Q4 2020 IHS Markit Ltd Earnings Call
[music], ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2028 chest Markit earnings conference call. At this time, all participant lines on on listen only mode. After the speakers presentation. There will be a question and answer session. That's the quick.
And on the session you need the press Star then one on your telephone. Please be advised of today's conference is being recorded if you acquire any further assistance. Please press Star then zero I would now like the hand, the copper sold the Tiro City, Eric Boyer head of Investor Relations. Please go ahead.
Good morning, and thank you for joining us from Digest Markit Q4, 2020 earnings Conference call earlier. This morning, we issued our Q4 earnings press release and post and supplemental materials to the I just Mark Investor Relations website for discussion on the quarter are based on non-GAAP measures are adjusted numbers, which exclude stock based compensation amortization of acquired intangibles and other items I just markets.
These non-GAAP results are useful and more to enhance understanding of the ongoing operating performance, but they are that's something of the two and should not be considered and isolation from or as a substitute for GAAP financial information as a reminder of this comes called the being recorded webcast. This copyrighted property of I'd just markets any rebroadcast of this information or and part without the prior written consent of by just more.
Rebutted This conference call, especially the discussion of our outlook may contain statements about expected future events that are forward looking and subject to risks and uncertainties factors that could cause actual results to differ materially from expectations can be found and I just markets Marlins best and see I don't know how you just mark let's say after our prepared remarks, Lance will go chairman and CEO John.
And gear, SVP, and Chief Financial Officer will be available and take your questions with that it's my pleasure of the call. The true turn the call the with the Lance.
That's true.
Sorry, and there we go the first use of the year.
[noise] everybody can go mute on the teams there. We go okay, sorry, I'll start fresh thank you, Eric and happy New year and thank you for joining us for the Jets markets Q4 earnings call.
We achieved the law from 2020 solid financial results of proven the resiliency of our business model greater levels of innovation across the company.
The employee satisfaction.
Finally, we announced the strategic merger with S&P global which will create the leading global information services provider.
Overall, we finished the year ahead of expectations and are reiterating our 2021 revenue and adjusted EBITDA guidance. We are updating our adjusted EPS by three cents due to our share repurchase restriction because of the pending merger.
Now onto the financial highlights for the quarter and the year when.
When we speak the Q4 and fiscal year results, there and normalized to exclude the impact of the aerospace and defense divestiture and the cancellation of Q2 event on growth rates for organic revenue and adjusted EPS.
Organic revenue growth was zero percent for the quarter and the year adjusted EBITDA margin expansion was 160 basis points in the quarter and 250 basis points for the year and adjusted EPS growth was 11% and the quarter and 13% for the year.
In terms of our core industry verticals I'll provide Q4 and full year 2020 highlights and our outlook for 2021.
First our financial services segment had organic revenue growth of 6% in Q4 and 5% for the full year.
In 2020 within the information, we continued to benefit from the innovation and demand for our pricing.
Reference data and valuations offerings, the successful launch of new regulatory solutions, notably, our EPS Fcr reporting platform and.
And we had strong growth from indices led by our fixed income and newly launched U.S.G. and the seats with.
Within solutions, we continue to invest in our leading products and integration capabilities launched the private debt investment lifecycle solutions and experienced robust growth from continued expansion of our managed corporate action solutions.
Within processing, we invested in our core PC and loans settlement platforms to help the industry facilitates the IBALT transition and regulatory requirements. We also successfully surface the industry through one of the most volatile periods and recent history.
In 2021, we expect organic growth within financial services in the 6% to 8% range.
Within information growth will be led by increasing customer demand and new products within our pricing reference data and valuation services businesses. We also expect continued strength for regulatory reporting and compliance offerings.
Within this business.
We will integrate our recent acquisition of cap and tech, which will help solidify our leading industry position.
Now within solutions, we expect high growth across our diversified offerings, and a rebound and managed services and implementation of projects and.
Particular, we're looking for a strong year from our Onboarding and compliance management tools expansion of our portfolio and data management solutions, and the new sectors and continued high growth and private market offerings.
We also expect normalized levels of the equity and debt issuance that will drive solid performance and our syndication and book building businesses.
Processing is expected to be slightly up year over year with mixed market conditions, and both loans and derivative markets.
Now, let's move on the transportation with organic revenue growth and the quarter of 2% and the decline of 2% for the year.
In 2020, the pandemic had a major impact on the automotive industry and we responded proactively to the crisis by working with our customers and continue to see the rebound and our business with recurring organic growth of 6% in Q4.
Sure and the pandemic. We also increased our focus on driving adoption of newer products, such as carfax for life, well accelerate and product innovation across our portfolios in the areas such as marketing audiences in.
The enhanced compliance simulation and mastermind now available for used cars.
Our maritime and trade business had a solid year, excluding the impact of the cancellation of our TPM conference.
And 2021, we expect organic growth within transportation and the 12% to 15% range, we expect our automotive business to revert towards longer term growth range, although I could almost uncertainty remains our dealer facing businesses have strong momentum going and 2021 and.
The strong retention rates, we have maintained through 2020 attests to the critical nature of our products.
Roddick supporting our OEM and supplier customers will recover more gradually as the industry adjusted to lower long term volumes coming out of the Kobin.
In addition to the underlying growth of the business, we expect to see a onetime pickup and organic growth from pricing being at normal levels for the full year, specifically within carfax and mastermind businesses.
And finally, finally maritime and trade will continue to see accelerating subscription growth driven by product innovation in our risk and compliance and commodities analytics businesses.
Moving on to resources, where organic decline was 11% of the quarter and negative 5% for the full year.
And 2020, our upstream business was impacted by the industry undergo and some of your capex reductions, leaving the cost pressure within our customer base and bankruptcies, particularly in North America on.
Downstream organic revenue growth through Brazilian when normalizing for events.
Growth within our gas power and renewables businesses were driven by customer expansion in the areas such as when batteries solar and hydrogen services.
This was somewhat offset by lower non recurring revenue within consulting.
We also completed the integration of the agribusiness.
And acquired true view, a small upstream analytics company.
And in 2021, we expect organic revenue results within resources to improve compared to 2020 and to be down year over year in the low single digits.
Our downstream businesses are expected to return to mid single digit organic growth driven by continued demand for our pricing chemical information the.
The release of the additional plastic circularity products and new database of estimated energy chain emissions and from the realization of synergies from the agribusiness integrations.
Within our upstream businesses, we expect customer capex spend to continue to be constrained for annual contract value, which will bottom in Q1.
And 2021, we excite are excited to launch our new.
On a predictive analytics tool that will marry our upstream and midstream global dataset with our proprietary insights and research.
And will drive additional forward growth.
Finally, CMS organic revenue growth was zero percent for the quarter and 1% normalize for the impact of BBB seat for the full year.
Product design proved its resilience with organic growth and the low single digits normalized for BPVC, well PMT and HCR performed as expected.
And 2021, and we expect organic revenue growth to be in the mid single digits.
Moving on to some of our recently announced strategic initiatives.
We entered into a 50 50 joint venture with shared control with CMV to combine our post trade services, including trade processing and risk mitigation mitigation opera operations.
The venture is going to incorporate our market share of business and see a nice optimization business through the combination will achieve increased operating efficiencies and new revenue opportunities by being able to better service clients with enhanced platforms and services for OTI see markets.
The cross interest rates FX equity and credit asset classes.
We expect the deal to close in the summer and to be neutral to our adjusted earnings in the near term.
And finally, we announced the strategic merger with S&P Global which joins two world class organizations with unique highly complementary assets. This combination creates a pro forma company with increased scale world class products and core markets and strong joint offerings in the high.
Growth adjacent Ses, including the S.G. and energy transition private assets and small and medium.
Enterprises.
Counterparty risk management supply chain trade and alternative data are.
Our unique and complementary assets will leverage cutting edge innovation and technology capability, including the digest market data Lake and S&P Global's can show to enhance the customer value proposition.
Right, yes markets shareholders employees and customers merging with S&P global what's the best strategic fit to create the most long term value.
Post the merger announcement.
Doug Peterson CEO of S&P Global announced his executive team for the pro forma company, which includes the fall and members of my executive team.
First Adam Kanzler will lead the combined S&P global market and Teligent business and the I, just mark and financial services segment.
Edwards of Ernie will lead the transportation segment.
Sherri granite will be the combined company's chief administrative officer, and General Counsel and Sallie more will lead strategic alliances and a lot of responsibility for corporate development and strategy.
Other members of my executive team and myself have also agreed to help with the integration for 12 to 18 months post the close.
I believe Doug is assembled the great executive team that will bring together members of both companies and.
The <unk>.
And the and give the leadership and sorry, Doug.
Doug is assembled the great executive team that will bring together members of both companies' leadership and will be a great first step and merging the two companies and now I'll turn the call over to Jonathan.
Great. Thank you Lance.
The strong finish to the year with results ahead of our expectations. Our Q4 financial performance included revenue of one Dot 107 billion with organic growth of zero percent and all and revenue of negative 1% GAAP.
GAAP net income of 151 billion and GAAP EPS of 38 cents the.
Adjusted EBITDA of 465 billion, an increase of 3% with margins of 42, Dod zero percent and.
The net adjusted EPS was 72 cents a decrease of seven cents or 11%. We were pleased with the finish of the year and the solid revenue and profit performance we delivered throughout 2020.
Relative to revenue.
Our Q4 organic revenue growth of zero percent included recurring organic growth of 2% and non recurring organic growth of negative 11%.
Moving to segment performance financial services revenue growth was 7% it could and 6% organic and 1% FX recurring organic was 6% while nonrecurring organic growth was 9%.
Our information business organic was 4% led by strength and our pricing indices and equities information products.
Process is it sort of processing organic was 1% as we saw a return to growth and loan markets offset by a slight decline and derivatives processing.
Solutions organic was 10% due primarily to strong performance and our corporate actions private markets and digital businesses.
Transportation had revenue decline of negative, 4% and good and 2% organic flat FX and divestiture of negative 6% organic growth was comprised of 6% of occurring and negative 9% nonrecurring.
Resources revenue declined, 11%, including negative, 11% organic and flat FX recurring organic was negative 8% and non recurring organic was negative 32%.
Our Q4, ACB decreased 22 million and our full year ACB decreased 74 billion down 9% versus prior year, we and ended the year with ATP of 719 billion, which now includes the agri of approximately 30 billion.
CMS revenue declined 2%, including zero percent organic organic our benchmarking business divestiture impact of negative, 1% and the flat FX recurring organic was 2% and nonrecurring organic growth was negative 13%.
Turning now the profits and margins adjusted EBITDA was 465 million and up 3%. Our adjusted EBITDA margin was 42 does zero percent up 160 basis points.
Moving the segment profitability financial services adjusted EBITDA margin was 48 up 7% up 260 basis points.
Transportation is March and was 45 dot 3% of 350 basis points.
Resources margin was 40 dot, 2% down 200 basis points and.
Yeah. This margin was $24, 7% up 20 basis points.
GAAP net income was 151 million or 38 cents per share. Our adjusted EPS was 72 cents per diluted share a seven cents or 11% improvement over the prior year.
Our full year adjusted tax rate was 18%.
Q4 of free cash flow was 275 billion, our full year free cash flow was 940 million and represented a conversion rate of 51%.
As a reminder, our full year conversion rate was impacted by several non recurring items.
Turning to the balance sheet, our year end debt balance was four dot 9 billion, which represented a gross leverage ratio of approximately two thoughts seven times on the bank covenant basis.
Have you closed the quarter with 126 billion of cash.
The year end, our Undrawn revolver balance was approximately one dot $2 billion.
Our Q4 fully diluted weighted average share count was $400 5 billion chairs and our full year was 401 thought 5 million shares.
We completed the 200 million MSR and November of Twentytwenty on.
Our full year share repurchases were approximately one dot 1 billion.
Or 14 Das 6 billion shares.
At an average price of $73.71.
The merger agreement with S&P global restricts our ability to reap the purchase our shares and therefore, our share repurchase program is currently suspended other.
And then the put the repurchase of shares associated with tax withholding requirements for share based compensation.
We paid a dividend of 67 billion and Q4, Fred F.Y. Twentytwenty total of 270 billion of dividends.
The merger agreement allows for the continued paying of a regular quarterly cash dividend and the future and.
And we are recommending to our board for their approval and our January 2021, beating the increase of quarterly dividend from 17 cents per share to 20 cents per share effective for the Q1 Twentytwenty one dividend payment.
Moving to full year financial results, let me speak the for your results the our normalized to exclude the impact of the aerospace and defense divestiture.
And the cancellation of Q2 events on the growth rates for organic revenue adjusted EBITDA and adjusted EPS.
Total full year revenue was $4 to 8 billion, which represented a decline of negative 3%.
Zero percent organic negative, 2% acquisitive and flat FX turning.
Turning now to reported profits adjusted EBITDA was $1.83 7 billion up 8% versus prior year.
Adjusted EBITDA margin was 42 dot, 8% with reported margin expansion of 250 basis points.
GAAP net income was 871 billion with GAAP EPS of $2.17.
And adjusted EPS was $2.84, a 13% increase versus prior year.
In terms of guidance, we are reiterating our 2020, one revenue and adjusted EBITDA guidance and updating our debt at our adjusted EPS for a three cents impact due to our inability to repurchase shares as a result of the pending merger.
Our Twentytwenty one guidance is as follows revenue of four dot 535 to four dot Sixthree 5 billion.
With organic revenue growth of six 8%, including recurring organic growth of 6% to 7%.
Adjusted EBITDA of 2 billion the two dot O 3 billion with adjusted EBITDA margin expansion of 100 basis points.
And the adjusted EPS of three Dot one one the free dot one six per share.
Finally, we do expect cash conversion and the mid Sixtys as we lap our Twentytwenty, one time cash impacts and with that I will turn the call back over to Lance.
Okay. Thanks, Jonathan we managed through the many challenges of 2020, very well and our position tab of strong 2021.
We're excited about the merger with S&P global and believe it will create long term value for shareholders, new insights and capabilities for customers and greater opportunities for employees.
Finally, I want to thank our shareholders for their continued support.
And our colleagues around the world for their dedication and focus through what was a very challenging 2020.
Operator, we're ready to open the lines for questions.
Thank you.
As a reminder to ask the question you and need to press Star then one on your telephone to lift draw. Your question. Please press the pound key.
Our first question comes from the line of Kevin Mcveigh with Credit Suisse. Your line is now open.
Great. Thanks, so much hey, and pardon.
Pardon the congratulations.
The answer Jonathan you know what do you think about kind of the.
The.
The joint venture you announce it see me seems really interesting is there more opportunity you know just given the unique datasets to cultivate be on see me into other opportunities and just thinking.
I think it underscores the strategic rationale for the S&P deal is there more opportunity you know from a client perspective any initial reactions around the units acquisition and then just additional opportunities that you're seeing similar to kind of what you would see on me.
Okay, No one of the I start and then I'll pass it the Adam.
Did the transaction for us but.
This was something that when we originally thought about selling.
Selling markets are we actually thought the the there.
There would be a.
The impetus of buyers that wanted to find ways. The consolidated the assets, but I think given the the assets are primarily held by strategics and consortia and a variety of.
The industry owned relationships. It I think it it proved a of total order for any private equity firm to create and that consolidation and so.
You know post that.
And we looked at the strategic assets across the industry and of course between ourselves and see a me we have the majority of the O.P.C.
Processing assets and so therefore on the.
The synergies for both of both on the cost side, but also you know in terms of the servicing the customer and creating incremental margin for investment.
Stood out really strong and we think that the consolidation of processing assets across the industry, it's something that the the CMO the I just market transaction.
As the JV is the first step, but wonder I pass it over to out of who can give you some incremental color Adam.
Sure. Thanks Lance.
The will be much more to come on over the next few months as we bring the two businesses together, but at the sort of as a high level answer to your question you have a very common set of customers. The common set of workflows and a lot of the same data enriching the the workflows that the customers use on multiple platforms across of the C N the assets and ours.
So this this opportunity to bring it together you'll have a much more complete dataset across all of those workloads and certainly within the derivatives markets.
I'm, giving you the opportunity to build additional analytical tools work flow tools on and things that allow our customer set to manage their risk and processes more efficiently I think the the the customer set has found for many years that maintain these datasets and these workflows and multiple places is highly inefficient it's expensive.
And and the causes breaks and some circumstances of this is the there's an opportunity to improve the risk management profile for our customers that bring efficiency bring their costs down and bring a better set of tools, so and they will certainly be a.
Innovation, and new applications and tools again, those datasets and and bringing those workflows together over time.
Thanks, Adam on next question thanks much.
Thank you and next question comes on the line of Manav Patnaik with Barclays. Your line is now open.
Hey, good morning, guys I, just want and focus on the resources business. So if I got the ACB right. If you exclude the agri business is down and 9% and that decelerated again, the take what in the door. So just curious why of confident that things on the bottom in Q1 the.
And Jonathan do you want to start and then pass that the Brian or vice versa.
Sure I'll go to start the and the pass on the Brian Crotty, Yeah, Yeah Meyer, so we but the the resource is really it's playing out as we expected back and in Q2 of this year. When we saw the impact coming in on upstream and we're seeing the two tier world. Obviously, we're up ship business challenge by the external markets.
And the our downstream business performing pretty much in line on the on the subscription side, the where the where the HCV and as we kind of we need to lap. The full 12 months from the restructuring of the marketplace, which took place and kind of that the Q2.
As we don't as we've discussed on previous calls the kind of lead into this pretty heavily worked closely with our with our customers and the industry customers around this but it does take a full 12 months. So that's we look forward to be on Q4 performed as we expected. We expect further decline of Q1 of the Q1 from ACB being the bottoms out and the build and and.
Due to the pass over to Brian from these specific color of the DC.
[noise], you know, Brian and I don't think we get I don't think we can hear the bride I think your.
Okay sorry.
Okay, Yeah, I said, Jonathan you're you know you're exactly right when I look at the ACB is its really upstream that's true.
All of the decline in HCV.
When when you look out at the next the next year, you can see us and.
You're going to need the on the other work right.
Yes, the other call. Thanks.
Thank you.
Can you hear me sorry, yes, okay. Yeah. When you when you look at the the Cvs on the rest of the of the of the group you can see the dumb improving steadily and even upstream we hit bottom of Q1, and then we steadily improve and get positive. They see the Q2 Q2 Q3 Q.
Q4.
Great. Thanks, Thanks, Brian Jones and my next question.
Our next question comes from the line of Gary Bisbee with Bank of America. Your line of sight opens.
Guys. Good morning, maybe I'll stick with resources and one of the key questions I get from people around the S&P.
Action is just.
Thinking through the potential synergies and and.
The resources, it's not so clear to me and I think the other is exactly where those will be since you.
The couple of years ago, which of the similar business model from a lot of classic.
Help us understand.
What synergies, adding opus to your portfolio has.
Deliver for the resources businesses and help innovations and help create new data sets.
Have there been some real clear.
It fits the business and especially the top line from adding that the your portfolio over the last couple of years. Thank you.
Maybe I can start Brian and then I'll hand, it to you. So so first off you know if you look at our business you know.
A.
The 50% of upstream cash.
Insulting data analytics and of course that that business.
Is the is different than the S&P global business and so there aren't the.
Numerous product synergies, but there's definitely scale with customers and new customer opportunities for.
For opportunity as.
As you shift down through chemicals, agriculture, Opus all the pricing.
Chluski coal indices as you're getting to the pricing and the indices are of course on all of those services.
Where we have synergies of.
Between them.
Have the same opportunity set.
The plots of teams. So we're quite excited about the mid and downstream synergies around the pricing and new services X, where there's overlap and we'll have to address that within the within the within the closing of the merger, but that's the small piece of the revenue of Brian do you want to add to that.
Yeah, you know I think for us it gives us a whole new customer base as well you know when you look at wholesalers.
Convenience store and marketers, even even kind of treats us more into traders. So I think that was a good thing for the OPIS acquisition well. So you know from pricing services tend to have to pick your renewal rate and then the of the strong news component gives Ah gives us the lower end product the upsell higher and services. So I think strategically it was <unk>.
It was a very good acquisition.
Okay. Thanks, Thanks, Brian.
Next question.
Our next question comes from the line of Jeff Mueller with Baird. Your line of sight open.
Yes. Thank you on the transportation outlook is it the typical annual pricing increase and carfax and Hmm or is there some catch up since I don't think you got your typical increase this year and what's the timing of that and then any comments on kind of forward visibility on the on road.
Curry within transportation and I know that like the timing of recall campaigns can impact that but just as we think about getting back to the growth that you're projecting thanks.
Okay, and where do you want to take that one.
Yes and to pick it up thank you just on the question.
So on the price inside the there will be plus and increases in 2021, the and we will proceed cats for the that's the remember the across North America, which did in the middle of the pandemic and so we are still reflected on the exactly the lifetime to introduce the price increase and so that currently is on the but it would be a normal price.
Greece and no particular catch up so we all the refocus on the health of on customers and be the buttons.
In terms of the forward visibility as you mentioned, Jeff a lot of our transactional revenues all types of things like marketing spend by the industry as well as I said, it's in the recall business now with C. and some of those and nothing has come back and were high in Q4 of the in Q, we the west in a lot of good.
The marketing activity coming through in Q1. So we are confident of the on the way back and but as long as mentioned in the introductory comments and it will take a bit longer for them to give us the normalized trends that we expect that and the second half of the next year.
Thank you.
Thanks, Edward next question.
Our next question comes from the line of Alex Kramm with you BS and your line is now open.
Hey, just quick one on the on the guidance I know the largely unchanged, but the you know the margin upside pretty consistent with prior years any anything support out there on the segment basis or on the on a seasonal basis, we should be aware off as we think about 2021 or on a pretty consistent with what we've seen in the past.
Okay sure Alex the.
Yeah, well do Alice and thanks. Thanks for the question in terms of the hundred basis points of margin performance again, and that's really just building as you know and it.
Last fiscal year a.
Very useful fiscal year for us and many many ways, but we did make some structural changes in our and our and our costs and that's why you're seeing a flow through there.
Plus the normal growth rates that we're seeing on the six 8% total and helps drive that that overall margin I think you will see it, particularly as you flow through and I would look at and that's why 21 as a relatively normal year. The comparison of the Twentys, where it gets a bit of it Harry of times from quarter to quarter, So Q to Q2 and transportation free.
Example, was a particularly challenging time for us the I think you'll see some odd seasonality on year on year comparisons there, but I would think of the F. why 21 really at a pretty normal year for us.
Makes sense. Thanks. Thanks. Thanks, Thanks, Jonathan on next question.
Our next question comes from the line of Andrew Steinerman with JP Morgan. Your line is now open.
Hi, John on could you just on I know you just said on transport the the the main quite and we'll have this kind of just proportional of pop on to make the 12% to 15% of organic revenue growth for the year can you just be a little more directionally and kind of in the <unk> and the kind of current quarter you know how that's trending on no.
And got the May quarter will be on kind of the disproportional year over year comparison.
Sure and it will do Andrew and it out on a kind of call you take a look at the supplemental of you kind of see see what happened at the Fytwenty and that will kind of let take and see what's going to happen and and that fly 21, the but just just the go back of what happened last year and as a reminder, when the when cobot heads, we became significant price concessions voluntarily, particularly interest.
Rotation and Q2, a little bit I would also add Android and Q3 is the lead the little bit into into Q3 as we look forward now right. Now is the first the industry overall has seen the strong recovery and the second half of Twentytwenty I. In fact, I just tried to my son, turning Stacy that type of buying of a used car is very high.
The five used car right now and speaks of the strength of the industry. The light did use carfax, especially the plan of great card recommended to you Andrew but but if you look for the industry has recovered there. So as we see the performance and EPS why 20, why we're so we're seeing a pretty healthy industry, particularly at the dealership dealership level as Edward mentioned.
And we do work closely and support the health of our dealer customers. So we are being careful as to how we how do we look at value of cap captured the price increase and the timing around that the right now we're seeing on our customer is doing pretty well and that's reflected and kind of our expectations, but Edwards anything else you want to comment on.
No I think you covered the key points, Jonathan but there is the seasonality effects like if you look at 2020, we took a significant head cost in Q2 on revenues.
Even as we work and on our cost base and in Q3 revenue started coming back and when costs, one, though and that it creates some seasonality in the margin accretion and youre going to see some of that down from 2021 and homes and otherwise you comfortable the coupons Jonathan and good. Thank.
Thank you appreciate it.
Thanks next question.
Our next question comes from the line of Ashish Sabadra with Deutsche Bank. Your line is now open.
Hi, Thanks for taking my question and congrats on the quarter.
So my question is on the S and the strategic rationale and the revenue synergies and gains have had chance to spend some more time.
Can you just talk about the ability to get to the new product and improve commercialization of inflows eight on the come by combining it with the Aesynt piece can show and then at the follow on of combining influence the elite that the center piece of market intelligence platform.
And if you can talk about just the new product of love and as with the improved distribution of day does that how that can help going forward. Thanks.
Sure Okay, well, we'll maybe focus his question around market intelligence and financial services because that is the the area, where we have substantive you know product related synergies and the <unk> really.
And I'll pass the data them to add on to the this as well, but if we start with the data Lake and can show.
The data Lake is where I just markets spent three years organizing all of its alternative datasets into a column and library with ease of access for both our internal use as well as now to commercialize the customers. So.
So we've done the heavy lifting on to organize those datasets.
S&P Global acquired the 10 show assets, which are advanced analytics data science experts, which have scale and size that.
Our I'm very excited to begin a to b be able to begin working with the information alternative data sets that we have on.
To help provide you know new forms of decision making schools the.
The city decision, making signals as well as trading signals alerts.
You know and and just deeper decision, making tools and ways that the without the organized the.
Datasets tied to and advanced analytics platform like can show you don't have the of the same opportunity to do so so that's the first thing. The second thing is the market intelligence is the platform that has you.
You know a hundreds of thousands of users that are active on the platform and that gives us an opportunity for our direct distribution as well as the build up of Ah tools and services to the offered on the platform and I'll, let Adam or add on to that because the.
Several other ways the two financial services groups that Adam will lead a hub revenue synergies mapped out and it.
Cited about going forward Adam.
Yeah. Thanks Lance.
A lot of this was discussed by both Doug and last at the time of the merger and the thing a lot of those themes remain true and as Weve continued to explore and get ready for integration a lot of those original themes of played out and that's really looking at the scale of data and insights available to the combined business and the ability to put.
The the massive datasets and content available through the market intelligence platform into some of the technology solutions, we offer to our customers in there.
And compliance risk management workflows.
It should be a real game change and the ability to make decisions and to give them the very efficient platform for consuming those wide ranging datasets.
On the they look for look at the corporate customer group automotive oil and gas engineering companies well of the opportunity to give the both financial market and risk capability of the need to run their business, but also the data tools capabilities and the let them thrive and their core markets the industry specific expertise.
Market insight and including things like asset valuations, which the we have and able to get before you know because of the the really the that the expertise that we're now bringing to that core customer said that that's the user of the market intelligence products.
And that those those are sort of the key areas. It's really the the combination of the cross asset cross industry dataset with work flow solutions already touching many of those and customers.
Thanks, Adam on next question.
Thank you. Our next question will come from the line of Shlomo Rosenbaum with Stifel. Your line is now open.
Hi, Thank you very much for taking the questions Hey, let's just kind of to two questions. One of the sneak in first is just the data Lake went all fully wise I think in the summer or just and ask you to comment a little about what the uptick from customers words and it really validate the fact that you will be able to improve.
The improved the selling motion over there that seems to the key.
Kind of a points debt, you're hoping to capitalize on with the can show being able to use a lot of the stuff its and the data Lake and then just.
The for John its and what are you assuming for events and the year are you assuming that we're not going to go back to anyone of events and what would be events revenue the and kind of a normalized year. Thank you.
Okay, Let me start with that yes, so the on the data Lake we launched the commercialization.
You know and mean.
You know the first half of 'em of.
The sub 2020 and we.
We started off with several of proof of concepts with bigger active.
And users hedge fund banks that have Ah you know.
[noise], you know big decision, making strategies and around the use of alternative the data and.
So far.
We started just commercialized or are those relationships and turn them into longer term of contracts on contracts are reasonably sized which term and give the cash.
Customers the ability to be able to access a part or all of the library off towards the defined the decision making purposes. So you know and and sometimes the ability to create some form of redistribution deposits into their own the products and services that would you cash.
Cannibalize, our our data sets. So so we're building out two things one on the pipeline of customers to we've now started to convert the customers I don't want to stay we converted 100 customers, but we've definitely Ah you know have converted the 10 customers and the year.
So that's the starting to the picked up a we have a.
The great pipeline and the have numerous ways of creating.
[noise] [noise], the commercial or the commercial I'm sorry.
Yeah.
Some of these types of and all of that you must be typing. Your note [laughter] sales put that I'm sorry.
On the day.
[laughter] Oh, okay. So so then the on the next bit that I'd like to say is that.
GAAP.
So for us the day.
Gives us speed the development of new products, but also this ability to attach our content with our customers content and give the new unique ways of leveraging and utilize and the data sets. So we see a bunch of efficiencies and a bunch of commercial activities of which we've started.
To get on a positive trend going on those are already.
On the second part of the questions on the events I'll pass it over to John.
Great. Thanks, Lance so on the advance and as we know we we we offer events throughout the year, but Q2 is our heavy heavy events, but from a revenue perspective liquid we have our three large flagship and susser week, the world Petrochemical conference and the TBM conference and on Maritime and Maritime segment.
We're not planning on holding those physical events this year or so so when we look at our forecast revenue forecast for the year. We we've taken that we've we've anticipated though no revenue from physical events. We are however, holding the virtual events and those three those three events. The revenue from those is significantly lower some gross.
So so don't expect to see a significant pop there, but I think it's important way of far teams continue to lead the industry and lead and with our customers and help connect the industry. During the during these type of so so again the you won't see the revenue with significant revenue from the best for Us and and that's why 21, and but we will be holding the events virtually.
Can I add the does the and as we one of the things I'd say Shlomo that I was quite impressed with is with the with virtual events and we do have experience running a share or weak India last year, which we did the with positive revenue and so.
We're applying that to the virtual model to the bigger share a week event for 2021, and I have to say that the customer take up in terms of participating on in the events.
As well and sponsoring and participating or you know from a commercial and perspective has been has been reasonable and you know so I've been quite impressed with the teams work I know they've been bulb me with some of the discussions and building some of the panels up et cetera, but they're doing a great job.
And I know they won't be able to produce the revenue they get physically but the they share our building.
Building some momentum to add some revenue positive revenue off of virtual events as well and Oh, let's see how that plays out in the quarter going into next quarter, but they'll definitely have the number.
Thanks next question.
Our next question comes from the line of hands on Mazare with Jefferies. Your line is now open.
Happy New year. My question is just on on the S&P transaction expected to close second half of you know any any next steps or milestones any delays you expect from an antitrust perspective, you know on the other divestitures you have to do.
How long do you expect the HSR processed or day I'm sort of any any color around that would be great. Lance. Thank you so much.
Okay.
Well first off of our expectation is that it will close and the second half and we don't see anything specifically on that's going to create any you know substantives hurdles. So all of the hurdles that we knew going into it in terms of the business overlap of within on.
And our plots and Opus is businesses are there and the teams are working to address those and so you know my view is there shouldn't be any significant roadblocks or hurdles, we'd expect the close and the second half and expect the teams to work with the.
Regulatory bodies to determine you know the precise nature of the overlap of any assets, which is a substantial is is Ah ah insignificant in terms of size the across the transaction I don't know Jonathan anything else you on AD or is that.
No I think you have it right last the right that we've already started engaging with the with the government regulators. So very positive engagement, there and I mean, as Lance said I'll just reiterate what he said we see no surprises. This given the size of this transaction that of course requires appropriate the review by government agencies, but there's nothing I think the we see.
The nor have we heard the feedback of what would cause us any concern and it's the.
The nature of the size of it that the good will be a second half the completion.
Thank you so much.
Excellent next question.
Our next question comes from the line of George Tong with Goldman Sachs and then on the South open.
Hi, Thanks, good morning diving a bit deeper in the transportation and you expect organic growth to be and the 12% to 15% range and 2021 and you mentioned dealers are performing relatively well can you elaborate a little bit more on the health of dealers and Oems and what meets the change of the customer level for you. The hit your targets also but can you discuss.
Whether you've seen any negative impact from the full reverse on though of earlier pricing concessions and transportation.
Edwards.
Yes, Hi, George Thanks for the question. So in terms of what the Miss you did it on well costs. The Doc loans, it's a continuation of current trends drive, which means the market that in the U.S. is probably down roughly 10% year on year. It means continuing challenges with the inventories of it means.
Oh and lot of significant volumes of both used on the new costs and most of the those were made and open even if they were on kind of local business restrictions. So we have adjusted in all of those risks and and we can execute on all kind of on well costs within the current markets environments and.
In terms of what we're seeing and in the in the D. the markets and signposts about the health of I would say couple of things like.
In the end many dealers had a very strong 2020, because even the volumes were down and because the hats and lower costs and because inventories were very low the margins on loans were high and the does remain profitable routes twin twin day since most of the lives on pretty good shape coming in into two.
And 21, the and expect the remaining pretty good shape of the expect prices remain pretty solid growth throughout the day, where they do see the uncertainty right and that's on Sevenci means there is risk and it means the not bringing in one of the cost of back into the dealerships the and it means that there may be some ups and downs throughout the year the bond off of that is the.
On the inbound questions today and that is the environment in which we can execute on <unk>.
George that was the first question can you just remind me on the second question was.
Yes, if there's been any negative impact from the full reversal now of pricing concessions.
Yes, the great question. Thanks for asking it the I think we mentioned on the Q3 cool the as we were moving the pricing concessions, we would be tracking the retention rates and very very closely and again.
All of the grapes and uses a it's remained very very strong rights on cancellation rates have remained low even as we took out of the option to suspend the service and were very happy about of the if you remember back in Q2, when the crisis truck. We said the most important thing for our business is to make sure that when we come out.
Of the crisis, we come out with customer relationships at all even stronger than the work coming into into the crisis. That's why we made hard decisions. That's why we took the shorts and kind of revenue hits them and because we believe that's what we have to do together with the pandemic and I think we're coming out of it in the right place with.
The strong customer relationships, the critical products and with high retention rates.
Thank you Edward next question.
Our next question comes from the line of Jeff Silber with BMO. Your line is now open.
Thank you so much.
And a few investors ask me. This question. So I'll just ask you on can you talk of a little bit about from morale and internal turnover at your company since the merger announcement, especially in light of last month's announcement of the new divisional structure for the combined company. Thanks.
Okay. So no. It's a good question. So you know there's not a lot of.
Product sales of management overlaps in terms of the.
You know the of the products and services that both companies.
The offer and we have a lot of opportunity for revenue synergies, where we're going after applying new people to work on the new opportunity sets. So therefore, the the synergies of.
Come across all of the shared services and of course in a merger like this we put in you know the retention in order to.
Keep the the team so well motivated intact with performance of successful performance related retention that ties into us executing the deal really well and that goes across the executives include myself that will stay on the post closing.
Make sure the of the deals of success and you know other people across the sort of shared services that may not be having the long term roles, but the short term rolls are very important and therefore, we structure and compensation to help make that happen I have to say as we went into the end of the year.
The post the merger announcement, we really had the and and the pandemic, we've really been operating that the absolute highest.
Satisfaction levels and the from that we the Brad it's been a real pleasure.
Motivating people through the pandemic getting the teams are working on a you know a running the company and a tough time doing the merger and you know post the merger we've announced the our hub platform. The JV with sea of me a cap attack acquisition and you know there's no stopping and this.
This is the company that are going into a close of of merger and the second half we're still doing the things that you.
You know I just market has been a you know a design and designed to do and does very well and so no I'm I'm very pleased with Oh everybody's responded the morale and how we're treating employees that may be a.
Without the long term job of.
Post the close.
And then just close the dollar of.
Oh, I'm, sorry, I just the dollar on one of the synergy of the retention of the Retentions sorry.
I think it's called the big on Jonathan do you want to.
Talk whatever it's been disclosed there.
True then that was like the Dover talked that as the the dollar amount of the retention on PV escalate the our total retention pools across the two companies sure.
Sure. So we used the we created a 16 billion dollar retention pool, which we had the announced at the time of the merger.
And that's a cash pool the used to retain that.
Jobs, which could potentially be at risk and I'll I'll emphasize potentially as you can imagine you do version of like this a lot of excitement at the individual level couple of wearable what's it need from me personally and that retention pulled or the allows as Lance said at basi buys time for people, who the kind of see what their future looks like kind of go forward and kind of de risked the delivery of of this year.
But the 6 million dollar pool, which weve of the should we began to rollout shortly after announcing the the merger.
Okay. Appreciate the color. Thanks, so much.
Thank you.
Next question.
Our next question comes from the line of Andrew net this with William Blair. Your line is now open.
Great. Thank you.
I was hoping you could speak a little bit more to the hub announcement, you made I last week certainly on a handful of major players coming together that initiative and so I'm wondering if you could speak to the specific set of of middle and back office solutions, the company's targeting on that.
I think there is already a handful of skilled players in that space on and make sure I understand where and the asset manager operations stack hub plant and play and and also how hub will be differentiated versus some of the income and that space. Thank you.
Right, Okay, well I will hop initiate sort of.
Two very large customers that were.
Looking at opportunities to create efficiencies of with respect to technology on going forward and those were announced in the press release of Pimco and a man group and you know Dab of very close relation given the current co CEO what was formerly the man group CEO, So close relation.
The ship and of both.
Both the Ceos are looking at the four words.
Use of two new technologies to create efficiencies and the total cost of ownership of the solutions that there needed and so hubs on initial a job is to build the foundation of client transactions and reference data you know.
Storage and.
For the management of the activities of the middle and back office of and asset manager. So therefore, reducing the inefficiencies that half and from using multiple different systems and.
The early early stage.
The Microsoft as a partner is of course, a of choice of the observed with respect to the build and advisory on the build on Mckenzie of course, great partner, whose work who are working with the asset managers, who are trying to make their forward.
Technology decisions and of State Street, a great partner because they managed the source back office for Ah Pimco and ourselves who have a lot of experience and you know data management and the build out of financial services technology. So it's really a on a.
A joint venture of senses, where we have many many owners who are going to own a a build of a foundation technology that will will will help bring asset management total cost of ownership down across the middle and back office.
Functional needs to better manage those data sets and it will be a a platform that can that will will connect the all the industry administrators over time various software assets on a mass of Pms risk.
Management risk attribution pricing or a real integrated hub and the name.
That looks to reduce.
The costs of the management of data.
With respect to and you know a big asset manager and the two asset managers that you know are announced and the transaction you know of course, they have a lot of knowledge and IP themselves and we will be.
Putting that expertise to work as we look at the forward of plans the hub.
I don't know Adam if you want to adding the else or we can pause there and the.
Okay.
So we'll go through the next question. Thank you.
Thank you on next question come from the line of Toni Kaplan with Morgan Stanley. Your line is now open.
Thank you and he is cheese on high growth area and it will be an important part of your future with S&P and from S&P. We know that there, yes, GE revenue is about $16 million annualized growing at about 40% on.
How big is your EPS GE revenue and how fast is it growing and are there any specific products or areas that you can talk about that you're focused on for this year and particular thanks.
Right No. That's a good question, the Tony and our our revenues on as Doug and I mentioned, and the combination or slightly larger, but they're a little bit different than what you'd call. The pure bred Ah, yes, GE revenues, because we don't have the SG rating products for say, we have a whole bunch of products.
Really play into the E of yes, Gi and will be naturally combined and will create synergies with the S&P products. So for example, we have a carbon registry.
Which is.
Where where where we where we have voluntary and missions receipts on.
That are used for carbon offsets. We also built carbon auction platforms, Costa Rica, California, Quebec on to name a few and those auction platforms offer pricing of carbon locally and the state or region or country are increasingly important and we'll continue to build those out.
And then within our energy and transportation businesses of course, we have a lot of geo location data around the old the energy related assets, which are important to the climate discussions going forward, we have a lot of Ah Ah data with respect to.
Some of the land use around agriculture, we have.
Of course, I'm, a knowledge of the tailpipe emissions of all of the automotive fleets. So we have these.
I would call is within all of our businesses, we have parts of the ease of the S.G.
And when we combine that with the S.G. a rating services the true cost the BECO Sam's of S&P Global we start to have a much more significant circa 125 to 150 million of of of kind of base revenues that need to be brought together.
And then continued to grow at double digits.
The Doug.
Met has mentioned the 40% publicly we've never really talked about our growth rate, but it's also strong double digits.
Thank you.
Thanks, Toni next the question, maybe our final and.
Our last question comes from the line of Andrew Jeffrey with true as Securities. Your line is now open.
Thank you. Good morning. Appreciate you squeezing me in here at the end.
Lance I actually wanted to ask the question about financial services, which has been such a steady business for you and and specifically and solutions and I Prio.
Can you give us an update on sort of the performance of alternatives.
Broadly and then I wonder if you might.
Talk a little bit about a couple of the trends the and I Wonder. If you are participating if you have any thoughts and those would be bitcoin.
And and the emergence of specs as funding vehicles and those areas, where you think actually okay and can monetize over time along with alternatives.
No two of those are both the both good questions and I'll start and and Adam and can conclude.
So first off.
Our.
You know financial services business has.
Proved even through this tough year.
Year of the pandemic.
To provide us strong mid single digit recurring revenue growth and I don't I don't see that.
Waning going forward and I think with the synergies on has an opportunity to accelerate I prioleau as the acquisition and now the fleet.
Embedded part of our financial services business is accretive to our growth and it's accretive to our growth because of you know the market activity that.
Occurred this year through the pipe pandemic, but equally the alternatives business, which brings you need to the second part of your question which is.
You know I think we're one of two platforms that significantly plays in the alternative space private equity private debt and the provision of services that will help the GP LP relationship and manage more effectively and that strong.
On double digit growth for us whether its valuations whether its reporting whether it's on our new index JV, we've got some real exciting.
You know growth growth assets and and ones that we can continue to build on we.
We don't have any other plans at the moment I don't know, but S&P global but ourselves on it.
With respect to that claim maybe Adam's going to correct me at the moment, but I'll leave them to do so but not the nothing big and significant of course, we of every every of millennial that works for US thinks we should have a a major of pricing data services software.
And participation around a marketplace that is really legitimising itself. So we've got to take it seriously and so you know I expect pricing and data services et cetera that we normally would provide any otcs pricing or contracts those types of things, we'll be looking to value and and participate.
On the second part, which you mentioned was facts well you know to me of facts and just in other form of the new issue. So therefore, you know the IPO teams.
No through their activities or stay on top of all of the new issuance and so as a a spec or.
You know.
You know participates into the market place if.
If there's any follow on equity activity et cetera of course, they would be participating but in terms of the set up the war management of.
That's not something that we do.
And I imagine the data sets et cetera will be ones is the continued to grow that we've got to keep track of Adam do you want to add anything else to that.
I think you've covered things well and maybe to two quick comments.
First on the I. Prio acquisition and that really is fully integrated today. So we don't we don't look at it separately, but each of those businesses continued to perform really well and it really providing the central market infrastructure and a couple of places and highly volatile and really complicated financial markets over this past year and the performed incredibly.
The well and brought transparency and enhanced capabilities on and Thats includes the you mentioned specs and of the level of issuance and the spec market many of those transactions and.
And carried through our platforms on.
And the alternatives segment of that I preopening.
Combination with our existing capabilities like valuation data management the expansion into credit asset classes has proven to be consistent with where the markets are going the increased flow of capital into those spaces as position those business as well to the market leaders and providing portfolio management tools risk management tools and the.
Particular data management tools, we go forward, the both GP and LP community those dozens of grown.
Well well up into the double digits over this past year and we see that for the next you know next several years ahead.
In the last point I'd make is around crypto.
The though not a singular focus for us. We obviously are responding to our customers' needs to be able to value of those products, you'll see last November we announced day.
Partnership of the from called Luca and we have several other tactical partnerships, we do collect.
A lot of different pricing and reference data and other valuation information around cryptocurrency is in order to help customers value portfolios that may include cryptocurrency.
So with an area, we'll continue to focus on not just on the valuation of side, but probably the moving into the index side and and near future as well.
Okay. Thanks, Thanks, Adam and thanks, everybody for your questions today, I will turn it back to Erica operator.
We thank you for your interest and I just market. This calc the access via replay by 58592 056 or international dial and of course, there are four or five through seven 3.06 conference I'd 80891, or two beginning and about two hours and running through January 22.
2021, and addition, the webcast will dark hide from one year on our website. Thank you and we appreciate your interest and time.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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