S&P Global Q2 Earnings Beat on Ratings & Indices Strength

SPGI's Ratings Business Sets the Pace

Ratings revenues increased 17% year over year to $1.34 billion. Transaction revenues climbed 25% to $746 million, driven by higher debt-rating activity, while non-transaction revenues rose 8% to $593 million.

Adjusted operating profit advanced 22% to $917 million. The adjusted operating margin expanded 310 basis points to 68.5%, as revenue growth outpaced a 6% increase in adjusted expenses. Higher compensation and continued investments in strategic initiatives contributed to the expense increase.

S&P Global's Indices Extend Strong Growth

Indices revenues jumped 20% year over year to $534 million. Growth reflected higher asset-linked fees, supported by increased assets under management and strong trading volumes in exchange-traded derivatives.

Asset-linked fees rose 22% to $348 million, while sales usage-based royalties also increased 22% to $99 million. Adjusted operating profit grew 21% to $382 million, and the adjusted operating margin improved 90 basis points to 71.5%.

Recurring revenues represented 81.5% of segment revenues compared with 81.9% a year earlier. Adjusted expenses increased 16% due primarily to strategic growth investments and higher compensation costs.

SPGI's Energy Growth Remains Measured

Adjusted Energy revenues were $623 million, up 3% year over year. Mid-single-digit growth in Platts, supported by demand for price assessments, was partly offset by muted Global Trading Services volumes and comparatively slower growth in CERA.

Recurring revenues accounted for 91.2% of the division’s total, increasing 90 basis points from the prior-year quarter. Adjusted operating profit rose 4% to $296 million, while the adjusted operating margin expanded 70 basis points to 47.5%.

Adjusted expenses increased 1%. Higher compensation and investments in growth initiatives were partly offset by productivity measures, helping profit growth remain ahead of the segment’s top-line increase.

S&P Global's Market Intelligence Margin Rises

Adjusted Market Intelligence revenues increased 6% to $1.24 billion. High-single-digit growth in Kensho Data & Platforms, including contributions from With Intelligence, supported the results. Enterprise Solutions delivered low-single-digit growth, including the impacts of the Enterprise Data Management and thinkFolio divestitures.

Recurring revenues represented 97% of the segment’s total, up 20 basis points. Adjusted operating profit climbed 10% to $445 million, and the adjusted operating margin expanded 120 basis points to 36%.

Adjusted expenses increased 4%, reflecting With Intelligence costs and higher compensation. The divestitures and productivity savings partly offset those pressures.

SPGI's Profitability & Cash Flow Strengthen

Pro-forma non-GAAP adjusted operating profit increased 15% year over year to $2 billion. Adjusted expenses rose 6% to $1.68 billion, allowing the adjusted operating margin to expand 200 basis points to 54.3%.

Adjusted net income increased 19% to $1.43 billion. The adjusted effective tax rate declined to 19.8% from 23.3%, while a 3% reduction in diluted shares outstanding also supported per-share growth. Currency added 3 cents to adjusted earnings.

Cash provided by operating activities was $1.44 billion. The adjusted free cash flow, excluding certain items, totaled $1.37 billion, up 1%. The company paid out $287 million in dividends during the quarter.

S&P Global's Capital Returns Remain Active

SPGI repurchased $500 million in shares in the second quarter, bringing year-to-date repurchases to $1.5 billion. Management expects total 2026 share repurchases to exceed $7 billion following the Mobility separation.

Cash, cash equivalents and restricted cash stood at $4.14 billion at the quarter-end. Short- and long-term debt, excluding $2 billion in bonds transferred to Mobility Global, was $13.17 billion. Adjusted net debt was 1.9 times adjusted EBITDA.

SPGI's Outlook Reflects Post-Spin Business Mix

S&P Global expects 2026 year-over-year reported revenue growth of 5.9-7.9%, lower than the preceding quarter’s 6.3-8.3%, excluding Mobility. Organic constant-currency revenue growth is projected at 6-8%, with adjusted operating margin expansion of 35-60 basis points (bps), a surge from the first quarter 2026 view of 10-35 bps.

Adjusted diluted earnings are expected to plummet between $17.5 and $17.75 compared with the preceding quarter’s view of $19.4-$19.65. The company projects adjusted corporate unallocated expenses to dip to $185-$195 million from the preceding quarter’s view of $220-$230 million.

Management reduced net interest expense expectations to $390-$410 million from the $405-$415 million reported in the preceding quarter. Capital expenditure of $190-$210 million is lowered from the preceding quarter’s $215-$225 million.

SPGI carries a Zacks Rank #5 (Strong Sell) at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot

FactSet Research Systems Inc. FDS reported third-quarter fiscal 2026 adjusted earnings of $4.53 per share, beating the Zacks Consensus Estimate of $4.44 by 2%. The figure increased 6.1% from the year-ago quarter.

Revenues of $622.9 million surpassed the consensus mark of $617.2 million by 0.9% and rose 6.4% year over year.

Paychex, Inc. PAYX posted solid fourth-quarter fiscal 2026 results. Adjusted earnings of $1.32 per share surpassed the consensus estimate of $1.31 by a slight margin and increased 11% from the year-ago quarter.

Total revenues of $1.61 billion rose 12% year over year and beat the consensus estimate by a slight margin.

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