Adam Kansler: Thanks, Ashish, for the question. So we watch our recurring revenue growth very carefully in this quarter, more than 7% growth in our recurring revenue. Some of that comes from volumes in our businesses that are affected by capital markets volumes. Over the years, we’ve sought to actually temper that a bit using more fixed contracts. Our customers in most of those markets prefer it. And for us, it adds a little bit more stability and regular growth to the business. Quarter-to-quarter, we’ll see some variation in those numbers, but we do expect our recurring revenue, our subscription revenue to continue to grow in line with our full year guidance for the division. Thanks again.
Doug Peterson: Thanks, Ashish.
Operator: Our next question comes from Jeff Silber with BMO Capital Markets.
Jeffrey Silber: I just wanted to continue with the Ratings question. I think you said that billed issuance was up 45% year-over-year in the quarter, but Ratings revenue was only up 29%. I know in prior quarters, they’ve been much tighter in terms of the correlation. Can you explain what happened this quarter, why the difference?
Martina Cheung: Jeff, it’s Martina. Thanks for the question. So to your point, billed issuance was up 54 — sorry, 45%. But transaction revenue, which is the revenue portion or revenue category that is most closely correlated to billed issuance was up 54%. So we grew faster than billed issuance in the quarter. Overall revenue growth of 29% represented both the transaction revenue growth of 54 and the non-transaction revenue growth of 8%. So really just the evening out of the performance across those to get to the 29% growth. Perhaps I will just comment briefly on the non-transaction growth drivers. We were quite pleased with the performance in the quarter. We had continued strength in RES with a lot of companies looking for scenarios around their capital stacks. We saw some new ICR issuance in the quarter and had strong performance on the surveillance book and fee programs. Thanks for the question.
Doug Peterson: Thanks, Jeff.
Operator: Our next question comes from Scott Wurtzel with Wolfe Research. Your line is open.
Scott Wurtzel: Good morning, guys. I wanted to ask just on the revenue synergies here. I mean it looks like it was a pretty strong quarter, recognizing $56 million and then the run rate being pretty impressive here. And in the context of you guys talking about recognizing 45% of synergies in 2024, wondering how we should think about that number now that we seem to be tracking ahead there? And also just kind of wondering what’s really resonating on the synergy side here.
Doug Peterson: Thanks, Scott. Let me start, and then I’m going to hand it over to Adam. When it comes to our tracking of the revenue synergies, it’s something that we look at every quarter. We look at them. We actually looked at it on our Executive Committee earlier this week. We have a combination of cross-sell as well as new products. We’ve been quite successful with cross-sell. It’s been our most important aspect of what we’ve been doing. As you know, we have a target of $350 million into the ’25, ’26. And we’re already running ahead of our expectations for that, especially because of cross-sell. When it comes to new products, we’ve been successful with many right out of the box with Indices with, for example, fixed income indices, we have a fixed income VIX that we’ve come up with.
We have a set of fixed income products that we build around ESG. We’ve also had multi-asset class products. But I think in Market Intelligence, we’ve also seen a lot of really, really strong synergies. So let me ask Adam to supplement the answer.
Adam Kansler: Thanks, Doug, and thanks, Scott. It’s Adam. We’re very excited about our synergy progress. We’ve got 15 more new products that will come to market in 2024. The combination of businesses, the strength that we have in the marketplace, the receptivity of our customers to what a combined offering can do, that’s all been a tremendous uplift. I think it’s given us the path to achieve the revenue synergy targets that we outlined. I think what’s most exciting for me and most exciting for our customers are the new products, right, where we’re able to integrate new data sets into workflow solutions or give customers in private markets the ability to immediately look at public company comparables, the ability to put our fixed income capabilities into our Desktop.
These are all things that roll out over the course of 2024. As Doug mentioned, the cross-sell has given us such early wind in ourselves to achieve the synergy targets we set out. As we start to roll out new products into the back half of this year, we’re even more excited about what that will look like as we exit the year.
Doug Peterson: Thanks, Scott.
Operator: Our next question comes from Shlomo Rosenbaum with Stifel.
Shlomo Rosenbaum: Hi, thank you very much for taking the question. Doug, maybe you could talk a little bit about — touch on both Market Intelligence and Mobility. Just talk about the sales cycles which you’re hearing from your on-the-ground guys sequentially from last quarter and then also year-over-year? And has there been any change in the competitive landscape with some of the new products you’ve put in there? If you can kind of touch on those ideas, I’d appreciate it.
Doug Peterson: Okay. Great. Well, first of all, we’ve been out seeing our customers, as we mentioned in the prepared remarks. We’ve been out seeing customers everywhere we can. We’ve been around the globe. I myself have been traveling extensively this year seeing customers. As you know, in the financial services market, there’s been a little bit of a slowdown in sales cycles. We’ve talked about that in the past, which we’ve seen. It just takes a little bit longer to close some transactions. You’ve heard about that from us before. In the Mobility business, there is a massive transformation taking place in the entire industry. If you think about it, you see that there’s this electric vehicle transformation that’s taking place.
And what we’ve seen is that for — whether you’re an OEM, you’re a supplier, you’re a dealer, you need data and analytics to understand what is happening in the market. And we provide that no matter what the sales cycle is, no matter what’s happening in the industry. In addition to that, we’re providing new products for dealers, for OEMs for them to be able to make much more informed decisions. So as you’ve seen, the amount of EVs have started to stack up in ports and on dealers’ lots. It’s something that we can provide them much more information. The manufacturers can use that information to make decisions about how they’re going to look at incentives going forward. So it’s a very close dialogue, very good relationship with all sets of clients in every industry around the globe.
And we’re able to pivot very quickly to provide them the kind of data and analytics they need to make decisions. Thanks, Shlomo.
Operator: Our next question comes from Craig Huber with Huber Research Partners.
Craig Huber: Great. Thank you. On your AI investments, obviously, you do not enhance the products you have but also improve the ongoing efficiency of the company, which is already at a high level and stuff. I’m curious, as you guys think out over the next couple of years, your internal investment spending behind AI, you’ve been able to do it so far within your technology budget, not a huge increase or it puts downward pressure on your margins near term. I’m just curious, do you think you can continue to hit going forward here?
Doug Peterson: Thank you, Craig. As you know, when we’ve been looking at our artificial intelligence road map, it’s something that we’ve been very explicit about going back many, many years. This isn’t something new for us. It started with our acquisition of Kensho six years ago. We since then have come up with a very structured approach to AI, which starts with a vision and a strategy. We’ve recently set in place a leadership team that’s led by Chief Digital Solutions Officer and a Chief Artificial Intelligence Officer for the entire organization. We have governance over that, and the governance includes looking very cautiously and carefully at budget. We’ve already been absorbing AI expenses in our budget for the last six years.
We’re very conscious that rolling out an AI program is not inexpensive. It requires us to have that kind of discipline. And we’re also tracking our successes. And we’ve had a lot of successes when it comes to new products, which we’re starting getting — we’re getting ready to roll out. We’re looking at how we can have more productivity. We hope that over time, the productivity can be returned partially through margin but also be using as a way to reinvest in innovation and growth. So overall, I think the message you should take is that we have a very structured approach to AI. It’s an open ecosystem. We can take advantage of all of the AI developments happening anywhere with any large language models coming out from anybody. And we’re also protecting our data in a way that we can ensure that our intellectual property is not being used by others to build great AI products that we’re going to do that ourselves.
So overall, we’re very pleased with our progress so far, and we really appreciate — we’ll continue to bring you a lot of our progress over time. So thanks, Craig. Thanks for that.
Operator: Our next question comes from Jeff Meuler with Baird. Your line is open.
Jeff Meuler: Yes. Thank you. So questions on Market Intelligence. I think, you kind of heard the angst coming into the quarter from investors, given the peer results. Adam, I was just hoping you can maybe highlight some of the MI businesses that are maybe more unique to S&P and how they’re doing or maybe highlight any businesses that have already gone through some pretty significant cyclical headwinds like the Ipreo Book building Business or whatever. They just help with investor confidence regarding what’s assumed over the remainder of the year through the cyclical channel launches. Thanks.
Adam Kansler : Yes. Thanks, Jeff. Appreciate the question. We do have a number of unique solutions and a pretty diversified set of solutions to the marketplace. So you do see dislocations in the market or volatility affecting parts of our business differently than other parts of the business. You mentioned some of our capital markets platforms. Obviously, in the last quarter, those saw quite a lot of resilience. We saw very strong markets, particularly in credit and debt markets. Equity markets, I think, are still a little bit slower to recover, and we’ll see what happens through the balance of the year. Some of our unique offerings really are around alternative assets in the loan marketplace in private markets. These are places where our workflow solutions, our valuations capability, reference data, we saw that across the firm in other divisions as well.
