Earnings Review: SPGI Q1 2026
Breaking Down the Q1 2026 Numbers & AI Tailwinds
Business Update
S&P Global provides credit ratings, benchmarks, analytics, and workflow solutions across core global markets.
The company is currently undergoing a transition to strengthen its core focus with the upcoming spin-off the mobility segment and divesture of assets from its energy division. SPGI currently operates through five primary divisions:
S&P Global Market Intelligence
S&P Global Ratings
S&P Global Commodity Insights (Energy) - divesting non-core assets late ‘26/'27
S&P Dow Jones Indices
S&P Global Mobility: Currently in process of a spin-off into a separate publicly traded company, Mobility Global Inc. - expected close mid-2026.
Company Highlights:
Strong Brand: Despite 2008, company remains resilient through worst case crisis scenario.
Oligopoly - monopolistic with STRONG barriers to entry.
Commitment to return of capital to shareholders.
Historically High Return on Capital Employed.
Requires very little capital expenditures to operate.
High recurring subscription revenue.
Strong network effects of data.
Pricing power& inflation protection.
High and strong margins.
Potential for accelerated growth in margins utilizing AI in rating through automation of ratings workloads.
Lumped into the AI/SaaS Selloff
Let’s address the chief concern first…
SPGI’s stock is currently in a 26.4% drawdown… and has returned -19% YTD. SPGI has consistently traded at “premium” PE multiples averaging near 39x over the last 5 years. I am not the biggest believer in such elevated multiples - if this past year taught us anything it is that it doesn’t take much for premium multiples to compress.
However, today SPGI sits at its lowest PE multiple in 5 years ex the 2022 lows and is at its highest FCF yield over that same period of time.
SaaS companies and ‘premium information and data’ companies (or anything related at all…) alike have faced massive swings of multiple compression driven by fear and uncertainty from AI. Panic selloffs go hand-in-hand with every Claude release and they market is acting like anything that can’t be bolted into the ground is at risk of being vibe-coded into obsolescence.
With SPGI - this uncertainty has been primarily focused on the Market Intelligence segment. But, in my opinion, it is far overdone. Reactionary selloffs are ignoring the structural moats possessed by companies like SPGI - proprietary data, high-value integration, trust and reputability.
I have consistently believed that AI will benefit market leaders. On 2/12/26, after dropping 26% on AI headline fears, I shared the following:
Management agrees and spent a considerable amount of time discussing it on the call…
Highlighting AI
For the past few quarters, the market has been demanding proof that investments in AI will actually result in real returns. SPGI isn’t sitting by idly waiting to be displaced, rather they are rapidly innovating to help customers unlock the potential of AI.
Here are some of the callouts:
Increased engagement:
More than a third of our S&P Capital Q Pro users engage with the AI features we've launched, including ChatIQ and Document Intelligence. We now have more than 300 customers under contract or in trial periods for Kensho LLM-ready APIs."
Exponential Growth:
in the Q1, the volume of API calls made by our customers was more than 5x the volume that we saw just one quarter ago. Volumes doubled month-over-month just from February to March. We can see early indications of this translating into economic benefits.
AI Translating to Revenue Growth:
ACV (Annualized Contract Value) growth among customers who use our AI solutions is outpacing growth from other customers by a wide margin.
Growth in Market Intelligence is 30% higher among AI customers compared to others, and growth among AI customers in Energy is double the growth rate among other customers.
Customer Example: “Willing to pay in the range of 35%-45% more”
Perhaps maybe one other example I would provide is, in the quarter two financial clients who are just subscribing to our data at renewal, were opting to get that data available in an AI-ready format we're willing to pay in the range of 35%-45% on the renewal increase to get the AI access. Again, early days, but some very strong signal here around the monetization from an enterprise value standpoint. Thanks for the question.
This is the the commentary I have been waiting for and I was happy to hear it. In my opinion, SPGI is effectively using this ‘AI moment’ to integrate with and improve their offerings creating opportunities for upsell and increased engagement by customers.
Q1 2026
SPGI reported a strong Q1’26 earnings despite navigating elevated geopolitical and macro-economic headwinds:
Revenue: $4.171 billion vs. prior-year periods, a 10% YoY Increase.
GAAP Net Income: $1.395 billion, 28% YoY Increase.
Adj-Net Income: $1.479 billion, 10% YoY Increase.
Adj. EPS: $4.97, 14% YoY Increase.
GAAP EPS: $4.69, 32% YoY Increase.
Management reiterated its full-year guidance for organic, constant currency revenue growth in the range of 6%–8% and EPS of $19.53 at the midpoint, around ~10% growth.
Now, 6-8% revenue growth and 10% EPS growth isn’t necessarily exciting at surface level, I am invested in SPGI because its durability as an oligopoly with STRONG barriers to entry. It is a toll booth of global debt and capital markets, supported by data and indices recurring subscription businesses and the adoption of AI will lead to increased efficiency, competitive advantages, and eco-system stickiness.
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Looking beyond the top-line we see the strength of SPGI’s operating leverage in their business model. Revenue increased 10% but Operating Profit increased by 27% YoY. All of SPGIs segments are growing and expanding margins with the total company adjusted operating profit margin hitting 52%
TTM Operating Margins:
Market Intelligence: 34.2%, +160bps
Ratings: 65.6%, +220bps
Energy: 47.9%, +80bps
Mobility: 40.2%, +110bps
Indices: 71.3%, +90bps
Total: 50.7%, +180bps
Management also reiterated its full-year guidance for organic constant currency revenue growth in the range of 6%–8% and unchanged adjusted EPS ranges, locking in a highly visible trajectory for the rest of 2026.
Buybacks
As usual, one of my favorite aspects of the report was the the highlight of capital returns via buybacks.
Quarterly Repurchases: S&P Global repurchased $1.0 billion Q1 2026 alone.
Free Cash Flow: Cash provided by operating activities reached $1.037 billion, resulting in an Adjusted Free Cash Flow of $992 million (up 10% YoY). Management “expects to return 100% or more of adjusted Free Cash Flow through dividends and share repurchases in 2026.”
“Given the strength and resilience of our business and our confidence in its long-term profitable growth, we believe the current share price reflects an attractive opportunity to increase our repurchases from the expected 85% of adjusted free cash flow to at least 100% or roughly $4.5 billion for the year.”
Management also noted that the upcoming Mobility spinoff will result in a ~$2 billion debt offering with the new company with proceeds to fund a cash payment to SPGI which “we would expect to use for a combination of incremental share repurchases and some debt reduction.”
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