Heather Balsky: Hi. Thank you for taking my question. I was curious, on the call you talked about the near-term challenges in climate and sustainability, and some of the pressure you’re seeing. And you talked about — essentially, you pulled your long-term target. But also earlier in the call, you reiterated your view on mid-term growth for your businesses. I am curious given the pressure you’re seeing in the sustainability area, kind of what do you see offsetting that, that gives you confidence in your targets.
Ewout Steenbergen: Good morning, Heather. This is Ewout. Welcome first of all, to the call. So, just to be very clear about sustainability and energy transition. We’re not backing away from the $800 million target. We are currently backing away from the timing around that, because we’re not 100% certain anymore that we can hit that by 2026. Why? Because we are still continuing to see very positive trends with respect to the longer term secular trends around ESG. We think that all of those — underlying drivers are still there. But in the short-term, we are impacted by some uncertainties, uncertainties about the regulatory landscape, the political climate, mostly in U.S. We’re seeing some on the buy side firms reconsidering what they want to do around sustainability.
But we see continued actually pocket of strength in our business. Think about our climate activities, think about ESG raw data, energy transition, all of these products continue to grow very well. I also would like to point out that we expect a reacceleration of our sustainability and energy transition revenues growth in the second half of this year. So, growth will come back in the second half of this year. And we’re still very positive and optimistic about the outlook for the medium and long-term.
Douglas Peterson: Thanks Heather.
Operator: Thank you. Our next question comes from Seth Weber with Wells Fargo Securities. Your line is open.
Seth Weber: Hi. Good morning. Thanks for taking the question. I wanted to ask about the Ratings, the operating margin in the Ratings business, which came down with revenue going up. I know you addressed some of the kind of short-term expense headwinds there. But can you just talk a little bit more about your confidence for margins to get — to ramp higher through the back half of the year in Ratings business specifically? Thank you.
Ewout Steenbergen: Yeah. Good morning, Seth. First of all, I think this is exactly in line with our expectations, the margin development in Ratings. And let me explain why that’s the case. The same what we said for the company as a whole, we are seeing now also this quarter for Ratings with respect to the expense reset of incentive compensation compared to last year. Last year, in the second quarter, we saw a large change in the accrual for incentive compensation across the board, but also in Ratings, both for the short-term and the long-term incentive compensation accruals. And we are resetting that for this year based on the strong performance of the company and the strong performance of the Ratings business as well. So, we are overall very positive about the medium and long-term perspective and outlook.
If you look at where we are from a trailing 12-month perspective for margin for Ratings, we’re at 55.2. We’re guiding this year to 56 to 57. And then as you know, we have our IR targets for 2025 and 2026, 58 to 60. So, you will continue to see strong margin improvement of Ratings over the next few periods.
Douglas Peterson: Thanks Seth, and welcome.
Operator: Thank you. Our next question comes from Manav Patnaik with Barclays. Your line is open.
Manav Patnaik: Hi. Good morning. I just want to focus on the Market Intelligence revenue. I guess, you lowered by 50 basis points. Did I hear you right by saying most of that was because of the — I guess, the sustainability trends you talked about? And I was just curious like, Doug, you mentioned the weakness mainly in financial services end market. I’m guessing that’s most exposed here in Market Intelligence. In spite of all the vendor consolidation and those kinds of things that pick up in this period, are there any, I guess, trends, or what’s your strategy to be a winner in that area?
Ewout Steenbergen: Good morning, Manav. You’re absolutely right. Where we are with the business at this moment is exactly the same place where we thought the business would be when we had our last call in April. The business is performing in line with expectations. And the only reason why we are making the change with respect to the guidance range has to do with the short-term uncertainty around sustainability and energy transition. So, to give you a little bit more color around it. If you look at some of the key drivers of Market Intelligence, ACV growth is good. Closing rates are good. Retention rates are good. User growth is good. We see a lot of new product launches bringing to the — being brought market by Market Intelligence.
So, overall, we believe the business is in a very good shape. At the end of the day, we are very excited about the potential of Market Intelligence, particularly combining the two companies together in that segment and the potential it will have with respect to commercial growth, and we fully expect to hit our Investor Day targets for Market Intelligence.
Douglas Peterson: Thanks Manav.
Operator: Thank you. Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.
