S&P Global (formerly McGraw-Hill Financial) is now a provider of credit ratings, benchmarks, and analytics for the global capital and commodity markets. The company was a leading publisher of textbooks, tests, and related materials, serving the elementary, secondary, and higher education markets through McGraw-Hill Education (MHE) before it spun that business off in 2013. Other businesses include S&P Ratings (indexes and credit ratings); S&P Capital IQ & SNL and S&P Indices (financial and business information); and Commodities and Commercial (Platts, J.D. Power and Associates, McGraw-Hill Construction, and Aviation Week).
The company operates four reportable segments: Standard & Poor’s Ratings Services (S&P Ratings); S&P Capital IQ and SNL; S&P Dow Jones Indices (S&P DJ Indices); and Commodities & Commercial (C&C).
Standard & Poor’s Ratings Services provides credit ratings, research and analytics to investors, issuers and market participants. S&P Ratings is the largest segment, accounted 45% of total revenue.
S&P Capital IQ and SNL (26% of total revenue) provides digital and traditional financial research and analytical tools for capital market participants. It includes the following business lines: S&P Capital IQ Desktop & Enterprise Solutions, S&P Credit Solutions and S&P Capital IQ Markets Intelligence.
Commodities & Commercial (18%) delivers data, analytic services and pricing benchmarks to B2B companies specializing in the commodities and commercial markets. Brands include Platts and J.D. Power.
S&P Dow Jones Indices (11%) maintains a wide variety of indices for investors. It makes its money from investment vehicles, exchange listed derivatives, index-related licensing fees, and data and customized index subscription fees.
S&P Global operates in 31 countries around the world. The company has more than 120 office locations with about 30 in the US. The US is the company's largest market, accounting for around 60% of the company's revenue, while Europe is responsible for roughly 25% of total revenue, and Asia 10%.
Sales and Marketing
The company spends millions per year on advertising and promotional costs. It spent $33 million on advertising in fiscal 2015 after spending $35 million in 2014 and $41 million in fiscal 2013.
In fiscal 2015, revenue climbed 5% to $5.3 billion as increases in average contract values for each new customer relationships drove growth in the Capital IQ and SNL segment. Points of strength were S&P Capital IQ Desktop, RatingsXpress and RatingsDirect. S&P Global overturned a 2014 net loss of $0.1 billion, posting net income of $1.2 billion for 2015. This was a result of higher net revenue, a decrease in selling and general expenses, and mostly significantly the absence from the books of a $1.5 billion settlement with the Department of Justice over inflated ratings for sub-prime mortgage companies in the run-up to the 2008 financial crisis. Cash from operations decreased sharply, coming in at $195 million for the year, compared to $1.2 billion in 2014.
The company spun off its education business (and changed its name) in response to decreased spending on elementary and high school textbooks. Its financial business, which provides global financial information, research, and analytics tools to investment advisors, wealth managers, and institutional investors, has fared better.
In 2015, S&P Global Market Intelligence signed an agreement to sell Standard & Poor's Securities Evaluations and Credit Market Analysis, two assets within the S&P Global Market Intelligence division, to Intercontinental Exchange, an operator of global exchanges, clearing houses and data services. S&P Global Market Intelligence does not have critical mass in the area of securities pricing.
It made two notable acquisitions in 2014 and 2015. In 2015, the company acquired SNL Financial, a provider of benchmarks, data and research for global capital, commodity and corporate markets, for around $2.2 billion. The company was integrated into S&P Global's CapitalIQ segment. In 2014, it acquired (through subsidiary Platts) London-based Eclipse Energy Group, which provides data on the European gas, power and global liquefied natural gas markets.
Mergers and Acquisitions
In 2014, S&P Global's Platts division acquired privately owned data and analytics company Eclipse Energy Group, based in London. The company provides data and analytics for the European gas, power and global liquefied natural gas markets. S&P Global hopes the combination of Platts' pricing data and Eclipse's analytics will deepen understanding of the impact of events on pricing.