Hey, good morning, and welcome. I'm George Tong. I am very pleased to be joined by Ewout Steenbergen, CFO of S&P. Ewout, thank you for being here with us today. Thanks, George. Let's start at a high level. S&P as a diversified financial services and technology company, certainly has a lot of insight into multiple corners of the economy. What's your outlook for the overall macro environment over the next two-four quarters, based on what you're seeing in your business? And how sensitive is S&P's business to economic trends? Yeah. Well, first of all, George, thank you for inviting us to this conference. In general, if we look at the macroeconomy, it seems to be that the probability that the Fed is going to pull off a controlled environment around inflation, but not pushing the economy in a recession, I think that probability is going up. So I would say that's pretty impressive to really find that right balance in taking the right interest rate actions, but still keep the economy going. So far so good, and we are not calling for a recession anymore. We think there will be some economic slowdown, probably prolonged over a number of quarters, but we're not calling for a recession anymore in the near future. So I would say that's a clear positive. Maybe there's going to be one or two more rate hikes, but that's probably would be it, and then we would see at some point a pause in terms of the rate environment. That would be clearly a positive from our perspective. Once the volatility around the yield curve will go away, there's clarity, how the rate environment looks, where it's heading, when potentially rates would come down again, I think that would be clearly, particularly for the debt capital markets, would be a, a real positive. Because now the uncertainty and the volatility around the yield curve have quite a large impact on that market. We would say that there's probably going to be a bit of an uptick from an overall credit perspective, so the cycle will definitely be a little bit more meaningful there, but not extreme in terms of, of credit losses. How that is going to work through the, the economy, I think there's probably going to be some sectors that are going to face some of the impact everyone is talking about. Commercial real estate, private credit is going to be an interesting one when they start to face some credit losses and how that is going to hold up. Mm. So those are a couple of those questions. What does it mean for us as a company? A couple of things. First of all, I would say we have a very diversified revenue base, so that's a big benefit. We're having a lot of stability for that reason. As you know, a large part of our revenue base is subscription, so that gives us a lot of continuity. If there is more stability in the general economic environment, that's a positive for us. It will mean that probably debt market activities will come back earlier. There's probably going to be some... Then some tailwinds from M&A activity that is going to be stronger in the future. I would say, in general, the more there are questions around the economy, about sectors, around volatility, macro indicators, and so on, generally, that's good for our business. Because when markets are really stable, people don't need so much information analytics. Mm. When there's a lot of uncertainty around where oil price is going, as an example, they need much more of the information from our experts. So I would say we're really pleased where the markets are, where it's trending. Obviously, it has some impact and some longer sales cycles. We can talk about that- Mm-hmm ... A little bit more. But, overall, in terms of the outlook that we have provided for the full year, the Investor Day targets for 2025 and 2026, I think we're very much in a good place there. On the topic of the targets that you announced last year at your Analyst Day, you had targeted organic revenue growth of 7%-9% by 2025, 2026. Obviously, a lot has changed over the past year with interest rates, with the debt issuance market, with ESG. So how confident are you in achieving that 7%-9% organic growth target within that timeframe? We are still absolutely on track to hit those targets. We have reiterated that at our earnings call. I'm sitting here today, two months later. I would say we're still very much in the same place where we were when we had our Q2 earnings call. So no concerns about that. Also, just as a reminder, we didn't give CAGRs. Mm. We said there's probably, in the short term, some uncertainty on an overall quarter-by-quarter basis. But when we are through 2024 and we're hitting the time period of 2025, 2026, now we should expect to see those kind of growth levels for, for the company. So no, no change at all, and I can definitely reiterate those targets. Got it. Another topic that of note is your cost synergies that you're on track to achieving 80% of your cost synergies this year, but your revenue synergies are still very early. Can you give us an update, especially on the revenue synergy side, of how you're achieving these targets, and when you would expect to see more meaningful lift on the revenue side? Yeah. First, quickly on the cost synergies, I think you saw that we announced at the Q2 earnings call run rate $574 million, so we're almost done with the $600 million. I think the operational integration of the organization also almost done, which is great news, because one and a half years for such a large, complex integration, I'm really happy how the teams have performed, how quickly they have gone, and that's good for an organization. You want to take away the uncertainty overhang on the personal side, so, to go really fast and capture, those benefits is really important. Now the big, of course, task is to deliver on the revenue synergies. I would say we are exactly where we thought we would be at this point in time. We're still looking at about 45% delivery of revenue synergies next year, of the $350 million. And if you think about the phasing, the first part was very much cross-selling. Mm-hmm. We have a product that comes from uncertain, heritage IHS Markit, and a heritage S&P Global customer. The sales force is realizing that that customer is looking for this particular product. Think about, as an example, a KY3P product, makes the introduction, you make the sale. That is definitely now most of the activity with respect to revenue synergies. The next phase is going to be the one that is really strategically important, the new product development- Mm-hmm ... and the traction that will get. Think about new data sets that are being put on the desktop. We now have loan data, the IHS Markit loan data on the desktop, the Mobility data has been added. There's many of those examples that ultimately will drive the next wave of revenue synergy. So again, I, I think we're on track, but we have always said that is a multi-year path to deliver on those revenue synergies. Right. Recently, you also gave an update on generative AI on your earnings call. Can you provide us with an update on some of your initiatives with generative AI? How you're leveraging Kensho, some of the external partnerships to build out generative AI. You talked about CapIQ in the past, so an update there would be good, and then when would you expect to see revenue and margin benefits from generative AI? Yeah. George, I think in general, there's a lot of vaporware, as you know, around generative AI. Everyone is talking about it, but if you ask actually who has a product developed for their customers, there are not so many examples there. We are very focused on bringing actually production-grade level products- Mm-hmm ... To our customers, as quickly as possible, because we believe there's a first mover advantage there. The more we can be embedded with our customers in their workflow tools, in the data sets they are using, they might now, at this moment, consider: Should I billed something myself? Should I partner with a large tech company? But if we can give them alternative number three, is buy a Gen AI tool from us, from a trusted partner with a strong brand recognition and credibility, embedded with workflow and data tools, I think that could be a really attractive alternative, and which means that we are getting even more embedded with customers, even more difficult to get replaced in the future. So that is a really important element. Maybe we are making less noise around it in general about our plans in terms of innovation, because we're very much focused on really developing not a POC, but a real- Mm ... Production-grade kind of, of tool. Obviously, we're also looking at the efficiency side, because I think there's two large elements to us. One is, what can we do for our customers? The second is just the workflow that we are having internally around unstructured data sets, structuring it, linking it, helping our internal analysts, our data scientists, our data operations teams in, in many parts of the world, making them more efficient. We have been doing that the last five years with traditional AI tools, so I see this just as a continuum, that we will continue to do that now with the newest Gen AI tools, and that will help with a lot of productivity and efficiency. I have no concerns about that at all. We're really good in that. We have been capturing that in the past. We will continue to capture that. But I think the commercial opportunity, that's really the attractive part, and we're focusing on it. Last element to the question you asked: What does that mean financially? It's really hard to give you a precise answer on it today. I think actually no one can really give you an answer. But we have to go very fast in this area, because I truly believe this is going to be really meaningful. This is going to be a massive shift in terms of our industry, data, tech, analytics, and we have to make sure we are going fast. And then over time, we will learn what is going to be the commercial model, how much do we make out of it, how much additional efficiencies it will bring, and we can give you updates. So it's really hard to say now. Mm-hmm. But is it going to be really meaningful? Absolutely. I'm, I'm a really deep believer of that. Great. Let's turn to the Ratings business. So, global debt issuance volumes since 2Q have been relatively soft, if you look at, volumes in the months of July and August. How comfortable are you in attaining your full year target of 5%-7% Ratings revenue growth, which you raised with your last earnings call, based on the trends that you've seen to date? Yeah. Completely comfortable. I would say, actually, one of the reasons that we were maybe a bit prudent in some of the outlook we provided for the company and some of the businesses at the earnings call, I'm so happy that we did that. Mm. Because sitting here today, you could say, "Yeah, July issuance, market issuance was down a bit." We, by the way, published bond issuance for us was up 1%. That's below the 4%-8% bond issuance for the full year. Mm-hmm. August is always slow, as we know. Mm-hmm. September started really high. Yesterday was a really busy day. Again, one day is not, it's not a trend. But I... If I look at this month and what we're seeing, I feel very comfortable that the guidance we have provided, we're still on track on delivering on this. Right. As you look across multiple corners of the debt issuance market, where do you see most opportunity for the growth? And where do you see most risk? Yeah. This year, we think particularly if you look at the mix of the different debt categories, non-financials is going to show the highest growth, and probably the largest decline is going to be in Structured Finance and in International Public Finance. That mix is actually quite good for us because non-financials, we are quite strong. Structured finance, it depends on which category. International public finance is a category usually from a commercial perspective, is a little lower. So the mix is actually a benefit for us this year. Mm-hmm. So you could say there's always that translation from market issuance to build to revenue, and you see actually the reverse of last year, the billed issuance is stronger than market issuance. And of course, with pricing and other elements that go into the mix, we expect that revenue growth of 5%-7%, that it's still solid growth of the Ratings business for this year. Got it. Now, last year at your Analyst Day, you also provided a medium-term target for the Ratings business of 6%-9% growth by 2025, 2026. That does come above what the Ratings business has grown historically. So what in the business has changed structurally that should enable better growth in the future compared to historically? Yeah. We're, we're looking actually, George, at that target to be quite consistent with performance in the past. If you look at the 10 years before 2022, on average, the Ratings growth was somewhere between 7%-9%. So 6%-9% is not so far off. I think the elements that go into the mix are still very similar, so that's good news. It's maybe a boring answer, but I think it's, it's good news because we still think refinancing is there. The refinancing walls are very strong. We know this ultimately will come to the market and will drive new business. And then the algorithm, other elements in terms of new debt that will come to the market, pricing, other growth initiatives and Ratings, all of that is still the same. So the algorithm is still there, and ultimately, over time, we will get back to that trend line, maybe 2021, 2022, were some of the exceptions, but ultimately, over time, we will get back to the trend line that we had, let's say, until 2019, 2020. Right. Now, on the flip side, there are potentially other factors that could limit medium-term growth in debt issuance, higher interest rates, for example, the growth of private credit. How do you think about those factors in achieving or impacting your medium-term growth for ratings? Yeah, it's so interesting because there's always that comment about interest rates, but everything is relative. Mm-hmm. Because with 4% interest rates, is that high, or is it what we saw the last decade was low, and actually four is normal, if you look from a longer historical perspective? I don't think rates where they are today are punitive for issuers. Mm-hmm. As long as the economy is strong, as long as there is good, healthy economic growth, as long as companies are therefore interested in investing in new factories, in new buildings, in new business growth, debt financing is still the most attractive form of financing, also at current interest rate levels. Not speaking, of course, about low quality, high yield, with very wide spreads. That's, of course, a- Mm-hmm ... Very different discussion, but for the vast majority of the debt market. Private credit is definitely a strong trend. Last year, there was maybe. It was a little exaggerated because high yield was close, so a lot of issuers had no other alternative than to turn to private credit. But we think this market is going to be there. We actually see it as an opportunity. Some of this debt will potentially get refinanced and come back to the public markets. We have seen some examples of that this year. We see private credit that needs to be syndicated at some point in time. There needs to be more transparency from a credit risk perspective, and we're actually working very closely with many private equity firms at this point in time, how to help them more in the future. We don't see this so much as a threat. We actually see this as an opportunity to expand our offering to the market. Right. Now, maybe we can switch gears and talk about the sustainability and ESG business, which you noted last quarter, there were some headwinds. Can you elaborate on where you're seeing the headwinds in the U.S. and in Europe, and how you expect it to impact near- and medium-term performance within- Yeah ... across the company? Does sound like it's isolated to the Market Intelligence? Yeah. Generally, sustainability, energy transition, we're still very committed to this from a strategic perspective. We think this will continue to be a large growth initiative for the company, and we expect to hit $800 million of revenues, maybe not in 2026, so the timing has become a little bit more uncertain, maybe a year later, but we'll hit those numbers and the growth will be there. Why? Because we see customers continuing to have a lot of questions around this. How do I make my TCFD reports? How do I commit to a net zero plan? How do I track the underlying actions and initiatives? What are the quality data sets that go into this? How can I get more insights in pricing of biofuels and hydrogen and carbon offsets, and so on? So all of those questions are still the same. If I speak to many CFOs in many different industries, they all say: "Oh, yeah, we need so much help in this, in this space." We see growth very strong in energy transition, in the commodities business, the move to EVs, in the Mobility business, in climate data. Where we see particularly a little bit of a pause at this moment- Mm-hmm. is mostly on the buy side. Many buy-side firms are reconsidering their ESG strategies, how much they want to push these products, what are the growth expectations, and where they should buy the data from. And we see many of them reconsidering buying ESG scores off the shelf of a provider or moving to a more in-house proprietary methodology. As you know, we were never the market leaders in scores. We're usually more a, a number three, a runner-up, but we have a lot of ESG raw data. We know all the underlying factors under the E, the S, and the G, so actually, the demand for ESG raw data is going up a lot. So yes, that is the part where there's a little bit of uncertainty, particularly driven by the regulatory and political environment. But we think actually this is temporary, and the fact that maybe scores will move to raw data, purchases by customers is actually will be over time, will be a positive for us. Now, S&P reduced its guide for Market Intelligence by 0.5 point, six-eight rather than 6.5-8.5, because of energy transition and sustainability. Can you talk about trends in Market Intelligence outside of ESG? Mm-hmm. How are the underlying trends with desktop, enterprise spend, and the overall customer selling cycle? Yeah. I, I would say it was not only due to sustainability, because if you, if you go back a quarter, we said we're trending to the low end of the range of 6.5%-8.5% because we saw some longer sales cycles of, of customers, and then the incremental element was that uncertainty about sustainability at the end of the Q2. Moreover, we wanted to have a range for Market Intelligence for the full year that was having sufficient prudency, that was de-risked. So we didn't want to go out with the Q3 and then say, "Oh, now we have to change the Market Intelligence range." But just to be very clear, I, I don't think there is any large concern- Hmm ... I'm seeing across the board with Market Intelligence at all, including sustainability. Maybe to make a comment on those longer sales cycles, why is that happening? That has mostly to do with two factors. One is some of the customers that are in the current economic environment, thinking a bit longer, needing more approvals, higher up in the cycle in terms of new product purchases. The other is we're adding more and more products and features to the contracts that we're having with customers. We have many customers that are now saying... And actually, there's concrete examples to just to use one anecdote. One recent customer meeting with a very large financial institution, they said to us, "We have 50+ data, market data providers. We would like to consolidate. Actually, here is the list. Tell us which of these providers you can replace, because we would like better to consolidate, some of these data purchases with you." So if that's happening, obviously, it's an expansion. It takes more time to have the contract negotiations. The good news is, I'm particularly focused on, are those deals ultimately getting done? A long sales cycle is no problem if ultimately the deals get closed, then it's purely a timing matter. And what I'm seeing is the deals get closed. They are not falling through. So overall, from a company perspective, I'm not concerned about it at all. Right. You've previously mentioned that Commodity Insights should be able to sustain high single-digit growth, basically, regardless of the oil environment. If oil prices stay within a broad range of $60-$100, then it should be fine. But if it goes outside of those ranges, it becomes problematic. So if oil prices over the near to medium term aren't the driver for Commodity Insights, what do you expect will be the driver of high single-digit growth within the company? Well, first of all, this is a business that is benefiting from the large shift to new energy renewables, and we're having that benefit of traditional energy is still there. It's not going away for the time being, but also market participants are really focused on that energy transition. So when there's such a large change to an industry, and we are a prominent player in that industry, we can help customers in both of these areas. That's going to be a very large growth driver- Hmm ... for Commodity Insights. The other is, we have seen in the past, particularly still in the period that IHS Markit was owning the upstream business, that there was pressure on that. We have now seen that stabilizing, and higher oil prices will help that business because then there's more exploration, there's more CapEx, and ultimately, that business will see some upside. We're making a change more in that business, less of one-time sales and more to subscription, so that should also create more stability around the upstream business in the future. So I would say those are the key elements why we're so optimistic about the outlook for Commodity Insights. Right. Within your index business, you actually raised the guide incrementally for the full year, due to market appreciation, some fund flows. Can you talk a bit about the trends that you're seeing there, and also about the movement of customers to some of the lower-priced ETFs? You've seen some negative mix from a pricing perspective. Talk a little bit about that and whether you're seeing some competitive shifts as a result. Yeah. We see healthy growth in exchange-traded derivatives. There's actually a bit of a structural change, because in the past, exchange-traded derivatives, we saw the volumes going up a lot when there was a lot of market volatility... Technically, actually, volatility of the VIX itself, so the volatility of volatility, that was driving a lot of the exchange-traded derivative volumes. Now we have seen that generally stepping up and being at a higher level. So that's a positive. The data contracts, we see continued healthy growth. You're right, this was a quarter where there was actually an interesting observation, because normally you would see AUM levels on average going up, AUM fees going up, and this time there was a breakage of that correlation. We think that's temporary, because that had to do really with a mix shift. We saw some assets flowing from higher basis point fee products, like thematic funds, to more plain vanilla 500, ETFs. But we have seen flows always going in different directions in this industry over time. So we think over time, there will be a mean reversion, and this will correct itself. So yeah, this was special for the Q2, but we don't think that that is going to be a structural threat. Got it. The Mobility business continues to be the fastest growing segment within S&P, 8.5%-10.5% growth guided for the full year. Can you talk about how sustainable growth in that segment is in that high single, low double-digit range, and what should continue to fuel that growth? Yeah. First of all, maybe good as a reminder for everyone, there was an acquisition in that business at the beginning of the year of a company called Market Scan, which is a pricing engine for more direct-to-consumer sales of vehicles. That added this year around 2%, approximately 2% points of growth, so obviously, that needs to be corrected. We're still guiding to 7%-9% growth in 2025, 2026. And you're absolutely right, George, this is a very entrepreneurial business. I'm really always so happy when they come with their plans and their proposals, because this is really a group that knows their customers, their markets, are always thinking about new innovation. CARFAX, a lot of new product launches. There is sometimes a misperception that the market is saturated for CARFAX. Not at all. Many of the products have still very large market opportunities. And then the other part of the Mobility business, there's of course this huge industry change from combustion engine production to hybrid and EV vehicles. And we're helping the OEMs with their supply chain, with predictive analytics, planning models, thinking about where they should source the batteries, where to place the factories, and so on. So there will be a really big benefit from also our deep customer involvement in those areas. So, I think this is a business that's continued to see good, healthy growth in the future, too. Right. Let's shift gears and talk a little bit about margins. So operating margins in 3Q are expected to be relatively subdued because of accrual compensation expenses. The same thing happened in the Q2, and you're expecting more of a sharper rebound in the Q4. Can you talk a little bit about how much of the performance in the Q2 was a surprise internally, and how confident you are in seeing that inflection in the back half of the year? Yeah. No surprise at all. This was exactly what we expected to happen. So let me give three thoughts on this on this topic. So last year, when we think about margins, we saw a very particular pattern. So think about Q1 to Q4 margins, 45, 47, 46, 41. That was the trend over the four quarters. This year, our margins for the company as a whole were 46, approximately 46, again, Q1 and Q2. And ballpark, that's the level we also would expect margins to be in the third and the Q4. So you would say this year, relatively stable margins. Last year, it moved around a lot. Why I'm pointing this out is there's not a problem with the margins we have this year. Mm-hmm. We have a very strange basis from last year. And why is that the case? Because remember, we pulled back very hard on many expenses, including incentive compensation, when the markets became tougher in after March of last year. I think generally we were praised a lot by preserving margins better than most of our peers, but of course, memories are short around those things. So we saw incentive compensation accruals really being very low, second, Q3. But then the Q4 of last year, the performance was a bit better, and we could bring back some of those accruals in the Q4. So therefore, you saw that pattern. But again, this year, we would expect margins to be far more stable. Maybe to add more specifically by segment, we would expect margins to be relatively a bit stronger for Market Intelligence and Ratings in the Q4, and for the other three divisions, a bit stronger in the Q3. So those are the details underneath a more stable pattern for the full year. So that's the expectation, and hitting those numbers, and as I said, I'm very confident around it. We're on track to deliver on that. We would have about 60-160 basis points margin expansion for the full year, in line with the guidance. So that is number two. Number one. Number two is, when we think about margins and expenses, we think about this always in a bifurcated way. We're looking at business as usual expenses, run it very tightly, be very disciplined, focus on operating leverage. But then we have the flip side of investing in future growth initiatives. It could be cloud, it could be GenAI, it could be our strategic initiatives. As an organization, you have to be very clear, and sometimes it's a mixed message, that you should do both at the same time. You don't want to say, "Oh, we're investing in growth, and therefore, so we can relax about expenses across the board." You have to run it in a very tight way, capturing really the productivity on the one hand, but then, of course, also have the mindset of investments for future growth on the other hand, and do both at the same time. This is how we have been running the company for years, and this is continuing, continuing the way how we will run the company in the future. So I really want to make sure people know that we stay very disciplined on the BAU expense perspective. And then the last comment I want to make is, if you then look at overall expense pattern, maybe over a two-year period, so take out the noise of incentive comp, bring it down, bring it up, et cetera. Last year, our expenses were more or less flat. This year, we expect expenses for the full year to go up in a low single-digit level. So now you look at two years in a high inflationary environment with very low expense increase over a two-year window. Look through all the noise from a short-term quarter-by-quarter perspective. Obviously, why is that possible? That's because of the cost synergies and delivery on the cost synergies. But compared to many other companies that have two years of high inflationary pressure, I think we have clear economic benefit coming out of that. Right. Sorry for the lengthy answer, but I think it was very good to give a lot of details around this. No. Good, good, good perspective. And then perhaps lastly, around capital allocation. S&P has guided to return 85% of free cash flow to shareholders in the form of buybacks and dividends, and the rest goes to M&A. Can you talk a little bit about your M&A strategy, which areas of the business you're most focused on with potential acquisitions? Yeah. No new verticals, no new strategic initiatives that we haven't announced. We, we think it could be sometimes attractive to have some inorganic opportunities to help to drive faster the organic growth initiatives. So of course, private markets is an option, sustainability is an option. Some, some of those areas we're thinking about, energy transition could be, could be one, but we're not looking at new initiatives, new verticals. It should be very focused and tailored around the areas that we have already considered as strategically core for the company, and these acquisitions should then help to accelerate existing initiatives. So as an example, we acquired, at the end of last year, a small entity called Shades of Green. It's in the Ratings business. It's focused on second-party opinion, sustainability-linked bonds, sustainability-linked banking facilities assessments, and we think that is exactly an area where Ratings already was developing. So it will just help us to go faster to a market leading, leading position. So that's just one of those examples. That's great. Yeah. Please join me in thanking Ewout for participating in our conference. Thank you.