S&P Global Inc. (SPGI) Earnings Call Transcript & Summary

All right. Good afternoon, everybody. Thank you for being here. For those of you who don't know me, my name is Manav Patnaik. I'm Barclays' information services analyst. And we're pleased to have back with us, as always, S&P Global. We have Ewout, the CFO, back with us, you know him. But we're also pleased this year to have Adam Kansler with us, who runs the Market Intelligence business. So thank you for being here.

Thank you.

Thank you.

Adam, I know Ewout brought you here to do most of the talking. So I'll get to you eventually, but I'm going to first ask a question to Ewout just to clear the question out of the way. And so last quarter, it was [ a relatively ], it would say, emotional reaction perhaps to the stock. And I think a lot of it continued -- was just around the margins that met estimates. And I know you've already explained this early last week, but maybe just for the benefit of those who didn't catch that. What happened there? And are the expectations for the second half still intact?

Sure. So I think from my perspective, 2 important points to make. The first is with respect to the outlook of the company for the remainder of the year, what we did after our second quarter earnings call was, deliberately, to put guidance out based on prudent assumptions because when we are looking at the macro environment, there's still a lot of uncertainty. The higher interest rate environment still has to work through the real economy. We don't know if there's going to be more fallout in certain areas. And we wanted to make sure that what we put out to the market, that it is something that we're really confident about being able to deliver, and not that we, later in the year, have to backtrack at any moment on the outlook for the company and for each of the divisions. So actually sitting here today, I've heard people saying, "Oh, my God, what happened with issuance in July and August and that [ it's light ]?" And other of those questions. And that is, just from my perspective, reinforcing that we made the right decision with respect to the outlook we provided because I'm still very comfortable sitting here today with respect to the guidance for 2023. I think we're on the way to achieve those numbers. So that is point number one. Point number two is with respect to margins, unfortunately, there's a lot of noise in our margins this year. And the noise is actually not so much driven by the performance in '23, but more the comparable base in 2022. So let me describe to you the margins overall for the company for the 4 quarters in 2022. That was 45%, 47%, 46%, 41%. I repeat, 45%, 47%, 46%, 41%. This year, we're around 46% in the first quarter, second quarter ballpark. We expect there to be the next 2 quarters. So actually really stable pattern, what you see in margins for this year. Continuing like that, we will deliver on the expected margin expansion that we gave in our guidance of 60 to 160 basis points margin expansion. But you see, it is over a very volatile margin pattern for 2022. Why were margins so volatile last year? Actually, I think we were praised a lot last year around protecting the margins in a difficult environment when the markets really got tough from March onwards. And that had to do with a lot of cost reduction exercises with respect to hiring, with respect to discretionary spend, with respect to variable spend. And particularly in that last category, there was incentive compensation, where we're reducing the accruals in the second and third quarter based on the formulaic approach, what is behind all of those incentive schedules. But then the fourth quarter, in the end, was a bit better than we originally assumed. The Ratings business came back a little bit, and then we brought back those accruals up. So again, that created a little bit of the noise from a margins perspective. So this year, about 46% ballpark for the next 2 quarters. And specifically by division, we expect Ratings and Market Intelligence to be a little bit stronger with margins in the fourth quarter and the third quarter, and the other 3 divisions, the other way around. The third quarter -- a little bit stronger in the third quarter than the fourth quarter.

Got it. The 60 to 160 points range, I'm guessing a big factor in that range is just volume activity, so just basically getting issuance. I think in your rated issuance, you said July was up 1%. August was probably slow. Any just -- I know you said you were glad you were prudent. So I guess, that's implying things are a little bit worse than maybe anybody was hoping for. But just some thoughts on that variability that you factored in the second half of the year.

No, I don't want to signal that things are worse. Actually, the 1% billed issuance in July is still exactly in line with what we said, that we think billed issuance this year will go up somewhere between 4% and 8%, Ratings revenue will be up in the range of 5% to 7%, the margin expansion promises that we have provided for each of the divisions. So I would say we're exactly on track to deliver what we said at the end of July.

Got it. And then you were just out in the market yourself, so maybe just some observations on, perhaps by what you saw -- because we just had Jamie Dimon. He was pretty negative broadly, cautious on spreads and everything. But just curious, your timing and how the CFOs think about that.

Yes. Of course, last week was a really busy week from an issuance perspective compared to July and August. But it's also proving the point you should not really look at this on a month-by-month, week-by-week basis. This will all [indiscernible]. So the reason we went to the market is we had some short-term borrowings, mostly CP for cash management purposes. And because short-term money is so expensive, it was better for us to term it out. It was leverage-neutral. We could still do that at attractive terms. Actually, we're able to issue at no issuer concession, which I thought was really a great achievement. And ultimately, this will help us to reduce our interest expense for this year and in the year [ ago ]. That was the reason why we did that, and we thought it was a good step from an overall corporate financing perspective.

Got it. Okay. So I pulled forward those questions so you could take a break. And now, Adam, let's get to you. So firstly, high level, some of the people might not have seen you speak before, but just a quick background on -- you were obviously at Markit for many, many years. So just maybe a quick, brief background on how you got involved in this business.

Yes. Thanks. Exciting to be here. Thank you for having me. I started -- well, I started my career as a lawyer many, many years ago. Joined Markit when it was a small -- much smaller company, eventually merged with IHS, became IHS Markit. I took over some of the financial services businesses around index and some of our data businesses. My set of responsibilities grew over time. Company merged with IHS and became IHS Markit. Then had a pretty rapid period of growth and expansion, during which I led all financial services businesses. And in 2020 at the end of the year, merged with S&P Global. We took the financial services businesses of IHS Markit, merged them with the S&P Global Market Intelligence business, creating the new Market Intelligence division of S&P Global today, the largest division of S&P Global, with a vast set of capabilities. I tell you, while at IHS Markit, we always pined for the distribution capabilities like an S&P Global had. And I think as people who a little bit always looking over their shoulder and saying, "Wow, all those content and workload tools. That would be interesting." So it has become a bit of a fantastic combination.

Got it. So maybe just to elaborate on the high-level strategy there. I know, even at Markit, when we used to talk to CapEx, you would always observe on the outside. How did you have the 2 pieces together and you've been running it for a while, like on a high level, like what are the top 3 [ opportunities ] you're most excited about? You mentioned distribution and some capabilities. Maybe a little -- elaborate a little bit more on why that merging made sense specifically in Market Intelligence.

A couple of things I'll probably touch on. First, the scale of the enterprise today, the variety of capabilities that we have, from workflows to data sets, ability to serve a customer across many different areas of their needs. Particularly at the current moment, where we see our customer base, particularly large customers, looking to consolidate their vendor relationships, looking to be able to get more and more services from a single place where those things interact with each other, that scale actually becomes a commercial advantage. Second, and I think Ewout actually said this at one of our meetings earlier today. The combination of software, technology tools, data and services. Think of those 3, it's a very powerful combination. The ability to lift the service out from a customer, provide a managed service in connection with a leading software tool and providing all the underlying data. Think about the loans business, fixed income businesses, corporate actions, private company portfolio monitoring, all areas -- supply chain management. All areas that you think of as really important areas for secular growth, we're able to address a customer's needs on multiple fronts with the combination of assets. I think prior to that, we couldn't do it. So those are 2 things that jump out of me. You don't want to miss the power of the brand and the power of the franchise. Across S&P Global, we're able to bring together a very wide array of capabilities and data sets. Even outside of Market Intelligence, I think about our oil and gas data and how we can pull that into a desktop solution to power up an investment banking team who's in power, [ oil and ] gas. Each of -- there's a lot of these small pieces where bringing capabilities together is a bit of a game-changer for each of the set of capabilities that would have stood alone.

Got it. Maybe to ask it in a different way, let's focus on the synergies. And maybe, Ewout, I'll ask you first on the cost synergy side. Briefly total company, but more specifically Market Intelligence. It's obviously the largest, I think you said, component of both the cost and revenue synergies. So where are we on the cost side?

On the cost side, we're almost done. We reported at the end of the second quarter run rate $574 million of cost synergies realized. We had the target, as you know, of $600 million. And we like this to be done quickly because cost synergies and operational integration are, of course, completely linked to each other. So you want to have an overhang to an organization too long of we're integrating, we are still bringing companies together. At some point, you want to just say we're one organization. We have one system environment running the same processes. We have clarity about how the organization is looking. And then from that point, you're really moving forward to the future and grabbing all the opportunities. So we're actually happy that we're close to that point with respect to the cost synergies that we can say, "Okay, we're done, and we're calling it a day." That doesn't mean that we will quit efficiencies and productivity. We have then, of course, to think about what's the next wave of opportunity because our businesses, with the scale, with the leverage we have, there's always opportunity then to do more. But then at least, the chapter of synergies, we can close off.

Got it. And those comments would be broadly applicable to just MI as well, correct?

Absolutely, yes. MI is, of course, the largest component into both cost and revenue synergies, as the largest division, the larger groups that are coming together, also the largest revenue part. So in terms of the central functions, synergies that are realized, also the allocation, is the largest part goes to MI and the second-largest part goes to Ratings. So yes, MI is definitely the part where most of those results are showing up.

Got it. Adam, you get the harder part of the question, which is revenue synergies. Maybe just a quick update where you are today. Most investors tend to be skeptical on revenue synergies. So just in terms of your target, if you could also just help us break out how you [ piece ] getting to there? What are some of the big categories or many small categories? Just some color there will be helpful.

Yes. Let me give -- I'll give a 10-second [ comment ] just on costs as well in the interest of context. We've thought of cost on a 3-year time frame and revenue on a 5-year time frame. But 3 years really is a very long time on cost, especially within a particular business line. Within Market Intelligence, I mentioned before, you have 2 large businesses coming together, you have half and half. So you really needed to have a full integration of businesses. To Ewout's point just a moment ago, that operational integration was so important to getting people on the right track from a strategic and development perspective. So that accelerates your path on cost, it was important to have a line of sight there very quickly. On the revenue side, that's driven by that new organizational structure and focusing on core areas for growth. The early period of revenue synergies, if you think about that over that 5-year period I described, year 1 being 2022, that's almost entirely a cross-sell revenue synergy. That means introducing customers to new products on each side of the table. And that actually went better than expected. I did expect it to go well. But the S&P brand, the depth of relationships that each of the companies had with their customers, gave a lot of opportunity to introduce new products to those customers. And quite successful, tracking ahead of plan. Small numbers, early days, but tracking ahead of plan. As you go through that 5-year period, the best way to think of it is, in year 2, so that's this year, that moves to 90-10, 90% are cross-sell, 10% is new products, new enhanced products. We're incorporating a data set that we have into Xpressfeed solution. We're putting public company-comparable data into a private company portfolio management tool. It's the integration of businesses that create something new for our customer. As you get towards year 3, that moves to 30-70. As you get towards year 4, 45-55. Eventually by year 5, it's over a majority, by 60% of this, is coming from new and enhanced products as you get out. That's what we watch carefully, the launch of those new and enhanced products. We look at our launch schedule. Merger only closed March of last year, we've already launched 4 new and enhanced products. And we have about 4 to 6 a quarter now starting to come out in the back half of this year, and that will continue out through 2024.

Got it. And in terms of these new products you just talked about, is it fairly diversified? Is there one particular area? Or when we think about it over a [ monthly ] period, what are the true markets that your capabilities allow you to grow more in?

Yes. Diversified in the sense that there are multiple product enhancements or new products that are available for us. Concentrated in the sense it's concentrated around some [ focal ] areas of growth. Private markets, right, launching managed data services, enhanced private company information for all different types of portfolios. But a real concentration around private markets, a real concentration on the supply chain. A new product called Supply Chain Console. We can manage all the aspects of your supply chain, which each company could do a bit in a piece, but now you can see credit, you can see shipping, you can see economics, political risk, all in one dashboard. Credit and risk management, large project on helping corporates manage their credit risk. A place where some of our competitors have had products for years. But the combined set of assets now allows us to have a much more robust offering in credit risk management. Sustainability. Everyone is aware of our presence there, but our combined capabilities now around climate risk, physical risk, giving us outsized opportunity over the next 3 to 5 years. So focused in 4 or 5 core areas, but within each of them, multiple areas of growth.

Got it. I wanted to maybe ask the next few questions by your [ sub-line ] segments. So maybe just starting with Desktop, which I think is a 1/4 of MI. Obviously, there's a lot of headlines of [ bank chaos ] coming. I think we all know that the CS-UBS merger going on, that has lowered your guidance in MI last quarter for through the year. Just a general update on how -- what your customer conversations look like. What does the macro feel in the near term there?

Yes. Overall, very positive. We've spent a lot of energy over the last 1.5 years. It has really started a little bit before the merger even -- looking at the Desktop, understanding where are our strengths, what are our capabilities. We have some incredible data sets, really important sector data in several industries. We had a Desktop that has lots of capabilities. We had -- remember, we had 2 Desktops. We had Capital IQ, one was called SNL. We brought them together into Cap IQ Pro today, making sure we have a full set of capabilities available to our customers. We've upgraded it quite significantly. This past June, we had the largest release we've ever had on Desktop. We have a completely new Ratings Direct, Ratings on Capital IQ Pro product that's available. Customers have been very excited with those capabilities. I think more importantly, seeing our forward road map, customers now see in our Desktop, now there's fixed income data, there's loans data, there's economic and country risk data. There's an expansion of its ability to use our Desktop with plug-ins to Excel, PowerPoint, Word, automatic updating of files. Things where, if it's a user from 7 years ago on Cap IQ, you wouldn't -- it doesn't bear any resemblance to what the capabilities are today. So our focus there is really on that quality. As you know, we moved to an enterprise pricing model around Desktop several years ago. So user count is no longer a proxy for actual dollars, but it is a proxy for adoption and interest and confidence in the platform. And that's what we're seeing, steady growth. Even through this period of contraction, we've had user growth every quarter. We're continuing to see that. And I think the value proposition is increasingly being recognized by our customers, not just in terms of how good the product has become today, but the road map we've now laid out for what it will be over the next 3 to 5 years.

Got it. And you mentioned vendor consolidation earlier, which I think is obviously a big theme. But is it fair to assume that, maybe in the near term, you feel a little bit of pressure from budgets and stuff from your financial customers? But longer term, vendor consolidation is probably the opportunity?

I think some of our customers are under budget pressure, and that is driving their consolidation decisions. I don't know that, that's hitting us negatively as much as it may hit others. I don't know that, in that consolidation, we're seen as the one that's being consolidated away from. I think it's given us increased opportunity to do some of the things that either are more expensive or a point solution or something that can be done in our platform, it's an opportunity to actually move to our platform. So I'm always hesitant when I see customers under budgetary pressure, but over 20 years of a career, I've always seen that as an extra opportunity to actually get closer and put the right relationship in place to expand the relationship.

Ewout, maybe you could just remind us or clarify, the guidance reduction, and what the moving pieces are there? And perhaps also just what your exposure to sell side and the buy side might look like?

Yes. At the end of the first quarter, what we said was we see some of those longer sales cycles, and Adam explained the reasons why. So we thought that we would end up at the lower end of the range that we had from a top line growth perspective. So the range of 6.5% to 8.5% at the time, we said we expect to be at the low end. So incrementally, we're now -- we're looking at is a bit of uncertainty around particularly the sales of ESG scores. We think, by the way, long term, this reconsideration in the market around scores and a lot of asset management moving to in-house proprietary methodologies is actually an opportunity for us to sell the raw data, the ESG raw data. But short term, there was a bit of uncertainty, that pause would mean for the business. So we thought it's better to be careful, give ourselves a little bit of wiggle room. So we moved the range to 6% to 8%, but we were not pointing to the low end of the range anymore. So there wasn't anything dramatic that was in that signal behind it. I think the interpretation was maybe a little bit too extreme from my perspective, for what we're tending to do. We also are not coming off. On the contrary, we think the business is doing well. As Adam was saying, the outlook is great. We see deals getting done and closed. We see the price uptick being healthy. We see the user growth being very strong. So there's many, many, many positive signals that we're seeing. We just thought it was better to be a little bit more careful from a range perspective. But again, I think the only incremental little thing was they are, on top of what we said to the end of the first quarter, was the uncertainty around sustainability and ESG scores.

Got it. And you already gave us the cadence on the margins for MI. I guess how much of that is reliant on -- I think there's 15% of MI, perhaps if I got that right, that's tied to volumes, capital markets volume. So just maybe some help on the tie to those assumptions.

The expectations in that are, again, very careful. So we haven't put any heroic assumptions in with respect to a return of growth from the capital markets businesses in order to achieve those numbers. So deliberately, we are careful. The costs are becoming easier. FX becomes less of a headwind. And then we actually -- we believe that the second half of this year, the number for the whole company and MI will be stronger than the first half of the year. I think some people have said that sounds strange because -- in this current environment. But again, that has more to do with the comp than with the outlook that we are actually having for the back half of this year. So I would say still very confident we can hit that.

Got it. Adam, maybe the next line item, that you guys call it Data & Advisory. I think that's the biggest part of the MI business. Maybe just for some perspective, what exactly is in that line item? And I think, other than Desktop, all the others seem to be going pretty well. So maybe just what's driving some of that growth in Data & Advisory.

Data & Advisory is what's on the tin. These are specialized data sets, could be anything from fixed income pricing, to special maritime data sets, to our TMT consulting business, wide range of reference data, all different types of data and light analytics capabilities. The demand for those services continues to grow. Even in stressful times, customers want better insights. What we do see is customers asking for that data to be delivered into their systems in a highly flexible way. You see, this year, we won Provider of the Year with both Snowflake and Databricks. We're delivering through AWS. You all read about a large partnership we signed there. That kind of flexibility and a lot of things we're building internally in S&P Global in order to make our data even more flexible and accessible to customers, coding it in a way so that you can discover it more rapidly with a product called Marketplace. If you haven't gone, you all should. There's over 230 titles there today, about 25% of them came from the IHS Markit merger. So bringing that broad data set and making it widely available to our customers for exploration. Very sticky products. Once a customer is using that data set, they tend to continue to use it because it's been built into their workflows, and it uses their benchmark. So just an area that continues to grow for us.

And is it right to think that, that's the data you sell outside of Cap IQ Pro? I guess what I'm trying to tie in is you can feed a lot of data through Cap IQ Pro. So if someone's buying it through that, does it get reported in this line? Is it separate line? Or how does that work?

Yes, this would be data that's not sold through a Desktop subscription. So you might be looking up the prices of securities on the Desktop or using that as a research tool, but you're not feeding your risk management system at your firm through the Desktop. You feed that through a feed, a flat file or some other way of distributing it. That's part of our data business.

Got it. And then if you go to the next one, Enterprise Solutions. Maybe again just a similar -- just to level-set what's in that line item, and some of the trends you're seeing there.

Yes. This is, in some ways, maybe the hardest for people to understand because there's a combination of industry platforms and software and workflow solutions within the Enterprise Solutions segment. Sometimes in the quarter, we explain the components a little bit to give you some context. But if you think about our software tools and portfolio management tools, those continue to grow very strongly, many of them growing at double digits. The other components of Enterprise Solutions are some of our platforms, they're market-driven platforms. When you see variation based on volume or activity in the market, you're seeing it in that Enterprise Solutions business line. That's why you saw through 2022, pretty challenged levels there, and that's as we normalize and have periods of comparison that are now been brought down through '22. Now you're starting to see the growth there normalize and reflect our tax compliance solutions, our iLEVEL portfolio management, WSO on the loan side, all of those software solutions that are growing really well in the current environment.

Got it. And then the last piece, the Credit & Risk Solutions. Is that basically the Ratings resale?

Correct. And the principal products there are RatingsDirect and RatingsXpress. One a delivery over our feeds and one a platform that's used by customers to manage their risk. RatingsDirect is a product that, if any of you are users, you probably know it has grown a bit long in the tooth. It was lacking some of the analytical and user-friendly capabilities that it should have had. Still a growing product, but it needed to read -- we did launch that about 6 weeks ago now. Customer reception has been exceptional. We're continuing to roll out new functionality on the new platform. So we're pretty excited about how that will continue to grow.

Got it. You obviously have a pretty broad portfolio. How do you think about what are the white spaces, maybe how you think about cleaning up portfolio perhaps, even though there's so much in there?

Yes. I do think it's important for us to remain focused. There are -- it's a big segment of services and we have a lot of different vectors for growth. We focus around 5 core areas. Private markets has been a big focus for us; the supply chain, a big focus for us; credit and risk management; expanding the capabilities of that Desktop; sustainability. These are areas where we're highly focused. I know we have a very significant footprint today and the opportunity to expand our existing product set, but also add adjacent to it. There are other things in the portfolio that maybe don't support that as much. We'll look selectively and be thoughtful about trimming there where it's appropriate. But you'll see, even in this current year, we've done several acquisitions. We acquired the other half of PMC, which is a private company data management capability. We acquired ChartIQ, leading charting capability on the market today. Within 90 days, we had that up and running within Cap IQ Pro. You can now have the leading charting capability on the Desktop. We bought a company called TruSight, which was a competitive product to our KY3P, our vendor management tool. That was owned by and run by a group of banks. We've now put all of those banks into our platform, and that's now continuing to grow. So we'll use both acquisition and paring where appropriate to stay focused in these core areas.

Got it. Ewout, maybe I can ask you the same question for the broader company, and maybe we'll just call it a capital allocation question. But I think you said minimal M&A. Just remind us of your buyback and dividend policy. But then the question is, as a broader company, how do you keep evaluating whether you still have the right mix of business?

Yes. Maybe first on the portfolio itself, we are always looking at our portfolio. There's always discipline. At any point in time, you should say, "Okay, these are the businesses we have." They have an opportunity to prove themselves, but over time, we will be very disciplined portfolio managers. You have seen us doing that over the last few years, including selling Engineering Solutions, of course, earlier this year. And I think if you look at the assessment to prove yourself within the portfolio, I think it is 2 particular factors. One is the strategic rationale because it is important that the total company is better. It adds value to the total enterprise by being part of the portfolio. I think that is an element to prove. And then, of course, financial performance is the second element to improve. With respect to capital allocation, I think not so much different, but I would say a boring, very stable, predictable answer is the best thing in this area. We continue to drop off a lot of free cash flow. We will return at least 85% to our shareholders. That leaves 15%, max 15%, for some small tuck-in and bolt-on acquisitions. Those need to be in the strategic areas that we have identified that are important for us as a company. So they should really help and enhance some of those growth areas, like energy transitions, sustainability, private markets, with supply chain and so on. And obviously, from a valuation perspective, it should remain attractive as an opportunity as well. So very much similar to what you have heard in the past.

Got it. Adam, you mentioned private markets, private credit comes up a lot as a big opportunity. MSCI just gave -- had the [ multiple ] to acquire the remaining stake of Burgiss, so they're obviously making the same call there. In your portfolio, like what are the private market capabilities? And how do you think of yourself as being positioned to take advantage of these?

I think it's an exciting market. I think it's going to continue to grow significantly. And I think as private capital becomes more common in the portfolios of not just institutions, but some of the high net worth individuals or other individual portfolios, you'll see an expansion in the need for valuations reporting, at least make some levels of regulatory [ insight ] across all of those capabilities that we operate. So portfolio monitoring, things like iLEVEL. Private company valuations is a very rapidly growing business for us. Building benchmarks, like our partnership with Cambridge. Building reference data and other pricing tools, reporting tools, data visualization, bringing in public company comparables into our private portfolio management tools. On the credit side, you mentioned private credit. The combination of WSO, which is a leading platform for managing syndicated loans, that credit experience. Now we have a combined product, WSO-iLEVEL product, for managing private credit. We've put on near $100 billion of AUM just this year. This is a big area of growth for us in providing those services. How large a role private credit ultimately plays in markets, I think that's [ to be borne ] out. Still a small part of the market today, but growing very rapidly. And there a lot of participants that want to be involved in that market, but with that come the challenges of managing those portfolios, and those are the tools we provide. So I think it continues to be a big area of growth for us.

Got it. And Ewout, we -- you get a lot of this question around private credit and the ratings market. I know [indiscernible] thinks it's relatively small, but actually, every day, there's a big headline around it. So can you just help contextualize it for us? Like is there an opportunity, near-term risk, long-term opportunity? How do we think of it?

Yes. My view is, Manav, is this is too much positioned as a black or white kind of topic. Actually, this is an area that, on the one hand, you could say private credit takes away from the market of public debt, but the public debt market is anyhow so much larger. And then secondly, we have actually a really large opportunity within private credit. We can rate-price debt, and we're already doing that today as private credit at some point needs to be securitized or come back to the market in secondary trading, so there needs to be objective evaluation of risk and other elements to that. So these are all the aspects that we can bring. It can be held to maturity in insurance portfolios. It's important there that we also have an objective measure of the credit risk and what is the appropriate capital charge behind it. So there's many different areas, and we're working very closely with all the large private equity firms to help them in this space and to provide our rating services to them. So it's actually a large opportunity, and we're already really recording a lot of activity in this space.

Got it. Maybe in the last 5 minutes, let's just touch on Gen AI since everyone loves to talk about it. Adam, maybe just to start with you, just your view on Gen AI and the opportunity within MI. And I think everyone appreciates that data is going to ultimately be the differentiator. So maybe just talk about which particular data sets you think would be your...

I'm glad you said that. I don't know that everybody immediately knows that data really is the differentiator when we start talking about Gen AI. Let me take a half step back, AI, forget Gen AI for a moment. We acquired Kensho many years ago. Use of artificial intelligence in our applications has been an ongoing part of our development, whether it's the way we enable customers to discover keywords within documents and put them in an organized way, connecting data together through products developed by Kensho. These are called Link, NERD. These are acronyms, they have the ability to link data sets together. We have many, many different things across the firm. We took an inventory. This year, we've released 8 AI-driven products or internally used products within the division just in 2023, And that's not large language models, generative AI, which is the buzz that I know everybody is thinking about. That presents a whole new set of opportunities for us, not just the expertise of Kensho, but the application of our data set to large language models. We have probably the world's leading set of what we call training data or data that you can use to train a model. That's very powerful. Having that data organized with the right provenance, accuracy, et cetera, critical. We'll partner with different market participants, but we also have an internal capability to build models in a way that allow us to produce really interesting product capabilities for our customer. I can give you one quick example. I mean, I can give you a couple but probably most interesting. ChatGPT, probably everybody in the room's played with it. It was kind of interesting. It sends you back a paragraph. Most sophisticated financial analysts, institutions, use that for a couple of things. But at the end, not actually that useful. What would be useful is when you put in a question or something you're investigating, that it returns to you a summarized view and source documents. You can actually click through and get to what you needed. You can construct a table from it, you can construct a report from it, you can modify the report based upon a new query that it searches and that it generates. So that's more complicated, and that requires the application of a lot of expertise and high-provenance data. That for us what that vision is, right? If we can, within Cap IQ Pro, for example, accelerate the capabilities of an analyst, from a first year analyst to a third year analyst, through an AI-driven tool that has the right kind of accuracy and click-through provenance, that's a very powerful tool. Do I have a specific revenue attached to it, I don't know. But does it have a competitive distinction? Yes. And if we can train it on our data and with our expertise, I think that gives us an interesting edge.

Got it. And Ewout, maybe if you can end up here, but the question is more around, obviously, Kensho specifically. I know you've overseen Kensho for a while here, but a lot of your peers obviously doing a lot of sessions around the capabilities there. But just you said Kensho has given you an advantage. So maybe just talk about why. And eventually maybe large language models will be commoditized, but that's a little edge with your fin LLM stuff, too, today. So maybe just talk about this.

Yes. So our advantage is we have already 5 years of experience dealing with AI within the company. I still recall when we acquired Kensho, there were a lot of eyebrows that went up and say, "What are you doing?" But clearly, I think over time, this has been a huge game-changer for the company, to be very early in embedding AI tools, as Adam explained, within our company, within our tools, within the products that we provide to our customers. Secondly is the data sets. In the end, training these models depends on the quality of the data sets. And we can put together the largest data set that's specifically so-called token that is formatted in order to train these models. Just to tell you maybe one interesting anecdote here. We launched 2 months ago a large language model data content within the company. It was a crowdsourcing initiative, where we also helped all of our people because, in the end, we have everyone in the company working on data technology, data science or any form in between. And they all want to be part of this. And we asked them help us to deliver your data in this format so that we can really train our in-house industry-specific language model that we are developing with Kensho as quickly as possible. We got within 1 month 24,000 submissions, 24,000 submissions from a crowdsourced internal initiative, which I thought was fantastic. So we can really use that as a differentiator. And then in the end, our brand. Our brand is, of course, also very important because most of our customers will say, "You know what? I can do a few things. Either I'm going to develop an analyst support or copilot myself. I can outsource it to a large tech company and ask them to help me with it. Or I can buy it from one of my present providers, someone that I already know that helps me with my data, with my workflow tools, that has a brand that I trust and rely upon." We should be able to deliver that last element to it. So actually, you're hearing us less talking about it, but you should interpret this that we're more doing it. We're more developing it. And our objective is to really be 1 of the first 2 markets with an actual production-grade level tool that we can provide to our customers. Yes, maybe over time, that becomes standardized and commoditized, but the first-mover advantage in this space can be really a big differentiator.

Got it. Makes sense. So looking forward to this update. And we're just out of time, so thank you, both Adam and Ewout, for being here. And thanks, everyone, for coming as well.

Thanks, Manav.