Q4 2023 S&P Global Inc Earnings Call

Good morning, and welcome to S&P Global's fourth quarter and full year 2023 earnings conference call I'd like to inform you that this call is being recorded for broadcast.

All participants are in a listen only mode. We will open the conference to questions and answers after the presentation and instructions will follow at that time to access the webcast and slides go to Investor Dot S. P. Global Dot Com, if you need additional technical assistance. Please press star zero and I will assist you momentarily.

I would now like to introduce Mr. Mark Grant Senior Vice President of Investor Relations for S&P Global Sir you may begin.

Good morning, and thank you for joining today's S&P global fourth quarter and full year 2023 earnings call presenting on today's call are Doug Peterson, President and Chief Executive Officer, and <unk>, Steenbergen Executive Vice President and Chief Financial Officer for the Q&A portion of today's call. We will also be joy.

And by Adam Cansler, President of S&P Global market intelligence, and Martina Cheung President of S&P Global ratings, we issued a press release with our results earlier today. In addition, we have posted a supplemental slide deck with additional information on our results and guidance.

If you need a copy of the release and financial schedules or the supplemental deck that can be downloaded at investor <unk> S. P Global dotcom.

The matters discussed in today's conference call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including projections estimates and descriptions of future events.

Any such statements are based on current expectations and current economic conditions and are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward looking statements additional information concerning these risks and uncertainties can be found in our forms 10-K, and 10-Q filed with the U S. Six.

<unk> and Exchange Commission.

In today's earnings release and during the conference call, we're providing non-GAAP adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the company's operating performance between periods and to view the company's business from the same perspective as management.

The earnings release contains financial measures calculated in accordance with GAAP that correspond to the non-GAAP measures. We are providing and contains reconciliations of such GAAP and non-GAAP measures.

The financial metrics will be discussing today refer to non-GAAP adjusted metrics unless explicitly noted otherwise.

I would also like to call your attention to certain European regulations, any investor who has or expects to obtain ownership of 5% or more of S&P global should contact investor relations to better understand the potential impact of this legislation on the investor and the company.

We are aware that we have some media representatives with us on the call. However, this call is intended for investors and we would ask that questions from the media be directed to our media relations team, whose contact information can be found in the release.

At this time I would like to turn the call over to Doug Peterson Doug.

Thank you Mark 2023 was an exciting year for S&P global a year of innovation and growth our results in 2023 serve as a testament to strong execution and S&P Global's unique position at the center of the global markets.

Speaker Change: Excluding engineering solutions, which was divested in the second quarter of last year revenue increased 8% year over year.

Speaker Change: We expanded adjusted operating margins by almost 300 basis points year over year in the fourth quarter to finish the year with approximately 100 basis points of margin expansion and we surpassed our $600 million target for cost synergies by $19 million.

We delivered adjusted EPS growth of 13% to come in at the high end of our guidance range. As we continue to benefit from strong revenue growth disciplined expense management and a commitment to strong capital returns.

On the topic of capital returns 20, twenty-three marks the 15th consecutive year that S&P global has increased its cash dividend and we've already announced board approval to make 2024 the 51st.

In 2023, we returned $4 $4 billion to shareholders through dividends and buybacks representing more than 100% of our adjusted free cash flow.

Speaker Change: In addition to strong financial performance, we created a formal artificial intelligence leadership team in 2023, which we'll discuss in more detail. Shortly we also delivered double digit growth and significant innovation in key strategic investment areas private market solutions, and sustainability and energy transition both delivered double digit.

<unk> growth in 2023, and we're well positioned to continue growing in these important areas in 2024.

Speaker Change: Our vitality index, which we target to remain at or above 10% of company revenue actually exceeded 11% in 2023 and also increased at a double digit rate.

Speaker Change: In 2023, we delivered key wins in each of the five strategic pillars. We introduced at the end of 2022, we look forward to accelerating that success in 2024, and continuing our track record of creating value for our customers and our shareholders.

Speaker Change: We know that our success depends on creating value for our customers and we delivered for them in 2023, we improved customer retention rates in several of our divisions last year will continue to introduce new products and features more quickly and more frequently.

Speaker Change: Through deep engagement with customers around the world tens of thousands of customer touch points. We saw continued adoption of enterprise contracts and market intelligence and acceleration of enterprise agreements and commodity insights.

Speaker Change: We know that certain customer verticals, particularly financial services and regional banks had unique challenges in 2023.

Speaker Change: While we discuss longer sales cycles through 2023, we were able to keep our sales pipeline moving and continue to demonstrate value for our customers even in challenging times.

Speaker Change: As we look to 'twenty 'twenty four we continue to see macroeconomic market and geopolitical challenges our customers need unique and differentiated datasets and key insights for the markets. They serve which means our role as a trusted and strategic partner is more important than ever.

Speaker Change: Now nearly two years after the merger we've put to work of operational integration behind us and we are fully turned to the exciting work of growth innovation and execution, we remain committed to balancing margin expansion with strategic initiatives and long term growth.

Speaker Change: We will also look for ways to optimize our portfolio of products and services with the merger integration behind US we plan to continue reviewing and optimizing our portfolio of assets to meet our customers' needs either through tuck in acquisitions or potentially further divestitures as you've seen us do historically.

Speaker Change: Turning to the 2023 issuance environment, we saw strong growth in build issuance in 2023, particularly in the second half.

Speaker Change: In the fourth quarter, we continued to see issuers returning to the market with build issuance growth driven primarily by strength in bank loans structured finance and high yield this.

Speaker Change: This contributed to a successful rebound for the full year 2023 with build issuance increasing 8%.

Speaker Change: Turning to vitality, we're pleased to see the continued outperformance in our index to close out 2023.

Speaker Change: As we shared with you when we introduced this metric a little over a year ago. Our goal is to make sure at least 10% of our revenue comes from new or enhanced products each year.

Speaker Change: As products mature they'll naturally age out of the vitality index, even if they continue to grow rapidly, but we remain committed to that 10% target as a steady stream of innovation takes the place of any products that graduate from the index.

Speaker Change: We view the vitality index is a direct measure of the value our customers are realizing from the improvements, we're making in our products and services each year with 18% growth in revenue from vitality products. In 2023, we ended the year with more than 11% of our total revenue coming from these new offerings. This is an incredible achievement by our.

Speaker Change: Product development and commercial teams as they not only built great products and features in 2023, but also make sure our customers were aware and equipped to benefit from the innovation, we're bringing to the table.

Speaker Change: Across divisions, we've seen new products in 2023 that demonstrate our commitment to powering global markets in the world of rapidly evolving technology.

Speaker Change: First in another compelling example of a cross divisional development between market intelligence and commodity insights, we launched our power evaluate or tool it.

Speaker Change: It's already received great feedback from power utility market participants Additionally, and commodity insights we combine the most powerful features of two leading commodity platforms platts dimensions pro and IHS connect to great Platts connect which we believe is the market's most holistic source of data insights and.

Speaker Change: Tools custom built for commodity market participants.

Speaker Change: In market intelligence, we also significantly enhanced capital IQ probe June saw the release of one of the largest and most important updates in years and we're thrilled with the preliminary release of our new generative AI solution chat IQ to a set of pilot customers in December we're excited for more customers to get access to these proprietary.

Speaker Change: Three tools as 'twenty 'twenty four progresses, we also launched powerful new tools with our new supplier risk indicators and entity insights offerings.

Speaker Change: In ratings, we continue to deliver assessments and insights to help market participants evaluate different assets and we leveraged our expertise in blockchain technology in crypto currencies to launch the first stable coin stability assessment in late 2023.

Speaker Change: 2023 saw the launch of several new indices as well, including the S&P be three corporate bond index in Brazil, multiple cross asset indices and new sector factor in somatic indices that we believe will contribute to strong growth in the years to come.

Speaker Change: As we mentioned last quarter, we want to provide an update on our AI strategy. We've elevated the focus on artificial intelligence to make sure we have executive leadership governance and sponsorship at the enterprise level in late 2023, we announced internally that our former Chief information Officer Swamy Coachella quota wood.

Speaker Change: Take on the new role as Chief Digital solutions officer, including executive sponsorship of AI and Kimco.

Speaker Change: Perversity algae CEO of Kimco has expanded his role to now lead cross divisional AI initiatives as our first chief artificial intelligence officer.

Speaker Change: These changes toward leadership structure around technology, and especially around AI or the next logical steps and a commitment to AI that began with our initial investment in kitchen, nearly seven years ago.

Speaker Change: As part of this strategy, we've developed an AI accelerator to fast track high priority AI initiatives and build common capabilities that can be deployed and used by teams across the enterprise.

Speaker Change: There are four important ways that we expect our AI to impact our performance.

Speaker Change: First through the development of new products and services second leveraging can show to accelerate and automate manual processes and data operations third amplifying the productivity over internal experts freeing up more capacity for higher order work and fourth embedding AI functionality in existing products to increase customer.

Speaker Change: We're a value and improve user experience.

Speaker Change: We're committed to keeping you informed about these initiatives. So we've launched a new a page on our public website S. P. Global Dot AI, which includes important research our key thought leadership and insights into our developments.

Speaker Change: At S&P Global we have a strategic vision of the importance of AI to our industry and the world going forward as we believe that AI will quickly become embedded in everything we do.

Speaker Change: And we have a framework to deliver the best capabilities in as many products as we can and by extension into the hands of as many customers as we can as fast as we can.

Speaker Change: Fortunately S&P global starts with some of the most powerful proprietary datasets and the world sourced from all five divisions are proprietary data layers, a key differentiator that we believe sets us apart as we've outlined for you in the past we remain committed to sound governance protecting this proprietary data and preventing third.

Speaker Change: <unk> for monetizing or commercializing our data independently.

Speaker Change: The challenge that even data, which companies will face is that much of this data isn't ready to be ingested or used by large language models.

Speaker Change: The data requires traditional machine learning preprocessing things like data cleaning data transformation data reduction and data integration, but it also requires tokenism mission and tagging, which can be very resource intensive.

Speaker Change: This is Ken show layer the proprietary tools developed over the last several years by the teams that can show automate much of the preprocessing work for both structured data like financial reports, but also unstructured data like the transcript from this very earnings call.

Speaker Change: Tools like scribe nerd link extract and classify do much of this heavy lifting and allow our proprietary data to be leveraged more easily and updated more quickly and frequently.

Speaker Change: This leads to the third element of our framework the open ecosystem as we've shared with you before we aren't dependent on any individual technology partner, having so much AI expertise in house means that we can leverage infrastructure and compute platforms from multiple hyperscale cloud providers third party L. L EMS our own proprietary.

Speaker Change: L O lamps, and a wide array of other vendors without having to lock ourselves in or seed economics to one ecosystem or another ultimately the goal is to have generative and traditional AI capabilities embedded everywhere that makes sense, we will track our progress through improving customer win rates retention rates price in <unk>.

Speaker Change: Ultimately growth it should also show up in our own workflows to improve productivity and efficiency, improving our unit economics and our operating margins over time, we're excited about the significant progress we've made in 2023 and we're even more excited about what this company will accomplish in 2024 and beyond.

Speaker Change: Our innovation also extends to the efforts, we make to develop our people and improve our communities.

Speaker Change: In 2020 three we held an internal event called accelerate progress live to reinforce our commitment to our teams around the world and highlight our purpose and values as a global employer of choice. We provide dedicated time for people to pursue volunteer opportunities. We saw an 89% increase in the number of S&P global people.

Speaker Change: <unk>, who took advantage of these programs in 2023 and as more of our people return to our offices around the world Our global people resource groups saw nearly 50% increase in engagement.

Speaker Change: We also demonstrated our commitment to continuously improve our reporting and transparency around our sustainability and related initiatives.

Speaker Change: In 2023 we published our 12th annual impact report and our fifth annual T. C. F. D report, we also published our first ever diversity equity and inclusion report taking much of the information that we've been reporting for years, enhancing our disclosures and making that information more accessible in a dedicated report.

Speaker Change: We're very pleased that our efforts have been recognized by many external organizations in the last year S&P Global has iconic global brands and is well known as a desirable destination for highly skilled professionals around the world. We look forward to building upon that hard one reputation in 'twenty 'twenty four.

Speaker Change: Turning to our financial results Eva will walk through the fourth quarter results in more detail in a moment, but the headline numbers tell a strong story for 2023, we're pleased to see accelerating growth and margin expansion in almost every division in 2023 the.

Speaker Change: The 20th twenty-three results in the 'twenty 'twenty four guidance, we're introducing today give us confidence that our trajectory towards the growth and margin targets, we introduced at our 2022 investor day.

Speaker Change: As we approach the two year anniversary of the merger we can definitively say it has been a success in the last two years not only have we brought together two world class organizations, but we've delivered through a challenging period against our aspirational and ambitious targets.

Speaker Change: We integrated major software systems in record time, and consolidated our offices around the world, We're able to close many of our Datacenters due in part to a transformational partnership with AWS we've.

Speaker Change: We've maintained a disciplined approach to managing our product portfolio and we demonstrated this commitment through the divestiture of engineering solutions and the after sales business and our mobility Division and also through the decommissioning of a number of low margin or slower growth products lastly, since the merger closed we have returned 17.5 bill.

Speaker Change: <unk> dollars to shareholders through share repurchases and dividends we.

Speaker Change: We initially set a target of $480 million in cost synergies, then raise that target to $600 million and have now exceeded that higher target by $19 million.

Speaker Change: We're ahead of schedule on our revenue synergies to date and we'll continue to report our progress there.

Speaker Change: Lastly, we told you when the merger closed that we believed it would be accretive to adjusted EPS by 2023, and I'm pleased to confirm that we have delivered.

Speaker Change: Both our internal analysis and independent external analysis indicate that in 2023 we delivered higher adjusted EPS than we likely would have generated with S&P global as a standalone company.

Speaker Change: I'm thrilled to be able to call the merger a success and to move forward to power in global markets as one company.

Speaker Change: Now I'll turn to Eva to review the financial results pave out thanks.

Eva: Thank you, Doug we close the year with strong fourth quarter performance overall as we saw growth across all five of our Deficience adjusted earnings per share increased 23% year over year reported revenue grew 7% in the fourth quarter, but excluding the impact of the engineering solutions divestiture and the small tuck ins done earlier this year.

Eva: Year revenue growth was 11%. We're also expanded adjusted margins by nearly 300 basis points and reduced our fully diluted share count by 3%.

Eva: Moving to our strategic investment areas I am pleased to report we saw growth across all categories sustainability and energy transition revenue grew 17% to $84 million in the quarter driven by strong demand for our energy transition products and benchmark offerings sustainability and energy transitions full year revenue.

Eva: <unk> grew 24% to approximately $301 million as we introduce more products and continue to innovate in the space. We remain committed to this important growth driver for the business moving to private market solutions, we saw revenue increase by 18% year over year to $113 million.

Eva: Driven by strong growth in ratings private market revenue as improved market conditions increased bank loan issuance private credit estimates and M. I <unk> software solutions as we progress towards our goal of $600 million of private market solutions revenue by 2026, I am pleased to report full year.

Eva: Revenue grew 10% to $430 million for 2023 vitality revenue, which is revenue generated by innovation through new or enhanced products from across the organization was $380 million in the fourth quarter, representing a 19% increase compared to the prior year.

Eva: Importantly, vitality revenue represented 12% of our total revenue in the quarter again, surpassing our index target of at least 10%.

Eva: Now turning to synergies as Doug mentioned earlier, we have completed our cost synergy program associated with the merger and outperformed our stated targets in the fourth quarter of 2023, we recognized $156 million of expense savings due to cost synergies and our annualized run rate exiting the year.

Eva: <unk> was $619 million exceeding our goal of 600 million for the full year, we recognized $581 million in cost savings from synergies, we had been targeting 85% of total cost synergies realized in 2023 and I'm pleased to see that we not only achieved.

Eva: It targets, but that we surpassed it by more than $70 million, we continued to make progress on our revenue synergies as well with $40 million in synergies achieved in the fourth quarter and an annualized run rate of $152 million exiting the year.

Eva: Now turning to expenses, our total expenses grew approximately 2% in the fourth quarter, primarily driven by increases in our core and investment growth areas and compensation expenses, which were partially offset by benefits associated with the engineering solutions divestiture and cost synergies.

Eva: Core and investment growth, we continue to make the necessary investments in our strategic initiatives, which includes hiring the right people for key roles and investing in new and existing avenues of growth for our businesses.

Eva: Within compensation to our two factors I would like to call out first our salary expenses remained elevated due to our hiring activity and inflationary pressure throughout 2023 second our benefits cost were higher due to finalization of benefits of realignment of IHS markit employees in the fourth quarter.

Eva: As we go through the deficient you will see these factors impacting expenses and margins this quarter, particularly in market intelligence and mobility. This drove slightly higher expense growth than we were expecting but total adjusted expenses still grew only 2% year over year in the fourth quarter, while revenue increased seven.

Eva: Ascent.

Eva: Now, let's turn to the deficient results market intelligence revenue increased 9% driven by strong growth in data and advisory solutions and enterprise solutions desktop accelerated to 7% growth in the fourth quarter as continued product innovation introduction of new content sets and improvements to speed and perf.

Eva: [noise] formats supported strong subscription growth.

Eva: Data and advisory solutions, and enterprise solutions grew 8% and 10% respectively. Both benefited from double digit growth in subscription based offerings credit and risk solutions grew 10% in the fourth quarter supported by strong new sales and price realization.

Eva: While renewal rates remained strong overall for Eni, we did see slightly elevated cancellations in the fourth quarter as customers, particularly in the financial surfaces vertical continued to see some budgetary constraints combined with the modest softness in nonrecurring revenue. This resulted in total revenue for M. I <unk> slightly below our <unk>.

Eva: Expectations, though we continue to see accelerating growth for the deficient in the fourth quarter.

Eva: Adjusted expenses increased 4% year over year, primarily due to higher compensation expense, an increase in royalties and data cost partially offset by cost synergies operating profit increased 18% and the operating margin increased 280 basis points to 34, 2% for full year.

Eva: 2023 margins improved by 120 basis points to 33%. The margin results are below our guidance range and are a result of a combination of an admittedly strong topline falling short of our expectations and expenses being slightly higher due to the reasons I mentioned.

Eva: Now turning to ratings in the fourth quarter, we saw refinancing activity drive issuance as improving market conditions reduced borrowing costs and macroeconomic indicators give issuers comfort coming to the market even in December which is historically, a very quiet month for debt issuance revenue increased 19%.

Eva: <unk> year over year exceeding our internal expectations.

Eva: In section revenue grew 35% in the fourth quarter as heightened refinancing activity increased bank loan and high yield issuance non transaction revenue increased 10%, primarily due to an increase in annual and program fees and growth at Crystal.

Eva: Adjusted expenses increased 6% driven by higher compensation, which includes hiring associated with growth initiatives at crystal and higher incentives due to financial performance. This resulted in a 32% increase in operating profit and an impressive 540 basis point increase in operating margin to <unk>.

Eva: 53, 4%.

Eva: For the full year 2023 margins increased by 60 basis points to 56.5%.

Eva: And now turning to commodity insights revenue growth increased 10% following a third consecutive quarter of double digit growth in both price assessments and energy and resources data and insights upstream data and insights revenue grew by approximately 3% year over year benefiting from strong demand for software.

Eva: The offerings as well as significant improvement in retention rates. The business line continues to prioritize growth in its subscription base.

Eva: Rice assessments in energy and resources data and insights grew 12% and 13% respectively growth was driven by continued strength in our benchmark data and insights products. Both business lines continue to see robust subscription sales driven by strong commercial momentum and enhance value being delivered to customers.

Eva: Advisory and transactional surfaces revenue grew 8% driven by strong trading volumes across all sectors in global trading services and strength in energy transition related product offerings. These markets with in volumes helped G. T. S delivered its strongest quarter of 2023 adjust.

Eva: Adjusted expenses increased 10%, primarily driven by higher compensation and continued investment in growth initiatives, partially offset by cost synergies.

Eva: Operating profit for commodity insights increased 10% and operating margin contracted 20 basis points to 44.4%. There are a few factors I would like to call out that contributed to see is very modest margin contraction in the fourth quarter. In addition to the compensation drivers I mentioned earlier, we saw an increase in.

Eva: Performance related compensation due to the top line outperformance, we remain very confident in the growth opportunities for commodity insights and also wanted to make sure. We continue to adequately invest to capture dose opportunities trailing 12 month margin, which we believe is the best way to assess the performance of our deficient incur.

Eva: <unk> by 180 basis points to 46, 1% in 2023.

Eva: In our mobility deficient revenue increased 9% year over year. The dealer segment marked its fourth consecutive quarter of double digit growth while manufacturing in financials and other continued to deliver solid results dealer revenue increased 14% year over year, driven by the continued benefit of price realization within the last year.

Eva: <unk> and new store growth, particularly in car fixed for life as well as the addition of markets again Manny.

Eva: Manufacturing grew 2% year over year, driven by planning solutions, and marketing solutions financials, and other increased 5% as the business lines benefited from strong underwriting volumes and price increases adjusted expenses increased 10% driven primarily by higher compensation due to the benefits alignment already.

Eva: And and also due in part to higher commissions related to revenue outperformance in our OEM and dealer businesses. We also incurred some inorganic expense growth on the markets can acquisition and aggregate dis dry first were sold at an 8% increase in adjusted operating profit of 30 basis points of operating margin contraction.

Eva: <unk> year over year in the fourth quarter.

Eva: For full year, 2023 margins contracted 20 basis points to 38.8%.

Eva: Now turning to S&P Dow Jones indices revenue increased 5%, primarily due to strong growth in exchange traded derivatives revenue and new business activities within data and custom subscriptions revenue associated with asset linked fees were relatively flat in the fourth quarter. This was driven by higher E. T F E N, which.

Eva: Fitz from both market appreciation and net inflows, leading to higher Etfs and declines in OTC products exchange traded derivatives revenue grew 22%, primarily driven by strong volumes in SPX and fixed products and strong price realization.

Eva: Data and custom subscriptions increased 4% year over year, driven by continued strength in end of day contract growth during the quarter expenses decreased 6% year over year, primarily driven by lower outside services and incentive expenses operating profit and indices increased 11% and the operating margin.

Eva: Increased 390 basis points to 66, 1% for the full year 2023 margins expanded 50 basis points to 68, 9%.

Speaker Change: As we reflect on 2023 as a whole I'm incredibly proud about the many things we're able to accomplish we returned more than 100% of adjusted free cash flow to shareholders. We also continue to make the right investments in our strategy allocating approximately $140 million to the enterprise initiatives that we have.

Speaker Change: As discussed with you and we are encouraged by the fact that approximately 10% of the company's revenue growth came from dose initiatives in 2023 on an inorganic basis, we executed a disciplined M&A strategy with tactical acquisitions immediately adding value to the enterprise the optimization of our capital and liquidity.

Speaker Change: Sure [noise] completed earlier in the year provided $750 million of capital due to the prudent and strategic application of rate swaps were able to execute that debt issuance in a rising rate environment, well avoiding an increase in our efforts cost of capital with a team that can deliver impressive accomplishments.

Speaker Change: Dis in 2023 I'm confident this will continue under the leadership of the future CFO of S&P Global now I'll turn it back to Doug to cover the 'twenty 'twenty four outlook. Thank.

Doug: Thank you a that we're updating our outlook to reflect our economists' view of the most important economic and market factors that will impact 'twenty 'twenty four while this isn't meant to be an exhaustive list. These are some of the key factors will be tracking this year.

Doug: We're currently expecting a soft landing scenario with a base case assumption that we avoid a global recession, though we expect geopolitical uncertainty to persist. We also expect energy transition and higher interest rates to remain factors for the equity markets. We expect the secular tailwind of flows from active to passive management to continue though changes.

Doug: Market volatility can impact our E T D business and indices and fluctuations in asset prices will have a lagged, but potentially meaningful impact on our asset linked fees revenue.

Doug: Early signs in 'twenty 'twenty four indicate market optimism with the market currently pricing in multiple rate cuts in 2020 for the timing of these potential cuts is unpredictable, but we expect the issuance environment to be stronger than the first half of the year than the back half. We expect continued focus on energy transition in the commodity markets with volatility.

Doug: T and the evolving regulatory landscape, having the potential to impact our results this year.

Doug: Our financial guidance assumes global GDP growth of 2.8% U S inflation of 2.4% and an average price for Brent crude of $83 per barrel.

Doug: We're also forecasting build issuance growth in the range of 3% to 7% in 2024 with stronger growth expected in the first half.

Doug: Well, we've included a market issuance forecast in the past, we will only report unbilled issuance going forward when discussing our outlook for financial performance as it historically has been a better indicator of our revenue growth and aligns with our monthly disclosures.

Doug: Turning to our most recent refinancing study when we compare these refinancing walls to last year's study, we see the current year maturities, meaning 'twenty 'twenty four maturities now compared to 2023 maturities measured at this time last year or more than 10% higher than they were at this point last year.

Doug: The maturity is expected over the next two and three year periods are more than 12% higher while we can't be certain how the higher rate environment impact these maturities or issuers likelihood to delever. We're confident that this puts us in a strong position to achieve the ratings revenue targets, we're outlining today for 2024.

Doug: Now turning to our initial guidance for 'twenty 'twenty four.

Doug: This slide illustrates our initial guidance for GAAP results.

Doug: For adjusted guidance were expecting revenue growth in the range of 5.5% to seven 5% driven by strong growth in all five divisions, we expect organic revenue growth, excluding the impact of 2023 divestitures in the range of 7% to 9%.

Doug: We expect to deliver at least 100 basis points of adjusted operating margin expansion in 2020 for.

Doug: This will require us to maintain discipline around expenses and productivity, while ensuring that we are making the necessary investments to drive growth and innovation in vital strategic areas like generative AI sustainability energy transition and private markets.

Doug: We expect to deliver adjusted EPS for the full year in the range of $13.75 to $14, which represents double digit growth at the midpoint. It's important to note that our expected adjusted tax rate is nearly two percentage points higher in 'twenty 'twenty. Four then in 'twenty two 'twenty three if our tax rate were to remain unchanged from 'twenty.

Doug: 'twenty three we would expect adjusted EPS growth of approximately two to three percentage points higher consistent with the low to mid teens growth rate, we pointed to for 2025 2026 at our Investor day.

Doug: As you saw in our supplemental materials earlier. This morning, we also expect adjusted free cash flow, excluding certain items of approximately $4.4 billion. We expect growth in adjusted free cash flow to be driven primarily by strong growth in revenue and profitability, though free cash flow growth will be tempered somewhat by the <unk>.

Doug: Timing of working capital items, and the full year impact of the $750 million debt offering completed in the third quarter of 2023.

Doug: With the geopolitical macroeconomic and market risks and opportunities. We've discussed on this call. We expect that the financial outlook. We provided today likely has more upside risk than downside and you can count on our focus determination and discipline over the coming year.

Doug: Our outlook for 'twenty 'twenty four calls for further acceleration in revenue growth compared to 2023 and continued margin expansion, even though we will no longer have the benefit of the vast majority of our cost synergy actions going forward our financial outlook for 2024 illustrates our continued progress towards the targets, we outlined at our Investor day.

Doug: Just over a year ago, and we remain committed to those targets.

Doug: Moving toward division outlook for market intelligence, we expect revenue growth in the range of 6% to 7.5% with expected growth to be slightly higher in the back half than in the first half of the year. We expect adjusted operating margins in the range of 33, 5% to 34.5% as we continue to invest in key <unk>.

Doug: Growth initiatives, while maintaining rigorous discipline around expenses for ratings, we expect revenue growth in the range of 6% to 8% driven by build issuance growth of 3% to 7%, we expect revenue growth rates to be stronger than the first half of the year than the second half as comparisons are easier in the first half we expect some level of <unk>.

Doug: All forward given the uncertainty around the timing of any potential rate actions by central banks.

Doug: We expect adjusted operating margins in the range of 57, 5% to 58.5%.

Doug: For commodity insights, we expect revenue growth in the range of 8% to 9.5% and adjusted operating margins of 46, 5% to 47, 5% for.

Doug: For mobility, we expect revenue growth in the range of 8.5% to 10% and adjusted operating margins of 39% to 40% less.

Doug: Lastly for S&P Dow Jones indices, we expect revenue growth in the range of 7% to 9% and adjusted operating margins in the range of 68.5% to 69, 5%.

Doug: As you saw on the press release earlier. This morning, our board has authorized the repurchase of shares totaling up to $2.4 billion, which we expect to execute throughout the year.

Doug: And with that I'd like to invite Adam Cansler, President of S&P Global market intelligence, and Martina Cheung President of S&P Global ratings and executive lead for sustainable one to join US and I will turn the call back over to Mark for your questions. Thank.

Adam Cansler: Thank you Doug for those on the line if you would like to ask a question. Please press star one and record your name to cancel or withdraw your question simply press Star two participants will be limited to one question in order to allow time for others. During today's Q&A session. Operator, we will now take our first question.

Doug: Thank you. Our first question comes from Faiza <unk> with Deutsche Bank. Your line is open.

Faiza: Alright, Thank you good morning.

Faiza: So I wanted to start with a big picture question on rating take advantage of the call, but maybe you can talk a little bit about the driver behind the rating topline outlook that mentioned, 327%.

Faiza: Issuance gorilla, but give us a bit more color around it our transaction by transaction growth and the various components, whether it you know corporate structured.

Faiza: And you know greater private assessment, and so just a bit more color around around what's underlying the revenue outlook. Thank you.

Speaker Change: Hi, Thanks, very much for the question.

Speaker Change: As Doug mentioned in his remarks, we do expect.

Speaker Change: First half of this year, 'twenty, 'twenty, four and compared to the back half of the year and I'll break it down a little bit first on the transaction revenue.

Speaker Change: And our build issuance estimate in the 3% to 7% we're expecting to see continued refinancing activity that we saw buildup in the back half of last year with high yield and bank loans and we saw that.

Speaker Change: Distant in January so we would expect to see that continued throughout the first half of this year.

Doug: We would also expect to see some investment grade, although not as robust as last year and part of that is just because so many investment grade issuers tapped market last year and other potential factor. There is the fact that we would see we would see some investment grade issuers being able to wait until the rates come down now at some of the factors driving first half.

Doug: The first and second half I would say anecdotally, we're hearing that issuers are looking to come to market to take advantage of.

Doug: Strong investor appetite to lock in rates out once theyre higher than before the rates come down and ahead of potential volatility in the back half of the year on transaction revenue, we would actually expect to see stronger frequent issuer.

Doug: Graham issuances this year than we saw last year, you won't see that in our build issuance estimate for example, and we would also expect to see continued strong performance in our surveillance book across Chris, though our royalty and other products such as Reza ratings evaluation service overall, though as Doug said, we do expect stronger.

Doug: First half compared to second half.

Doug: All of these factors that we take into consideration, including our pace and timing of rate cuts volatility et cetera. These are all baked into our overall outlook.

Speaker Change: Is it early in the year and so we will definitely seek to become more precise as we go throughout the year, but that's I think a good summary of where we're at.

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

Manav Patnaik: Thank you good morning.

Manav Patnaik: Wanted to touch on the revenue synergies and you said I think it was $152 million annualized exiting the year I think that for a number higher than what we would have thought I was just hoping you could give us some color on where what kind of areas. Those are coming from what you've kind of baked into 2024 and also perhaps.

Doug: Haps.

Doug: Thank you Manav. This is Doug well, we're really excited about what we've been able to achieve with the merger and you've heard us talk about the power of the merger the capital return that we had the accretion to EPS the cost synergies, which we now have delivered $619 million and going forward, we're going to keep talking about the revenue synergies.

Doug: When we look at the revenue synergies they started off traditionally with cross sell cross sell within divisions. This is where we were selling a commodity insights products from the platts customers to the IHS markit customers and vice versa same in the market intelligence business, where we're selling our financial services products to corporate customer.

Doug: As for market intelligence, but now we're starting to deliver the new products as well and be a combination of both of these has allowed us to be ahead of the schedule. We're very excited about the new products coming out let me give you. One example from from the commodity insights division something called Platts connect Platts connect is a product that took the platform of plaid.

Doug: Dimensions Pro and took the IHS Markit connect platform, we put them together, we now have a very unique single holistic platform for prices for research for forecasting, but let me hand, it over to Adam since he's on the call and he can give us some more color for market intelligence.

Adam Cansler: Great. Thanks, Doug on the revenue synergies, obviously, one of the most exciting parts of the combination of businesses as Doug mentioned the early successes have been in going to our customers with combined product capabilities that strengthen what we were already providing to those customers. We've seen outsized performance there even against our own expectations.

Adam Cansler: What's really exciting is we get now into the years, where we've landed those early merger synergies is the launch of new products. Doug mentioned, a few over the course of 2023 we launched seven new products just within market intelligence, we have 14, new products set to come to market across 2024.

Adam Cansler: Will increasingly become part of what we're offering out to customers, whether it's just putting our bond pricing and together with our credit analytics capability looking at our economics and country risk data across our desktop incorporating sustainability data into our private markets portfolio management capabilities. These are all exciting areas that will.

Adam Cansler: Continue to add to the growth of the business.

Adam Cansler: Youll also see us announce some increasing generative AI capabilities across broader data sets of the combined businesses I'm sure, we'll talk a little bit more about that later on the call.

Speaker Change: Thank you question.

Speaker Change: I apologize our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.

Toni Kaplan: Hey, Good morning, This is Greg Paris Opera Toni Thanks for taking our question.

Toni Kaplan: Adam I wanted to go back to you to talk about market intelligence six to seven 5% revenue growth guide similar to last year.

Toni Kaplan: Selling environment has that improved at all or is that still a bit of a headwind.

Toni Kaplan: Then on the capital markets piece of the business I think some of that.

Toni Kaplan: Oh assets thing some increased activity to start the year. So is there upside from that or are you still a little bit cautious.

Speaker Change: Okay. Thank you for the call.

Speaker Change: We're very optimistic about continued growth in the business and you've seen that progression from 'twenty two to 'twenty three and you see our guidance for 2024 hour end markets have had a pretty challenged period through 'twenty, two and 23 right you've seen 30 plus percent declines in M&A activity.

Speaker Change: <unk> 34 per cent decline in private equity investment activity, but even through that period, we've been able to deliver the solutions that our customers want I think that will continue into 'twenty four we do see some early activity in capital markets, but I think the way the full year will play out is yet to be seen for us going into the first.

Speaker Change: We see more challenging comps so we will see a little bit slower start to your then we'll see towards the back half of the year I am cautiously optimistic that as markets stabilize that presents opportunity for us, but we want to be careful because our largest customer sets continue to be under pressure you see that in the news every day as we go into the beginning.

Speaker Change: Part of this year, we want to see how that ultimately plays out, but we feel we feel pretty good about the guidance range, we've put out.

Speaker Change: Thanks, Greg.

Speaker Change: Thank you. Our next question comes from Andrew Nicholas with William Blair You May proceed.

Speaker Change: Hi, Good morning. This is Tom on for Andrew.

Tom: I wanted to ask about <unk>. You mentioned you started piloting that in December I was wondering what kind of customer feedback youre getting so far and what kind of benefits you can expect can it help increase pricing on our cap IQ platform or any other benefits you're seeing there. Thank you.

Tom: Tom Thanks. Thanks for the question, we're very excited about the early responses on chat IQ, that's a tool that lets our customers get into our desktop and get back actionable insights lets them actually click through directly down to the source documents on what's one of the most robust.

Tom: Data sets available to financial markets and corporate participants in the world.

Speaker Change: Chad I keep very exciting we are out with a few pilot customers will start to release that out more broadly to our customer set over the course of 'twenty 'twenty four but it's also not the only thing that we're doing with generative AI you may have seen our press release in the last couple of days, we've actually launched now widely available to customers the ability to use generative AI to search in.

Speaker Change: S&P global market place, which is the place where you can go and look at all the data sets available across all of S&P Global we are using generative AI to allow people to query into those datasets to get broader understanding of what's actually available through our company. We're pretty excited about that and early responses have been positive you'll also see.

Speaker Change: Our leases from us during the year, if things were calling Reg G. P T.

Speaker Change: Some other tools around our ratings related data that we deliver through market intelligence to allow our customers to probe into that data and get quick responses that helped increase the speed within their own workflows.

Speaker Change: Youll continue to see this across the course of 'twenty 'twenty four we're very focused on making sure. We release things that are actually useful to our customers enhance the value proposition of what we're delivering to them and ultimately embed our solutions more deeply into their workflows.

Speaker Change: Thanks, Tom.

Speaker Change: Thank you. Our next question comes from Andrew Steinman with J P. Morgan Your line is open.

Speaker Change: Hi, everybody. This is Alex has on for Andrew Steinman Ah I was hoping you guys could walk us through a little bit of the the incremental margin outlooks embedded in your guide, especially for market intelligence commodity insights.

Speaker Change: Hum.

Alex: And maybe mobility would just sort of helpful to know sort of.

Alex: And those higher subscription businesses, you know what the puts and takes are unexpected and you know how how we should see see that flowing through to the operating income. Thank you.

Alex: Thanks, Alex This is Doug let me start by saying that we always start our year with looking at how we're going to be able to grow our margins. We always build a budget that begins with topline growth and we want to make sure that we can build our business through investment for innovation, but also continued to deliver margin expansion. So if you you asked.

Doug: Each of the divisions and each of the divisions has different characteristics for how we're moving forward, we have technology and productivity plans in place, but let me start with a couple of the divisions and then hand it over to Adam So within the commodity insights Division. We're looking at as you saw 8.8% growth to nine 5% growth with a margin.

Adam Cansler: Expansion into $46 five to 47.5 range, we have growth in that area in particular in.

Adam Cansler: The energy transition products, we see high demand coming for new sorts of products that are related to carbon to carbon intensity carbon markets two different types of metals, which youre going to be important for the energy transition. So we see a lot of growth in the area coming from energy transition on top of what are the regular markets. There we do.

Adam Cansler: Do have some investments taking place in the commodity insights division both for some regional expansion as well as some new products when it comes to.

Adam Cansler: Mobility, we're making some investments in some new products in mobility. So that we will be able to grow our top line as you see we have an eight 5% to 10% our revenue guide is at 39% to 40%.

Adam Cansler: The margin guide, but we always operate all of our businesses beginning with top line with discipline to deliver growth just to mention before I turn it over to Adam as you know we've delivered 200 basis points of organic margin expansion over the last 10 years. So it's something that's in our DNA, but let me hand, it over to Adam.

Adam Cansler: Sure I'm, just commenting briefly on margins within market intelligence, we do expect to continue to see expansion as we go into 2024. It is important for us to keep balancing the need for.

Adam Cansler: Continued efficiency looking for where we can operate more effectively and continue to drive margin expansion. We expect to do that on course to the levels that we laid out in the 2022 Investor day, but also balancing that with making the right investments to drive the increased top line growth that we also expect to deliver as we get towards.

Adam Cansler: Those target dates that we laid out in the in the Investor day as well.

Speaker Change: Thanks, Alex.

Adam Cansler: Thank you. Our next question comes from Alex Kramm with UBS you May proceed.

Alex Kramm: Yes, Hey, good morning, everyone. Just I guess continuing that last point, Adam that you made when when I look at the revenue targets that you laid out at the Investor day across the company I think youre, making good progress everywhere, but in market intelligence I think.

Alex Kramm: It appears that if it's if it's a steady path where the most behind so maybe just.

Alex Kramm: Coming back to the comments you made earlier in terms of the environment as it is at the environment that needs to improve is that the the the revenue synergies that need to click more or or what's what needs to happen to get to that seven to nine in 2025.

Speaker Change: Yeah, and yeah, what are the biggest factors get you there and what's your confidence level sorry.

Speaker Change: Thanks, Thanks, Alex.

Speaker Change: Confidence level, Hi, we set those targets for 2025 2026, I think we're well on track to get there even even in this current year, while coming in behind our goal.

Speaker Change: We're still right near the very bottom of that 7% to 9% growth range right. We delivered a 6.9 or so percent year, you've seen our guidance like we will continue to push towards that you identified actually a couple of the important factors that synergy growth will continue to build and we always said we'd start to see the real impact of that in years three through.

Speaker Change: Five and that's the period that we're just starting to enter so you will see that continue to be a factor second biggest factor is we've gone through in 2022 and 2023, one of the toughest macro environments that we've seen.

Speaker Change: Particularly for our customers over the last certainly five to 10 years, so as that macro environment improves restaurant condition for that customer set improves for us. It also sets us up to continue to accelerate towards those growth levels.

Speaker Change: Even through that challenging period, you know as I mentioned, we're delivering actually pretty close to that range and on a pretty straight line path into it and that's pretty high confidence that we'll get there.

Speaker Change: Thank you.

Speaker Change: <unk>.

Speaker Change: Our next question comes from Ashish <unk> with RBC capital markets. You May proceed.

ashish: Thanks for taking my question I, just wanted to poke arcade down further on the index business.

ashish: A mention of declines in OTC product I was wondering if you could provide some color on that trend and then as we get into 2024 I was wondering if you could provide some color on what are your assumptions around E. M cord, and then fees, which were a headwind this year, how should we think about.

ashish: Potentially becoming a tailwind in 'twenty four.

Ewald: Good morning, Ashish. This is ewald. Thank you for giving me an opportunity to answer a question Jeremy laughs to call them.

Ewald: M vies in the fourth quarter, you say, hey that strange why is it flat where markets are up so much and we see two underlying dynamics that go in opposite directions. So as we have always had in AUM fees. There's many things that go into the mix. There is mutual fund store's otc's and others actually if you're assuming on Etfs, it's up about.

Ewald: <unk>, 8% in terms of fees and that has helped by market depreciation as well as very strong inflows that we have seen into the ETF area, but offset by OTC volumes that were down period over period OTC volumes can always be a bit lumpy quarter to quarter. So I wouldn't read too.

Ewald: Much Intuit this can really change again, the following quarter. So overall I would say this is a this is a normal trends that we are sitting here with respect to the assumptions for 2024 first of all the assumption is that <unk> is up mid single digit level.

Ewald: <unk> volumes low single digit increase and then the subscription growth at the double digit level for the index business for 2024 those are the assumptions. Thank you Ashish.

ashish: Thank you. Our next question comes from Scott <unk> Wolfe Research Your line is open.

Scott: Great. Thank you and good morning, guys, just moving back to the ratings segment and I'm thinking about the results and guidance here sort of looking at that slide 32 and seeing the.

Scott: The decline in expected maturities for 2024, we're just wondering if you guys saw any pull forward activity into the fourth quarter given the decline in rates and tightening spreads that we saw and how that may have informed your outlook for 2024 here. Thanks.

Scott: Scott. Thanks for the question, we did see some pull forwards.

Speaker Change: More for 'twenty for a little bit of 'twenty fives into 2023 not just in Q4, I would say I mean, I think the sort of the repricing and other.

Speaker Change: Refinancing activity starting to pick up momentum in the back half overall.

Speaker Change: And we've certainly seen that continue into this year, but I would maybe take a step back and and perhaps fair to characterize how we build our outlook.

Speaker Change: For the year, so absolutely refinancing is very important and as Doug mentioned in his remarks, the refinancing wall continues to grow nicely, which is a very healthy.

Scott: Indicator for us, but we also look at a number of other factors, including you know the overall macro picture, whether it's GDP growth.

Scott: And timing of some of the interest rate cuts.

Scott: We also look at opportunistic issuance, we know that's than historically is very hard to predict and that's become even more difficult in.

Ewald: In the last two years and you know candidly M&A, we don't have a historic our heroic assumptions around M&A.

Ewald: As Adam mentioned earlier, it was down quite a bit.

Ewald: Last year, and what we're hearing a little bit of positive market sentiment.

Ewald: Need to see how that plays out throughout.

Ewald: Throughout the course of the year. We also look at Investor appetite fund flows and how that could that could impact our issuance across different asset classes. So for example, as I mentioned earlier, we would expect to see higher frequent issuer issuance. This year than we did last year.

Ewald: And then we you know we keep an eye on this throughout the course of the year a lot of contacts with investors I think we did a we increase our investor meeting a frequency quite a bit last year somewhere between the 25030 thousand range of meetings with investors.

Ewald: So you know a lot of work goes into building up the the bottom up it's not just the refinancing piece that although of course, you know that said that's a good long term indicator for US and then just to you know is a kind of.

Ewald: Recap or draw a line under it as Doug said, we would expect slightly.

Ewald: Foster first half than the second half and as we go throughout the year. We can now we can come out with greater precision.

Speaker Change: Thank you Scott.

Speaker Change: Thank you. Our next question comes from Jeff, Jeff Silber with BMO capital markets. You May proceed.

Jeffrey Marc Silber: Thanks, so much in your prepared remark I think you had said you are constantly reviewing and optimizing your portfolio can we just kind of step back maybe you can tell us what youre looking for whether it's tuck in acquisitions or maybe more importantly potential divestitures would it be possible to see a large divestiture in the future. Thanks.

Speaker Change: Thank you Jeff as you know, we always play a discipline to looking at our portfolio looking at topline growth looking at the margin expansion also looking at how it fits across the portfolio. During the year last year, we didn't we didn't make a lot of noise about it but we did shut down some very small products, we shut down 8000 indices.

Jeffrey Marc Silber: That were subs sub par sub size across the businesses within commodity insights market intelligence or some more small products that we that we moved on we also had a couple of small divestitures, but when you you asked the question to US we're constantly looking at the portfolio trying to understand what fits best we have different themes, you've heard us talk about the key thing.

Jeffrey Marc Silber: <unk> private market sustainability supply chain analytics.

Speaker Change: Risk in credit. These are the sorts of areas that we're always looking to expand our presence to make sure. We have the best capabilities possible to meet the needs of our clients, but within looking at the needs of clients. We look at the shareholders. We look at how we're going to put this portfolio together with the best way to leverage our technology, we will always apply the discipline as well to how we're going.

Speaker Change: Look at the portfolio in the future.

Speaker Change: Thank you.

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

George K. Tong: Alright, Thanks, good morning, I'd like to better understand your guidance for ratings revenue growth in 2024, you expect bill debt issuance growth of 3% to 7% ratings revenue growth of only 6% to 8% in 2024, which would reflect little to no pricing benefit or mix headwinds can you help bridge the gap there.

Speaker Change: Yeah, Hey, George Thanks for the question, so maybe I could.

Speaker Change: With a transaction versus non transaction and how we think about both of those and as you know.

Speaker Change: The transaction is a is a somewhat lower proportion of our revenues compared to let's say pre pandemic on the transaction front and specific to build issuance and as I said and in our in my last response.

Speaker Change: This year.

Speaker Change: Potential challenge in predicting opportunistic issuance and and there we really do not have heroic assumptions around opportunistic issuance for this year and so we're being cautious on that and and then I would say as I mentioned as well that we would expect to see more frequent issuer.

Speaker Change: And sit here, which wouldnt show up in our build issuance estimate of 3% to 7%.

Speaker Change: So you know I think with all of that you have to take into consideration of the potential wide range of outcomes, whether it's rates, whether it's you know almost half the world's population voting in elections.

Speaker Change: And potential for greater volatility in the back half of the year. So you know that informs both the overall outlook of 3% to 7% build issuance, but also the timing that Doug has mentioned, which is a stronger first half versus second half on the transaction side, we see a strong performance across all key areas there so that.

Speaker Change: It will include our surveillance book It would include.

Speaker Change: The Roz portions of the book for example, Chris So as well as the royalty payment that we get from market intelligence.

Speaker Change: You know maybe again I would just reiterate our strong first half and so you know tapering off in the back half.

Speaker Change: And then you know as Doug mentioned it is early in the year there is potential for upside in the range and we would look to get more precise on this week as we go throughout the year.

Speaker Change: Thank you George.

George: Thank you. Our next question comes from Craig Huber with Huber Research Partners you May proceed.

Craig Anthony Huber: Yes, hi, good morning, maybe just talk a little bit further about your guidance for the year about where potentially you could be conservative in your mind, whether it be on the cost side of things.

Craig Anthony Huber: Taking into assumption for cost there on the top line what segments potentially come in ahead of your outlook at this stage of the game. Thank you.

Speaker Change: Thanks, Craig as you saw when we put together our information we put in our slides what are the key factors that we look at and when you take a step back we know that GDP growth is always the number one driver. It's the highest correlated factor to our long term revenue growth we've looked over the years to see what are those factors that drive it the most we see.

Speaker Change: Some potential slowdown in the economy in the U S and in the EU, We're planning for what we call. We're planning against what we call a soft landing, which means that there could be some sort of slowdown in the economy. As you heard we've seen some slowness in a little bit of longer sales cycles in certain segments, but that's those are some of the downside factors.

Craig Anthony Huber: What would happen with the geopolitical factors, how long will it take before central banks begin to cut rates, we've taken those into account as we built our guidance with some conservatism. So if we saw a much quicker return to lower interest rates. If we saw a much quicker a N G.

Craig Anthony Huber: No political environment that was more stable. These are the kinds of things that create some upside for the company. We also look at segment by segment. We know that the automotive segment is going through a lot of change we know that the energy transition, which is changing the commodity cycle. So we've taken into account all of these different factors as we've looked at the overall.

Craig Anthony Huber: All of the guidance so to your upside risk with upside opportunities, we think that it could come if interest rates move down lower faster if the interest rates are if the economies grow.

Craig Anthony Huber: Faster than we think et cetera, but the these are all the factors we take into account across the divisions as we're setting up our guidance for 2024. Thanks.

Speaker Change: Thanks, Greg.

Speaker Change: Thank you. Our next question comes from John Med, Sony with Wells Fargo. Your line is open.

Speaker Change: Cross platform as well as potential kind of upsell and cross sell from kind of new products.

Speaker Change: Great. Thank you for that and when we think about technology. When you think about AI, we start with the.

John Med: Framework that we showed you in our prepared remarks today, which has a foundation of very strong proprietary data. We think that this is going to be one of the most important factors for AI, becoming successful at any company no matter, where they are and we think that this gives us a running start in addition to what we've already been developing with Ken show over the over the last five years, but turning that.

Craig Anthony Huber: Into into earnings and turning that into growth is something that we're starting to build we think that the AI opportunities. We have Adam talked early about chat IQ is an example of something that give customers the opportunity to dig much much deeper into our data.

Craig Anthony Huber: We think that it's going to create stickiness, we're starting with metrics that look at for example, our net promoter scores. We're looking at retention. We're looking at how people are how what kind of feedback we get from calls from customers that are calling in to see how we're doing we also believe that right now we're going to be able to.

Craig Anthony Huber: To meet our our guidance that we gave you for in our Investor day in 2022, we'll be able to continue along that track and then we'll be able to come out with much more precise guidance for the impact of AI across our portfolio in the future, but we see this as something that's gonna be a game changer for all of our businesses, it's going to be embedded in everything we.

Craig Anthony Huber: Do and we're just now learning how we're going to measure those those impacts, but let me hand, it over to Adam because he's very close to a couple of the in in market opportunities that we have right now.

Adam Cansler: Great. Thanks, Doug and thank you for the question as Doug mentioned, we do think generative AI has a transformative potential across almost all of our products remember we are one of the largest data providers in the world and the one thing we have is a highly trusted highly developed accurate set of data.

Adam Cansler: That in a very rapid timeframe for us thinking about portfolio monitoring workflows research and insights credit assessments risk assessment.

Adam Cansler: Looking across a broad set of data for insights and what's developing in various sectors or regions or how it could impact the portfolio. Those are all opportunities for us for making the datasets and workflows that we already provide today to our customers all the more powerful.

Adam Cansler: When we look at the opportunity set in front of us and even just our product launch sheet for 'twenty 'twenty four we're pretty encouraged that we're well positioned to take advantage of the technology increase the penetration we have with our customers and expand the kinds of services and insights we're able to give them efficiently that also increases the efficiency.

Adam Cansler: Their own internal workflows, which obviously comes with significant value.

Craig Anthony Huber: We'll see how that all materializes and how we're able to monetize that but we do think it's a tailwind for us.

Speaker Change: Thank you John.

Speaker Change: Thank you. Our next question comes from Jeff Miller with Baird. Your line is open.

Jeff Miller: Yes, Thank you Eva.

Jeff Miller: And as the new rate kind of like a good steady state rate for the portfolio. Thank you.

Jeff Miller: Yeah. Thanks, Jeff So let me explain why there's benefits re alignment so benefits realignment is that we brought to as of January 1st 2023, all of our employees across the world to the same benefits package. Because we think it is fair that we should treat everyone. The same in every country around the world. So think about the med.

Jeff Miller: <unk> plans to think about the retirement plans. We have made estimates about expenses for 2023 and for the first three quarters <unk> expenses came in exactly in line with our expectations, but they exceeded the expectations in the fourth quarter and benefits costs are always not 100% shortened because just to give an <unk>.

Jeff Miller: Sample the medical cost in the U S. We're self insured so they can be higher if we have higher medical claims or the matching for four one K contributions can be higher. So we're seeing this more as a one time step up cost and that should be in our baseline going forward from 2024 own words.

Jeff Miller: Your second part of your question about the detects rates, we saw in 2023, a bit of a benefit in the tax rate in the third quarter into fourth quarter and then we're seeing some upward pressure in the tax rate in 2024 show to expand on that on the third quarter of 2023.

Craig Anthony Huber: We had some favorable new guidance with respect to the utilization of foreign tax credits and then in the fourth quarter. We had the conclusion of certain state tax audits that led to some reserve releases. So it brought the effective tax rate a little bit down in 2023 compared to <unk>.

Craig Anthony Huber: My life's level and what we're seeing in 2020 for the implementation of pillar two global minimum tax in several jurisdictions as well as the UK statutory tax rate is going up so 'twenty 'twenty four is I think the right level to think about this where tax rates will go from a longer term perspective is really hard to say.

Craig Anthony Huber: Because it really depends on government finances, and BARDA that will go around the world in the future.

Speaker Change: Thank you Jeff.

Speaker Change: Thank you. Our next question comes from Russell clubs with Redburn Atlantic You May proceed.

Russell Clubs: Yeah, Hi, Thanks for having me on the call.

Russell Clubs: So let's go back to this but on the ratings business.

Russell Clubs: Paul Coster, implying well I think as the soft landing conducive rate cuts.

Russell Clubs: And as I understand it the maturity both build throughout the year I. Appreciate some of that could be pulled forward into the front end, but I'm still struggling to square the sort of front end loaded.

Speaker Change: Observation when you discuss revenues relative to your mat credit guidance. So maybe you could explain that again, please let's say what you're assuming for the non transactional revenue growth in 2012, sorry, if I missed that thanks.

Speaker Change: Thanks, So much Russell for the question just a quick one on the non transaction, we don't separate out our guidance between transaction and non transaction, but as I said, we do expect a robust performance in our non transaction part of the book this here.

Russell Clubs: The picture is a little counterintuitive in fact for the timing piece because he would in fact expect given our economist predictions.

Russell Clubs: Three rate cuts for example by the Feds are starting in the middle of the year.

Russell Clubs: This year that you might see a more even a result with issuance throughout the year, but what we're actually hearing from the market is a little bit different so for bank loans and high yield for example, we're seeing and hearing a couple of things number one issuers have accepted the higher for longer but more importantly.

Russell Clubs: Number two there's a good really good strong investor appetite.

Russell Clubs: For these asset classes and pricing is much more constructive this year for example that while at the same time last year. So these are issuers are coming to market are theres, a high volume of repricing.

Russell Clubs: And to that so for example, the bank loan January volumes for repricing was actually around if not a little bit higher than the full year of 2023 re pricing that we saw in bank loans.

Russell Clubs: And then on investment grade.

Russell Clubs: Some of that we see that tapered a little bit this year compared to last year. The reason for that is that there was so many issuers that came to market last year, but also those that are sitting.

Russell Clubs: Waiting for rate cuts can afford to actually absorb what theyre sitting on today, whether it's using commercial paper or otherwise.

Russell Clubs: Wait for some of those rate cuts two to play out.

Russell Clubs: Hopefully that answers your question as I said, it's a it's early hour in the first half.

Russell Clubs: February and you know this is our base case, there's a pretty wide range of possibilities here and we'll look to get much more precise as we go out go throughout the year.

Speaker Change: Thank you Russell.

Russell Clubs: Thank you. Our next question comes from Shlomo Rosenbaum with Stifel. Your line is open.

Speaker Change: Hi, This is Adam on for Shlomo excuse me can you discuss the level of incentive compensation in the quarter and what is implied in 2024 versus 2023, and how much does that impact the margin guidance for 'twenty 'twenty four is well. Thank you.

Speaker Change: Yes, we brought up our incentive compensation accruals in the fourth quarter and that was driven by the strong top line performance from both the ratings and commodity insights. So for the total year 2023, our cash bonus incentive accruals are now ending up at a level above 100% what.

Speaker Change: We always do when we do planning is to reset cash bonus incentives back to a 100% from a planning perspective for the next year. So for 2024 in the plan is embedded a 100% payout of our cash bonuses.

Speaker Change: Thank you Adam.

Speaker Change: Thank you. Our next question comes from Heather <unk> with Bank of America. Your line is open.

Heather: Hi, Martha on fire.

Heather: I'll see you talked about elevated cancellations and market intelligence can you kind of detail on what type and maybe size of customers, who are saying gosh ow.

Heather: And what kind of discussions you've had so far this year.

Heather: Hi, Heather it's Adam Thank you for the question so.

Adam Cansler: The fourth quarter in particular, the places where we saw cancellations are actually in our smallest customers right customers under relatively low threshold, our larger customers while under pressure due to range of macro reasons. Those are places, where we have opportunity in our vendor consolidation initiative, where those customer.

Russell Clubs: They are looking to consolidate the number of vendors they work with given the scale and scope of relationship that they have with S&P global that often presents opportunity for us and and accordingly, we saw a much stronger renewal rates and that group of customers than we did amongst our smallest customers.

Russell Clubs: I think the other places where we see pressure is discretionary spend where customers have a decision whether to undertake a consulting project or a new initiative. Those are places where customers had been a little bit more hesitant into the fourth quarter.

Speaker Change: Thank you.

Russell Clubs: We will now take our final question from Owen Lau with Oppenheimer You May proceed.

Owen Lau: Hey, good morning. Thank you for squeezing me in I just wanted to go back to AI and I think AI, it's quick and there are lots of potential but it looks like what our clients who exited pay extra for it it's still uncertain I'm. Just wondering what makes you confident that you can put up a killer app that people will use it and pay for it. Thanks.

Owen Lau: Thank you Owen well, we take we take a view that AI can be embedded in everything we do and we don't think there's going to be a killer app it'd be great. If their word but that's not our plan. Our plan is to look at AI to see how it can improve our productivity how we can use it with our developers our data management data linking et cetera.

Owen Lau: Up into how we're going to improve our products and build products and link them overtime as you heard from Adam We've got a few very exciting products that are already being tested in the market. We've launched one recently and then we've got some more coming we also have the capabilities of can show, which are available on the marketplace. So we don't think of it as a killer App, we think of it is continuous improvement and we.

Owen Lau: We think that if you look at it over time, it's going to be something that's going to change the way, we work and the way that our people work. So we're really excited about it. We're also excited that we have such a strong internal team that we were one of the first companies who was able to name a chief artificial intelligence officers somebody who has the experience of of Ken show of being the CEO there.

Owen Lau: With the expertise we have an open model in terms of the ecosystem, we're gonna be working with so we're not looking for a killer app, but we're looking to see every single way, we can use it and how it's going to improve the way we serve our customers as well to manage the business.

Speaker Change: Thank you Owen let me make a couple of closing remarks first of all I want to thank all of you as usual for being on the call and for your excellent questions and it was great to have Adam and Martina on the call today.

Speaker Change: And I'm really excited about everything that we were able to deliver in 2020 three we delivered what we think is the promise of the merger.

Speaker Change: As you know we've paid back over $17 $5 billion of capital over the last two years since the merger we've been delivering innovation, we delivered on our synergies. So we're excited about taking that energy in all of all of the incredible work that our people have done and turning that now into growth into the future.

Speaker Change: I also want to thank our people as always for their incredible work. It's what May 2023, what it is and it's what makes me very confident about the foundation, we have for going forward and especially our leadership team who is focused on growth innovation and execution. This is our last earnings call with Eve out he's been with us for seven years of remarkable service.

Owen Lau: Know that everybody is very pleased with our margin and as well as our capital return in and that's something that Ive been instrumental and he's helped us lead with our accelerated growth with the renovation and he's had a tremendous impact he partnered with us on all of the major strategic transactions. He's been the sponsor of Ken show for the last five years, which we now talked about many.

Owen Lau: Times on this call the importance that brings to the company as well as a one of the initial architects as well as execute to the IHS Markit merger.

Owen Lau: So he's done a fantastic job.

Owen Lau: Building, a world class Finance organization.

Owen Lau: As we previously announced our current Chief Accounting Officer, Chris Craig will be named as the interim CFO on Monday, and he has done a fantastic job here for the last 13 years and he is going to continue to evaluate the businesses and as we look in both internally and externally for candidates for the permanent role.

Owen Lau: And I look forward to working with Chris in his in Israel, but again. Thank you Eva we wish you the best in your new role and continued success in your career and please keep making the world a better place with your leadership with UNICEF.

Speaker Change: So again, thank you everyone for joining the call great questions and we're very excited about the future. Thank you very much.

Speaker Change: Thank you that concludes this morning's call a PDF version of the presenter slides is available for downloading from Investor Dod S. P. Global Dot com replays of the entire call will be available in about two hours the webcast with audio and slides will be maintained on S&P Global's website for one.