Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)
The following Management’s Discussion and Analysis (“MD&A”) provides a narrative of the results of operations and financial condition of S&P Global Inc. (together with its consolidated subsidiaries, “S&P Global,” the “Company,” “we,” “us” or “our”) for the three months ended March 31, 2024. The MD&A should be read in conjunction with the consolidated financial statements, accompanying notes and MD&A included in our Form 10-K for the year ended December 31, 2023 (our “Form 10-K”), which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The MD&A includes the following sections:
• Overview
• Results of Operations — Comparing the Three Months Ended March 31, 2024 and 2023
• Liquidity and Capital Resources
• Reconciliation of Non-GAAP Financial Information
• Critical Accounting Estimates
• Recently Issued or Adopted Accounting Standards
• Forward-Looking Statements
OVERVIEW
We are a provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. The capital markets include asset managers, investment banks, commercial banks, insurance companies, exchanges, trading firms and issuers; the commodity markets include producers, traders and intermediaries within energy, petrochemicals, metals & steel and agriculture; and the automotive markets include manufacturers, suppliers, dealerships, service shops and customers.
Our operations consist of five reportable segments: S&P Global Market Intelligence (“Market Intelligence”), S&P Global Ratings (“Ratings”), S&P Global Commodity Insights (“Commodity Insights”), S&P Global Mobility (“Mobility”) and S&P Dow Jones Indices (“Indices”).
• Market Intelligence is a global provider of multi-asset-class data and analytics integrated with purpose-built workflow solutions.
• Ratings is an independent provider of credit ratings, research, and analytics, offering investors and other market participants information, ratings and benchmarks.
• Commodity Insights is a leading independent provider of information and benchmark prices for the commodity and energy markets.
• Mobility is a leading provider of solutions serving the full automotive value chain including vehicle manufacturers (Original Equipment Manufacturers or OEMs), automotive suppliers, mobility service providers, retailers, consumers, and finance and insurance companies.
• Indices is a global index provider maintaining a wide variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.
As of May 2, 2023, we completed the sale of S&P Global Engineering Solutions (“Engineering Solutions”), a provider of engineering standards and related technical knowledge, and the results are included through that date .
Key results for the three months ended March 31 are as follows:
(in millions, except per share amounts) 2024 2023 % Change 1
Revenue $ 3,491 $ 3,160 10%
Operating profit 2
$ 1,385 $ 1,144 21%
Operating margin % 40 % 36 %
Diluted earnings per share from net income $ 3.16 $ 2.47 28%
1 % changes in the tables throughout the MD&A are calculated off of the actual number, not the rounded number presented.
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2 2024 includes IHS Markit merger costs of $36 million, employee severance charges of $35 million, acquisition-related costs of $5 million and recovery of lease-related costs of $1 million. 2023 includes IHS Markit merger costs of $64 million, a gain on dispositions of $50 million, disposition-related costs of $13 million, employee severance charges of $12 million and acquisition-related costs of $2 million. 2024 and 2023 also include amortization of intangibles from acquisitions of $278 million and $275 million, respectively.
Revenue increased 10% driven by increases at Ratings, Market Intelligence, Commodity Insights, Indices and Mobility, partially offset by a decrease at Engineering Solutions due to its sale on May 2, 2023. The increase at Ratings was driven by growth in both transaction revenue and non-transaction revenue. Transaction revenue increased primarily due to growth in corporate bond ratings revenue and bank loan ratings revenue driven by increased issuance volumes due to higher refinancing activity. Non-transaction revenue increased due to an increase in surveillance revenue, higher Ratings Evaluation Service (“RES”) revenue and an increase in new entity credit ratings revenue. The increase at Market Intelligence was primarily due to subscription revenue growth for data feed products within Data and Advisory Solutions, work flow solutions at Enterprise Solutions, RatingsXpress®, RatingsDirect® within Credit & Risk Solutions, and Market Intelligence Desktop products. Revenue growth at Commodity Insights was primarily due to continued demand for market data and market insights products. The increase at Mobility was primarily due to new business growth within the Dealer business as well as the favorable impact of the acquisition of Market Scan in February of 2023. The increase at Indices was primarily due to higher asset-linked fees revenue and higher exchange-traded derivative revenue. Foreign exchange rates had a favorable impact of less than 1 percentage point.
Operating profit increased 21%. Excluding the impact of a gain on disposition in 2023 of 3 percentage points and higher employee severance charges in 2024 of 1 percentage point, partially offset by higher IHS Markit merger costs in 2023 of 1 percentage point and higher disposition-related costs in 2023 of 1 percentage point, operating profit increased 19%. The increase was primarily due to revenue growth, partially offset by higher compensation costs driven by annual merit increases, increased incentives as a result of financial performance and higher technology costs. Foreign exchange rates had a favorable impact of 2 percentage points.
Our Strategy
We are a provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. Our purpose is to accelerate progress. We seek to deliver on this purpose in line with our core values of integrity, discovery and partnership.
Powering Global Markets is the framework for our forward-looking business strategy. Through this framework, we seek to deliver an exceptional, differentiated customer experience by enhancing our foundational capabilities, evolving and growing our core businesses, and pursuing growth via adjacencies. In 2024, we are striving to deliver on our strategic priorities in the following key areas:
Financial
• Meeting or exceeding our organic revenue growth and EBITA margin targets;
• Realizing our merger/integration commitments - cost and revenue synergy targets; and
• Driving growth and superior shareholder returns through effective execution, active portfolio management and prudent capital allocation.
Customer at the Core
• Enhancing customer support and seamless user experience with a focus on ease of discoverability, distribution, and delivery of our products and services and integrated capabilities;
• Continuing to invest in customer facing solutions and processes; and
• Prioritizing key strategic relationships to drive enterprise alignment and account/relationship development.
Grow and Innovate
• Continuing to fund and accelerate key growth areas and transformational adjacencies;
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• Exercising disciplined organic capital allocation, inorganic and partnership strategies; and
• Growing the value of S&P Global’s brand through an integrated marketing and communication strategy; driving awareness and consideration across the product offering.
Data and Technology
• Strengthening data management capabilities for cross-enterprise value creation, ensuring data quality through governance, enhanced architecture, and policy codification. Utilizing advanced technologies to enhance data processing efficiency, precision, and drive new insights, prioritizing optimized data management and analysis;
• Adopting efficient modern native cloud technologies and data services; implementing technologies that align with customer needs and unlock new opportunities; and
• Formulating and executing on an enterprise-wide AI strategy that accelerates innovation in our product offerings and drives the productivity of our people with common AI capabilities.
Lead and Inspire
• Continuing to improve diverse representation through hiring, advancement and retention, while continuing to raise awareness through Diversity, Equity, and Inclusion education; and
• Ensuring our people are engaged with a particular focus on learning, development and career opportunities, and continue to embed our purpose and values throughout the Company.
Execute and Deliver
• Driving continuous commitment to risk management, compliance, and control across S&P Global;
• Strengthening the security and resiliency of business-critical systems through the elimination of known risk areas vulnerable to threat actor exploitation; and
• Creating a more sustainable impact.
There can be no assurance that we will achieve success in implementing any one or more of these strategies as a variety of factors could unfavorably impact operating results, including prolonged difficulties in the global credit markets and a change in the regulatory environment affecting our businesses. See Item 1A, Risk Factors in our most recently filed Annual Report on Form 10-K.
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RESULTS OF OPERATIONS — COMPARING THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
Consolidated Review
(in millions) 2024 2023 % Change
Revenue $ 3,491 $ 3,160 10%
Total Expenses:
Operating-related expenses 1,120 1,088 3%
Selling and general expenses 705 705 —%
Depreciation and amortization 287 287 —%
Total expenses 2,112 2,080 2%
Gain on disposition — (50) N/M
Equity in income on unconsolidated subsidiaries (6) (14) (55)%
Operating profit 1,385 1,144 21%
Other (income) expense, net (9) 11 N/M
Interest expense, net 78 85 (8)%
Provision for taxes on income 248 188 32%
Net income 1,068 860 24%
Less: net income attributable to noncontrolling interests (77) (65) (18)%
Net income attributable to S&P Global Inc. $ 991 $ 795 25%
N/M – Represents a change equal to or in excess of 100% or not meaningful
Revenue
The following table provides consolidated revenue information for the three months ended March 31:
(in millions) 2024 2023 % Change
Revenue $ 3,491 $ 3,160 10%
Subscription revenue 1,778 1,740 2%
Non-subscription / transaction revenue 794 598 33%
Non-transaction revenue 435 403 8%
Asset-linked fees 244 210 16%
Sales usage-based royalties 99 84 17%
Recurring variable 141 125 13%
% of total revenue:
Subscription revenue 51 % 55 %
Non-subscription / transaction revenue 23 % 19 %
Non-transaction revenue 12 % 13 %
Asset-linked fees 7 % 7 %
Sales usage-based royalties 3 % 2 %
Recurring variable 4 % 4 %
U.S. revenue $ 2,150 $ 1,926 12%
International revenue:
European region 776 711 9%
Asia 356 337 6%
Rest of the world 209 186 13%
Total international revenue $ 1,341 $ 1,234 9%
% of total revenue:
U.S. revenue 62 % 61 %
International revenue 38 % 39 %
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Revenue increased 10% as compared to the three months ended March 31, 2023. Subscription revenue increased in the three month period primarily due to growth in data feed products within Data and Advisory Solutions, work flow solutions at Enterprise Solutions, RatingsXpress®, RatingsDirect® within Credit & Risk Solutions and Desktop products at Market Intelligence, continued demand for Commodity Insights market data and market insights products and new business growth within the Dealer business as well as the favorable impact of the acquisition of Market Scan in February of 2023 at Mobility, partially offset by a decrease at Engineering Solutions due to its sale on May 2, 2023. Non-subscription / transaction revenue increased primarily due to growth in corporate bond ratings revenue and bank loan ratings revenue driven by increased issuance volumes due to higher refinancing activity. Non-transaction revenue increased due to an increase in surveillance revenue, higher RES revenue and an increase in new entity credit ratings revenue. Asset linked fees increased at Indices primarily due to higher levels of assets under management (“AUM”) for ETFs and mutual funds. The increase in sales-usage based royalties was primarily driven by higher exchange-traded derivative revenue at Indices. An increase in sales usage-based royalties from the licensing of our proprietary market data and price assessments to commodity exchanges at Commodity Insights also contributed to revenue growth. Recurring variable revenue at Market Intelligence increased due to increased volumes. See “Segment Review” below for further information.
The favorable impact of foreign exchange rates increased revenue by less than 1 percentage point. This impact refers to constant currency comparisons estimated by recalculating current year results of foreign operations using the average exchange rate from the prior year.
Total Expenses
The following tables provide an analysis by segment of our operating-related expenses and selling and general expenses for the three months ended March 31:
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(in millions) 2024 2023 % Change
Operating-
related expenses Selling and
general expenses Operating-
related expenses Selling and
general expenses Operating-
related expenses Selling and
general expenses
Market Intelligence 1
$ 523 $ 282 $ 488 $ 250 7% 13%
Ratings 2
256 114 233 105 10% 8%
Commodity Insights 3
193 106 182 104 6% 1%
Mobility 4
119 118 99 117 20% 1%
Indices 5
56 49 53 45 6% 10%
Engineering Solutions — — 64 20 N/M N/M
Intersegment eliminations 6
(45) — (42) — 7% N/M
Total segments 1,102 669 1,077 642 2% 4%
Corporate Unallocated expense 7
18 36 11 63 61% (43)%
Total $ 1,120 $ 705 $ 1,088 $ 705 3% —%
N/M – Represents a change equal to or in excess of 100% or not meaningful
1 In 2024, selling and general expenses include employee severance charges of $31 million, IHS Markit merger costs of $11 million and acquisition-related costs of $3 million. In 2023, selling and general expenses include IHS Markit merger costs of $13 million and employee severance charges of $6 million.
2 In 2024 and 2023, selling and general expenses include employee severance charges of $2 million and $1 million, respectively.
3 In 2024, selling and general expenses include IHS Markit merger costs of $5 million. In 2023, selling and general expenses includes IHS Markit merger costs of $13 million and employee severance charges of $2 million.
4 In 2024, selling and general expenses include IHS Markit merger costs of $1 million. In 2023, selling and general expenses includes IHS Markit merger costs of $1 million and acquisition-related costs of $1 million.
5 In 2024, selling and general expenses include IHS Markit merger costs of $1 million and employee severance charges of $1 million. In 2023, selling and general expenses include employee severance charges of $1 million and IHS Markit merger costs of $1 million.
6 Intersegment eliminations primarily relate to a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.
7 In 2024, selling and general expenses include IHS Markit merger costs of $18 million, employee severance charges of $2 million, acquisition-related costs of $1 million and recovery of lease-related costs of $1 million. In 2023, selling and general expenses includes IHS Markit merger costs of $37 million, disposition-related costs of $13 million, employee severance charges of $1 million and acquisition-related costs of $1 million.
Operating-Related Expenses
Operating-related expenses increased 3% primarily driven by higher compensation costs, increased incentives and higher technology costs, partially offset by a decrease at Engineering Solutions due to its sale on May 2, 2023.
Intersegment eliminations primarily relate to a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.
Selling and General Expenses
Selling and general expenses remained unchanged compared to 2023. Excluding the impact of higher IHS Markit merger costs in 2023 of 5 percentage points and higher disposition-related costs in 2023 of 2 percentage points, partially offset by higher employee severance charges in 2024 of 4 percentage points, selling and general expenses increased 3%. The increase was primarily driven by higher compensation costs and increased incentives, partially offset by a decrease at Engineering Solutions due to its sale on May 2, 2023.
Depreciation and Amortization
Depreciation and amortization remained unchanged at $287 million due to higher intangible asset amortization offset by lower depreciation driven by asset disposals.
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Gain on Disposition
During the three months ended March 31, 2023, we received a contingent payment that resulted in a pre-tax gain of $50 million which was included in Gain on disposition in the consolidated statement of income:
• In the first quarter of 2023, we received a contingent payment following the sale of Leveraged Commentary and Data (“LCD”) along with a related family of leveraged loan indices in June of 2022. The contingent payment was payable six months following the closing upon the achievement of certain conditions related to the transition of LCD customer relationships. During the three months ended March 31, 2023, the contingent payment resulted in a pre-tax gain of $46 million ($34 million after-tax) related to the sale of LCD in our Market Intelligence segment and $4 million ($3 million after-tax) related to the sale of a family of leveraged loan indices in our Indices segment.
Operating Profit
We consider operating profit to be an important measure for evaluating our operating performance and we evaluate operating profit for each of the reportable business segments in which we operate.
We internally manage our operations by reference to operating profit with economic resources allocated primarily based on each segment's contribution to operating profit. Segment operating profit is defined as operating profit before Corporate Unallocated expense and Equity in Income on Unconsolidated Subsidiaries. Segment operating profit is not, however, a measure of financial performance under U.S. GAAP, and may not be defined and calculated by other companies in the same manner.
The tables below reconcile segment operating profit to total operating profit for the three months ended March 31:
(in millions) 2024 2023 % Change
Market Intelligence 1
$ 189 $ 229 (17)%
Ratings 2
679 477 42%
Commodity Insights 3
226 187 21%
Mobility 4
70 64 9%
Indices 5
272 238 14%
Engineering Solutions 6
— 14 N/M
Total segment operating profit 1,436 1,209 19%
Corporate Unallocated expense 7
(57) (79) 27%
Equity in income on unconsolidated subsidiaries 8
6 14 (55)%
Total operating profit $ 1,385 $ 1,144 21%
N/M – Represents a change equal to or in excess of 100% or not meaningful
1 2024 includes employee severance charges of $31 million, IHS Markit merger costs of $11 million and acquisition-related costs of $3 million. 2023 includes a gain on disposition of $46 million, IHS Markit merger costs of $13 million and employee severance charges of $6 million. 2024 and 2023 include amortization of intangibles from acquisitions of $140 million and $141 million, respectively.
2 2024 and 2023 include include employee severance charges of $2 million and $1 million, respectively, and amortization of intangibles from acquisitions of $7 million and $2 million, respectively.
3 2024 includes IHS Markit merger costs of $5 million. 2023 includes IHS Markit merger costs of $13 million and employee severance charges of $2 million. 2024 and 2023 include amortization of intangibles from acquisitions of $32 million and $33 million, respectively.
4 2024 includes IHS Markit merger costs of $1 million. 2023 includes IHS Markit merger costs of $1 million and acquisition-related costs of $1 million. 2024 and 2023 include amortization of intangibles from acquisitions of $76 million and $74 million, respe ctively.
5 2024 includes IHS Markit merger costs of $1 million and employee severance charges of $1 million. 2023 includes a gain on disposition of $4 million, employee severance charges of $1 million and IHS Markit merger costs of $1 million. 2024 and 2023 include amortization of intangibles from acquisitions of $9 million.
6 2023 includes amortization of intangibles from acquisitions of $2 million.
7 2024 includes IHS Markit merger costs of $18 million, employee severance charges of $2 million, acquisition-related costs of $1 million and recovery of lease-related costs of $1 million. 2023 includes IHS Markit merger costs of $37 million, disposition-related costs of $13
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million, employee severance charges of $1 million and acquisition-related costs of $1 million. 2023 includes amortization of intangibles from acquisitions of $1 million.
8 2024 and 2023 include amortization of intangibles from acquisitions of $14 million.
Segment Operating Profit — Segment operating profit increased 19% as compared to 2023. Excluding the impact of a gain on disposition in 2023 of 1 percentage point, segment operating profit increased 20%. The increase was primarily due to revenue growth, higher compensation costs driven by annual merit increases, increased incentives as a result of financial performance and higher technology costs. See “Segment Review” below for further information.
Corporate Unallocated Expense — Corporate Unallocated expense includes costs for corporate functions, select initiatives, unoccupied office space and Kensho, included in selling and general expenses. Corporate Unallocated expense decreased 27% compared to 2023. Excluding the impact of higher IHS Markit merger costs in 2023 of 40 percentage points, higher disposition-related costs in 2023 of 27 percentage points and recovery of lease-related costs in 2024 of 2 percentage point, partially offset by employee severance costs in 2024 of 1 percentage point, Corporate Unallocated expense increased 41% primarily due to higher compensation costs.
Equity in Income on Unconsolidated Subsidiaries — The Company holds an investment in a 50/50 joint venture arrangement with shared control with CME Group that combined each company’s post-trade services into a joint venture, OSTTRA. The joint venture provides trade processing and risk mitigation operations and incorporates CME’s optimization businesses (Traiana, TriOptima, and Reset) and the Company’s MarkitSERV business. The combination is intended to increase operating efficiencies of both businesses to more effectively service clients with enhanced platforms and services for OTC markets across interest rate, FX, equity, and credit asset classes. Equity in Income on Unconsolidated Subsidiaries includes the OSTTRA joint venture acquired in connection with the merger with IHS Markit. Equity in Income on Unconsolidated Subsidiaries was $6 million for the three months ended March 31, 2024 compared to $14 million for the three months ended March 31, 2023.
Foreign exchange rates had a favorable impact on operating profit of 2 percentage points. This impact refers to constant currency comparisons and the remeasurement of monetary assets and liabilities. Constant currency impacts are estimated by re-calculating current year results of foreign operations using the average exchange rate from the prior year. Remeasurement impacts are based on the variance between current-year and prior-year foreign exchange rate fluctuations on assets and liabilities denominated in currencies other than the individual business’s functional currency.
Other (Income) Expense, net
Other (income) expense, net includes gains and losses on our mark-to-market investments and the net periodic benefit cost for our retirement and post retirement plans. Other income, net was $9 million for the three months ended March 31, 2024 compared to Other expense, net of $11 million for the three months ended March 31, 2023 primarily due to gains on our mark-to-market investments in 2024 compared to losses in 2023.
Interest Expense, net
Interest expense, net decreased $7 million or 8% compared to the three months ended March 31, 2023 primarily due to higher interest income from invested cash due to a more favorable interest rate environment combined with a benefit from our net investment hedge program.
Provision for Income Taxes
The effective income tax rate was 18.8% and 17.9% for the three months ended March 31, 2024 and 2023, respectively. The increase in the three months ended March 31, 2024 was primarily due to change in mix of income by jurisdiction.
The Organization for Economic Co-operation and Development (“OECD”) introduced an international tax framework under Pillar Two which includes a global minimum tax of 15%. This framework has been implemented by several jurisdictions, including jurisdictions in which we operate, with effect from January 1, 2024, and many other jurisdictions, including jurisdictions in which we operate, are in the process of implementing it. The effect of enacted Pillar Two taxes has been included in the results disclosed and did not have a significant impact on our consolidated financial statements. The Company continues to monitor jurisdictions that are expected to implement Pillar Two in the future, and it is in the process of evaluating the potential impact of the enactment of Pillar Two by such jurisdictions on its consolidated financial statements.
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Segment Review
Market Intelligence
Market Intelligence is a global provider of multi-asset-class data and analytics integrated with purpose-built workflow solutions. Market Intelligence's portfolio of capabilities are designed to help trading and investment professionals, government agencies, corporations and universities track performance, generate alpha, identify investment ideas, understand competitive and industry dynamics, perform valuations and manage credit risk.
On February 20, 2024, we entered into an agreement to acquire Visible Alpha, the financial technology provider of deep industry and segment consensus data, sell-side analyst models and analytics from high-quality, exclusive sources. The acquisition is expected to create a premium offering of fundamental investment research capabilities on Market Intelligence’s Capital IQ Pro platform. The combination of Visible Alpha with S&P Capital IQ Pro, the flagship S&P Global platform for research and analysis across institutional and corporate markets, reflects S&P Global’s continued commitment to be the foremost provider in this space. The transaction with Visible Alpha is subject to customary closing conditions, including receipt of certain regulatory approvals, and is expected to close during 2024. The proposed acquisition of Visible Alpha is not expected to be material to our consolidated financial statements.
On February 20, 2024 we announced our intent to explore strategic opportunities for Fincentric, formerly known as Markit Digital. Fincentric is S&P Global’s premier digital solutions provider focused on developing mobile applications and websites for retail brokerages and other financial institutions. Fincentric specializes in designing cutting-edge financial data visualizations, interfaces and investor experiences. Fincentric joined S&P Global through the merger with IHS Markit and is part of our Market Intelligence segment. The assets and liabilities of Fincentric were classified as held for sale in our consolidated balance sheet as of March 31, 2024. The proposed divestiture of Fincentric is not expected to be material to our consolidated financial statements.
In the first quarter of 2023, we received a contingent payment following the sale of Leveraged Commentary and Data (“LCD”) that resulted in a pre-tax gain of $46 million ($34 million after-tax) which was included in Gain on disposition in the consolidated statements of income.
Market Intelligence includes the following business lines:
• Desktop — a product suite that provides data, analytics and third-party research for global finance and corporate professionals, which includes the Capital IQ platforms (which are inclusive of S&P Capital IQ Pro, Capital IQ, Office and Mobile products);
• Data & Advisory Solutions — a broad range of research, reference data, market data, derived analytics and valuation services covering both the public and private capital markets, delivered through flexible feed-based or API delivery mechanisms. This also includes issuer solutions for public companies, a range of products for the maritime & trade market, data and insight into Financial Institutions, the telecoms, technology and media space as well as ESG and supply chain data analytics;
• Enterprise Solutions — software and workflow solutions that help our customers manage and analyze data; identify risk; reduce costs; and meet global regulatory requirements. The portfolio includes industry leading financial technology solutions like Wall Street Office, Enterprise Data Manager, Information Mosaic, and iLevel. Our Global Markets Group offering delivers bookbuilding platforms across multiple assets including municipal bonds, equities and fixed income; and
• Credit & Risk Solutions — commercial arm that sells Ratings' credit ratings and related data and research, advanced analytics, and financial risk solutions which includes subscription-based offerings, RatingsXpress®, RatingsDirect® and Credit Analytics.
Subscription revenue at Market Intelligence is primarily derived from distribution of data, valuation services, analytics, third party research, and credit ratings-related information through both feed and web-based channels. Subscription revenue also includes software and hosted product offerings which provide maintenance and continuous access to our platforms over the contract term. Recurring variable revenue at Market Intelligence represents revenue from contracts for services that specify a fee based on, among other factors, the number of trades processed, assets under management, or the number of positions valued. Non-subscription revenue at Market Intelligence is primarily related to certain advisory, pricing conferences and events, and analytical services.
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The following table provides revenue and segment operating profit information for the three months ended March 31:
(in millions) 2024 2023 % Change
Revenue $ 1,142 $ 1,071 7%
Subscription revenue $ 947 $ 890 6%
Recurring variable revenue $ 141 $ 125 13%
Non-subscription revenue $ 54 $ 56 (3)%
% of total revenue:
Subscription revenue 83 % 83 %
Recurring variable revenue 12 % 12 %
Non-subscription revenue 5 % 5 %
U.S. revenue $ 685 $ 628 9%
International revenue $ 457 $ 443 3%
% of total revenue:
U.S. revenue 60 % 59 %
International revenue 40 % 41 %
Operating profit 1
$ 189 $ 229 (17)%
Operating margin % 17 % 21 %
1 2024 includes employee severance charges of $31 million, IHS Markit merger costs of $11 million and acquisition-related costs of $3 million. 2023 includes a gain on disposition of $46 million, IHS Markit merger costs of $13 million and employee severance charges of $6 million. 2024 and 2023 also include amortization of intangibles from acquisitions of $140 million and $141 million, respectively.
Revenue increased 7% primarily due to subscription revenue growth for data feed products within Data and Advisory Solutions, work flow solutions at Enterprise Solutions, RatingsXpress®, RatingsDirect® within Credit & Risk Solutions, and Market Intelligence Desktop products. An increase in recurring variable revenue due to increased volumes also contributed to revenue growth. These increases were partially offset by a slight decrease in non-subscription revenue. Foreign exchange rates had a favorable impact of 1 percentage point.
Operating profit decreased 17%. Excluding the impact of a gain on disposition in 2023 of 17 percentage points and higher employee severance charges in 2024 of 9 percentage points, operating profit increased 9% primarily due to revenue growth, partially offset by higher compensation costs driven by annual merit increases and increased technology costs. Foreign exchange rates had a favorable impact of 4 percentage points.
For a further discussion of competitive and other risks inherent in our Market Intelligence business, see Item 1A, Risk Factors in our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory matters see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.
Ratings
Ratings is an independent provider of credit ratings, research, and analytics, offering investors and other market participants information, ratings and benchmarks. Credit ratings are one of several tools investors can use when making decisions about purchasing bonds and other fixed income investments. They are opinions about credit risk and our ratings express our opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time. Our credit ratings can also relate to the credit quality of an individual debt issue, such as a corporate or municipal bond, and the relative likelihood that the issue may default.
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Ratings disaggregates its revenue between transaction and non-transaction. Transaction revenue primarily includes fees associated with:
• ratings related to new issuance of corporate and government debt instruments, as well as structured finance debt instruments; and
• bank loan ratings.
Non-transaction revenue primarily includes fees for surveillance of a credit rating, annual fees for customer relationship-based pricing programs, fees for entity credit ratings and global research and analytics at CRISIL. Non-transaction revenue also includes an intersegment royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings. Royalty revenue was $40 million and $36 million for the three months ended March 31, 2024 and 2023, respectively.
The following table provides revenue and segment operating profit information for the three months ended March 31:
(in millions) 2024 2023 % Change
Revenue $ 1,062 $ 824 29%
Transaction revenue $ 582 $ 379 54%
Non-transaction revenue $ 480 $ 445 8%
% of total revenue:
Transaction revenue
55 % 46 %
Non-transaction revenue
45 % 54 %
U.S. revenue $ 609 $ 460 33%
International revenue $ 453 $ 364 24%
% of total revenue:
U.S. revenue 57 % 56 %
International revenue 43 % 44 %
Operating profit 1
$ 679 $ 477 42%
Operating margin % 64 % 58 %
1 2024 and 2023 include employee severance charges of $2 million and $1 million, respectively, and amortization of intangibles from acquisitions of $7 million and $2 million, respectively.
Revenue increased 29%, with a favorable impact from foreign exchange rates of less than 1 percentage point. Transaction revenue increased primarily due to growth in corporate bond ratings revenue and bank loan ratings revenue driven by increased issuance volumes due to higher refinancing activity. An increase in structured finance revenue driven by increased collateralized loan obligations issuance also contributed to transaction revenue growth. Non-transaction revenue increased due to an increase in surveillance revenue, higher Ratings Evaluation Service revenue driven by scenario testing and credit rating profile evaluations and an increase in new entity credit ratings revenue. Transaction and non-transaction revenue also benefited from improved contract terms across product categories.
Operating profit increased 42%. Excluding the impact of higher amortization of intangibles in 2024 of 1 percentage point, operating profit increased 43% due to revenue growth, partially offset by higher compensation costs driven by annual merit increases and additional headcount, increased incentives as result of financial performance, and an increase in travel and entertainment expenses. Foreign exchange rates had a favorable impact of 2 percentage points.
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Billed Issuance Volumes
We monitor billed issuance volumes regularly within Ratings. Billed issuance excludes items that do not impact transaction revenue, such as issuance from frequent issuer programs, unrated debt, and most international public finance to more effectively correlate issuance activity to movements in transaction revenue.
The following table provides billed issuance levels based on Ratings’ internal data feeds for the three months ended March 31:
(in billions) 2024 2023 % Change
Investment-grade billed issuance *
$ 456 $ 349 31%
High-yield billed issuance *
$ 120 $ 61 99%
Other billed issuance **
$ 417 $ 274 53%
Total billed issuance $ 993 $ 684 45%
* Includes Corporates, Financial Services and Infrastructure.
** Includes Bank Loans, Structured Finance and Government.
Billed issuance was up as favorable market conditions enticed issuers to capitalize on tightening spreads. Investment-grade, high-yield and bank loan billed issuance were up due to an increase in refinancing activity. Structured Finance billed issuance increases were driven by new CLO issuances.
For a further discussion of competitive and other risks inherent in our Ratings business, see Item 1A, Risk Factors in our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory matters see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.
Commodity Insights
Commodity Insights is a leading independent provider of information and benchmark prices for the commodity and energy markets. Commodity Insights provides essential price data, analytics, industry insights and software & services, enabling the commodity and energy markets to perform with greater transparency and efficiency.
Commodity Insights includes the following business lines:
• Energy & Resources Data & Insights — includes data, news, insights, and analytics for petroleum, gas, power & renewables, petrochemicals, metals & steel, agriculture, and other commodities;
• Price Assessments — includes price assessments and benchmarks, and forward curves;
• Upstream Data & Insights — includes exploration & production data and insights, software and analytics; and
• Advisory & Transactional Services — includes consulting services, conferences, events and global trading services.
Commodity Insights’ revenue is generated primarily through the following sources:
• Subscription revenue — primarily from subscriptions to our market data and market insights (price assessments, market reports and commentary and analytics) along with other information products and software term licenses;
• Sales usage-based royalties — primarily from licensing our proprietary market price data and price assessments to commodity exchanges; and
• Non-subscription revenue — conference sponsorship, consulting engagements, events, and perpetual software licenses.
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The following table provides revenue and segment operating profit information for the three months ended March 31:
(in millions) 2024 2023 % Change
Revenue $ 559 $ 508 10%
Subscription revenue $ 450 $ 409 10%
Sales usage-based royalties $ 26 $ 19 36%
Non-subscription revenue $ 83 $ 80 4%
% of total revenue:
Subscription revenue 81 % 81 %
Sales usage-based royalties 4 % 4 %
Non-subscription revenue 15 % 15 %
U.S. revenue $ 247 $ 232 6%
International revenue $ 312 $ 276 13%
% of total revenue:
U.S. revenue 44 % 46 %
International revenue 56 % 54 %
Operating profit 1
$ 226 $ 187 21%
Operating margin % 40 % 37 %
1 2024 includes IHS Markit merger costs of $5 million. 2023 includes IHS Markit merger costs of $13 million and employee severance costs of $2 million. 2024 and 2023 also include amortization of intangibles from acquisitions of $32 million and $33 million, respectively.
Revenue increased 10% primarily due to continued demand for market data and market insights products driven by expanded product offerings to our existing customers under enterprise use contracts. An increase in sales usage-based royalties from the licensing of our proprietary market data and price assessments to commodity exchanges mainly due to increased trading volumes in Petroleum, Metals and LNG and an increase in conference revenue driven by CERAweek in 2024. All four business lines contributed to revenue growth in the first quarter of 2024 with the Price Assessments, Energy & Resources Data & Insights and Advisory & Transactional Services businesses being the most significant drivers, followed by the Upstream Data & Insights business. Foreign exchange rates had a favorable impact of less than 1 percentage point.
Operating profit increased 21%. Excluding the impact of lower IHS Markit merger costs in 2024 of 6 percentage points, lower employee severance charges in 2024 of 1 percentage point and lower amortization of intangibles in 2024 of 1 percentage point, operating profit increased 13%. The increase was primarily due to revenue growth partially offset by higher compensation costs driven by annual merit increases and investment in strategic initiatives. Foreign exchange rates had a favorable impact of 1 percentage point.
For a further discussion of competitive and other risks inherent in our Commodity Insights business, see Item 1A, Risk Factors in our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory matters see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.
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Mobility
Mobility is a leading provider of solutions serving the full automotive value chain including vehicle manufacturers (Original Equipment Manufacturers or OEMs), automotive suppliers, mobility service providers, retailers, consumers, and finance and insurance companies.
Mobility includes the following business lines:
• Dealer — includes analytics to predict future buyers, targeted marketing, and vehicle history data to allow people to shop, buy, service and sell used cars;
• Manufacturing — includes insights, forecasts and advisory services spanning the entire automotive value chain, from product planning to marketing, sales and the aftermarket; and
• Financial — includes reports and data feeds to support lenders and insurance companies .
Mobility’s revenue is generated primarily through the following sources:
• Subscription revenue — Mobility’s core information products provide critical information and insights to all global OEMs, most of the world’s leading suppliers, and the majority of North American dealerships. Mobility operates across both the new and used car markets. Mobility provides data and insight on future vehicles sales and production, including detailed forecasts on technology and vehicle components; supplies car makers and dealers with market reporting products, predictive analytics and marketing automation software; and supports dealers with vehicle history reports, used car listings and service retention services. Mobility also sells a range of services to financial institutions, to support their marketing, insurance underwriting and claims management activities; and
• Non-subscription revenue — One-time transactional sales of data that are non-cyclical in nature – and that are usually tied to underlying business metrics such as OEM marketing spend or safety recall activity – as well as consulting and advisory services.
The following table provides revenue and segment operating profit information for the three months ended March 31:
(in millions) 2024 2023 % Change
Revenue $ 386 $ 358 8%
Subscription revenue $ 311 $ 281 11%
Non-subscription revenue $ 75 $ 77 (3)%
% of total revenue:
Subscription revenue 81 % 78 %
Non-subscription revenue 19 % 22 %
U.S. revenue $ 318 $ 294 8%
International revenue $ 68 $ 64 6%
% of total revenue:
U.S. revenue 82 % 82 %
International revenue 18 % 18 %
Operating profit 1
$ 70 $ 64 9%
Operating margin % 18 % 18 %
1 2024 includes IHS Markit merger costs of $1 million. 2023 includes IHS Markit merger costs of $1 million and acquisition-related costs of $1 million. 2024 and 2023 also include amortization of intangibles from acquisitions of $76 million and $74 million, respectively.
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Revenue increased 8% primarily due to growth within the Dealer and Financial businesses driven by continued new business growth within the Dealer business as well as the favorable impact of the acquisition of Market Scan in February of 2023, and strong underwriting volumes within the Financial business. These increases were partially offset by a decrease in non-subscription revenue in the Manufacturing business due to lower recall activity and marketing services. Foreign exchange rates had a favorable impact of less than 1 percentage point.
Operating profit increased 9%. Excluding the impact of higher amortization of intangibles in 2024 of 5 percentage points, partially offset by lower acquisition-related costs in 2024 of 1 percentage point, operating profit increased 5% driven by revenue growth, partially offset by higher compensation costs driven by annual merit increases, an increase in strategic investments and expenses associated with the acquisition of Market Scan. Foreign exchange rates had a favorable impact of 2 percentage points.
For a further discussion of competitive and other risks inherent in our Mobility business, see Item 1A, Risk Factors in our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory matters see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.
Indices
Indices is a global index provider maintaining a wide variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors. Indices’ mission is to provide transparent benchmarks to help with decision making, collaborate with the financial community to create innovative products, and provide investors with tools to monitor world markets.
Indices derives revenue from asset-linked fees when investors direct funds into its proprietary designed or owned indexes, sales usage-based royalties of its indices, as well as data subscription arrangements. Specifically, Indices generates revenue from the following sources:
• Investment vehicles — asset-linked fees such as ETFs and mutual funds, that are based on the S&P Dow Jones Indices’ benchmarks that generate revenue through fees based on assets and underlying funds;
• Exchange traded derivatives — generate sales usage-based royalties based on trading volumes of derivatives contracts listed on various exchanges;
• Index-related licensing fees — fixed or variable annual and per-issue asset-linked fees for over-the-counter derivatives and retail-structured products; and
• Data and customized index subscription fees — fees from supporting index fund management, portfolio analytics and research.
The following table provides revenue and segment operating profit information for the three months ended March 31:
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(in millions) 2024 2023 % Change
Revenue $ 387 $ 341 14%
Asset-linked fees $ 244 $ 210 16%
Subscription revenue $ 70 $ 66 6%
Sales usage-based royalties $ 73 $ 65 12%
% of total revenue:
Asset-linked fees 63 % 62 %
Subscription revenue 18 % 19 %
Sales usage-based royalties 19 % 19 %
U.S. revenue $ 317 $ 281 13%
International revenue $ 70 $ 60 18%
% of total revenue:
U.S. revenue 82 % 82 %
International revenue 18 % 18 %
Operating profit 1
$ 272 $ 238 14%
Less: net operating profit attributable to noncontrolling interests 70 61
Net operating profit $ 202 $ 177 14%
Operating margin % 70 % 70 %
Net operating margin % 52 % 52 %
1 2024 includes IHS Markit merger costs of $1 million and employee severance charges of $1 million. 2023 includes a gain on disposition of $4 million, employee severance charges of $1 million and IHS Markit merger costs of $1 million. 2024 and 2023 also include amortization of intangibles from acquisitions of $9 million.
Revenue at Indices increased 14% primarily due to an increase in asset linked fees revenue driven by higher levels of assets under management (“AUM”) for ETFs and mutual funds and higher exchange-traded derivative revenue driven by continued strength in trading volume. Ending AUM for ETFs increased 34% to $3.655 trillion compared to March 31, 2023 and average levels of AUM for ETFs increased 27% to $3.411 trillion compared to the three months ended March 31, 2023. Foreign exchange rates had an unfavorable impact of less than 1 percentage point.
Operating profit increased 14%. Excluding the impact of a gain on dispositions in 2023 of 1 percentage point, operating profit increased 15% due to revenue growth partially offset by an increase in strategic investments and higher compensation costs driven by annual merit increases. Foreign exchange rates had an unfavorable impact of less than 1 percentage point.
For a further discussion of competitive and other risks inherent in our Indices business, see Item 1A, Risk Factors in our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory matters see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.
LIQUIDITY AND CAPITAL RESOURCES
We continue to maintain a strong financial position. Our primary source of funds for operations is cash from our businesses. Cash on hand, cash flows from operations and availability under our existing credit facility are expected to be sufficient to meet any additional operating and recurring cash needs into the foreseeable future. We use our cash for a variety of needs, including but not limited to: ongoing investments in our businesses, strategic acquisitions, share repurchases, dividends, repayment of debt, capital expenditures and investment in our infrastructure.
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Cash Flow Overview
Cash, cash equivalents, and restricted cash were $1,544 million as of March 31, 2024, an increase of $253 million from December 31, 2023.
The following table provides cash flow information for the three months ended March 31:
(in millions) 2024 2023 % Change
Net cash provided by (used for):
Operating activities $ 948 $ 594 60%
Investing activities $ (20) $ (253) (92)%
Financing activities $ (657) $ (230) N/M
In the first three months of 2024, free cash flow increased $363 million to $851 million compared to $488 million in the first three months of 2023. The increase is primarily due to an increase in cash provided by operating activities as discussed below. Free cash flow is a non-GAAP financial measure and reflects our cash flow provided by operating activities less capital expenditures and distributions to noncontrolling interest holders. Capital expenditures include purchases of property and equipment and additions to technology projects. See “Reconciliation of Non-GAAP Financial Information” below for a reconciliation of cash flow provided by operating activities, the most directly comparable U.S. GAAP financial measure, to free cash flow.
Operating activities
Cash provided by operating activities increased $354 million to $948 million for the first three months of 2024. The increase is mainly due to higher operating results and proceeds received from the termination of interest rate swaps in 2024, partially offset by higher compensation payments in 2024.
Investing activities
Our cash outflows from investing activities are primarily for acquisitions and capital expenditures, while cash inflows are primarily proceeds from dispositions.
Cash used for investing activities decreased to $20 million for the first three months of 2024 compared to $253 million in the first three months of 2023, primarily due to cash used for the acquisitions of Market Scan Information Systems, Inc., ChartIQ and TruSight Solutions LLC in 2023. See Note 2 — Acquisitions and Divestitures to the consolidated financial statements of this Form 10-Q for further discussion.
Financing activities
Our cash outflows from financing activities consist primarily of share repurchases, dividends to shareholders and repayments of short-term and long-term debt, while cash inflows are primarily attributable to the borrowing of short-term and long-term debt and proceeds from the exercise of stock options.
Cash used for financing activities increased $427 million to $657 million for the first three months of 2024. The increase is primarily attributable to higher proceeds received from commercial paper borrowings in 2023.
During the three months ended March 31, 2024, we purchased a total of 1.0 million shares for $500 million of cash. During the three months ended March 31, 2023, we purchased a total of 1.1 million shares for $500 million of cash. See Note 8 — Equity to the consolidated financial statements of this Form 10-Q for further discussion.
Additional Financing
We have the ability to borrow a total of $2.0 billion through our commercial paper program, which is supported by our $2.0 billion five-year credit agreement (our “credit facility”) that will terminate on April 26, 2026. As of March 31, 2024, there was $250 million of commercial paper outstanding. As of December 31, 2023, we had no commercial paper outstanding.
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Commitment fees for the unutilized commitments under the credit facility and applicable margins for borrowings thereunder are linked to the Company achieving three environmental sustainability performance indicators related to emissions, tested annually. We currently pay a commitment fee of 8 basis points. The credit facility contains customary affirmative and negative covenants and customary events of default. The occurr ence of an event of default could result in an acceleration of the obligations under the credit facility.
T he only financial covenant required is that our indebtedness to cash flow ratio, as defined in our credit facility, was not greater than 4 to 1, and this covenant level has never been exceeded.
Dividends
On January 23, 2024, the Board of Directors approved a quarterly common stock dividend of $0.91 per share.
Supplemental Guarantor Financial Information
The senior notes described below were issued by S&P Global Inc. and are fully and unconditionally guaranteed by Standard & Poor's Financial Services LLC, a 100% owned subsidiary of the Company.
• On September 12, 2023, we issued $750 million of 5.25% senior notes due in 2033.
• On March 1, 2023, S&P Global Inc. issued new senior notes that have been registered with the SEC and guaranteed by Standard & Poor’s Financial Services LLC in exchange for the following series of unregistered senior notes of like principal amount and terms:
• $700 million of 4.75% Senior Notes due 2028 that were originally issued on March 2, 2022;
• $921 million of 4.25% Senior Notes due 2029 that were originally issued on March 2, 2022;
• $1,237 million of 2.45% Senior Notes due 2027 that were originally issued on March 18, 2022;
• $1,227 million of 2.70% Sustainability-Linked Senior Notes due 2029 that were originally issued on March 18, 2022;
• $1,492 million of 2.90% Senior Notes due 2032 that were originally issued on March 18, 2022;
• $974 million of 3.70% Senior Notes due 2052 that were originally issued on March 18, 2022; and
• $500 million of 3.90% Senior Notes due 2062 that were originally issued on March 18, 2022.
• On August 13, 2020, we issued $600 million of 1.25% senior notes due in 2030 and $700 million of 2.3% senior notes due in 2060.
• On November 26, 2019, we issued $500 million of 2.5% senior notes due in 2029 and $600 million of 3.25% senior notes due in 2049.
• On May 17, 2018, we issued $500 million of 4.5% senior notes due in 2048.
• On September 22, 2016, we issued $500 million of 2.95% senior notes due in 2027.
• On May 26, 2015, we issued $700 million of 4.0% senior notes due in 2025.
• On November 2, 2007 we issued $400 million of 6.55% Senior Notes due 2037.
The notes above are unsecured and unsubordinated and rank equally and ratably with all of our existing and future unsecured and unsubordinated debt. The guarantees are the subsidiary guarantor’s unsecured and unsubordinated debt and rank equally and ratably with all of the subsidiary guarantor’s existing and future unsecured and unsubordinated debt.
The guarantees of the subsidiary guarantor may be released and discharged upon (i) a sale or other disposition (including by way of consolidation or merger) of the subsidiary guarantor or the sale or disposition of all or substantially all the assets of the subsidiary guarantor (in each case other than to the Company or a person who, prior to such sale or other disposition, is an affiliate of the Company); (ii) upon defeasance or discharge of any applicable series of the notes, as described above; or (iii) at such time as the subsidiary guarantor ceases to guarantee indebtedness for borrowed money, other than a discharge through payment thereon, under any Credit Facility of the Company, other than any such Credit Facility of the Company the guarantee of which by the subsidiary guarantor will be released concurrently with the release of the subsidiary guarantor’s guarantees of the notes.
Other subsidiaries of the Company do not guarantee the registered debt securities of either S&P Global Inc. or Standard & Poor's Financial Services LLC (the “Obligor Group”) which are referred to as the “Non-Obligor Group”.
The following tables set forth the summarized financial information of the Obligor Group on a combined basis. This summarized financial information excludes the Non-Obligor Group. Intercompany balances and transactions between members of the Obligor Group have been eliminated. This information is not intended to present the financial position or results of operations of the Obligor Group in accordance with U.S. GAAP.
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Summarized results of operations for the three months ended March 31, 2024 are as follows:
(in millions) 2024
Revenue $ 959
Operating Profit 688
Net Income 1,598
Net income attributable to S&P Global Inc. 1,598
Summarized balance sheet information as of March 31, 2024 and December 31, 2023 is as follows:
(in millions) March 31, December 31,
2024 2023
Current assets (excluding intercompany from Non-Obligor Group) $ 1,353 $ 1,303
Non-current assets 982 1,005
Current liabilities (excluding intercompany to Non-Obligor Group) 1,350 1,184
Non-current liabilities 11,842 11,864
Intercompany payables to Non-Obligor Group 14,211 14,185
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
Free cash flow is a non-GAAP financial measure and reflects our cash flow provided by operating activities less capital expenditures and distributions to noncontrolling interest holders. Capital expenditures include purchases of property and equipment and additions to technology projects. Our cash flow provided by operating activities is the most directly comparable U.S. GAAP financial measure to free cash flow.
We believe the presentation of free cash flow allows our investors to evaluate the cash generated from our underlying operations in a manner similar to the method used by management. We use free cash flow to conduct and evaluate our business because we believe it typically presents a more conservative measure of cash flows since capital expenditures and distributions to noncontrolling interest holders are considered a necessary component of ongoing operations. Free cash flow is useful for management and investors because it allows management and investors to evaluate the cash available to us to prepay debt, make strategic acquisitions and investments and repurchase stock.
The presentation of free cash flow is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. Free cash flow, as we calculate it, may not be comparable to similarly titled measures employed by other companies. The following table presents a reconciliation of our cash flow provided by operating activities to free cash flow for the three months ended March 31:
(in millions) 2024 2023 % Change
Cash provided by operating activities $ 948 $ 594 60%
Capital expenditures (24) (28)
Distributions to noncontrolling interest holders (73) (78)
Free cash flow $ 851 $ 488 75%
(in millions) 2024 2023 % Change
Cash used for investing activities (20) (253) (92)%
Cash used for financing activities (657) (230) N/M
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CRITICAL ACCOUNTING ESTIMATES
Our accounting policies are described in Note 1 — Accounting Policies to the consolidated financial statements in our most recent Form 10-K. As discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , in our most recent Form 10-K, we consider an accounting estimate to be critical if it required assumptions to be made that were uncertain at the time the estimate was made and changes in the estimate or different estimates could have a material effect on our results of operations. These critical estimates include those related to revenue recognition, business combinations, allowance for doubtful accounts, valuation of long-lived assets, goodwill and other intangible assets, pension plans, incentive compensation and stock-based compensation, income taxes, contingencies and redeemable non-controlling interests. We base our estimates on historical experience, current developments and on various other assumptions that we believe to be reasonable under these circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that cannot readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates. Since the date of our most recent Form 10-K, there have been no material changes to our critical accounting estimates.
RECENTLY ISSUED OR ADOPTED ACCOUNTING STANDARDS
See Note 13 – Recently Issued or Adopted Accounting Standards to the consolidated financial statements of this Form 10-Q for further information.
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FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future events, trends, contingencies or results, appear at various places in this report and use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “strategy,” “target” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would.” For example, management may use forward-looking statements when addressing topics such as: the outcome of contingencies; future actions by regulators; changes in the Company’s business strategies and methods of generating revenue; the development and performance of the Company’s services and products; the expected impact of acquisitions and dispositions; the Company’s effective tax rates; and the Company’s cost structure, dividend policy, cash flows or liquidity.
Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements include, among other things:
• worldwide economic, financial, political, and regulatory conditions (including slower GDP growth or recession, instability in the banking sector and inflation), and factors that contribute to uncertainty and volatility, natural and man-made disasters, civil unrest, public health crises (e.g., pandemics), geopolitical uncertainty (including military conflict), and conditions that may result from legislative, regulatory, trade and policy changes;
• the volatility and health of debt, equity, commodities, energy and automotive markets, including credit quality and spreads, the level of liquidity and future debt issuances, demand for investment products that track indices and assessments and trading volumes of certain exchange traded derivatives;
• the demand and market for credit ratings in and across the sectors and geographies where the Company operates;
• the Company’s ability to maintain adequate physical, technical and administrative safeguards to protect the security of confidential information and data, and the potential for a system or network disruption that results in regulatory penalties and remedial costs or improper disclosure of confidential information or data;
• the outcome of litigation, government and regulatory proceedings, investigations and inquiries;
• concerns in the marketplace affecting the Company’s credibility or otherwise affecting market perceptions of the integrity or utility of independent credit ratings, benchmarks, indices and other services;
• our ability to attract, incentivize and retain key employees, especially in a competitive business environment;
• the Company’s exposure to potential criminal sanctions or civil penalties for noncompliance with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which it operates, including sanctions laws relating to countries such as Iran, Russia and Venezuela, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010, and local laws prohibiting corrupt payments to government officials, as well as import and export restrictions;
• the continuously evolving regulatory environment in Europe, the United States and elsewhere around the globe affecting each of our businesses and the products they offer, and our compliance therewith;
• the Company’s ability to make acquisitions and dispositions and successfully integrate the businesses we acquire;
• consolidation of the Company’s customers, suppliers or competitors;
• the introduction of competing products or technologies by other companies;
• our ability to develop new products or technologies, to integrate our products with new technologies (e.g., artificial intelligence), or to compete with new products or technologies offered by new or existing competitors;
• the effect of competitive products and pricing, including the level of success of new product developments and global expansion;
• the impact of customer cost-cutting pressures;
• a decline in the demand for our products and services by our customers and other market participants;
• the ability of the Company, and its third-party service providers, to maintain adequate physical and technological infrastructure;
• the Company’s ability to successfully recover from a disaster or other business continuity problem, such as an earthquake, hurricane, flood, civil unrest, protests, military conflict, terrorist attack, outbreak of pandemic or contagious diseases, security breach, cyber attack, data breach, power loss, telecommunications failure or other natural or man-made event;
• the level of merger and acquisition activity in the United States and abroad;
• the level of the Company’s future cash flows and capital investments;
• the impact on the Company’s revenue and net income caused by fluctuations in foreign currency exchange rates; and
• the impact of changes in applicable tax or accounting requirements on the Company.
The factors noted above are not exhaustive. The Company and its subsidiaries operate in a dynamic business environment in which new risks emerge frequently. Accordingly, the Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made, except as
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required by applicable law. Further information about the Company’s businesses, including information about factors that could materially affect its results of operations and financial condition, is contained in the Company’s filings with the SEC, including Item 1A, Risk Factors in our most recently filed Annual Report on Form 10-K.
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