Earnings Call Transcript
S&P Global Inc. (SPGI)
Earnings Call Transcript - SPGI Q1 2024
Operator, Operator
Good morning, and welcome to S&P Global's First Quarter 2024 Earnings Conference Call. This call is being recorded for broadcast. I would now like to introduce Mr. Mark Grant, Senior Vice President of Investor Relations for S&P Global. Sir, you may begin.
Mark Grant, Senior Vice President of Investor Relations
Good morning, and thank you for joining today's S&P Global First Quarter 2024 Earnings Call. Presenting on today's call are Doug Peterson, President and Chief Executive Officer; and Chris Craig, Interim Chief Financial Officer. For the Q&A portion of today's call, we will also be joined by Adam Kansler, President of S&P Global Market Intelligence; and Martina Cheung, President of S&P Global Ratings. We issued a press release with our results earlier today. In addition, we have posted a supplemental slide deck with additional information on our results and guidance. If you need a copy of the release and financial schedules or the supplemental deck, they can be downloaded at investor.spglobal.com. The matters discussed in today's conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates, and descriptions of future events. Any such statements are based on current expectations and current economic conditions and are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. Additional information concerning these risks and uncertainties can be found in our Forms 10-K and 10-Q filed with the U.S. Securities and Exchange Commission. In today's earnings release and during the conference call, we're providing non-GAAP adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the company's operating performance between periods and to view the company's business from the same perspective as management. The earnings release contains financial measures calculated in accordance with GAAP that corresponds to the non-GAAP measures we're providing and contains reconciliations of such GAAP and non-GAAP measures. I would also like to call your attention to certain European regulations. Any investor who has or expects to obtain ownership of 5% or more of S&P Global should contact Investor Relations to better understand the potential impact of this legislation on the investor and the company. We are aware that we have some media representatives with us on the call. However, this call is intended for investors, and we would ask that questions from the media be directed to our Media Relations team whose contact information can be found in the release. At this time, I would like to turn the call over to Doug Peterson. Doug?
Douglas Peterson, President and Chief Executive Officer
Thank you, Mark. S&P Global is off to a tremendous start for 2024. Total revenue increased 14%, excluding the divestiture of Engineering Solutions. Transaction revenue in our Ratings division drove much of the upside, but importantly, subscription revenue across the entire company increased 8% year-over-year as well. Strong growth across the enterprise contributed to quarterly revenue of nearly $3.5 billion, representing the highest quarterly revenue we've ever generated in the history of our company. Execution was the theme in the first quarter. Our efforts to capture market opportunities, combined with discipline on the expense side, led to more than 350 basis points of adjusted operating margin expansion year-over-year and adjusted EPS growth of 27%. In addition to the stellar financial results in the first quarter, we continued to demonstrate our leadership across global markets. Capital markets were vibrant in the first quarter, and customers turned to S&P Global to help power their investment, funding, and trading activities. Equity markets saw strong volumes from both IPOs and M&A. We saw the highest level of debt issuance since 2021. As the globe grapples with the future of energy security and energy transition, it's no coincidence that this conversation took place on the stage of S&P Global CERAWeek conference and other S&P events around the world. As we Power Global Markets in equity, fixed income, commodities, derivatives, and in many industrial verticals, our innovation drives customer value. We'll continue to innovate and invest in our leading data, technology, and workflow tools to drive growth, and we'll highlight some of that innovation today. As we look to the 5 strategic pillars we outlined for you at our Investor Day, we're pleased with the progress we've made across the board. While that fifth pillar of execute and deliver is on full display this quarter with the strength of our financial results, we continue to invest in customer relationships, innovation, technology, and our people. Beginning with our customers, we saw nearly $1 trillion of billed issuance in the first quarter. This represents the dollar value of debt issued by our customers for which they actively sought out a rating from S&P Global. Issuers know that an S&P Global rating provides a credible, trusted, and objective measure of their credit risk, and they know that we have the capacity, even in a very active market, to fully meet their needs. When we look at the broader financial services landscape, we're certainly not back to what we would consider normal levels in the capital markets overall, but we did see improvement. With the macro and geopolitical uncertainties still facing our customers through this year, we continue to hear some concern about the back half, and many market participants are still carefully evaluating expenses for 2024. All of this is consistent with what we shared in February regarding our expectation that Ratings would see a stronger first half than second half, while Market Intelligence would likely start to see improvements in the growth rates in the back half. Energy customers from all of our divisions and from around the globe converged once again in Houston, Texas for our annual CERAWeek conference. We're thrilled that customers, partners, regulators, government officials, and global thought leaders view S&P Global's CERAWeek as the premier event of the year. Customer engagement remains vital for S&P Global. In the first quarter, we had well over 100,000 calls and meetings with customers in addition to the thousands of meaningful interactions our Ratings colleagues had with fixed income investors. Billed issuance increased 45% year-over-year in the first quarter. Tight spreads and stabilizing risk appetite in the market created favorable conditions for issuers. We saw investment-grade, high-yield, and bank loan volumes all increase as issuers took full advantage to raise debt early in the year. We do expect much of this strength was pull-forward from later in 2024, reinforcing our continued view of a stronger first half than second half in issuance volumes. The strength in billed issuance in the quarter also underscored the importance and advantages of a robust public debt market. We saw tremendous growth over the last 2 years in private debt markets, but we began to see early signs of some of that debt being refinanced in the public markets in the first quarter. While this private-to-public refinancing activity only represented a low single-digit percent of billed issuance, we've heard from customers that they're saving up to 150 to 200 basis points in their interest rates by refinancing to public markets. We expect the private markets to play an important role going forward as well, and we're working with major private debt partners to deliver risk analytical solutions. Private markets revenue in our Ratings division increased 30% year-over-year in the first quarter. Turning to Vitality, we're pleased to see that our Vitality Index continues to account for 10% of our total revenue despite the fact that several strong and fast-growing products matured out of Vitality Index at the end of 2023. As we've called out in the past, this index is meant to highlight the contributions from new or enhanced products. So as products mature, they will no longer be part of the Vitality Index even if they continue to grow rapidly. Key contributors were pricing, valuations and reference data, as well as several thematic and factor-based indices, matured out of the Vitality Index at the end of the year. We remain committed to that 10% target as a steady stream of new innovation takes the place of any products that graduate from the index. That was the case this quarter as products that contributed roughly $80 million of revenue to the Vitality Index in the first quarter of 2023 were no longer in the Vitality Index this quarter. We expect the Vitality Index to increase as a percent of total revenue as we progress through the remainder of the year. Turning to some examples of that innovation, in the first quarter, our Commodity Insights team launched a new food and agriculture commodities dashboard, providing a comprehensive view on commodity data as well as new reports and research on energy. Additionally, we launched new price assessments for renewable energy as well as new benchmark prices for the Middle East and Asia. Our energy transition and climate products continued to show rapid growth, nearly 30% year-over-year in the first quarter, supported by the continued innovation in price assessments, new and enhanced data sets and crucial insights solutions. We also introduced an exciting innovation in Market Intelligence. We've spoken at length about the tools and data sets available through our Market Intelligence Marketplace. But in the first quarter, we introduced what we are calling Blueprints. These Blueprints are packages of data sets and tools combined based on specific customer personas and workflows, such as private markets performance analytics. We introduced the first 5 Blueprints in the first quarter with plans to add more in the coming months. These intuitive combinations allow customers to easily discover how our data and tools can work together to facilitate analytics and workflows in new ways. We're also pleased to see early results from the enterprise AI initiatives we outlined for you last quarter. By elevating artificial intelligence to a position of enterprise-wide strategic focus, we're accelerating the development of new tools, deploying common capabilities across multiple divisions and increasing the value we create for our customers and our shareholders. With our in-house expertise, we've developed tools to help market participants benchmark performance of large language models, specifically for business and finance use cases. The S&P AI benchmarks by Kensho is a project informed by our world-class data and industry expertise. The questions in our benchmark are designed to assess the ability of large language models to understand and solve realistic finance problems, and each question has been verified by an experienced domain expert. Lastly, we introduced a remarkable tool we call S&P Spark Assist. This is a copilot platform developed jointly between Kensho and our other internal technology teams. We're deploying this platform throughout the organization to improve productivity, facilitate more rapid innovation, and reduce the time necessary to accomplish many routine tasks. Because of our proprietary data, the tools and expertise developed through Kensho and remarkable technologists we are working throughout S&P Global, we were able to develop S&P Spark Assist chat interface without relying on a third-party vendor. As a result, we're delivering the power of generative AI to our people in an easy-to-use platform at the cost of less than $1 per user per month. We're incredibly excited about what this tool can do for our people, and we'll provide more details around use cases and productivity as we progress through the year. Turning to our financial results, Chris will walk through the first quarter results in more detail in a moment, but we have had an incredible start to 2024. With strong growth across every division, we continue to balance the need to invest for future growth with the opportunity to deliver margin expansion and earnings growth this year. Revenue grew double digits as reported. But excluding the impact from the Engineering Solutions divestiture, revenue increased an impressive 14%. Trailing 12-month margins improved 170 basis points to nearly 47%. Now I'll turn to Chris Craig, our interim CFO, to review the financial results. Chris, welcome to the call. Over to you.
Christopher Craig, Interim Chief Financial Officer
Thank you, Doug. 2024 got off to a strong start as we saw 3 of 5 divisions achieve double-digit growth. As Doug mentioned, reported revenue grew 10% in the first quarter. And excluding the impact of the Engineering Solutions divestiture, revenue growth was 14%. Adjusted expenses grew by only 3% year-over-year as we continue to focus on disciplined execution and benefiting from the Engineering Solutions divestiture. Strong growth and solid execution combined to deliver more than 350 basis points of adjusted margin expansion in the quarter. With our commitment to capital returns over the last 12 months, we've reduced the fully diluted share count by 3% year-over-year. This led to adjusted earnings per share increasing by 27% year-over-year to $4.01. Now turning to strategic investment areas. Sustainability & Energy Transition revenue grew 15% to $78 million in the quarter driven by strong demand for Commodity Insights, energy transition products and benchmark offerings as well as EV transition-related consulting in Mobility. We are continuing to invest in our energy transition offerings where we see opportunities across our divisions. Moving to Private Market Solutions. Revenue increased by 16% year-over-year to $116 million. Growth was driven by debt and bank loan ratings as well as continued strength in iLEVEL and other Private Market Solutions within Market Intelligence. We continue to build momentum in our revenue synergies and are ahead of schedule toward our $350 million target. We exited the first quarter with an annualized run rate of $184 million. During the first quarter alone, we recognized $56 million in revenue synergies. While the majority of this was from cross-sell initiatives, we are beginning to gain traction with new products as well. As of the end of Q1, we have launched 25 new products through our revenue synergy initiatives, and we plan to launch more than 15 additional synergy products by the end of 2024. Turning to our divisions. Market Intelligence revenue increased 7% in the first quarter with all business lines growing in the mid- to high single-digit range. Desktop grew 5% as we continue to focus on speed, performance improvements and the introduction of new content and capabilities, including the expansion of our collection of premium broker research providers within aftermarket research. Data & Advisory Solutions grew 7% driven by expanded coverage and continued investment in high-growth areas of our company information and analytics and market data and valuation product offerings. Enterprise Solutions benefited from an increase in issuance volumes in the debt and equity capital markets and grew over 8% in the quarter. Credit & Risk Solutions grew 6%, supported by strong new sales and price realization, particularly for RatingsXpress subscriptions. We saw solid growth in Market Intelligence in Q1 that was in line with our expectations and consistent with what we signaled on our fourth quarter earnings call. Adjusted expenses increased 6% year-over-year primarily due to an increase in compensation expense, cloud costs, and royalties, partially offset by a reduction in outside services expense. Operating profit increased 9%, and the operating margin increased 70 basis points to 32.7%. Trailing 12-month margins expanded 50 basis points to 33.1%. Now turning to Ratings. As Doug mentioned earlier, we saw issuers take advantage of favorable financing conditions, which led to strong refinancing and opportunistic issuance in the first quarter. Ratings revenue increased 29% year-over-year, exceeding our internal expectations. Transaction revenue grew by 54% in the first quarter as heightened refinancing activity increased bank loan and high-yield issuance. Non-transaction revenue increased 8% primarily due to an increase in annual fee revenue and strong demand for our Rating Evaluation Service and Issuer Credit Rating products. Adjusted expenses increased 9% driven by higher compensation, including incentives as well as increased T&E expense as our commercial and analytical teams were actively meeting with issuers to help drive the strong growth we saw in the quarter. This resulted in a 43% increase in operating profit and a 640 basis point increase in operating margin to 64.7%. For the trailing 12 months, Ratings margin expanded 290 basis points to 58.5%. And now turning to Commodity Insights. Revenue increased 10% following the fourth consecutive quarter of double-digit growth in both Price Assessments and Energy & Resources Data & Insights. Price Assessments and Energy & Resources Data & Insights grew 14% and 12%, respectively. We continue to see commercial momentum across both business lines as our established benchmark data and insights products have driven customer conversations about our emerging offerings. Advisory & Transactional Services revenue grew 10% driven by strong trading volumes across key sectors in Global Trading Services and an excellent turnout at our premier global energy conference, CERAWeek. Upstream Data & Insights revenue grew by 2% year-over-year, benefiting from demand for our carbon emissions monitoring offerings as well as improvement in retention rate. The business line continues to prioritize growth in its subscription base. Adjusted expenses increased 7% due to higher compensation costs and ongoing investment in growth initiatives. Operating profit for Commodity Insights increased 13%, and operating margin improved by 110 basis points to 47.2%. The trailing 12-month margin increased by 120 basis points to 46.4%. Now turning to Mobility. Revenue increased 8% year-over-year. The dealer segment marked its fifth consecutive quarter of double-digit growth, and we also saw solid performance from our Financials & Other business line. Dealer revenue increased 12% year-over-year driven by new business growth in products, such as new car listings and CARFAX for Life, as well as the addition of Market Scan. Manufacturing declined by 3% driven by a decrease in onetime transactional revenue, particularly in our recall and marketing businesses, which was partially offset by growth in subscription sales. It's important to understand that revenue from recall products will fluctuate based on the level of activity in any given period. Financials & Other increased 12% as the business line benefited from strong underwriting volumes and price increases. Adjusted expenses increased 10% due to both planned investments in strategic growth initiatives and the full quarter impact of the Market Scan acquisition. While this resulted in a 100 basis points of margin contraction to 38.1% for the quarter and a 70 basis point reduction to 38.6% for the trailing 12 months, operating profit for Mobility increased by 5% year-over-year. Now turning to S&P Dow Jones Indices. Revenue increased 14% primarily due to strong growth in asset-linked fees, which benefited from higher AUM and continued strength in Exchange-Traded Derivative revenue. Revenue associated with Asset-Linked Fees was up an impressive 16% in the first quarter. This was driven by higher ETF and mutual fund AUM benefiting from both market appreciation and net inflows. We also saw an increase in revenue for OTC products. Exchange-Traded Derivatives revenue grew 12% primarily driven by strong volumes in SPX products and price realization. Data & Custom Subscriptions increased 6% year-over-year driven by new business growth in end-of-day contracts. Expenses increased 9% year-over-year primarily due to increasing investments in strategic growth initiatives as well as an increase in compensation expense. Indices operating profit increased 15%, and operating margin expanded 110 basis points to 72.9%. On a trailing 12-month basis, margins expanded by 30 basis points to 69.3%. In the aggregate, our businesses demonstrated exceptional revenue and margin growth while at the same time permitting us to invest in our strategic growth initiatives during the quarter, giving us a strong start to 2024. And with that, I will now turn it back to Doug to discuss our outlook for the remainder of the year. Doug?
Douglas Peterson, President and Chief Executive Officer
Thank you, Chris. We've updated our outlook reflecting our economists' view of the most important economic and market factors that will impact 2024 as well as the outperformance against our internal estimates during the first quarter. Our financial guidance assumes global GDP growth of 3.2%, U.S. inflation of 2.8%, and an average price for Brent crude of $85 per barrel. All three of these figures are slightly higher than we originally assumed in our outlook in February. Additionally, our original macroeconomic view included the base case assumption for 3 rate cuts by the U.S. Fed, beginning no earlier than June. As we've seen over the last 3 months, market expectations around interest rates have shifted. And while our economists have not formally updated the number of rate cuts in their base case scenario, our financial guidance now assumes fewer than 3 rate cuts in 2024. We're increasing our billed issuance forecast for 2024 by approximately 3 percentage points to a range of 6% to 10%. As we noted last quarter, our initial outlook for 2024 assumed a stronger first half of the year for issuance. Even with that assumption, the first quarter outperformed our expectations, though we believe much of that outperformance is pull-forward as issuers look to take advantage of very favorable market conditions. All of these factors impact our new full-year guidance calling for higher growth and stronger margins. This slide illustrates our current guidance or GAAP results. For our adjusted guidance, we're now expecting revenue growth in the range of 6% to 8%, reflecting the outperformance in Ratings and Indices in the first quarter, partially offset by slightly softer expectations for issuance in the second half of the year. Excluding the impact of 2023 divestitures, we expect revenue growth to be slightly more than 1 percentage point higher than reported revenue growth. We also now expect to deliver stronger margins in 2024 with margin expansion in the range of 100 to 150 basis points compared to our prior guidance of approximately 100 basis points. We're taking a balanced approach to reinvesting for future growth while still expanding margins and remain on track to achieve the Investor Day targets from 2022. We now expect to deliver adjusted EPS for the full year in the range of $13.85 to $14.10, which represents 11% growth at the midpoint. This represents a $0.10 increase from our prior range driven by the increased revenue and profitability outlook for the year. We're also increasing our outlook for adjusted free cash flow, excluding certain items, by $100 million despite modestly higher expected CapEx. Higher expected net income and disciplined management of working capital both contribute to the higher expected cash flow for the year. Moving to our division outlook. We're reiterating our revenue growth expectations for Market Intelligence, Commodity Insights, and Mobility. We're increasing the growth outlook for Ratings and Indices based on the strength in the first quarter. We're also raising the margin outlook for Indices to reflect the very strong performance year-to-date. While margins were also very strong in our Ratings division in the first quarter, we're reiterating the range for full-year margins, which implies approximately 150 basis points of margin expansion at the midpoint. Since much of the revenue outperformance in Q1 likely came from pull-forward, our full-year guidance assumes year-over-year declines in Ratings transaction revenue in the fourth quarter as we begin to lap much stronger comps from last year. As a result, we expect margins to be softer in the back half of the year than in the first half in Ratings. With that, I'd like to invite Adam Kansler, President of S&P Global Market Intelligence; and Martina Cheung, President of S&P Global Ratings and Executive Lead for Sustainable1, to join us. I'll turn the call back over to Mark for your questions. Thank you.
Mark Grant, Senior Vice President of Investor Relations
Thank you, Doug. Operator, we will now take our first question.
Operator, Operator
Our first question comes from Toni Kaplan with Morgan Stanley.
Toni Kaplan, Analyst
I wanted to focus on Market Intelligence. We've heard some negative commentary from others in the market, which made it sound like this past quarter was particularly challenging. So I wanted to see if that was your experience as well. And also if the large investment bank consolidation impact was in this quarter or if it hasn't hit yet. And then I know you're talking about Market Intelligence being better in the back half. And so wanted to just flesh out what gives you the confidence that, that happens.
Adam Kansler, President of S&P Global Market Intelligence
Thank you for the question. Yes, we're experiencing similar trends as others in our markets, especially among our financial services customers, particularly the smallest ones, which aligns with observations from others. This is where we see the greatest concentration. The consolidation you're referring to does not materially affect our overall division, as some of it has already been absorbed and more will follow. However, we anticipated this in our guidance. We regard the current market conditions as a cyclical challenge, but we also see strong secular growth trends in our core business areas, such as private markets and the expansion of our Desktop. We've made significant improvements over the past two years, which gives us confidence in reaching our long-term goals, the expectations for the current year, and the longer-term targets we outlined during our Investor Day in 2022.
Operator, Operator
Our next question comes from Manav Patnaik with Barclays.
Manav Patnaik, Analyst
I would like to ask about Market Intelligence and the strategy moving forward. Given the challenging budget environment, it's likely that competitors are also adjusting their approaches. Could you clarify the strategy in this area? Additionally, when is the expected closure of Visible Alpha? How should we assess its contribution and the planned divestiture? What other elements should we consider?
Adam Kansler, President of S&P Global Market Intelligence
Okay. Thanks, Manav, and thank you for the question. Let me just start with the last piece, Visible Alpha. We do expect that transaction to close here in the second quarter. We're quite excited about it. I think it's an important part of one of our strategic areas, which is the continued expansion and improvement in quality of the Cap IQ Pro set of solutions that we offer to the market. As we highlighted, I think really as far back as Investor Day, we have a few core areas of focus that we do think will continue to grow. And that really shapes our strategic focus. Those are in areas like private markets, sustainability of the supply chain, the expansion of our Desktop, the ability to deliver our data and solutions to customers in as easy a way as possible. These are things that our largest customers are looking for as they go through consolidations of vendors. That's where the scale and breadth of services that we're able to offer, through Market Intelligence, and of course across the broader S&P Global enterprise, really has impact. We'll be laser-focused on that strategy. And as you've seen when we announced at our last call, we'll look at those businesses where we see underperformance or lack of strategic fit, and we'll make decisions on those. And where we see opportunities to acquire unique assets that are high-growth or have particular proprietary value, a company like Visible Alpha, the one you mentioned, quite excited to get that integrated, we're going to take advantage of our position and our opportunity to bring them into the business. So thanks again, Manav.
Operator, Operator
Our next question comes from Heather Balsky with Bank of America.
Heather Balsky, Analyst
I would like to understand more about the increase in issuance during the first quarter. Could you share how much visibility you typically have when looking three quarters ahead? Also, how are you incorporating a cautious approach, particularly in light of the election year and an unpredictable rate environment? How are you setting your guidance based on what you observed in the first quarter?
Martina Cheung, President of S&P Global Ratings
Thank you for the question, Heather. We assess multiple factors to gauge the issuance pipeline in the short term. Generally, we analyze 180-day pipelines alongside shorter-term insights and extend our view to the next 9 to 12 months whenever possible. Key influences include macroeconomic elements like GDP and inflation rates, as well as geopolitical situations, which we are closely monitoring this year. Additionally, we consider maturity walls, refinancing trends, and investor interest in various asset classes such as private markets, sustainable finance, structured finance, and infrastructure. These factors give us a clear understanding of where we stand in any given year. In the first quarter, we observed substantial refinancing activity related to maturity walls in high-yield and bank loans, accounting for about two-thirds of total issuance. This included a significant amount of refinancing for maturities in 2024, with some activity for 2025 and 2026 as well. This refinancing dynamic has been the main driver of issuance performance in Q1, and we anticipate that this trend will persist into the second quarter before slowing down. We have been hearing from high-yield, bank loan, and investment-grade issuers expressing a desire to prepare for potential volatility later in the year and to capitalize on the current market's stability and favorable spreads. In the investment-grade sector, we had a robust quarter; however, we believe much of this activity was brought forward from the latter half of the year. There were several significant M&A transactions, but they weren't sufficient to alter our outlook for investment-grade issuance for the remainder of the year. I hope this clarifies things, and I’m happy to answer any further questions regarding issuance.
Operator, Operator
Our next question comes from Faiza Alwy with Deutsche Bank.
Faiza Alwy, Analyst
I would like to follow up on Ratings and discuss a bit more about the margins. While you've increased the revenue outlook, you haven't adjusted the margins. I'm interested in whether this is due to a mix of business or any investments, and how we should understand the margin performance for the remainder of the year.
Martina Cheung, President of S&P Global Ratings
Thank you for the question. As we've mentioned many times before, our focus is on achieving long-term sustainable margins in the Ratings business. We are very careful stewards of capital. Our guidance for the year remains at 57.5% to 58.5%, and as Doug highlighted, the midpoint indicates an approximately 150 basis points margin increase compared to last year. We have significant potential with our current base. This is evident from our exceptionally strong quarter in terms of issuance, all without needing to significantly increase our staffing. This illustrates our capacity preservation strategy implemented a few years back. We are very satisfied with our expense and capacity management and are confident in the margin range we currently have for the full year.
Operator, Operator
Our next question comes from Andrew Steinerman with JPMorgan.
Andrew Steinerman, Analyst
Martina, it's Andrew. I just wanted to ask you a little bit about issuance pull-forward. Just you're talking so much about it intra-year kind of second half pull-forward to first half. Just broadly, aren't we still in the midst of a pretty large issuance recovery after the big declines of '22?
Martina Cheung, President of S&P Global Ratings
Andrew, thanks very much for the question. I would say a couple of things. So the context on a lot of my commentary on intra-year, I would say I'd lean more on the investment-grade side where we think we saw a 2H pull-forward. I think we did see pull-forward of '25 and '26 maturities, for example, on the refinancing front for high-yield and bank loans. So a little bit of a mix there between the spec-grade asset class and investment-grade asset class. I think to your broader point, yes, we are and continue to be in midst of a recovery. Notwithstanding the very steep growth rates for example in high yield and investment grade, we're still not seeing the issuance volumes back to anything close to what we might have characterized as market highs, for example in the past, or even market averages that we might have seen in the past. So there's still room to go here throughout the next several years. This is something that we've commented on since '22, believing that it was going to take some years to come back to it. But of course, the maturity walls themselves are quite a large factor here. And on the spec-grade asset classes, high-yield and BLR, jointly, we've got about $1.1 trillion in maturities still outstanding for us in '25 and '26. So we're monitoring very, very closely and tightly the indicators that would give us a sense for the pace and timing of those maturities.
Operator, Operator
Our next question comes from Alex Kramm with UBS.
Alex Kramm, Analyst
Just another one on the margin actually, but more on the outlook for the full company. And nice to see the margin outlook being raised. But just wondering, is this just a business mix-driven upside? Or is there anything else going on and such? And I'm asking particularly since you mentioned execution in your prepared remarks. So just wondering, is this just execution on the sales and revenue side? Or following last year's, I guess, disappointments a couple of times, if you take a little bit of a harder look at the cost base and where you can be more efficient.
Douglas Peterson, President and Chief Executive Officer
Thank you, Alex. Well, as you know, we run the company with an approach to budgeting and management, where we always start the year with a positive jaw. That's just our philosophy. We look and see how we're going to do in our core businesses. We go out to see our customers. We understand what we can build as a forward-looking pipeline, forward-looking expectations for the market. We then ourselves say, 'What would be the expense level that we want to have to support that growth?' On top of that, we then come back and say, 'How much can we afford to invest?' As you saw in this quarter, our expenses grew 3%. That's a result of very, very strong execution coming out of 2023. We're ensuring that we can have very clear tracking of all of our expenses. It's just part of our philosophy of how we run the company. Going forward for the rest of the year, you see that we're going to continue that approach. But we think that this is part of the way we manage the company. We're always looking at being very tight on understanding our revenue sources and then moving forward to have a tight approach to our expenses. Thanks, Alex.
Operator, Operator
Our next question comes from Ashish Sabadra with RBC Capital Markets.
Ashish Sabadra, Analyst
I wanted to explore Market Intelligence further, specifically regarding the recurring variable and subscription growth. We've experienced strong 13% growth in recurring variable over the last two quarters. What should we consider regarding those tailwinds? Will Ipreo and WSO primarily drive this going forward? Regarding subscription growth, which has moderated to 6%, how should we evaluate that momentum as we progress through the year?
Adam Kansler, President of S&P Global Market Intelligence
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.
Operator, Operator
Our next question comes from Jeff Silber with BMO Capital Markets.
Jeffrey Silber, Analyst
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, President of S&P Global Ratings
Jeff, it's Martina. Thanks for the question. So to your point, billed issuance was up 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.
Operator, Operator
Our next question comes from Scott Wurtzel with Wolfe Research.
Scott Wurtzel, Analyst
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.
Douglas Peterson, President and Chief Executive Officer
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 with 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 the 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 built around ESG. We've also had multi-asset class products. But I think in Market Intelligence, we've also seen a lot of really strong synergies. So let me ask Adam to supplement the answer. Thank you.
Adam Kansler, President of S&P Global Market Intelligence
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, and 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 our sails 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.
Operator, Operator
Our next question comes from Shlomo Rosenbaum with Stifel.
Shlomo Rosenbaum, Analyst
Doug, could you share some insights on Market Intelligence and Mobility? Please discuss the sales cycles, what feedback you’re receiving from your team compared to last quarter, as well as year-over-year. Additionally, has there been any shift in the competitive landscape with the introduction of your new products? I would appreciate your thoughts on those topics.
Douglas Peterson, President and Chief Executive Officer
We've been actively visiting our customers globally this year. In the financial services market, we are experiencing a slight slowdown in sales cycles, making it take longer to finalize some transactions. In the Mobility business, there is a significant transformation happening within the industry, especially with the rise of electric vehicles. All players, whether OEMs, suppliers, or dealers, require data and analytics to navigate these changes effectively. We offer these insights regardless of the market conditions. Additionally, we are introducing new products that help dealers and OEMs make more informed decisions. As electric vehicles accumulate in ports and on dealer lots, we provide essential information that manufacturers can leverage when developing future incentives. This ongoing dialogue fosters strong relationships with our clients across various industries worldwide, enabling us to swiftly deliver the data and analytics they need. Thank you, Shlomo.
Operator, Operator
Our next question comes from Craig Huber with Huber Research Partners.
Craig Huber, Analyst
On your AI investments, obviously, you're doing that to 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 where it puts downward pressure on your margins near term. I'm just curious, do you think you can continue that going forward here?
Douglas Peterson, President and Chief Executive Officer
Thank you, Craig. As we examine our artificial intelligence roadmap, it's clear that this focus has been a priority for many years, not something new for us. It began with our acquisition of Kensho six years ago, and since then we have developed a structured approach to AI that starts with a clear vision and strategy. We have recently established a leadership team that includes our Chief Digital Solutions Officer and Chief Artificial Intelligence Officer overseeing the entire organization. Our governance structure is carefully monitoring the budget. For the past six years, we have included AI expenses in our budget, understanding that implementing an AI program is costly and requires disciplined management. We are also tracking our successes, which have led to new products that we are preparing to launch. We aim to enhance productivity, which we hope can contribute to margins while also allowing us to reinvest in innovation and growth. Overall, we have a structured approach to AI, utilizing an open ecosystem to leverage all AI developments, including large language models from various sources. We are committed to protecting our data and ensuring our intellectual property is not used by others. We are pleased with our progress so far and will continue to share updates over time. Thank you, Craig.
Operator, Operator
Our next question comes from Jeff Meuler with Baird.
Jeffrey Meuler, Analyst
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 bookbuilding business or whatever, to just help with investor confidence regarding what's assumed over the remainder of the year through the cyclical challenges.
Adam Kansler, President of S&P Global Market Intelligence
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 capabilities, reference data, we saw that across the firm in other divisions as well. Those are areas that continue to build and areas where we see large secular growth. Those are somewhat unique offerings for us, given our market position in some of those businesses. Across our data and reference data, pricing, valuations, those are in pretty steady demand. So they're less subject to the activity in the marketplace quarter-to-quarter. And that's where we see some of the stability and the general growth. What's really unique about the S&P Global offering is the scale and breadth that we can deliver to a customer. It's really being able to service them across the portfolio, from discovery and research for an investment, to processing the investment, monitoring it, valuing it, keeping it in a workflow tool. That set of solutions and the efficiencies we can drive through it, I think that's the biggest part of our value proposition. And particularly our larger customers, as they look to consolidate relationships, that gives us a bit of an advantage there. Thanks again for the question, Jeff.
Operator, Operator
Our next question comes from Russell Quelch with Redburn Atlantic.
Russell Quelch, Analyst
Doug, another really good quarter in Commodity Insights. So I was wondering if you could share what drove the 14% growth in Price Assessments in the first quarter. Is that maybe new product-related? Any early feedback on Platts Connect? Is that helping drive more cross-selling? And perhaps is there upside risk to guidance here? I mean, obviously, you've upgraded guidance on some of the sort of transactional base revenue segments, but this is maybe a higher-quality revenue line. So is there upside risk here?
Douglas Peterson, President and Chief Executive Officer
Yes, thank you for that, Russell. When you look at Commodity Insights, we've continued to advance incredibly well. This is one of the successes in integrating the ENR and Platts businesses. We have quickly brought together products like Price Assessments, and cross-selling has been strong, enabling us to sell ENR products to Platts clients and vice versa. This approach has been effective from the beginning. We've also observed significant demand for energy transition, placing us in a prime position in that area. This includes products related to oil and gas and their substitutes, the carbon intensity of oil and gas products, and trends in renewables. We have launched a new range of clean and alternative energy products and services. Additionally, we've been introducing new products in the metals and mining sector as well as agriculture. Overall, we've achieved very strong results. We also had a successful quarter for CERAWeek, the conference in Houston that serves as a key venue for understanding developments in the energy sector. This year has been exceptionally strong across the board. However, we anticipate that later in the year we will face tougher comparisons, as last year’s third and fourth quarters, particularly the fourth quarter, were robust. As we set our guidance, we carefully considered the tougher comparisons we might encounter at the end of the year. Nevertheless, the Commodity Insights business is performing exceptionally well and is broad-based. Additionally, Platts Connect has been an early success, and we are very pleased with it. You can expect more developments from Platts Connect in the upcoming quarters.
Operator, Operator
Our next question comes from George Tong with Goldman Sachs.
Keen Fai Tong, Analyst
In your updated Indices guidance, can you talk about how much of the growth comes from flows versus market performance? And what you're seeing from a pricing and mix perspective from customers?
Mark Grant, Senior Vice President of Investor Relations
George, this is Mark. The updated guidance on Indices is really driven just by strength across that business. But just giving you the underlying assumptions for the full year guide, we're expecting the S&P 500 to be essentially flat from 3/31 through the end of the year. The guidance assumes modest growth in the ETD volumes. And then we are expecting that subscription line to accelerate a little bit as we progress through the full year.
Operator, Operator
Our last question comes from Owen Lau with Oppenheimer.
Kwun Sum Lau, Analyst
So just a quick follow-up on Commodity Insights, and there are lots of conversation about commodities trading, growing our U.S. customers and the prices growth and things like that. How much does this volatility contribute to your business this year? And if this kind of volatility subsides, how do you see the sustainability of your growth?
Douglas Peterson, President and Chief Executive Officer
Thanks, Owen. We believe that volatility encourages more people to seek an understanding of market dynamics. Historically, this volatility persists, with new factors continually emerging to engage interest in the sector. We view several significant long-term trends as vital for our business, particularly energy transition, which is a prevalent topic, especially outside the United States. During my travels this year, I have consistently encountered discussions centered around energy transition. Not only does this impact our Commodity Insights business, but it also extends to our Ratings and Market Intelligence segments, as they explore financing solutions related to energy transition, which overlaps with our other divisions. Regarding Commodity Insights, as this is primarily a subscription-based business, we can track the subscription growth over time and identify the influx of new customers. I often say that every company is, in essence, an energy company, regardless of their primary focus. This broadens our client base to include non-traditional energy companies that require our solutions to manage their energy consumption. Thank you, Owen, for your insights, and I believe you were the last question. I would like to conclude with a few remarks. I genuinely appreciate everyone's participation in this call and for your insightful questions, as always. This has been an excellent quarter, and we are very satisfied with our results, which affirm our strategy and highlight our effectiveness. As I mentioned, I've been traveling extensively this year, engaging with customers from various industries across all our business areas. In these discussions, we recognize the strengths of our franchise align with our customers' future needs, including energy transition, private markets, supply chain, credit, and risk, alongside artificial intelligence. I am pleased with the numerous new capabilities and products we have introduced to safeguard our intellectual property and establish a leadership role in AI. I want to extend my gratitude to Martina and Adam for sharing their insights today. Additionally, I'd like to thank our team across the company for delivering an outstanding quarter. Thank you again for participating in the call today, and I wish you all a great day. Thank you very much.
Operator, Operator
That concludes this morning's call. A PDF version of the presenter slides is available for downloading from investor.spglobal.com. Replays of the entire call will be available in about 2 hours. The webcast with audio and slides will be maintained on S&P Global's website for 1 year. The audio-only telephone replay will be maintained for 1 month. On behalf of S&P Global, we thank you for participating, and wish you a good day.