S&P Global (NYSE: SPGI) reported second quarter 2020 results with revenue of $1,943 million, an increase of 14% compared to the same period last year. Net income increased 43% to $792 million and diluted earnings per share increased 46% to $3.28 primarily due to revenue growth in S&P Global Ratings and reduced expenses from COVID-19 related management actions.
Ratings: Revenue increased 26% to $1,006 million in the second quarter primarily due to strong global investment-grade issuance, including record quarterly U.S. investment-grade issuance. Transaction revenue increased 48% to $624 million due primarily to an increase in global bond issuance partially offset by decreased bank loan rating activity. Non-transaction revenue increased 1% to $382 million.
Operating profit increased 51% to $693 million and the operating profit margin improved 1,150 basis points to 68.9% compared to the second quarter of 2019. Adjusted operating profit increased 47% to $695 million and the adjusted operating profit margin improved 1,020 basis points to 69.1%.
S&P Dow Jones Indices: S&P Dow Jones Indices LLC is a majority-owned subsidiary. The consolidated results are included in S&P Global’s income statement and the portion related to the 27% noncontrolling interest is removed in net income attributable to noncontrolling interests.
Revenue increased 2% to $240 million in the second quarter of 2020 due primarily to a 20% increase in exchange-traded derivative fees and a 6% gain in data and custom subscriptions.
Asset-linked fees include fees associated with ETFs, mutual funds, and certain over-the-counter derivatives. Revenue from ETFs is the largest component of asset-linked fees, and average ETF AUM associated with the Company’s indices increased 2% year-over-year. However, quarter-ending ETF AUM associated with our indices was $1,616 billion, a 6% increase from 2Q 2019.
Operating profit increased 5% to $171 million and the operating profit margin increased 220 basis points to 71.4%. Adjusted operating profit increased 5% to $172 million and the adjusted operating profit margin improved 210 basis points to 71.9%. Operating profit attributable to the Company increased 5% to $125 million. Adjusted operating profit attributable to the Company increased 5% to $126 million.
Market Intelligence: Revenue increased 6% to $516 million in the second quarter of 2020 with growth in Data Management Solutions, Credit Risk Solutions, and Desktop as well as the addition of 451 Research. Quarterly operating profit increased 16% to $159 million and the operating profit margin improved 280 basis points to 30.8% as increased revenue outpaced modestly higher expenses. Adjusted operating profit increased 13% to $177 million and adjusted operating profit margin improved 220 basis points to 34.4%.
Platts: Revenue increased 2% to $217 million with growth in both the core subscription business and Global Trading Services. Quarterly operating profit increased 12% to $124 million and the operating profit margin increased 500 basis points to 57.3% due to revenue growth and lower expenses. Adjusted operating profit increased 9% to $127 million and adjusted operating profit margin increased 400 basis points to 58.3%.
Outlook: Due to the uncertainties associated with COVID-19, S&P Global has analyzed several scenarios that are contingent on the depth and duration of the COVID-19 pandemic and its resulting impact on economic and market-specific drivers that may impact the Company’s businesses. This quarter, S&P Global has disclosed two specific scenarios as part of its second quarter 2020 earnings materials, with the “late 3Q recovery” being the baseline scenario at this point in time and the basis for the following revised guidance. GAAP diluted EPS guidance is increased from a range of $9.50 to $9.70 to a new range of $10.25 to $10.45. Adjusted diluted EPS guidance is increased from a range of $9.95 to $10.15 to a new range of $10.75 to $10.95. Additional details for these scenarios are presented on slides 43-47 of the second quarter 2020 earnings materials which are available at http://investor.spglobal.com/Quarterly-Earnings.
Source: S&P Global Earnings Release