We’re using generative AI to allow people to query into those data sets 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 releases from us during the year things we’re calling RegGPT, 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 help increase the speed within their own workflows. You’ll continue to see this across the course of 2024. 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.
Doug Peterson: Thanks, Tom.
Operator: Thank you. Our next question comes from Andrew Steinerman with JPMorgan. Your line is open.
Alex Hess: This is Alex Hess on for Andrew Steinerman. I was hoping you guys could walk us through a little bit of the incremental margin outlook embedded in your guide, especially for Market Intelligence Commodity Insights, and maybe Mobility, just helpful to know sort of in those higher subscription businesses what the puts and takes are on expenses and how we should see that flowing through to operating income? Thank you.
Doug Peterson: 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 top line growth. And we want to make sure that we can build our business through investment for innovation, but also continue to deliver margin expansion. So if you asked about 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 9.5% growth with a margin expansion in the 46.5 to 47.5 range.
We have growth in that area in particular in energy transition products. We see high demand coming for new products that relate to carbon to carbon intensity to carbon markets to different types of metals, which are 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 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 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 8.5% to 10% revenue guide as a 39% to 40% margin guide. But we always operate all of our businesses beginning with top line with discipline to deliver growth.
Just to mention before I hand it over to Adam as you know we’ve delivered 1,200 basis points of 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 Kansler: Sure. Just commenting briefly on margins within Market Intelligence. We do expect to continue to see expansion as we go into 2024. It’s important for us to keep balancing the need for 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 those target dates that we laid out in the Investor Day as well.
Mark Grant: Thanks, Alex.
Operator: 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 I look at the revenue targets that you laid out at the Investor Day across the company, I think you’re making good progress everywhere. But in Market Intelligence, I think it appears that if it’s a steady path with the most behind. So, maybe just coming back to the comments you made earlier in terms of the environment, is it the environment that needs to improve? Is it the revenue synergies that need to click more? Or what needs to happen to get to that seven to nine in 2025. Yes and what are the biggest factors that get you there? Thanks. And what’s your confidence level, sorry.
Adam Kansler: Thanks, Alex. Confidence level, high. We set those targets for 2025, 2026. I think we’re well on track to get there. Even in this current year, while coming in behind our goal, 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 in our guidance like we’ll 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 start to see the real impact of that in years three through five and that’s the period that we’re just starting to enter. So, you will see that continue to be a factor. The second biggest factor is, we’ve gone through in 2022 and 2023, one of the toughest macro environments that we’ve seen, particularly for our customers over the last certainly five to 10 years.
So, as that macro environment improves, conditions for that customer that improves for us. It also sets us up to continue to accelerate towards those growth levels. Even through that challenging period, as I mentioned, we’re delivering actually pretty close to that range and on a pretty straight line path into it and pretty high confidence that we’ll get there.
Operator: Thank you. Our next question comes from Ashish Sabadra with RBC Capital Markets. You may proceed.
Ashish Sabadra: Thanks for taking my question. I just wanted to focus or drill down further on the Index business. There was a mention of declines in OTC products. I was wondering, if you could provide some color on that front. And then as we get into 2024, I was wondering if you could provide some color on what are your assumptions around AUM growth. And then fees which were a headwind this year, how should we think about those potentially becoming a tailwind in ’24? Thanks.
Ewout Steenbergen: Good morning, Ashish, this is Ewout. Thank you for giving me an opportunity to answer a question during my last call. Coming back to your point about OTC, obviously, if you look at AUM fees in the fourth quarter, you say, hey that’s strange, why is it flat where markets are up so much? And we see two underlying dynamics that go in opposite direction. So, as we have always said in AUM fees, there’s many things that go there into the mix. There is mutual funds there’s OTCs and others. Actually if we zoom in on ETFs, it’s up about 8% in terms of fees. And that is 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 much into it. This can really change again the following quarter. So, overall, I would say this is a normal trend that we are seeing here. With respect to the assumption for 2024, first of all, the assumption is that AUM is up at mid-single-digit level. The ETD volumes low single-digit increase, and then the subscription growth at a double-digit level for the Index business for 2024. Those are the assumptions. Thank you, Ashish.
Operator: Thank you. Our next question comes from Scott Wurtzel with Wolfe Research. Your line is open.
Scott Wurtzel: Great. Thank you. Good morning guys. Just moving back to the Ratings segment and I’m thinking about the results and guidance. You’re sort of looking at that Slide 32 and seeing the decline in expected maturities for 2024. I was 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.
Martina Cheung: Hey Scott thanks for the question. We did see some pull forward more for 2024, a little bit of 2025 into 2023 not just in Q4 I would say. I mean I think the sort of the repricing and other refinancing activity starting to pick up momentum in the back half overall and we’ve certainly seen that continue into this year. But I would maybe take a step back and perhaps sort of characterize how we build our outlook 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 indicator for us. But we also look at a number of other factors, including the overall macro picture whether it’s GDP growth pace and timing of interest rate cuts.
We also look at opportunistic issuance. We know that’s been historically very hard to predict and that’s become even more difficult in the last two years. And candidly M&A, we don’t have historic or heroic assumptions around M&A. As Adam mentioned earlier, it was down quite a bit. last year. And while we’re hearing a little bit of positive market sentiment, we need to see how that plays out throughout the course of the year. We also look at investor appetite fund flows and how that could impact 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. And then we keep an eye on this throughout the course of the year, a lot of contacts with investors.
I think we did — we increased our investor meeting frequency quite a bit last year so we’re between the 25,000 30,000 range of meetings with investors. So, a lot of work goes into building up the bond up. It’s not just the refinancing piece of it, although of course, that’s a good long-term indicator for us. And then just to kind of recap or draw a line under it. As Doug said, we would expect slightly faster first half than second half. And as we go throughout the year, we can come back to you with greater precision.
Doug Peterson: Thank you Scott.
Operator: Our next question comes from Jeff Silber with BMO Capital Markets. You may proceed.
Jeff Silber : Thanks so much. In your prepared remarks, I think you had said you’re constantly reviewing and optimizing your portfolio. Can we just kind of step back maybe you can tell us what you’re looking for whether it’s in tuck-in acquisitions or maybe more importantly potential divestitures? Would it be possible to see a large divestiture in the future? Thanks.
