10-QPeriod: Q3 FY2020

S&P Global Inc. Quarterly Report for Q3 Ended Sep 30, 2020

Filed October 28, 2020For Securities:SPGI

Summary

S&P Global Inc. (SPGI) reported solid financial results for the nine months ended September 30, 2020, with revenue increasing by 12% to $5.58 billion and operating profit growing by 23% to $2.96 billion compared to the same period in 2019. This growth was broad-based, with all reportable segments contributing positively. Diluted earnings per share (EPS) saw a significant increase of 22% to $7.78. The company demonstrated strong operational execution despite the challenging economic environment presented by the COVID-19 pandemic. Key drivers for the revenue growth included increased transaction revenue in the Ratings segment due to higher corporate bond ratings, growth in annualized contract value for Market Intelligence products, and higher assets under management for Indices-related ETFs. The company also benefited from cost management initiatives and reduced travel expenses. SPGI continues to return capital to shareholders through dividends and share repurchases, with $1.16 billion spent on repurchases in the first nine months of 2020. The company maintained a strong liquidity position, with cash, cash equivalents, and restricted cash increasing to $3.17 billion.

Financial Highlights

51 data points
Beta

Revenue

$1.85B

72.0% Gross Margin

Net Income

$455.00M

24.6% Net Margin

EPS (Diluted)

$1.88

Total Assets

$11.45B

Cash & Equivalents

$3.17B

Free Cash Flow

$809.00M

Financial Statements
Beta
Revenue$1.85B
Cost of Revenue$517.00M
Gross Profit$1.33B
SG&A Expenses$341.00M
Operating Expenses$910.00M
Operating Income$944.00M
Net Income$455.00M
EPS (Basic)$1.89
EPS (Diluted)$1.88
Shares Outstanding (Basic)240.60M
Shares Outstanding (Diluted)241.60M

Key Highlights

  • 1Revenue increased 12% to $5.58 billion for the nine months ended September 30, 2020, driven by strong performance across all segments.
  • 2Operating profit grew 23% to $2.96 billion for the nine months ended September 30, 2020, reflecting revenue growth and cost management.
  • 3Diluted Earnings Per Share (EPS) rose 22% to $7.78 for the nine months ended September 30, 2020.
  • 4Ratings segment saw a 19% revenue increase, primarily driven by higher corporate bond issuance.
  • 5Market Intelligence segment revenue grew 7%, supported by annualized contract value growth in desktop products and data solutions.
  • 6Indices segment revenue increased 7%, driven by higher AUM for ETFs and increased trading volumes in exchange-traded derivatives.
  • 7The company returned $1.16 billion to shareholders through share repurchases in the first nine months of 2020, alongside dividend payments.

Frequently Asked Questions

S&P Global reported a 12% increase in revenue for the nine months ended September 30, 2020, reaching $5.58 billion, compared to $4.96 billion in the same period of 2019. This growth was driven by increases across all four of its reportable segments: Ratings, Market Intelligence, Platts, and Indices.

While S&P Global monitored the impact of COVID-19, the company stated it did not have a material adverse effect on its reported results for the three and nine months ended September 30, 2020. The company benefited from reduced travel and entertainment expenses due to non-essential travel restrictions. However, it noted the uncertainty of the ultimate impact of the pandemic on its business, future results, financial position, or cash flows.

For the nine months ended September 30, 2020, S&P Global used $1.16 billion for share repurchases and also paid dividends to shareholders. The company's liquidity remained strong, with cash, cash equivalents, and restricted cash increasing to $3.17 billion by the end of the period. The company also increased its quarterly dividend to $0.67 per share in January 2020.

The Ratings segment revenue increased by 19% for the nine months ended September 30, 2020. This growth was primarily driven by a significant increase in transaction revenue, stemming from higher corporate bond ratings, largely due to historically low borrowing costs and central bank lending programs, which boosted corporate issuance volumes. Non-transaction revenue also saw an increase from higher surveillance and royalty revenue.