10-QPeriod: Q2 FY2020

S&P Global Inc. Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 28, 2020For Securities:SPGI

Summary

S&P Global Inc. (SPGI) reported strong financial results for the second quarter and first half of 2020, demonstrating resilience amidst evolving market conditions. Revenue increased by 14% for both the three and six-month periods, driven by broad-based growth across all segments: Ratings, Market Intelligence, Platts, and Indices. This top-line growth translated into significant operating profit increases of 36% and 33% for the respective periods, with operating margins improving substantially. Net income attributable to S&P Global Inc. shareholders saw a substantial rise of 43% and 48% for the quarter and half-year, respectively. Diluted earnings per share also experienced strong growth. The company highlighted cost management efforts, including reduced travel and entertainment expenses due to COVID-19, which contributed to margin expansion. Despite the global economic uncertainties, S&P Global's diverse business model and essential data and analytics services appear to be well-positioned, as evidenced by the robust financial performance.

Financial Highlights

51 data points
Beta

Revenue

$1.94B

74.6% Gross Margin

Net Income

$792.00M

40.8% Net Margin

EPS (Diluted)

$3.28

Total Assets

$11.11B

Cash & Equivalents

$2.68B

Free Cash Flow

$937.00M

Financial Statements
Beta
Revenue$1.94B
Cost of Revenue$493.00M
Gross Profit$1.45B
SG&A Expenses$295.00M
Operating Expenses$839.00M
Operating Income$1.10B
Net Income$792.00M
EPS (Basic)$3.29
EPS (Diluted)$3.28
Shares Outstanding (Basic)240.90M
Shares Outstanding (Diluted)241.90M

Key Highlights

  • 1Revenue increased by 14% year-over-year for both the three and six months ended June 30, 2020, reaching $1.94 billion and $3.73 billion, respectively.
  • 2Operating profit saw significant year-over-year increases of 36% ($1.11 billion) for the three months and 33% ($2.02 billion) for the six months ended June 30, 2020.
  • 3Diluted earnings per share (EPS) rose substantially by 46% to $3.28 for the quarter and 51% to $5.90 for the six months ended June 30, 2020.
  • 4The S&P Global Ratings segment showed strong revenue growth of 26% for the quarter and 22% for the six months, driven by increased transaction revenue from corporate bond ratings.
  • 5Market Intelligence revenue grew 6% for the quarter and 7% for the six months, supported by annualized contract value growth in its desktop products and data solutions.
  • 6Share repurchases remained a focus, with $1.15 billion utilized for share repurchases in the first six months of 2020, alongside a maintained quarterly dividend.
  • 7Despite the challenges presented by COVID-19, the company reported no material adverse effect on its reported results for the period and continued to monitor its impact.

Frequently Asked Questions

S&P Global Inc. reported a 14% increase in revenue for the three months ended June 30, 2020, compared to the same period in 2019, reaching $1.94 billion. This growth was observed across all of its reportable segments.

Profitability improved significantly. Operating profit increased by 36% to $1.11 billion for the three months ended June 30, 2020, compared to the prior year. Net income attributable to S&P Global Inc. rose by 43% to $792 million, and diluted earnings per share increased by 46% to $3.28.

The Ratings segment saw a 26% increase in revenue for the quarter, primarily driven by higher transaction revenue. This was largely due to an increase in corporate bond ratings revenue, reflecting higher investment-grade and high-yield corporate bond issuance volumes, benefiting from low borrowing costs and central bank actions.

The company demonstrated effective expense management. Total expenses decreased by 6% for the quarter, aided by a 20% reduction in selling and general expenses. Reductions in travel and entertainment expenses due to COVID-19, along with lower professional fees, contributed to this decrease and supported margin expansion.