The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: I say, a great segue to start the conversation as well because the biggest news is the merger. The biggest talk of the town is the merger among the
-- some of the largest deals on The Street and the company's history as well.
And since it is the biggest, it has to have the big (inaudible). So would love to understand the strategic rationale behind the merger. And how does
it change the company thinking and the company strategy on what you just described on revenue growth and margin expansion and EPS accretion
dropping the bottom line in going forward? How does it play into the company thinking? How does the company thinking change from here?
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: That's wonderful. So bringing the companies together, I think a very complementary skill set and data sets as you mentioned. So certainly offers a
good opportunity and a good value proposition going forward. Combined the 2 companies -- combining these 2 companies at such a scale, I mean
S&P is 23,000, 24,000 people. And IHS is 12,000, 13,000, 14,000. So combining these 2 large organizations, both from a personnel perspective and
technology perspective, I think that's a huge undertaking and something that really everybody thinks about how it's going to happen and how
it's going to come together.
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JUNE 01, 2021 / 4:40PM, SPGI.N - S&P Global Inc at Deutsche Bank Global Financial Services and FinTech /
Info Services Conference (Virtual)
You have already been working on it for -- since November, so like almost 6 or 7 months. Now that you have so much better visibility from what
you had in the beginning, how are things coming along? What are the things that have surprised you so far on the positive or on the negative side
as well? I mean it will be good to hear both the themes.
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: That's good. And so there have been preparations going on, and the latest news was the OPIS metals and mining divestiture. I think that was --
that's what people were talking about in terms of what is done. And I don't know what we can talk about, but any other things that could need to
happen in that front in terms of integration pass coming together? That is a question I get a lot from investors.
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: No, that's totally understandable. Good to know the scale of the business in there. I think we all talk about being greater than $100 million. So $125
million is a good number.
So with S&P, of course, integration and big -- company becoming bigger with INFO is great. And yes, there are current things as we operate as an
independent company right now. S&P still is -- the largest segment is the Ratings segment and the conversations always start with how are things
going in the Ratings space right now from your vantage point, where you are?
You already mentioned and/or has talked about it in terms of your forecast for the year was earlier for a decline of 3% in the issuance. Now you're
thinking more like 2%. So obviously, things are looking better than what it started -- when you started the year. So from the vantage point from
where you are, how does it look going forward? What's the sense you're getting right now?
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: That's great. And the kind of other things that [you also] talked about is the -- is this transitory inflation that could happen or that is happening.
Curious how that plays into the issuance trends? And does that impact corporate thinking on getting into some kind of a window? Or do you think
there's any kind of a pull forward that is potentially happening in the first half or anything like that?
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: That's good to know. And sticking to Ratings for a little bit and the thoughts going out of Washington and the opportunity in China. So combining
those 2 together as -- what's your view on the China opportunity right now? What are the trends you're seeing there? And once we're on the new
administration, I think we'll segue into the ESG side of things as well. But would love to hear your thoughts on China as they stand right now.
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: Well, that's great to know in terms of things are looking good. And kind of like staying on that administration thought before I go into the Market
Intelligence, the new initiatives coming out of Washington are clearly supportive of fixing climate change and moving towards clean energy and
initiatives like that. So I wonder how that helps with your -- with the ESG side of things because as you mentioned, it plays across all segments. And
you have already kind of outlined that as a business that is -- that has the potential to grow like in the 40s.
So I'm wondering how the thought process is evolving, and how that's changed over time? And where do you see it trending going forward?
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: Great. Then it seems like that's a positive trend. And you mentioned the ESG indices across both S&P and INFO, everything coming together on
the index side of things. So just curious in terms of what you're seeing on the Index business. Is there like a risk of overindexation to index funds?
Do you think that impacts the business in any way? How do you think that whole concept of overindexation or self-indexing kind of works to the
S&P side of things?
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: That's good. So we can talk about that quite a bit. And then maybe switching gears to Market Intelligence. And then obviously, that's where the
big technology play comes in.
So just to get a sense of in terms of the scale of the business, where it is right now? And obviously, that segment, financial services becomes a larger
segment going forward. So there would be a lot of things happening in that space. You will have more data sets coming together. There will be
opportunities for share gains. There will be -- you have opportunities to have more users, more pricing power.
How do you see these things playing out? And what role does technology play in this, especially new things that you're adding like Snowflake
distribution. How does this all come together to paint a big picture of the intelligence business?
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JUNE 01, 2021 / 4:40PM, SPGI.N - S&P Global Inc at Deutsche Bank Global Financial Services and FinTech /
Info Services Conference (Virtual)
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: That is good to know that there are going to be margin improvements, and that's certainly one of the -- that certainly is one of the benefits of
transitioning to public cloud, a journey. That's a multiyear journey for you. You certainly have -- from our understanding, you're 78% already part
of public cloud.
How do you think the journey has been? And where are you seeing IHS in that journey? And maybe seeing the combined company together, what
are the key milestones you're looking at like as soon as the merger is closed? And how do you see that going forward? (inaudible)
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: And that's a very positive note, I think, where we can wrap it up. A large company, leveraging the scale, leveraging the power of cloud to drive
revenue and margin growth going forward. And that's the way I think the long-term story looks right now. And any closing remarks you have before
we wrap up?
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: Absolutely. Looking forward to it. Thank you so much for your time today, Ewout. It was a pleasure having you here, and we look forward to hosting
you again in the future. Good luck with the conference.
Question: Sameer Kalucha - Deutsche Bank AG, Research Division - Analyst
: All right. Thank you. Take care. Bye now.
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