S&P Global (SPGI) Q3 2025: Ratings Margin Expands 540 bps, AI and Private Markets Drive Strategic Leverage
SPGI delivered record quarterly results, with standout margin expansion in Ratings and accelerating growth in Market Intelligence, underpinned by disciplined execution and AI-driven productivity. The company’s strategic pivot to proprietary, workflow-embedded data and private markets is reshaping its revenue mix and defensibility, while portfolio optimization and targeted divestitures signal a nearly complete transformation. Forward guidance was raised across most divisions, with leadership leaning into new AI monetization channels and deepening its competitive moat ahead of Investor Day.
Summary
- Margin Expansion Outpaces Revenue Growth: Ratings and Market Intelligence margins jumped, driven by productivity gains and disciplined cost controls.
- AI and Private Markets as Growth Engines: Strategic investments in proprietary data and AI-powered workflow tools are accelerating revenue and deepening client integration.
- Portfolio Streamlining Nearly Complete: Recent divestitures and acquisitions position SPGI for higher-margin, defensible growth into 2026.
Performance Analysis
S&P Global posted record revenue, operating profits, and EPS, with 9% year-over-year revenue growth and double-digit expansion in both Ratings and Indices. Operating margin rose 330 basis points to 52.1% overall, led by a 540 basis point surge in Ratings and 360 basis points in Market Intelligence (MI). Ratings benefited from strong high-yield and bank loan issuance, while MI saw its fastest organic growth in six quarters, propelled by subscription and transaction volume gains. Indices revenue climbed 11%, fueled by asset-linked fee growth and robust equity inflows, and Commodity Insights delivered 6% growth despite upstream headwinds.
AI-driven productivity and disciplined expense management enabled margin gains even as SPGI reinvested in product innovation and partnerships. Adjusted EPS rose 22%, with capital returns to shareholders totaling nearly $1.5 billion since the last call. The company announced a further $2.5 billion buyback, aiming to return approximately 85% of 2025 adjusted free cash flow. Portfolio actions, including the divestiture of enterprise data management and the acquisition of WithIntelligence, are reshaping the business mix toward proprietary, recurring revenue streams.
- Ratings Margin Expansion: 540 basis point improvement was fueled by both transaction and non-transaction revenue, with declining expenses from incentive normalization and productivity.
- Market Intelligence Acceleration: Organic revenue growth hit 8%, with ACV (annual contract value, a recurring revenue metric) up 6.5–7% and strong competitive wins in enterprise desktop solutions.
- Indices and Asset-Linked Fees: Double-digit asset-linked fee growth and new product launches delivered 11% revenue growth and 100 basis points of margin expansion.
Commodity Insights faced headwinds from sanctions and upstream customer consolidation, but continued to transition clients to enterprise contracts and invest in differentiated data. Mobility delivered 8% growth, led by dealer products, with the spinoff process on track. Across the board, SPGI’s focus on proprietary, workflow-integrated data and AI-powered tools is driving both top-line and margin upside.
Executive Commentary
"On every headline financial metric, it was the strongest quarter we've ever had. Revenue increased 9% year over year, with subscription revenue increasing 6%. We continue to make important strategic investments while focusing on productivity and disciplined execution. This allowed us to deliver 180 basis points of margin expansion on a trailing 12 month basis and increase our adjusted EPS by 22%."
Martina Chung, President and Chief Executive Officer
"Reported and organic constant currency revenue both grew 9 percent, while expenses grew 2 percent, enabling us to deliver 330 basis points of year-on-year margin expansion to 52.1 percent. Through our disciplined execution and continued capital returns, we delivered 22 percent growth in adjusted diluted EPS."
Eric Abouaf, Chief Financial Officer
Strategic Positioning
1. Proprietary Data and Workflow Integration
SPGI’s business model is increasingly anchored in proprietary, workflow-embedded data, with over 95% of revenue now derived from differentiated content, benchmarks, and software tools. The company’s platforms—such as Capital IQ Pro, iLevel, and Ratings Direct—are deeply integrated into client operations, creating high switching costs and defensibility against commoditization or AI-driven disintermediation. Only 12% of MI revenue is from non-enhanced, public data, underscoring the moat around core offerings.
2. Private Markets Expansion
Private markets are emerging as a major strategic lever, with revenue growth in the segment doubling to 22% year-over-year. The pending acquisition of WithIntelligence, a provider of direct-sourced data on private equity, credit, and infrastructure, will deepen SPGI’s coverage and enable new benchmarking and deal sourcing products. Partnerships with Cambridge Associates and Mercer further extend benchmarking capabilities, positioning SPGI as a data and analytics standard-setter in private assets.
3. AI-Driven Innovation and Productivity
SPGI’s early and sustained investment in AI—over $1 billion since 2018— is yielding both top-line and margin benefits. AI-powered features, such as automated data ingestion and document intelligence, are being monetized as product add-ons and embedded enhancements. Internally, AI tools are consolidating workflows and reducing costs, with “multi-millions of dollars of savings” cited this year alone. Strategic partnerships with Microsoft, IBM, Anthropic, and others are opening new distribution channels, with monetization models evolving as client usage scales.
4. Portfolio Optimization and Capital Allocation
SPGI’s multi-year portfolio optimization is nearly complete, with recent divestitures (EDM and ThinkFolio) and the planned mobility spinoff sharpening focus on higher-margin, strategically aligned businesses. Management is reallocating capital toward share repurchases and targeted acquisitions, with a disciplined approach to debt and cash deployment. The company’s willingness to exit non-core assets, even if immaterial to revenue, signals a commitment to margin accretion and strategic clarity.
5. Resilient Revenue Model and Enterprise Contracts
Enterprise subscription contracts—rather than per-seat licenses— insulate SPGI from volatility in client headcount or market cycles. This model, in place for over a decade, provides revenue stability and protects against AI-driven workforce reductions that could undermine seat-based pricing. The company is also expanding usage-based and add-on revenue streams, particularly as AI features proliferate.
Key Considerations
SPGI’s Q3 results highlight a business at the intersection of proprietary data, workflow integration, and AI-driven transformation. The company is executing on multiple fronts—margin expansion, innovation, and portfolio discipline—while positioning for secular growth in private markets and AI-enabled analytics.
Key Considerations:
- Defensible Data Moat: Over 95% of revenue is proprietary, limiting risk from AI commoditization or client insourcing.
- Private Markets as Growth Catalyst: WithIntelligence acquisition and new partnerships broaden SPGI’s data estate and addressable market.
- AI Monetization and Productivity: Embedded AI tools are driving new revenue streams and cost savings, with further upside as client adoption scales.
- Portfolio Rationalization: Divestitures and spinoffs are concentrating the business in higher-growth, higher-margin verticals.
- Capital Returns and Balance Sheet Discipline: Aggressive buybacks and prudent debt funding for acquisitions balance shareholder returns with growth investment.
Risks
Sanctions-related headwinds in Commodity Insights are expected to persist into next year, with $6 million in revenue impact in 2025 and $20 million in 2026 if current conditions hold. Upstream data and consulting remain pressured by energy sector consolidation and lower oil prices. AI-driven disruption remains a latent risk, though SPGI’s proprietary content and workflow integration provide substantial insulation. Execution risk around large-scale AI partnerships and new product monetization models could affect growth trajectory if client adoption lags expectations.
Forward Outlook
For Q4 2025, S&P Global guided to:
- Mid-to-high teens build issuance growth in Ratings, driven by continued refinancing and opportunistic issuance
- Flat U.S. equity markets, with modest year-over-year growth in exchange-traded derivatives volumes in Indices
For full-year 2025, management raised guidance:
- Total revenue growth of 7–8%
- Adjusted operating margins of 50–50.5%
- Adjusted diluted EPS of $17.60–$17.85, up 12–14% year-over-year
Management emphasized ongoing innovation, disciplined capital allocation, and further margin expansion as priorities heading into 2026, with additional detail to be provided at the upcoming Investor Day.
- Ratings and Indices outlooks were raised to reflect strong Q3 outperformance
- Commodity Insights guidance was trimmed at the upper end due to sanctions and upstream headwinds
Takeaways
SPGI’s Q3 performance confirms its transformation into a high-margin, innovation-led data and analytics powerhouse, with strategic levers in AI, private markets, and workflow integration driving sustainable growth and defensibility.
- Margin Expansion Validates Operating Model: Ratings and MI outpaced expense growth, with AI-driven productivity and portfolio discipline underpinning gains.
- Strategic Shift to Proprietary, Recurring Revenue: Private markets, enterprise contracts, and workflow-embedded tools deepen client stickiness and limit competitive risk.
- Watch for AI Monetization and Private Markets Integration: Execution on new distribution channels, product launches, and the WithIntelligence acquisition will define future upside.
Conclusion
S&P Global’s record quarter reflects a company capitalizing on secular trends in data, analytics, and AI, while executing a nearly complete portfolio transformation. With raised guidance, deepening client integration, and new growth vectors, SPGI enters 2026 with momentum and strategic clarity.
Industry Read-Through
SPGI’s results signal a clear industry pivot toward proprietary, workflow-integrated data and recurring revenue models, raising the bar for defensibility as AI commoditizes undifferentiated content. Competitors relying on public or lightly enhanced data face growing pressure as clients seek deeper integration and actionable intelligence. The acceleration in private markets data underscores a broader shift as asset managers and allocators demand standardized, multi-asset analytics. AI partnerships and embedded tools are becoming table stakes, but only those with scale, proprietary content, and workflow depth can monetize the opportunity at margin-accretive levels. Expect further portfolio rationalization and capital return focus across the sector as the data landscape consolidates around a few dominant platforms.