S&P Global Inc. ($SPGI)

Okay. Welcome, everyone. So having the pleasure of hosting Mark Grant, SVP, Investor Relations and Treasurer at S&P Global. Mark, thanks for coming today.

Thank you for having me, Sean. It's great to be here. .

So I'm going to kick things off. I'm going to dive into Market Intelligence and GenAI, which is the vast majority of the questions I get on S&P these days because the rest of the business is sort of resilient and strong. So my first question is, so how do you distinguish between cyclical headwinds, like end market softness in the financial sector? And any structural AI substitution risk to Cap IQ and all the similar workflow tools within Market Intelligence.

Yes. I think this is a really important question. And to your point, we get this lot on our side as well, right? I'm glad that you started with how resilient the rest of the business is, right? As most folks understand, we're primarily a benchmarks business, right? 2/3 of our revenue, roughly 3/4 of our profit comes from benchmarks, right? The Ratings, the Index, the Platts commodities prices. These are fantastic, very resilient businesses, where we are the only source on planet earth for that information, right? And so we do get a lot of questions around, well, what's this small pocket in market intelligence that could potentially be at risk here? And how do we assess that, right? So when we look at the Market Intelligence performance, most of the questions we get are specifically around Cap IQ, right? Cap IQ is the product that most of our investors are most familiar with because they either use it or they use one of the competitor solutions almost every day, right? Cap IQ is less than 6% of our total revenue and even smaller percentage of our profits, right? So when we look at this, it's -- they are very important questions about a very, very small part of our business. And so when we look at the Market Intelligence business broadly, you've got incredible data sets in there like Compustat and SNL that's the distribution platform for much of our ratings content through RatingsDirect and RatingsXpress. We've got these incredible workflow tools that are highly moated and have great network externalities that create a great deal of value for our customers. And we have a lot of data that gets distributed through these platforms that customers consume in various ways, whether that's through a desktop or through data feeds or through Databricks and Snowflake or more recently through MCP connectors, which I'm sure we'll get into as well. When we look at the performance of that business, it's actually fairly easy to differentiate between what are cyclical tailwinds, what are secular tailwinds, what are the themes that we're seeing in the market that really drive performance there. And one of the themes that we've seen is vendor consolidation. More and more of the customers that we talk to, primarily through our Chief Client office, our large sophisticated strategic customers, they want fewer vendors in their ecosystem. They know that there are huge swath of information and value that they can only get from S&P Global. And so they come to us very regularly and say, all right, what else could we be getting from you and how can we eliminate some point solutions in our ecosystem. So that's something that we would consider as a secular tailwind theme, right? The cyclicality piece impacts us a little bit less than you would expect in some -- for some other folks in the space because we haven't had seat-based pricing in 5, 6 years. right, longer than that. So having the enterprise contracts that we do allows us to look through a lot of the cyclical stuff without it actually impacting the financial performance of Market Intelligence materially at all.

Got it. And then I guess from a high level, like what are you hearing from your customers for demand for S&P's data?

Look, I think the general theme is your data is great. For most of what we're consuming, you're the only source we have, and all of the tools that we're looking at using or starting to deploy now require us to consume more data at higher volumes at higher velocity. So our customers are telling us we need to do more. We want to consolidate more. We view S&P Global as a very powerful strategic partner for us and an incredibly important vendor. And so how can we structure things such that we can consume this data and make sure that there's the value recognition on the economics, right? So when we look at the deployment of MCP connections, right? We've talked about this a little bit in our most recent earnings call, we've seen volumes of API calls through those MCP connections increase 500% quarter-over-quarter, 100% month-over-month, right? And so the value that our customers are getting from S&P Global data through all of these platforms is only increasing, right? And I think over time, you see that show up in the economics as well.

Yes. That was my next question was about just demand for data within this GenAI world, right? So yes, it was 5x quarter-over-quarter, right, for the API call volumes. And I think there was renewal uplifts as well as like 35% to 45%. I think maybe a few clients, but very promising. So I guess, taking a step back, can you help us like frame that I guess the revenue opportunity there from AI over the next 2 or 3 years?

Yes, I think this is another important point because the reality is nobody knows exactly how this is going to play out, right? When we look at the financial services end market, the energy end market or nonfinancial corporates, whatever customer base that we're serving, you have to start with the realization that customers don't have infinite budget. And so the value that we are creating for customers, we have to also help them understand not just how we're creating more value, but we can also help facilitate freeing up budget for them, right? And that goes back to the point on vendor consolidation. If you can eliminate point solutions in your ecosystem and do more through S&P Global, yes, your contract value with us is going to go up, but your total cost of ownership across that portfolio of products actually goes down. And so when we look at customers who are looking to invest more in their AI solutions, looking to invest more in data, looking to really scale out some of these strategic initiatives, S&P Global is probably as well positioned as any company in the world to facilitate that, right? And so I think as we look at revenue growth over time, you do see that show up in customer retention. You see it show up in wallet retention. You see it show up in sales cycles. You see it show up in competitive win rates, right? And ultimately, you see it show up in pricing power, too, as we increase the value we're creating for our customers, we ask them, of course, to share the economics of some of that value with us, right, through price.

Yes. And I was just going to touch on, I guess, the competitive environment with AI. Market Intelligence growth, I think you said last quarter is running 30% higher for AI customers versus non-AI customers? And then you touched on it that the net renewal rates increased 100 basis points last quarter, which is great to see. So are you seeing any share gains from competitors like Bloomberg or FactSet specifically because of these AI features that you're rolling out? Or is this primarily just wallet share expansion within existing clients?

Yes. It's a fair question. This is a space that's been competitive for a very long time. We have scaled competitors in Market Intelligence. We've got a great deal of respect for our competitors in that space. I think when we look at the investments that we've made over time in adding AI functionality to our products, so if you look at features like ChatIQ, Chart Explainer, Document Intelligence, all sit within CapIQ Pro it increases the functionality of that platform for the people that are using that as their daily tool, right? So that absolutely creates value. That shows up in renewal rates, and it certainly shows up in competitive win rates, right? But it's a much broader conversation with most of our larger customers. It's not just about what are you doing with Cap IQ. It's about what are you doing with MCP? What are you doing with the Kensho Grounding agent? What are you doing with the Kensho LLM ready APIs? And how are you looking at making the full data estate available, right? And so these are initiatives that we have internally as well about how we can meet the evolving needs of our customers faster than anyone else and delivering value, frankly, that they could only get from us anyway, right? So I do think this shows up in competitive win rates, but look, our competitors aren't still either, right? We've got -- like I said, we've got a great deal of respect for the competitors that we have in the space. It goes back to the iron sharpens iron analogy. But look, I think we -- if you go back to what we said at Investor Day, the financial targets that we put out, we admitted on stage. That's going to require us to take market share because the end market is not growing 6% to 8% on an organic constant currency basis. We're confident we'll be able to do that.

And when -- I guess, when you look across your competitors, right, whether it be Bloomberg, Factset, Thomson Reuters, like how is the -- how do you feel like company's positioned versus those competitors? And then also, like what specific advantages does S&P have versus them?

The single greatest advantage that S&P Global has is that we are the single source for the vast majority of what we do, right? Look across the entire ecosystem and we do have conversations where folks want to focus just on Market Intelligence, but our customers don't, right? Our customers come to us for a broad array of products across all of our divisions, right? The Ratings division sits a bit siloed just from a regulatory standpoint. We don't really package Ratings with anything else, right? But when you look at customers, a large global investment bank is likely buying data through the Index business. They may very well have portfolios on the asset management side that are benchmarked against our indices. They are likely buying pricing data from our energy business because their energy traders would have a really hard time actually managing their workflows without knowing dated Brent crude prices, right? You've got all the content that we distribute through Market Intelligence. And so the single greatest advantage that I think we have is just this massive holistic set of solutions that power the entire global market, whether that's the equity markets, the fixed income markets or the commodities markets. And so as we can demonstrate to our customers across that swath of products, we are adding more value for you. Every year, every quarter, we're launching new products. We're launching new features. We're launching new data sets, making more of our data available through LLMs, through the Kensho LLM ready APIs, right? All of that makes this conversation with customers about so much more than just the desktop.

And the Chief Client office is a huge part of it...

It is.

Right. And it's been up running for probably a little over a year now. .

Yes.

Can you just talk about, I guess, what the over the course of the last year? Like, I guess, what learnings you have kind of like where is it on its kind of maturation curve?

Yes. I think we're in very, very good shape. So Sally Moore is our Chief Client Officer. I think she's one of the most brilliant commercial minds I've ever seen in my career, having her in that position really does solidify that customer focus across the entire organization. And she's done a phenomenal job and the team that works for her has done a phenomenal job orchestrating our commercial initiatives, right? So if you go back a few years, you may have had a team from Market Intelligence to come and visit you as a customer. And the next week, somebody from Energy may have come and visited you. And they might not even have known that the other team was there, right? Because that coordinated effort wasn't necessarily as robust as it is now under the Chief Client Officer and with Sally in there, in particular, we've really created this ecosystem where the divisions focus on serving clients holistically, particularly those large strategic customers. We're talking about 150 of our largest customers or so in the Chief Client Office. And it really does allow those customers to have a greater sense of the value we create for them holistically, but it's also been a huge driver of just product awareness, like so any times we've gone into a customer who's bought 1 or 2 products from us for years and years and didn't even realize that we did so many other things. So when we go back to that point on vendor consolidation, the Chief Client Office facilitates that as well, elevating those conversations up into the C-suite and making more strategic decisions around just how much value we can create for a customer across the entire organization that's been a huge driver for us, not just in Market Intelligence but everywhere.

And you mentioned, I think it was a few quarters ago, but just about sales incentives and kind of restructuring them and maybe consolidating them from -- and I think that tears down silos just internally. But can you just talk about how the sales incentives, you don't have to be specific, but just how you kind of [indiscernible] them and changed them over the past year or so.

Yes. So this was -- I will probably forever be grateful to Saugata Saha for the transformation that he helped orchestrate inside of Market Intelligence, the simplification of the commercial teams and what we call publicly the revenue transformation and Market Intelligence was a big part of what Saugata was able to deliver in his first year there as the President of Market Intelligence, simplifying the incentive structure, making sure that it aligns with the best possible economic outcome for not just our customers but for us as a company and ultimately, for our shareholders as well. Going from 60-plus different [indiscernible] plans in Market Intelligence down to 10 and making sure that it was very clear to our commercial teams, how their incentives aligned with the incentives of the broader enterprise, our customers and our shareholders. That was a very, very heavy lift. And so when we have this leadership transition and market intelligence now whoever comes in and runs that Market Intelligence business will be in a very, very good position to execute and to deliver results because of what Saugata was able to do in 1.5 years there.

Got it. And then maybe just touch on the leadership transition a little bit more and also the data office because Saugata was the head of that as well. Could you just touch a little bit more about like kind of what's happening and how you guys are thinking internally?

Yes. So I think for those that may not know, Saugata Saha was the President, still is the President of Market Intelligence and our Chief Enterprise Data Officer. So when Martina established the EDO or the Enterprise Data Office, Saugata was put in place as the head of that when that was created. So he wore 2 hats simultaneously. They weren't necessarily won because of the other, right? He was just the best person to wear both of those hats. When he announced that he'd be leaving to go take a CEO role at a tech company, one of the things that Martina did immediately was take that Enterprise Data Office and roll that up under our Chief Technology and Transformation Officer, Firdaus, who is a phenomenal leader, right? And I think if we had somebody like for Firdaus 1.5 years ago, we may very well have structured this differently from the beginning. I don't know. But Firdaus joined just a few weeks ago, brilliant technologist, successful entrepreneur in his own right, he knows how to manage businesses, deeply steeped in the technology. And so it makes perfect sense for us to have the individual leading our technology and transformation, be also the same person who's leading our Enterprise Data Office. And so this is one that we just made perfect sense immediately to Martina and to everybody else. When we look at the Market Intelligence transformation there on that transition from a leadership standpoint, all we've really said at this point is that we're going to move quickly and thoughtfully, right? So we want to make sure that we're able to execute that we're able to deliver the results that we've talked about for this year and for the forecast from our Investor Day. But we'll have more to say about that at the appropriate time.

Great. Makes sense. And then we touched -- I mean we talked a lot about, I guess, GenAI from the revenue side, but just from the running an information data analytics business, just I guess, from the internal cost workflow side on S&P, what has GenAI -- I guess one for Market Intelligence, what kind of learnings there have you had about cost takeout and efficiency. Then also maybe about like Ratings, and I know it's a little bit different in terms of the regulatory environment, you move a little bit slower, more pragmatically. Could you touch on Ratings and the other businesses as well.

Yes. So I'll start with Ratings. I think this is -- there's a great opportunity for technology deployment inside the Ratings agency. That's been true for a long time. So we've gone through multiple generations of deploying technology inside the Ratings business, whether that was traditional machine learning and deep learning to multiple rounds of deploying robotic process automation and RPA, right? So that is an organization that is very used to adopting and moving quickly as technology has evolved, GenAI is no different, right? So we've created specific tools that sit inside of the Ratings agency that are actually separate from the rest of S&P Global just because we have to manage data silos, and there's information barriers that can be crossed. So Spark Assist is our internal kind of copilot tool that we've built. Most of the organization gets access to that. There's a separate version of it that is just for the Ratings agency, right, so that they can leverage data that only they have access to, there's no commingling of that. I think when we look at AI and its potential to drive further growth and opportunities in the Ratings Agency, we have to be cognizant of the fact that there is a significant degree of human judgment that is required to create a rating, right? And that's not just true from a practical standpoint, but it's true from a regulatory standpoint, right? The credit analysts that publish these ratings are taking personal liability, right? Similar to when you publish a note, you've got a Reg AC certification at the bottom of it, certifying that it matches your personal views right? And you're taking personal liability by publishing that note, our ratings analysts are the same, and AI can't do that, can't comply with that regulation, right? So we want to make sure that, that degree of human judgment and expertise stays there, stays robust and stays celebrated. What we can do is leverage new technologies and tools to make those people more productive. And in fact, we can hire more credit analysts at the covering level and give them the support that they need through staff and through technology augmentation to make sure that they can provide the attestations that they have to, that they have the bandwidth to surveil all of the ratings that they've published that they can effectively manage the workload. And so you've seen that show up in our margins in the Ratings business for several years, right? If you go back to our margin targets from the 2022 Investor Day, our 2025 margins in Ratings were well above the high end of what we thought they would be in 2022, right, part of that is through technology, part of that is through cross training and making sure that we've got the scale and scope in our population of analysts who are, in my opinion, the best in the world, right? And so outside of Ratings, I think there are huge opportunities because you don't have the same regulatory constraints or attestations and requirements that you have in ratings. But we said at our Investor Day, we actually think the greatest opportunity for margin expansion in any of our divisions sits within Market Intelligence, right? Roughly half of our global headcount sits within Market Intelligence. And I think there are huge opportunities there to help make those people more productive and help them dedicate more of their time to more fulfilling work. And I think arguably continue to scale that business on the top line much, much faster than we'll have to scale it at the head count label.

Got it. And I want to touch on Kensho Link for a little bit, which I think is like a great asset within S&P. So I think last quarter, you said there was like 300-plus customers under contract or a trial for the Kensho LLM LM API. So-- can you walk us through the product road map from here? And specifically, how you plan to evolve from API delivery to agentic workflows and what that means for the pricing architecture?

Yes. I think this is one that we very closely watch. This ecosystem is evolving very, very quickly. And when we first started talking about the Kensho Grounding Agent, the number of times that I had to explain and frankly, the number of times they had to explain to me, if I'm honest, just what a grounding agent is. And we were so early in MCP so early with getting grounding agents out there, data retrieval agents. . So this is an ecosystem where we've been comfortably working for quite some time. And when we look at how that ecosystem evolves from our customer perspective, our partners' perspective, right, there's -- there are a lot of moving pieces. We've seen significant evolution just in the last 7 months since we had our Investor Day with the launch of new products, new platforms, new models. I think when we look at agentic workflows, I think most people would look at that and say, all right, truly automated, agentic workflows, straight-through processing either moving from human-in-the-loop to human on the loop or from no human involvement whatsoever, right? People are exploring conceptually what that might look like. We have to make sure that we're moving quickly enough to facilitate that where our customers want it. So making more and more of our data available through LLM ready APIs, which means attaching machine-readable metadata and contextualizing that data so that it can be consumed and used in an LLM ecosystem, right? We've been very early to that. We continue to scale out. Every quarter, we introduce new data sets available through those LLM ready APIs. But we're also seeing the evolution of things like skills and applications where we can actually create something like a skill that sits almost like if you look at the software space years ago, the phenomenon of containerization, right? Skills kind of serve that same purpose, where we can build skills which function like a collection of prompts, right, or prewritten instructions, and you can put these skills together in stacks that can create truly value-driven workflows, leveraging S&P Global data through an MCP connector in an ecosystem like Claude or ChatGPT, right? So more and more, we're leaning on these not just the Kensho engineers, but other engineers and technologists like Firdaus and the people in his organization. to really scale out these initiatives and make sure that by the time our customers really want to be there, we're already comfortable operating.

Got it. And then just moving on to Ratings. We're just talking before that it seems like there's so many kind of structural tailwinds to the business right now. And 1Q billed issuance rose 14% year-over-year. And you're citing hyperscaler IG bond issuance for AI infrastructure is a primary driver there. So just how large this is AI-driven issuance opportunity? So you see these $7 trillion stats and huge demand there. And are you seeing outside the hyperscalers and other areas like energy or industrial end markets that are supporting the AI build out across the world?

Yes. I think this is a phenomenon that impacts a lot of industries, right? People don't realize just how much energy consumption goes into something like a data center. They also don't fully appreciate how much concrete goes into that, right? There are so many different industries that are impacted by this level of CapEx investment. But at the end of the day, it's funded, right? And predominantly, thus far, it's been funded by debt. When we look at our issuance forecast for 2026, we've said publicly, our issuance forecast really only assumes that less than half of the announced CapEx from the hyperscalers actually comes to the market funded by debt, right? So we've seen a mix of funding this year between -- predominantly, it's been debt, but there's been significant slugs of equity announced as well, right? So our guidance and our billed issuance forecast does not assume that even half of what's been announced actually comes and is funded by debt, if it were to come that meaning half of it were to come, that would be a point or 2 of upside to our billed issuance forecast. But I think that's an important distinction as well because we get this question a lot, right? The hyperscalers are not in our frequent issuer program, right? Otherwise, they couldn't impact the billed issuance at all. Billed issuances -- or frequent issuer is excluded from our billed issuance calculation. So when they come to the market and we're rating that debt, that isn't something where they've paid us a flat rate, and we're just going to rate whatever they do, they're paying us every time they come to the market and we rate that debt. So that's been an important driver of results for us, as you saw in the first quarter, right? I think if we were to see the pace of debt issuance in the first quarter continue through the rest of the year, that's more than we're assuming in our forecast, for sure. right? But I think we do stand to benefit from that very well. Like we know that through all the data that we have internally and the expertise that we've built out over years, we have a fantastic offering for rating the data center debt. And I think market participants understand and appreciate that as well. So we are frequently tapped to do those deals.

Could that change over time if one of the hyperscaler just has some road map when they're going to forecast that they're going to tap the debt markets over the next 5 years continuously. Could they come to you guys and say, hey, can you work with us or with a frequent issuer program or things like that or not really.

I mean, it's always possible. But at the end of the day, that's really not what the frequent issuer program is designed to do, right? It's not for customers that come to the market with big slugs of debt every once in a while, right? It's for market participants that are very frequently in the market all throughout the year in generally very predictable ways, right? So -- and that program has been structured to facilitate that part of the market. The hyperscalers, really, don't fall into that bucket for us.

Got it. And then what -- I guess, what other kind of deep funding currents are out there over the next year but also in the next few years? I know that's mature -- the large maturity walls and things like that.

That's exactly where I was going, Sean. When we look at the maturity walls over the next few years, they're very, very strong, up -- I mean the 3-year forward cumulative maturity wall is still up double digits from where it was last year. And when we look at particularly the '27 and '28 maturity walls, a lot of this is debt that was issued in 2020 or 2021 at very low rates. . So we don't necessarily think there's a lot of incentive for those issuers to pull forward the refinancing of that. That's why we don't include any kind of material impact from pull forward out of those maturity walls in 2026 guidance. But eventually, that debt comes, right? And what we've seen historically is that, that tends to get refinanced. We typically don't see large corporates paying off debt at scale. So we would expect those to benefit from those maturity walls as they come through. It's just very difficult for us to predict what quarter or even what year sometimes that issuance will come through. We know that if you've got a 3-year kind of horizon, you'll capture all of it.

And then moving on to private markets revenue and S&P is focused there. It ended '25, north of $600 million at the enterprise level. And then I believe in the first quarter, private credit was up 25% for Ratings year-over-year. So like how would you think about like S&P's like penetration today, I guess, in Ratings, but then, I guess, overall? And what are the biggest challenges looking forward, keeping that competitive edge? Is it like data sourcing, client adoption, competition to sustaining kind of this growth rate, high level?

Yes. So it's -- so you're right. Our total private markets initiative across the entire organization was north of $600 million last year. We've said just within the Ratings business, it's hundreds of millions. And to your point, growing 25% in the first quarter. So it's been a very strong growth driver for us off of a decent base, right? So this is not a subscale business for us by any means. Certainly, smaller than the public markets, of course, but a meaningful growth driver. I think as we've seen the evolution of that private market space really over the last 4 or 5 years, we've seen more debt that could be done in the public markets, actually getting done in the private markets. And for the most part, we rate that, right? So if it is debt that could be in the public markets, I think we've got a great chance at rating that debt. As more focus has been spent on the potential risk in private markets. I think that actually generates more demand for Ratings generally, but it also generates more demand for our Ratings specifically because we're a large global institution. The brand recognition is very strong. Our methodologies are exactly the same in the public markets and the private markets. So there's no differentiation there. If you are used to trading public market bonds and you're used to seeing an S&P Global Rating saying it's investment grade, it's that exact same methodology that gets deployed in the private markets that instills a great deal of confidence in the investment community because they know exactly how to interpret an S&P Global Rating. Importantly, that also means that our rating travels. So if debt that's issued in the private markets and that issuer wants to refinance that in the public markets they don't have to worry about a degradation in their rating, all else equal, right, because our methodologies, the risk factors, the criteria, they're all the same. And our pricing is the same, right? So for us, I think over the long run, we're largely ambivalent over whether the debt gets issued in the private markets or the public markets, we think our opportunity to rate that debt and create value in the ecosystem is the same and our economics are the same.

And then I've gotten questions. It's just about kind of the private credit headwinds that have been all over the headlines last few months. Are you seeing any of those headwinds in your more, I guess, the ratings private credit business versus this time a year ago?

I think if you go back to some of the numbers that you pointed to, billed issuance in the first quarter grew 14% overall. Private markets grew 25%. So it's still a much faster growing piece of our business. And so I do think, to the point that I was making earlier, as we've seen the ecosystem evolve and as we've seen the risk environment evolve a little bit, there is more demand for Ratings generally, more demand for our ratings specifically. . I think that likely continues, right? I don't know that there's necessarily anything that I would point to and say, "Hey, this is something that's structural that we're paying attention to", right? Like I mentioned before, I think in the long run, we're going to be fairly ambivalent whether it's public or private. .

And then moving on to Indices business, maybe -- someone would argue the crown jewel of S&P...

It is a beautiful business. .

Around 74% operating margin. I believe last quarter, revenue was up 17%, mostly because of the asset-linked fee business. So What do you -- when you look at the business, what are the most exciting investment opportunities in the Indices today? And then how should we think about margins over the next few years?

Yes. So one of the reasons that I love the index business so much is not only does it create a great deal of shareholder value, but it's also perfectly aligned with our customer interests. When you think about the way we've structured that business, to your point, the majority of the revenue is asset-linked fees, which means when our customers thrive, we thrive with them. When the markets go up, we grow all else equal, when fund flows benefit our customers, they benefit us as well, right? The flip side of that is also true, right? When our customers feel pain, we share it with them, right? We're directly tied to the interest of those customers, which makes that a very resilient business model for us that grows quite well. As you know, markets tend to go up over time, right? And so that business tends to grow automatically. When we look at the investment opportunities, we've talked about some really exciting opportunities in digital wealth, in direct indexing, right, on the custom index and data subscription side, which has been growing double digits for us for the last several quarters, like these are all great opportunities for us to grow that business. But there is a bit of a double-edged sword there because you've got the S&P 500 and that's a phenomenal product. It's an incredibly powerful ecosystem built around that, these liquid ecosystems. And so that piece of the business will continue to grow for a very long time, right? That's our view. And so for a new product to come in and potentially accelerate the growth when you've got a big product like the S&P 500 ecosystem that has $15 trillion, $20 trillion of AUM behind it, you've got to launch a lot of new products in order to dramatically move the needle, but there are some really exciting opportunities.

Got it. And then the energy vision has some strategic repositioning that was announced last quarter. So just looking at that, what is the ideal revenue mix look like for this division over the next few years? And maybe some of the motivations behind the repositioning you did last quarter?

Yes. So the Energy division is predominantly subscription. As you know, price assessments, energy and resources, data and insights, upstream, the vast majority of that is going to be subscription revenue for us. I think that's always going to be the case. There are pockets of that business that are event-driven. And so as you know, the first quarter of every year, we host CERAWeek, which is the world's premier energy conference. When the world wants to talk about energy, they do it at CERAWeek. And so you see that every first quarter in the Advisory & Transactional Services revenue, right? You also have this great business around Global Trading Services, which is somewhat event-driven. That's the derivative instruments against our Platts benchmark prices, right? So that can fluctuate from quarter to quarter based on what we're seeing in the markets, but it's a great business. So I think over time, that business will continue to be predominantly subscription, continue to have a really great market position. When we talk about upstream specifically, the divestiture that we announced of the upstream software business that software piece is really something that's better owned by somebody like S&P who's buying that, right, where they're scaling out an offering. That wasn't necessarily an area where we wanted to go in and say, we're going to make a big investment to scale this out and make it a globally competitive software business. Really the value that we see for our customers across the entire estate is in the truly proprietary data, that's in the 3/4 of upstream that we're keeping.

And then, I guess, the larger kind of strategic action that you've been taking and planning for the last year or so, as the mobility spin effective July 1 and the $2 billion of debt placed at Mobility Global. So I was just wondering, how should investors think about the capital strategy at S&P? And how -- does the bias shift towards buybacks with the stock price at these levels? More tuck-in M&A, maybe I was thinking like kind of unique data sets and things like that or deleveraging at these levels?

Yes. So with the completion of the mobility spin, which we expect to take place on July 1, you're right, we raised $2 billion of debt financing that gets dividended out to S&P Global. We've said publicly the intended use of proceeds there, share repurchases and some debt reduction as well. We want to make sure that the spin's leverage and neutral for us, but we're very comfortable with where we are in the balance sheet. We've managed that very well over time. So I think from a capital allocation standpoint, we have a publicly stated target of returning at least 85% of free cash flow every year to shareholders through dividends and buybacks, with the proceeds from Mobility, we're raising that 2026 to 100%, right? So that's going to be roughly [ $4.5 billion ] of share repurchases this year. And so that's -- that's really the focus, particularly given where the valuation is right now, the return that we get on buying back stock, I think, is very high, and that increases or elevates rather the bar that we would need to clear even for something like tuck-in M&A. So we've said publicly, there's no appetite for anything transformational. And even the appetite for tuck-ins has diminished a little bit just given the bar that they'd have to clear given where the share price is.

And then at your Investor Day, the medium-term targets, 7% to 9% organic constant currency growth, annual margin expansion of 50, 75 bps. And given the strong 1Q, right, 9% organic growth and then 100 bps of margin expansion. And looking at this year, I guess, what would need to go wrong to track towards the low end of those ranges? And I guess where do you see the most upside in the business this year, but also over the next like 2 to 3 years?

Yes. I mean this is the kind of question that we typically get at the end of almost every meeting we have, right? Like what's going to drive upside, what's going to drive potential downside. For us, the answer is always going to be the market-driven businesses because they're the hardest to predict, and they're the ones where you can see fluctuation and have seen that historically, right? So that's Ratings and Indices primarily. So in periods where we see very strong issuance, you're going to see potential upside even to the targets we gave out at Investor Day, in periods where you see dramatic outperformance in an index like the S&P 500, that will benefit us as well. And the flip side to that is also true.

I think that's it. Thanks, Mark. Appreciate it.

Thank you, Sean.