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S&P Global - $SPGI - Earnings Analysis: Revenue growth in all segments in 2024.

By sagebytes in Business —

Business Model

S&P Global provides essential intelligence through data, expertise, and connected technology. Revenue is generated through subscriptions, non-subscription (transaction-based), and non-transaction services.

Revenue Sources

  • Subscription revenue: Data distribution, valuation services, analytics, research, market data via feeds and web, software licenses, and Mobility's core information products.
  • Non-subscription (transaction) revenue: Ratings of publicly-issued debt and bank loans.
  • Non-transaction revenue: Surveillance of credit ratings, annual fees for customer relationship-based pricing, entity credit ratings, global research and analytics.
  • Asset-linked fees: Fees based on assets underlying exchange-traded funds, mutual funds, and insurance products.
  • Sales usage-based royalties: Trading based fees from exchange-traded derivatives and licensing proprietary market price data and price assessments to commodity exchanges.
  • Recurring variable revenue: Revenue from contracts that specify a fee based on number of trades processed, assets under management, or positions valued.

Income Statement Analysis

  • Revenue increased by 14% due to growth across all divisions.
  • Operating profit increased by 47% driven by strong ratings growth.
  • GAAP diluted earnings per share increased 56% primarily due to a 52% increase in net income, and a 2% decrease in diluted shares outstanding.

Balance Sheet Analysis

  • Total assets decreased slightly by $368 million.
  • Total liabilities increased by $224 million.
  • Total Equity decreased by $1044 million.

Cash Flow Analysis

  • Cash provided by operating activities increased significantly.
  • Investing activities changed from providing cash to using cash.
  • Financing activities used more cash compared to the previous year due to purchase of treasury shares
  • Cash, cash equivalents, and restricted cash at end of year increased.

Capital Allocation

The company maintains its target of returning 85% or more of adjusted free cash flow to shareholders through dividends and share repurchases. The Board authorized a quarterly cash dividend of $0.96 and repurchase of shares totaling up to $4.3 billion. An initial $650 million Accelerated Share Repurchase (ASR) will be launched in the coming weeks.

Management Commentary

I am pleased that S&P Global delivered an outstanding year in 2024.

We demonstrated the strength of our businesses and enter 2025 with strong momentum.

With this context, we are providing financial guidance highlighting our expectation for continued profitable growth in 2025.

Overall Sentiment: Positive, expressing confidence in continued profitable growth.

Recommendation

Rating: Buy

Reason for Rating: Strong financial performance in 2024, positive outlook for 2025, and disciplined capital allocation strategy support a buy recommendation.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/12/2025, 12:15:15 AM