B by year-end.

Ratings: Revenue grew 2% (moderated from H1); Issuance up 8%; Transaction revenue +1%, Non-transaction +4%. Operating margin contracted ~130 bps in Q3 but expanded >100 bps YTD. Indices: Revenue grew 20% (record 14th consecutive quarter); ETF AUM reached $6.5 trillion; Derivatives revenue +19%. Operating margin expanded 150 bps to 71.9%. Energy: Revenue grew 6%; Subscription growth accelerating despite geopolitical headwinds and sanctions impact (~0.5%). Operating margin expanded 190 bps to 48.1%. Market Intelligence: Revenue accelerated to 7%; Kensho Data & Platforms grew 10% (6% organic); Enterprise Solutions organic revenue +8%. Operating margin expanded 110 bps to 36.2%.

• Full Year Organic Constant Currency Revenue Growth: Raised to 7.5%-8.5% (from prior guidance).
• Full Year Adjusted Operating Margin Expansion: Raised to 75-100 bps (excluding Astra divestiture impact, expected 125-150 bps).
• Full Year Adjusted EPS: Raised to $17.70-$17.95.
• Ratings: Expect high single-digit build issuance growth. Organic constant currency revenue growth 6.5%-8%. Margins expanding towards lower end of company range.
• Indices: Expect organic constant currency growth 17%-18.5%. Margins expanding towards higher end of company range.
• Energy: Expect organic constant currency growth 4.5%-6%. Reported growth impacted by upstream software divestiture timing in Q4.
• Market Intelligence: Expect organic constant currency growth 5.5%-7% (comfortable above midpoint). Margins expanding near high end of company range.

• Geopolitical Volatility: Ongoing conflicts impacting energy markets (Strait of Hormuz), though flows are stabilizing toward pre-war levels.
• Execution Risk: Strategic review of CapIQ carries uncertainty regarding perimeter, timeline, and outcome; no definitive timetable provided.
• Regulatory/IP Negotiations: Normalization of AI rights negotiations required careful management to protect IP while enabling client adoption.
• Macro Sensitivity: Reliance on debt/equity issuance cycles and hyperscaler capex plans which may fluctuate based on interest rates and market conditions.

Q: Why initiate the strategic review now and how does it enhance the remaining business? / A: Management stated this is a long-term positioning move leveraging current strength in CapIQ’s acceleration. Separation would allow dedicated investment for CapIQ while enabling S&P Global to focus capital on its strongest core markets (credit, equities, commodities), creating a more focused portfolio with favorable financial profiles and greater capital allocation flexibility. Updates expected by February earnings call.

Q: How will separating Kensho/CapIQ affect S&P Global's AI strategy? / A: Kensho engineers and technology are critical to CapIQ’s momentum and will likely stay with the separated entity. However, S&P Global will retain essential AI capabilities integrated into core workflows, analysts' tools, and other divisions like Energy. The company ensures it keeps 'whole' by scaling retained AI capabilities to maintain innovation pace across the broader organization.

Q: What are the drivers and risks for future hyperscaler issuance? / A: Hyperscaler issuance has been stronger than anticipated, driven by massive AI/data center capex. Leading indicators include hyperscalers' Remaining Performance Obligations (RPOs), which stand near $3 trillion for 2027. Management assesses how much of this will be debt-funded versus equity-funded. While robust, issuance depends on macro conditions and hyperscaler funding choices.

Q: How are sales cycles and AI contract terms evolving? / A: Sales cycles have normalized after previous elongation due to AI rights negotiations. Management successfully standardized Terms & Conditions across divisions, protecting IP while allowing client adoption. Clients now accept these standard terms, removing a previous friction point. Consumption-based pricing models are emerging for adaptive retrieval agents, complementing new dataset licensing.

Q: What is the scope and integration level of the businesses under review? / A: The review includes CapIQ, Kensho Data/Platforms, SNL, and Visible Alpha. Enterprise Solutions, Ratings Direct, and Ratings Express are excluded. Integration is moderate; some cross-divisional usage exists (e.g., ratings analysts using CapIQ), but underlying tech stacks for Ratings, Indices, Energy, and MI are largely separate. Management believes they have the playbook to execute this without disrupting customer workflows.