S&P Global Highlights AI-Fueled Growth, Margin Expansion at Barclays Conference

Key Points

• AI adoption is accelerating at S&P Global: Customers using model context protocol connectors reached 500, while data usage through APIs and large-language-model calls increased fivefold in each of the past two quarters. The company views AI as an “accelerant” to growth and plans to preserve controls over its proprietary data.
• Productivity initiatives are supporting margin expansion: S&P Global sees potential to reduce roughly $500 million in data-operations costs by 20% and expects companywide margins to expand by approximately 50 to 75 basis points annually while continuing to invest in growth.
• Ratings and Energy outlooks remain constructive: Ratings billed issuance growth expectations improved to the mid- to high-single digits, supported by refinancing, structured finance and other activity. Energy revenue is expected to grow 4.5% to 6% this year, with a return to the company’s 6% to 8% medium-term target anticipated next year.

S&P Global NYSE: SPGI is seeing continued growth across its Market Intelligence, Ratings, Indices and Energy businesses, supported by commercial integration, artificial intelligence adoption and productivity initiatives, Chief Financial Officer Eric Aboaf said during a Barclays conference discussion.

Aboaf, who joined the company about a year and a half ago after two decades in banking, said his focus has been on improving visibility into commercial activity, including sales pipelines, customer segments and product offerings. He said the company is seeking to operate at greater scale while continuing to invest in growth and deliver margin expansion.

He credited the management team, led by Martina Cheung, with establishing a chief commercial officer organization focused on 130 customers representing roughly the top third of S&P Global’s revenue base. The approach is intended to bring the company’s ratings, market data, benchmarks and energy offerings together for senior client discussions, including with corporate and financial-services executives.

Market Intelligence Growth and AI Adoption

Addressing market speculation concerning the Capital IQ Pro business, Aboaf said S&P Global does not comment on “unwarranted rumors.” He said the company remains focused on growth in Market Intelligence, where first-half revenue growth exceeded 6%, within its full-year guidance range of 5.5% to 7%.

The company has reorganized Market Intelligence into two segments: Kensho Data Platforms, which represents about two-thirds of the division, and Enterprise Solutions, which accounts for the remaining third. Enterprise Solutions, which includes system-of-record workflow software and data offerings, grew 10% year over year during the first two quarters, according to Aboaf.

Aboaf said the company is seeing high-single-digit to low-double-digit growth in data, depending on the quarter. He said the number of customers using model context protocol, or MCP, connectors reached 500, up 50% from the prior quarter. Data usage through application programming interfaces and large-language-model calls increased fivefold from the first quarter to the second quarter, after also rising fivefold from the fourth quarter to the first quarter.

He also pointed to the integration of S&P Global data into ChatGPT financial-services workflows. According to Aboaf, an OpenAI study released the prior week found error rates below 3% when using trusted proprietary S&P Global data, compared with about 6.5% for the company’s nearest competitor.

Aboaf characterized AI as an “accelerant” rather than an immediate standalone revenue source. He said the company expects its pricing model to evolve over time from primarily value-based pricing toward greater usage-based components as customers gain experience with AI tools. S&P Global intends to maintain controls around its proprietary data, including keeping it behind a paywall and not allowing it to be used for model training.

Productivity and Margin Outlook

The CFO said AI and other technology tools are creating opportunities to reduce operating costs while funding reinvestment. In data operations, an area with roughly $500 million in costs, S&P Global sees a path to a 20% cost reduction and is evaluating additional opportunities through advanced AI and quantitative models.

Aboaf said the company expects to continue delivering companywide margin expansion of approximately 50 to 75 basis points while investing in products, features and geographic growth. Market Intelligence could generally be at the upper end of that range because of its larger expense base, he said.

In the first half, he said margins increased by more than 100 basis points in Market Intelligence, more than 200 basis points in Ratings, and 75 basis points or more in both Energy and Indices. He also expects more limited headcount growth across the company, citing productivity improvements in enterprise data, software development, research and analytical work.

Ratings Issuance and Investment Activity

For S&P Global Ratings, Aboaf said the company’s outlook for billed issuance has improved from low-single-digit growth at the start of the year to mid- to high-single-digit growth. He said issuance comparisons may become more difficult in the second half because the third and fourth quarters of the prior year were particularly strong.

Investment-grade issuance has been supported by hyperscaler financing activity, though Aboaf said this has been only one component of a broader issuance environment. Investment-grade issuance has represented roughly 40% to 45% of total issuance this year, broadly consistent with historical levels, he said.

He added that refinancing needs in high yield and bank loans remain substantial, while merger-and-acquisition activity, structured finance volumes and public and private ratings have also supported demand. Hyperscaler transactions have included not only conventional bonds but also structured and project finance, he said.

S&P Global continues to invest in automating parts of ratings surveillance and improving analyst productivity, according to Aboaf. The company also recently completed a small acquisition of a Nigerian and African ratings service as part of its regional expansion efforts.

Energy and Capital Allocation

In S&P Global Energy, the company now expects full-year revenue growth of 4.5% to 6%, after first-half growth of about 4%. Aboaf said the second quarter was expected to be the low point and that growth should improve in the second half, assuming some stabilization in energy markets.

He said S&P Global expects the Energy division to return to its medium-term growth target of 6% to 8% next year. Current sanctions have represented an approximately 75-basis-point headwind for the division over the last several quarters, he said.

Aboaf said the sale of a software slice of the energy business to SLB should improve the portfolio mix, while creating a new distribution partner for the company’s proprietary data. The company’s capital-allocation priorities remain organic investment, limited bolt-on acquisitions and selective exits from small, subscale product lines, he said. Recent bolt-on investments included datacenterHawk, a data-center power and forecasting business, and the African ratings expansion.

About S&P Global (NYSE:SPGI)

S&P Global Inc NYSE: SPGI provides financial information, analytics, benchmarks and credit ratings to businesses, governments and investors worldwide. Its services are used to evaluate credit risk, analyze markets, value assets, assess commodities and support investment and business decisions.

The company operates through businesses that include S&P Global Ratings, which provides credit ratings and related research; S&P Global Market Intelligence, which delivers financial and industry data, analytics and workflow tools; S&P Global Commodity Insights, which supplies information and pricing assessments for energy and commodity markets; and S&P Dow Jones Indices, which develops and maintains market indexes such as the S&P 500.

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