S&P; Global (SPGI) Q2 2022 Earnings Call Transcript

S&P Global (SPGI 1.06%)
Q2 2022 Earnings Call
Aug 02, 2022, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

 Good morning, and welcome to S&P Global's second quarter 2022 earnings conference call. I'd like to inform you that this call is being recorded for broadcast. [Operator Instructions] To access the webcast and slides, go to investor.spglobal.com. [Operator instructions] I would now like to introduce Mr.

Mark Grant, senior vice president of investor relations for S&P Global. Sir, you may begin.

Mark Grant -- Senior Vice President, Investor Relations

Good morning and thank you for joining today's S&P Global second quarter 2022 earnings call. presenting on today's call are Doug Peterson, president and chief executive officer, and Ewout Steenbergen, executive vice president and chief financial officer. We issued a press release with our results earlier today. If you need a copy of the release and financial schedules, they can be downloaded at investor.spglobal.com.

The matters discussed in today's conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates and descriptions of future events. Any such statements are based on current expectations and current economic conditions and are subject to risks and uncertainties that may cause actual results to differ materially from results anticipated in these forward-looking statements. A discussion of these risks and uncertainties can be found in our Forms 10-K, 10-Q and other periodic reports filed with the US Securities and Exchange Commission. In today's earnings release and during the conference call, we're providing adjusted financial information.

This information is provided to enable investors to make meaningful comparisons of the corporation's operating performance between periods and to view the corporation's business from the same perspective as management. The earnings release contains exhibits that reconcile the difference between the non-GAAP measures and the comparable financial measures calculated in accordance with US GAAP. I would also like to call your attention to a European regulation. Any investor who has or expects to obtain ownership of 5% or more of S&P Global should contact investor relations to better understand the potential impact of this legislation on the investor and the company.

We're aware that we have some media representatives with us on the call. However, this call is intended for investors, and we would ask that questions from the media be directed to our media relations team, whose contact information can be found in the press release. At this time, I would like to turn the call over to Doug Peterson. Doug?

Doug Peterson -- President and Chief Executive Officer

Thank you, Mark. Welcome to today's second quarter earnings call. Our second quarter results demonstrate the combined efforts of our truly incredible team. After our first 100 days as a combined company, it's clear than ever that after the merger, S&P Global is stronger, more resilient, more diversified and better positioned than ever.

We're maintaining fiscal and operational discipline in controlling what can be controlled, which is allowing us to post aggregate results in a challenging issuance environment that would have been inconceivable prior to the merger. Let me start with our financial highlights. As a reminder, the adjusted financial metrics we'll be discussing today refer to non-GAAP adjusted metrics in the current period and non-GAAP pro forma adjusted metrics in the year-ago period. Revenue decreased 5% year over year with growth in five of our six divisions, providing significant ballast against the 26% decrease in ratings revenue.

Recurring revenue increased 5% year over year, representing 81% of revenue in the quarter. Adjusted expenses only increased 1% as continued investment and inflation pressures on compensation and technology were almost entirely offset by cost synergies in the quarter. We're reinstating our guidance, which reflects the challenging macroeconomic environment, though we will be able to offset some of the EPS impact, as Ewout will discuss in a moment. Importantly, our updated guidance calls for a smaller than 2% decrease in adjusted EPS at the midpoint, illustrating the resilience of the businesses and the positive impact of our capital allocation strategy.

I would also like to share a few other highlights from the second quarter. As I mentioned, we are now more than 100 days past the merger close. Our post-merger integration efforts are proceeding on schedule, but very importantly, we're outperforming on both cost and revenue synergies. Momentum continues on product development with several areas of innovation that we'll highlight for you on today's call.

We see benefits from market volatility in parts of our businesses, and we're able to accelerate our share repurchase efforts relative to our original plan with $8.5 billion near completion at an average share price below $360. We expect to launch an additional $2.5 billion ASR in the coming weeks, which we expect to complete in October, with the final $1 billion to be completed by year-end. We've already seen remarkable progress in our integration efforts in a relatively short period. I am pleased with our progress in integrating our commercial and marketing teams.

We've recorded more than 2,000 cross-sell referrals across the divisions. We're also ahead of expectations on our cost synergies, realizing approximately $80 million year-to-date and exiting the quarter at an annualized run rate of more than $260 million. Beyond the transactional milestones related to the merger, like the necessary divestitures, we've also reached multiple operational milestones. We've standardized business practices, invested in culture and training and established leadership teams multiple layers deep across the enterprise.

We're moving fast on our office integration plan and consolidated 10 of our office locations around the world, lowering our real estate costs. We completed our major New York City consolidation and are on track to complete our London consolidation in the fourth quarter. When we announced the merger, we highlighted our expectation that the combined company would be more agile, innovative and entrepreneurial. And we've seen that in initiatives such as the Data Lake Hackathon led by Kensho's head of AI research and teams of data scientists, machine learning engineers and software developers.

These teams spent two days exploring how to best leverage Kensho tools and other technologies to drive value from the Data Lake data sets, and we're thrilled with what these teams have found in just two days. In addition to finding ways that Kensho solutions can add commercial value to unstructured data sets across the Data Lake, we identified new data sets for training Kensho Scribe, NERD, Link and Extract, more than doubling current training data sets in some cases. We also identified data sets to improve S&P Global's country risk assessments and found compelling new ways to classify and improve data for ESG. This hackathon enabled us to better realize the full capabilities of our combined data sets.

We also relaunched the cross-divisional S&P Global Research Council with new leadership and membership to reflect the expertise in our combined company following the merger. This council consists of both research and operational leaders with a core mandate to drive customer value and greater insights for markets. One of the first actions of the council was to align on key research themes that have the greatest potential for large-scale disruption and have a meaningful impact on the success of our customers. We'll be leveraging the full capabilities across the company and engaging meaningfully with customers and other stakeholders across industry and regulatory bodies.

There is incredible demand for insights and thought leadership on topics like energy security, climate, technology and digital disruptions, supply chains and capital markets. We have unique data sets and insights in all of these areas, and we see the research council as a way to make sure that our insights are most impactful for our customers and drive innovation within S&P Global. That focus on accelerating innovation was on full display in the second quarter. We launched exciting new products from commodity insights, including a new basin-level methane intensity calculation product for 19 US natural gas production areas.

We're using satellite imagery and data models trained in-house to significantly disrupt what has historically been a very manual process using data extracted from self-reported EPA forms. We also launched carbon intensity measures for all six crude grades in the global Brent benchmark. In mobility, we saw commercial success from our new auto credit insights product to help deliver insights to financial customers serving the automotive credit space. In engineering solutions, we continued to make progress building out our new software platform and have two successful proof-of-concept engagements in market now.

We continue to innovate in market intelligence as well, making new data sets available via feeds and introducing new products like PVR Source, which is a diligence platform aimed at helping clients get ahead of the compliance challenges of an ever-changing regulatory landscape. Now, to recap the financial results for the second quarter. Revenue decreased 5% to $2.97 billion. Our adjusted operating profit decreased 10% to $1.4 billion.

Our adjusted pro forma operating profit margin decreased approximately 280 basis points to 47% as both profits and margins were negatively impacted by the decrease in ratings transaction revenue and the expense growth I mentioned earlier. Importantly, our non-ratings businesses in aggregate posted strong growth in the quarter, increasing revenue by 7% year over year. As you know, we measure and track adjusted segment operating profit margin on a trailing 12-month basis, which was 46.1% as of the second quarter. Through strong and disciplined execution and prudent capital allocation, we were able to offset much of the earnings impact of the issuance environment, posting fully diluted EPS of $2.81, representing a 7% decrease year over year.

Looking across the six divisions, I'm pleased to report positive growth across five of our divisions with ratings executing very well in an extraordinarily difficult issuance environment. Our more diversified portfolio of products provides many opportunities to thrive in uncertain markets, and we saw double-digit revenue growth in multiple product lines as a result. Within our indices business, we continued to see remarkable strength in our exchange-traded derivatives, which grew more than 60% year over year, as well as our CDS indices, which increased 40%. Uncertainty in the markets continues to spur demand for our thought leadership and insights and a consolidated platform on which to access information.

Whether it's tracking market movements, company performance or supply chain constraints, our customers continue to come to us for help navigating uncertain waters. This helped drive 25% growth in aftermarket research in market intelligence. In the second quarter, we celebrated the second anniversary of the S&P Global Marketplace. Customers continue to come to S&P Global as a trusted source for differentiated data around ESG, fundamentals, machine-readable text and workflow tools like our Workbench.

We've seen explosive growth in the Marketplace since launch. And in the last year, a nearly 30% increase in the content and solutions available, 75% growth in deals closed and more than 200% growth in engagement as measured by page views. Now, turning to issuance. During the second quarter, global issuance decreased 37% year over year, deteriorating further from what we saw last quarter.

In the US, rated issuance in aggregate decreased 34%. European rated issuance decreased 45%. And in Asia, rated issuance declined 32%. We saw sharp declines in high yield, which was down nearly 80% year over year in Asia and was down more than 80% in the US and Europe.

Interestingly, this is the first time that I can recall seeing declines in every category and every region since I've been doing earnings calls. We've included additional details on the subcomponents of issuance by region in the slide deck. Each year, S&P Dow Jones Indices conducts a survey of assets, as depicted in this slide. Asset levels and actively managed funds that benchmark against our indices increased 38% to $12.8 trillion as of the end of 2021.

Assets and passive funds invested in products indexed to our indices increased 32% to $9.9 trillion. Numerous indices support the $9.9 trillion, including the S&P 500, the largest with $7 trillion in assets. We've seen strong growth in factor and sector indices, as well as many of our ESG and climate-related indices. While the S&P 500 still accounts for the majority of AUM, we continued to see strong demand for that historic index among asset managers.

We saw even faster growth among our other indices in 2021, evidenced by the fact that the S&P 500 accounted for 71% of indexed AUM in 2021, down from 72% in 2020. While this is historical AUM as of December 2021, we're very excited about what this slide will look like in the years to come as we integrate IHS Markit indices like iBoxx and iTraxx and drive commercial innovation in fixed income and cross-asset indices. We delivered extraordinary growth in our ESG initiatives this quarter. ESG revenue growth accelerated on both a reported and organic basis in the second quarter, growing 66% year over year to reach nearly $52 million.

We continue to introduce new ESG-related products and product enhancements at a rapid pace. In the second quarter, we saw the launch of multiple ESG- and sustainability-related ETFs based on our indices. And we ended the second quarter with AUM and ESG ETFs growing 16% year over year to approximately $30 billion. Our indices and commodity insights teams continued their collaboration and launched the S&P Battery Metals Index.

Within ratings, we completed 20 ESG evaluations and 34 sustainable financing opinions driven by strong demand for second-party opinions. Lastly, we hosted the S&P Global Sustainable1 Summit with events in several major cities around the world, bringing together leaders from various stakeholder groups to discuss the future of sustainability. Now, turning to our outlook. Twice a year, we update our global refinancing study.

But given the issuance environment, we wanted to provide a bit more color this quarter. Specifically, there are two impacts to highlight as investors look at total global debt outstanding. The two impacts are average time to maturity and FX rates. When we look at global corporate bond maturities, we see a similar phenomenon to what we have witnessed historically.

Over the next three years, we see a decrease in near-term maturities as refinancing pushed those maturity dates out. We have witnessed this phenomena in the July update each year, so we aren't surprised by it. While total global debt maturing over the next three years is down significantly from six months ago, it's important to note that debt maturing over the next 10 years is not down significantly, and it starts to increase over the next three to five years. We expect 2024 and 2025 refinancing activity to start next year.

This is particularly true for total debt outstanding on an FX-adjusted basis. With the strengthening of the US dollar since January, foreign-denominated debt is lower by 1% when converted to US dollars at July rates. This slide shows total global debt rated by S&P Global of all maturities on a constant currency basis, which increased 2% if measured at January FX rates. While we don't expect a significant rebound in issuance in the back half of this year, this demonstrates that over the long term, the public debt markets remain very healthy and have a strong history of resilience.

They also reinforce our view that the issuance headwinds we're seeing in the market now will likely moderate, if not reverse in the future. Now, for issuance outlook. S&P Global Ratings research has updated its bond issuance forecast for the year to reflect a decrease in the second quarter and more conservative assumptions around the back half. Global market issuance is now expected to decline approximately 16% year over year within a range of down 9% to down 24% in 2022.

This forecast implies an approximate 21% decline in the second half compared to the 11% decline seen in the first half. Non-financials are expected to see a 30% decrease in issuance, partially tempered by a smaller, roughly 10% decrease in financial services issuance. US public finance and structured finance are expected to soften by 12% and 14%, respectively, and international public finance is expected to be roughly flat. As a reminder, the global debt issuance forecast is a product of the S&P Global ratings research team and reflects market issuance, including unrated issuance.

We wanted to take the opportunity to explain the different categories of issuance that we discuss from time to time. The most frequently cited forecast is out of our S&P Global ratings research team, which I just outlined, but our Ratings revenue is more closely tied to S&P billed issuance, which is a subset of market issuance. Billed issuance includes leverage loans which are not included in the market issuance forecast. It does not, however, include debt from unrated categories such as medium-term notes and most domestic debt from China, nor would our billed issuance include international public finance.

While there are other nuances as well, these differences in aggregate bridge the gap between our market issuance forecast and the assumption for billed issuance that underpins our ratings revenue guidance for the year. As Ewout will outline, our ratings revenue guidance assumes a 30% to 45% decrease in billed issuance. Looking beyond issuance, we see a number of secular trends that stand to benefit the company, both this year and beyond. Our experts in commodity insights expect oil prices and volatility to remain above historical norms for some time.

This volatility often creates more demand among customers for price assessments and benchmarks, as well as our data and insights. Our mobility team also expects light vehicle sales to increase next year and beyond, returning to levels more in line with pre-pandemic production by 2025. As volumes continue to grow, we expect to see tailwinds in our mobility segment across multiple product lines, including CARFAX and automotiveMastermind. As we evaluate the remainder of this year, however, we wanted to discuss some of the assumptions that underpin our outlook.

As we noted in June when we suspended guidance, we have seen a deterioration in several economic indicators over the course of the second quarter. We expect slightly lower GDP growth, higher inflation and a lower debt issuance environment to impact not only our businesses, but our customers as well. As Ewout will discuss in a moment, we're seeing inflationary pressure on our costs with approximately 70% of our expenses tied to headcount. That pressure is showing up most in our compensation and technology costs.

As a reminder, this is not meant to be a comprehensive list of all metrics that inform our outlook, but we wanted to help investors understand the changes in some of the assumptions that we make about the global economy when formulating guidance. While we're not discussing 2023 or beyond on today's call, we're pleased to announce an investor day that we expect to hold on December 1 in New York City. We're looking forward to sharing with you some preliminary views on 2023, as well as a more holistic update on our strategy, positioning and medium-term financial targets at that time. Before handing it over to Ewout, I'd like to reiterate how pleased we are with the progress we're making on integration and the clear proof points we see reinforcing the industrial logic of the merger and the resilience of our businesses.

We have a world-class team and appreciate the hard work and dedication of our people in every area across the firm. Our teams continue to execute incredibly well, evidenced by our early outperformance on synergies. And we believe we're positioning the company to accelerate growth, expand margins and deliver innovation in the years to come. With that, I'll turn it over to Ewout to walk through the results and guidance.

Ewout?

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Thank you, Doug. With five of our six divisions once again posting revenue growth, we continue to see evidence that we are a stronger, more resilient company. Doug highlighted the headline financial results. I will take a moment to cover a few other items.

As Doug mentioned, the adjusted financial metrics that we will be discussing today refer to non-GAAP adjusted metrics for the current period and non-GAAP pro forma adjusted metrics in the year-ago period, unless explicitly called out as GAAP. Adjusted results also exclude the contribution from divested businesses in all periods. Adjusted corporate unallocated expenses declined from a year ago caused by synergies, as well as a combination of reduced incentive and fringe costs, as well as the release of certain accruals. Our net interest expense increased 3% as we increased gross debt, partially offset by lower average rates due to refinancings.

The decrease in the adjusted effective tax rate was primarily due to the post-merger change in the mix of income by jurisdiction. As most are aware, we exclude the impact of certain items from our adjusted diluted EPS number. Among those items in the second quarter were $220 million in merger-related expenses, the details of which can be found in the appendix. We generated adjusted free cash flow, excluding certain items, of $924 million.

We remain committed to returning the majority of this cash flow to shareholders through dividends and share repurchases. Year-to-date, as Doug mentioned, we have repurchased $8.5 billion in shares, and we expect to launch an additional $2.5 billion in the coming weeks. We expect that $2.5 billion will be completed in October with the final $1 billion to be completed by year-end. We note that the US dollar has strengthened against many foreign currencies year-to-date, and we have seen a corresponding impact on both our revenue and expenses.

Approximately three-fourth of our international revenue is invoiced in US dollars, which provides some protection to revenue against FX volatility. In addition to the natural hedges that exist due to the global footprint of our people, we have an active hedging program in place that further mitigates the ultimate impact on our earnings. Year-to-date, we have seen an unfavorable revenue impact due to the strengthening of the US dollar against the euro and British pound. Expenses saw a favorable impact due to FX movements against those same currencies and the Indian rupee.

Turning to expenses. As we have demonstrated in the past, we are committed to prudent management of the P&L and shareholder capital. This year, we have already taken decisive actions to protect margins where we can while still preserving our investments to drive future growth. Actions taken include a reduction in incentive accruals, pull-forward in synergies, adjustments to the timing of select investments, pausing selective hiring and limiting consulting spend in some areas.

We remain committed to our strategic investments, which are key to the growth of our business. These include investments in our people, innovation, infrastructure and our ability to execute merger-related integration and synergies. Looking at the year over year change in expenses this quarter, we're clearly seeing the impact of inflation, most notably in compensation expenses. We're also seeing higher cloud and T&E costs, as we highlighted last quarter as well.

Even with those headwinds, the decisive actions I outlined, together with our acceleration of synergies and favorable FX, have allowed us to keep expenses relatively flat year over year. Now, I would like to provide an update on our synergy progress. In the second quarter, we have achieved $80 million in cumulative cost synergies, and our current annualized run rate is $260 million. Through the combined efforts of our teams across the divisions and corporate, we're very pleased to see we're outperforming our initial timeline on both revenue and cost synergies year-to-date.

The cumulative integration and cost to achieve synergies through the end of the second quarter is $540 million. Our teams have been diligent and disciplined and have pulled forward some of the synergies we previously identified without materially impacting our ability to drive growth and revenue synergies. We have previously said that we expect to realize in 2022 approximately 35% to 40% of the $600 million in cost synergies we are targeting through 2024. We're still operating in an uncertain environment.

So while we are not changing the expected range for 2022, we're confident that we are more likely to come out at the higher end of the 35% to 40% target range. Now, let's turn to the division results and begin with market intelligence. Market intelligence delivered revenue growth of 7% with growth across all product lines. We want to emphasize the increased resilience and stickiness of most of our revenue and the more diversified portfolio of products in our divisions post-merger.

To highlight this improvement, we know that in market intelligence, recurring revenue, which includes variable recurring revenue, accounted for 96% of total revenue this quarter, slightly higher compared to the same period last year. Expenses increased 6%, primarily due to increases in compensation expense, cloud spend and outside services, offset by cost synergies and lower incentive compensation. Market intelligence remains the biggest driver of cost synergies from the merger and the synergy outperformance we have seen year-to-date. Segment operating profit increased 8%, and the segment operating profit margin increased 40 basis points to 33%.

On a trailing 12-month basis, adjusted segment operating profit margin was 30.2%. You can see on the slide our operating profit from the OSTTRA joint venture that complements the operations of our market intelligence division. The JV contributed $25 million in adjusted operating profit to the company. Because the JV is a 50% owned joint venture operating independent of the company, we do not include the financial results of OSTTRA in the market intelligence division.

Looking across market intelligence, there was solid growth in each category. And on a pro forma basis, desktop revenue grew 6%, data and advisory solutions revenue grew 9%, enterprise solutions revenue grew 2% and credit and risk solutions revenue grew 10%. For enterprise solutions, we continue to see headwinds in several of our volume-driven products that rely on equity and debt capital markets activity under variable subscription terms. Excluding the impact of these volume-driven products, growth across market intelligence would have been approximately 8% year over year in the quarter.

We expect those volume-driven headwinds to persist through the rest of the year. While we are pleased with the outperformance of credit and risk solutions in the first half, we're lapping some difficult comps in the second half and expect revenue growth to decelerate in that part of the business. Ratings faced continued difficult market conditions this quarter with revenue declining 26% year over year. Expenses decreased 6%, primarily driven by disciplined expense management, including lower incentive expenses, as well as lower occupancy cost and favorable FX, partially offset by increased salary and fringe expenses and T&E spend.

This resulted in a 35% decrease in segment operating profit and 850 basis points decrease in segment operating profit margin. On a trailing 12-month basis, adjusted segment operating profit margin was 59.8%. Non-transaction revenue increased 2% on a constant currency basis and decreased 1% as reported, primarily due to lower initial credit ratings and ratings evaluation services revenues, partially offset by increases in CRISIL and annual fees. Transaction revenue decreased 44% on the continued soft issuance already discussed.

This slide depicts ratings revenue by its end markets. The largest contributors to the decrease in ratings revenue were a 39% decrease in corporates and a 20% decrease in structured finance, driven predominantly by structured credit. In addition, financial services decreased 9%, governments decreased 15% and the CRISIL and other category increased 14%. And now turning to commodity insights, revenue increased 4%.

However, that growth was impacted significantly by the suspension of commercial activity in Russia and Belarus and other impacts of the Russia-Ukraine conflict. Adjusting for the impact of that conflict, revenues would have grown approximately 7% compared to prior year. On an annualized run rate basis, this conflict is expected to impact CI revenue and operating income by approximately $52 million and $51 million, respectively. For this quarter, 90% of commodity insights revenues were classified as recurring.

Expenses increased 4% primarily due to salary and fringe and increase in T&E expense, partially offset by realization of merger-related synergies. Segment operating profit increased 3%, and the segment operating profit margin decreased 40 basis points to 44%. The trailing 12-month adjusted segment operating profit margin was 43.3%. Looking across the commodity insights business categories, Price Assessments grew 5% compared to prior year, driven by strong subscription growth from market data offerings and continued commercial momentum.

We also saw strong performance from advisory and transactional services and energy and resources data and insights, both growing 4%, respectively. upstream data and insights increased marginally with second quarter 2022 representing the third consecutive quarter of ACV growth when adjusting for the impact of Russia. In our mobility division, revenue increased 7% year over year, driven primarily by strength in planning solutions and used car offerings. For this quarter, 78% of mobility's revenues were classified as recurring.

Expenses grew 5% on planned increases in headcount and advertising expense, which were somewhat offset by a reduction in purchased data and office costs and incentive compensation. This resulted in a 9% growth in adjusted operating profit and 90 basis points of margin expansion year over year. On a trailing 12-month basis, the adjusted segment operating profit margin was 39.5%. Dealer revenue increased 10% year over year driven by strong performance from CARFAX and very high dealer retention, as well as growth in new stores.

Growth in Manufacturing was 3% year over year, driven by demand for supply chain products among suppliers, though growth was tempered by relatively flat original equipment manufacturer or OEM spend on marketing initiatives powered by mobility products. Financials and Other increased 3%, primarily driven by continued strength in our insurance underwriting products, tempered by slowing consumer activity and persistent low volumes across auto sales. S&P Dow Jones Indices delivered another strong quarter of revenue growth of 12% year over year primarily due to gains in ETD volumes. For this quarter, 83% of indices revenues were classified as recurring.

During the quarter, expenses increased 1% due to increased technology and T&E expense. Segment operating profit increased 16%, and the segment operating profit margin increased 290 basis points to 71.9%. On a trailing 12-month basis, the adjusted segment operating profit margin was 68.6%. Once again, every category increased revenue this quarter.

Asset-linked fees were up 5%, primarily from AUM-driven gains in mutual funds and ETFs. Exchange-traded derivatives revenue increased 64% on increased trading volumes across key contracts, including the more than 60% increase in S&P 500 Index options volume. Data and custom subscriptions increased 6% driven by new business activities. Over the past year, ETF AUM net inflows were $231 billion, and market depreciation totaled $352 billion.

This resulted in quarter-ending ETF AUM of $2.5 trillion, which is a 5% decrease compared to one year ago. Our ETF revenue is based on average AUM, which increased 5% year over year. Revenue tends to lack changes in asset prices, which helped drive outperformance this quarter. However, we expect asset-linked fees to decrease in the back half of this year.

Sequentially versus the end of the first quarter, ETF net inflows associated with our indices totaled $6 billion, and market depreciation totaled $436 billion. Within our Engineering Solutions division, we saw 3% revenue growth, driven primarily by growth in non-subscription offerings, most notably the Boiler and Pressure Vessel Code, or BPVC, which was last released in August of 2021. For this quarter, 93% of engineering solutions revenues were classified as recurring. Adjusted expenses increased 5% driven by investment in product development and increased royalties.

This resulted in a 7% decline in segment operating profit and 300 basis points contraction to margin. On a trailing 12-month basis, the adjusted segment operating profit margin was 19.4%. Subscription revenue in engineering solutions increased 2% year over year, while non-subscription revenue increased 10% over the same period. As you look toward next quarter for engineering solutions, it will be important to remember we'll lap the August 2021 publication of the BPVC, which typically contributes approximately $8 million in the third quarter of odd years but is not published in even years.

Now, moving to our guidance, and this slide depicts our new GAAP guidance. This slide depicts our reinstated 2022 adjusted pro forma guidance. For revenue, we now expect a low to mid-single-digit decrease year over year, reflecting the issuance environment, partially offset by the strength we are seeing in our non-ratings businesses. We now expect corporate unallocated expense between $70 million and $80 million, approximately $15 million lower than our previous guidance on lower forecasted incentive compensation.

This drives our expectation for adjusted operating margins between 45.3% and 45.8%. As declines in high-margin ratings revenue disproportionally impacts margins to the downside this year, we wanted to emphasize the margin expansion we expect to see elsewhere in the business. In aggregate, within our five non-ratings divisions, we expect approximately 180 basis points of operating margin expansion this year. Interest expense is expected in the range of $360 million to $370 million, in line with our most recent guidance.

We expect capital expenditures of approximately $165 million and free cash flow, excluding certain items, in the range of $4.1 billion to $4.2 billion. The following slide illustrates our guidance by division. We now expect adjusted revenue growth and adjusted operating profit margin in the following ranges. For market intelligence, we expect revenue growth in the mid-single-digit range and margins in the low 30s.

For ratings, we now expect revenue declines in the low to mid-20s range and margins in the mid- to high 50s. For commodity insights, we expect revenue growth in the mid-single-digit range and margins in the mid-40s. For mobility, we expect revenue growth in the high single-digit range and margins in the high 30s. For indices, we expect revenue growth in the low to mid-single-digit range and margins in the mid- to high-60s.

For Engineering Solutions, we expect low single-digit revenue growth and margins in the mid-teens. In closing, this quarter provides further proof of the resilience of our business. Our ability to outperform on synergies speaks volumes on the focus and discipline of the teams we have at S&P Global. Those teams, combined with a phenomenal set of truly differentiated products and capabilities, position us well to drive profitable growth in the years to come.

And with that, let me turn the call back over to Mark for your questions.

Mark Grant -- Senior Vice President, Investor Relations

Thank you, Ewout. [Operator instructions] Operator, we will now take our first question.

Questions & Answers:

Operator

Thank you. Our first question is from Ashish Sabadra with RBC Capital. You may go ahead.

Ashish Sabadra -- RBC Capital Markets -- Analyst

Thanks for taking my question. I was just wondering, for the issuance guidance, would it be possible for you to provide some color around how we should think about third versus fourth quarter momentum in the back half of the year? Thanks.

Doug Peterson -- President and Chief Executive Officer

Hi, Ashish, this is Doug. Thanks for the question. Let me just give you, first of all, some overall view of what we've given you today. We provided you with information starting with our ratings credit research team and then gave you some new disclosure about how we look at the difference between that research report and what we call our billed issuance assumptions.

We see right now, the beginning of the third quarter was actually quite weak. One month doesn't make a quarter. But at the beginning of July, there was issuance of high-yield loans, and high-yield debt was down overall in the high-80s, low-90 percentage range. Investment-grade issuance was up actually for the month.

But the quarter is off to what I'd say still a pretty weak start, answering your question specifically.

Ashish Sabadra -- RBC Capital Markets -- Analyst

That's very helpful color. And then, on the cost synergies, obviously, pretty strong execution on that front with almost $260 million run rate achieved in the quarter. I understand you expect to achieve at the high end of that 40% range being realized by 2022. But I was also wondering if you could maybe provide any color on how we should think about the run rate of cost synergies exiting 2022.

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Ashish, this is Ewout. So 40% of $600 million, so we expect, therefore, in year 2022 approximately $240 million benefit from cost synergies. We think that's phenomenal that we're already having that pace of execution and integration of our organizations. We don't have a precise number for you in terms of the run rate exit.

But you should expect that that is a significant amount above the $240 million because, obviously, the more we execute this year, the better we are positioned for 2023. So I can't give you a precise number on that, but that will be a number significantly north of that $240 million.

Ashish Sabadra -- RBC Capital Markets -- Analyst

That's very helpful. Thanks.

Doug Peterson -- President and Chief Executive Officer

Thanks, Ashish.

Operator

Thank you. Our next question is from Manav Patnaik with Barclays. You may go ahead.

Manav Patnaik -- Barclays -- Analyst

Thank you. Good morning, guys. My first question was just broadly on guidance. I think, Ewout, you said that the non-ratings businesses should help offset the Ratings weakness.

But I think in the guidance summary, you pretty much lowered some of the non-ratings businesses at least to the lower end. So can you just talk about that gap and perhaps your level of conservatism you've taken in this attempted guidance today?

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Manav, good morning. Yes, we have always said that our businesses are very resilient. But of course, they are not immune to an external environment. So there is some slight impact you are seeing in terms of, for example, the Index business, the assumption for the second half of the year is that assets under management will remain flat from the June 30 points.

So that will have an impact on the Index business. So there are several of those. Another example is the Russia impact on commodity insights. But overall, these impacts are relatively minimal and modest.

So let me give you a few other data points with respect to the assumptions that have gone into the guidance. So as already mentioned, billed issuance, negative 37%. Then for the market depreciation, flat to the June 30 level. Exchange-traded derivatives, we expect those to be up about 10% from the second half of 2021.

That is lower growth than you have seen in the first half of the year, and the reason is that the comps become more difficult. But also when there is a period of extended volatility, we expect derivatives trading to taper off at some point. And then, the Brent oil price to remain in range bound until end of the year. Having said that, if you look at the overall performance of the company, we're actually really pleased with the outlook for five of our six divisions.

They are expected to perform very well, to be very strong, expenses to be more or less flat year over year, which we think is really a phenomenal outcome in a high inflationary environment; and then margins, excluding ratings, to be up for the full year, 180 basis points. So overall, we think these are actually really strong outlooks for the company, taking aside, of course, the market impact for ratings.

Manav Patnaik -- Barclays -- Analyst

Got it. And then, maybe if I can ask you a similar question on the margin front. I mean you talked about, obviously, a lot of the cost synergies being ahead of schedule, etc., but I think you're still taking the margin outlook down mostly. So is that just maybe being conservative or the run rate doesn't kick in for a while, I guess?

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Well, we are seeing a lot of dynamics in the overall expenses of the company. We have pointed at some inflationary pressures on compensation, on some of our procurement elements and other parts of the company. But we are in a very fortunate position that we have so many levers as a company, particularly the levers that are being given to us due to the merger with respect to the cost synergies, duplication of roles that we can eliminate, the volume benefits in terms of synergies in the procurement and the sourcing area, some of the consolidation of real estate and many other areas, plus the decisive management actions we're taking at this moment. So being flat with expenses, as I just said, in this environment, we think it's a very strong outcome.

The non-ratings businesses were achieving about $200 million or north of $200 million of margin expansion in the second quarter. And we think 180 basis points margin expansion for the full year would be a very strong outcome and would position us very well for 2023.

Manav Patnaik -- Barclays -- Analyst

OK. Got it. Thank you.

Doug Peterson -- President and Chief Executive Officer

Thanks, Manav.

Operator

Thank you. Our next question is from Alex Kramm with UBS. You may go ahead.

Alex Kramm -- UBS -- Analyst

Yeah. Hey, good morning, everyone. Just following up on Manav's margin question here for a little bit. Maybe this is nitpicking, but if I look at two of the segments, commodity insights and mobility, you did basically leave your adjusted revenue growth forecast unchanged from the prior guidance, but the margins are actually now lower.

So with everything you just changed -- said, it does seem like some costs are higher. So maybe you can flesh it out specifically to those two segments because I'm not sure why the margins would be lower if the revenue is unchanged.

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Alex, these are really small changes and movements on the revenue line. And with respect to the expense line for those two segments, which could drive that, for example, you're just staying within the range on revenues, but just having a slight adjustment with respect to the expected margins for that segment. So let me take as an example, commodity insights. As we have highlighted, this is the segment where we have some impact of the Russian situation, but then that is offset by very positive momentum commercially in the commodity insights businesses.

So we can offset a part of it. And as a result, you see a little bit of impact on revenue and margins, and that is being reflected in those changes. But overall, I wouldn't read too much into it. These are just really minor impacts that we are seeing on those businesses.

Alex Kramm -- UBS -- Analyst

OK. Helpful. And then, just second, just on the market intelligence side, I'm hoping that you can give us a little bit more color around the commercial success you're having so far. What I'm asking specifically is I've had some client conversation, and it sounds like for at least for some clients, you're not really integrating the sales force yet, and they're operating basically at two organizations until next year.

So I don't know if those are one-offs or this is representative of the whole book of business, but I would have expected with all the planning that basically you're going to be operating as one company. And so, maybe just flesh out what's been done and why maybe we're hearing that it's not fully integrated quite yet.

Doug Peterson -- President and Chief Executive Officer

Yeah. Alex, thanks for that. And we're actually fully integrated. Market intelligence is a division that's absolutely the furthest ahead on that.

We have done full training of all of the products across the two divisions. We have seen the ability to now go out with joint planning for all customers across the financial services and the market intelligence to prior segments. We have a lot of early wins both with clients, as well as with products. A couple of examples of some of the early wins have come by moving more and more data sets from financial services into what we talked about earlier on the call, the marketplace.

We've also seen some early wins on selling products, which would have been traditionally financial service products into the corporate client base of market intelligence. And then, we have some new products which have also been launched. We talked about one of them, the PVR, which is responsive to some new SEC rules which are coming out later this year. So that must be anecdotal.

I'm not sure who you're speaking with, but we are really excited about the integration and the speed that we're able to develop a cross-sell. We mentioned that we have over 2,000 cross-sell ideas and leads, and we're following up on those very, very quickly. And as you saw, we're also ahead of our prior assumptions about how we'd be doing with synergies. So this is one of the areas that I think we're actually doing the best on.

Alex Kramm -- UBS -- Analyst

Very good. Thank you.

Doug Peterson -- President and Chief Executive Officer

Thanks, Alex.

Operator

Thank you. The next question is from Toni Kaplan with Morgan Stanley. You may go ahead.

Toni Kaplan -- Morgan Stanley -- Analyst

Perfect. Thanks. I wanted to ask another one on synergies. It looks like you're making really great progress on the cost side.

On the revenue side, it makes sense that it will take a longer time just given the need to create new products. But I guess, are you where you thought you'd be on the revenue synergy side? Or is it taking longer? And do you still feel good about the 2024 target there?

Doug Peterson -- President and Chief Executive Officer

Yeah. Thanks, Toni. Well, I feel actually really positive about the projections that we have on the revenue synergies. It's something that we've always known that would take a while to understand the customers, to be able to integrate data sets, to have a fully integrated sales force.

But to have the ability to already be running at a $15 million run rate, which we announced this quarter, for me is ahead of what we would have thought we would have been. We still haven't changed the view that a lot of the revenue synergies will be more back ended in the next two to three years. But the early projections and the early progress is excellent.

Toni Kaplan -- Morgan Stanley -- Analyst

That sounds great. And then, just on market intelligence, the enterprise solutions piece, only up 2% year over year. Just want to clarify, is this the legacy IHS solutions business? I think it used to be comprised of enterprise software and managed services. I just -- I wasn't as familiar, I guess, with the volume-based offerings that are in there, which is driving maybe the slowdown.

Just any additional color on that.

Doug Peterson -- President and Chief Executive Officer

Yeah. Thanks, Toni. You're right about what's comprised of that solutions group. It includes Ipreo as well.

But there's a portion of the revenues in that business which come from IPOs. And as you know, the IPO market has been incredibly weak. So that's the main issue, which has seen a slowdown of growth. But the underlying business is doing quite well.

We're delivering software. We're delivering solutions. This is one of the areas where we've seen some of the early wins on being able to position products, which traditionally had been sold to financial services into the corporate sector. So off to a great start, but having some impact from the very, very weak capital markets and IPO positioning.

Toni Kaplan -- Morgan Stanley -- Analyst

Makes sense. Thank you.

Doug Peterson -- President and Chief Executive Officer

Thanks, Tony.

Operator

Thank you. Our next question is from Hamzah Mazari with Jefferies. You may go ahead.

Hamzah Mazari -- Jefferies -- Analyst

Hey, good morning. My question is on the non-transactional side of the ratings business, maybe you could just comment on how stable is that business through the cycle? And what are your sort of assumptions there for the balance of the year?

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Good morning, Hamzah. Of course, I will give you some further insights on that. As you know, non-transaction revenues is a bucket of different elements, and they are not all pointing in the same direction. So let me give you a little bit further insight in what we are expecting here.

So what is looking strong is annual fees, as well as CRISIL. So we would expect those to continue to do well for the remainder of the year, in line of what you have seen for the second quarter. And that will be offset by some impact of FX, ratings evaluation services, which is more linked to M&A, and initial credit ratings, which is also down. So I think best to expect a low single-digit decline for non-transaction revenue this year.

But that is, of course, in the bigger scheme for ratings, providing some offset and stability for the transaction revenue declines.

Hamzah Mazari -- Jefferies -- Analyst

Got it. Very helpful. And just my follow-up is just on the indices side of the business, I think the SEC was looking at whether indices businesses should be treated as investment advisors versus data publishers. Is there anything, I guess, on the regulatory front on the indices side that you're looking at or that investors should be tracking? Or is this just not really material?

Doug Peterson -- President and Chief Executive Officer

Yeah. Hamzah, as you know, our business is already run as if we're regulated, and we are regulated in some jurisdictions like the European jurisdiction under what's called the BMR. The SEC has a request for comment out about index providers. We will file a response.

As you know, there's a long-term trend from active to passive. It's an industry that has very low-cost independence, a lot of transparency. We have a very strong performance over the last 65 years, and we'll obviously highlight all of that in our response to the SEC. But as of now, this is just a request for comment.

There's nothing related to it that is any regulatory proposals, and we're not surprised given the size of the growth of the index industry.

Hamzah Mazari -- Jefferies -- Analyst

Got it. Thank you.

Doug Peterson -- President and Chief Executive Officer

Thanks, Hamzah.

Operator

Thank you. Our next question is from Jeff Silber with BMO Capital Markets. You may go ahead.

Jeff Silber -- BMO Capital Markets -- Analyst

Thanks so much. In looking at slide 23, where you have your economic assumptions, you're forecasting, obviously, slower growth in real GDP, but not really forecasting a recession. We can argue what the definition of a recession is later. But let me play devil's advocate.

Let's assume that the US and, more importantly, the global economy might be going into a recession in the second half of this year, what would be the impact on your different business segments?

Doug Peterson -- President and Chief Executive Officer

Let me start, and then I'm going to hand it over to Ewout to give you some more color. But first of all, we have the assumptions that you saw on slide 23. We have seen a significant slowdown in growth in the United States, the Eurozone and globally, and China being one of those markets which has also seen substantial slowdown given their current policies. This has also been matched with higher inflation.

Each of our businesses have different types of impact in this scenario. With the ratings business, you've already seen, it's being directly impacted already by the increase in inflation, by the weak issuance environment, by the uncertainty in the markets. If you look at our commodity insights business, we could see some growth in the volatility from the higher cost of oil, which you saw here. We have projected that the crude price will be at $106 and a range that's much higher than it had been in the prior years.

That leads to some increase in interest in trading information, for risk information, and then the overall energy industry does quite well in that positioning. So we could see some benefits from that. Our other businesses, market intelligence should see some benefits from people interested in information and data about the risk environment. But at the same time, if we -- if our customers start going under stress, we might have to think about how we negotiate with them to accompany them in their -- if they have difficult times.

I'm going to hand it over to Ewout to mention a little bit more about indices impact, as well as the other businesses.

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Jeff, of course, immediately thinking at the more market-sensitive businesses, ratings transaction revenue, the AUM fees in the Index business, but offset by, of course, higher ETD volumes and, as Doug mentioned before, the capital markets platform business in the enterprise solutions part of market intelligence. But the offset is that we are seeing other parts of the businesses doing well when we have higher volatility, for example, global trading services in commodity insights, just to mention one area. On top of it, we are then having the opportunity to take further actions. You could say, to some extent, we're already executing on our downturn playbook at this moment and taking those actions for the second half of this year, and that is to protect our margins.

And we can, of course, pull those levers even harder. I would like to point out that actually, the merger gives us a very good basis and a strong benefit to deal with a more uncertain environment and future. The resiliency of the business, the higher level of recurring revenues that we are having, the diversification benefits and then also, of course, all the synergies that we can achieve, and those gives us levers in terms of offsetting an environment that we think is a clear benefit and is a differentiator for us compared to many others.

Jeff Silber -- BMO Capital Markets -- Analyst

OK. That's really helpful. If I could shift back to the ratings business, we saw a pretty large bond sale yesterday from Apple. I don't know if they were a frequent issuer or not.

I don't know if you were involved as that will impact your transactional revenues. But more importantly, they seem to be a pretty good timer of the market. Do you think that might be a bellwether that we'll see other companies come to market that we might not have expected a few weeks ago?

Doug Peterson -- President and Chief Executive Officer

Yeah, Jeff, we've actually seen pretty strong issuance from the investment-grade sector. A lot of those large issuers, especially financial institutions, tend to be on frequent issuer programs. Where we really see the biggest impact on the downdraft of issuances in the non-investment grade, the high-yield sector, you're looking at the B, CCC, BB sectors. So there's been very low formation of CLOs.

In fact, we've seen the retail sector have withdrawals from risk positions. And so, we've seen a decrease in funding for CLOs. So the real part of the issuance curve, which we're not seeing any life at all, is really the high-yield sector. But on the investment grade, there has been a lot of activity.

We've seen in particular financial institutions, very active. And then, people like Apple, you've seen there. But the real story, we need to look deeper across all of the different segments. And it's the high-yield sector, both for loans and bonds, that we've seen the biggest weakness.

Jeff Silber -- BMO Capital Markets -- Analyst

OK. Really helpful. Thanks so much.

Doug Peterson -- President and Chief Executive Officer

Thanks, Jeff.

Operator

Thank you. Our next question is from Faiza Alwy with Deutsche Bank. You may go ahead.

Faiza Alwy -- Deutsche Bank -- Analyst

Yeah. Hi. Thank you and good morning. I was hoping to follow up on revenue synergies.

And curious if you could give us some examples of areas where you're seeing the most traction at this point.

Doug Peterson -- President and Chief Executive Officer

Yeah. So first of all, as I said earlier, we're really excited that we're off to such a fast start on the cross-sell. And so, the initial opportunities we have are on cross-sell. And the two biggest areas we've seen the growth is in the market intelligence business.

It's been with the sales of what had traditionally been financial services products. For example, products which are used for investor relations teams and finding the corporate segment, which market intelligence had a lot of penetration with, being able to open that door and bring those types of products to the corporate sector. In the commodity insights world, we see a lot of opportunities for data and research products, which were coming from the E&R side from IHS Markit that are now being marketed to the traditional Platts clients that were benchmark clients. And so, we've seen a lot of upside there.

A third area would be within the Index business. As you know, we brought the IHS Markit's fixed income index business over, and there's a lot of opportunities. These are not necessarily in our run rate yet, but they're in our pipeline related to ESG indices that will be on fixed income indices. So that's a big theme that we haven't seen necessarily the revenue coming in yet, but a lot of interest in that.

But those would be the three largest areas so far.

Faiza Alwy -- Deutsche Bank -- Analyst

Great. And then, just a follow-up on the ratings side of the business. You were just talking about high yield. And I'm curious, as we look at your refinancing study, assuming the volatility eases as we get into 2023, and I know you said you won't comment on 2023, but I just wanted to get just a holistic view around how you think about the high-yield market normalizing from here.

Doug Peterson -- President and Chief Executive Officer

Yeah. The high-yield market, we look at it in a few ways. One of them is, obviously, there's a large amount of firepower of capital that's available for the private equity in the sponsor industry. We estimate that that's well north of $1 trillion, somewhere around $1.3 trillion to $1.4 trillion of capital to be deployed.

We also look at the M&A pipeline. The M&A pipeline right now, there's a lot of deals to be completed, but they're actually taking a lot of time. So there's a slow realization of M&A, which has already been announced but not completed. So that's another one of the levers we look at quite closely.

And then, there's going to be a refinancing requirement. They'll start coming in over, which relates to 2023, 2024, 2025. Traditionally, we've seen some of that pull forward into earlier times as people look at how the interest rate market is playing out, what their growth prospects are, etc. But those would be the key factors we're looking at, what's happening with rates, what's happening with the private equity industry, with M&A, with refinancing.

And then, just generally speaking, as you know, I mentioned earlier to one of the other answers, there's kind of a risk-off approach, especially from the retail and the wealth management sectors. They have not been participating in the formation of new CLOs and, in fact, have been withdrawing their liquidity from the high-yield products. So we think that we will start seeing people go back into that when there's some more certainty and stability in the markets as well.

Faiza Alwy -- Deutsche Bank -- Analyst

Great. Thank you so much.

Doug Peterson -- President and Chief Executive Officer

Thanks, Faiza.

Operator

Thank you. Our next question is from Andrew Nicholas with William Blair. You may go ahead.

Trevor Romeo -- William Blair and Company -- Analyst

Hi. Good morning. This is actually Trevor Romeo in for Andrew. Just two quick ones for me.

First of all, the ESG revenue growth of 66% in the quarter, it's encouraging to see that accelerate kind of even further. Just wondering if there's anything in the current environment that's kind of boosting that ESG growth above trend or if there's kind of any evidence that even higher growth rates might be sustainable over a longer period of time?

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Good morning. So let me give you a little bit more color on the ESG growth, which is, of course, phenomenal. And we're very happy because we have been guiding to a 46% CAGR for a multiyear period. And to be coming in at this kind of a level of growth of 66% is, of course, really great.

So a couple of underlying elements. We're seeing nice growth in commodity insights. That's driven by clean energy technology, energy transition activities, as well as new price assessments around ESG. Also, market intelligence doing well, particularly around climate and the Trucost offerings and the ESG data sales.

If we look at the indices business, we have been investing a lot in new ESG indices, and that is also clearly starting to pay off. And then, in ratings, although coming from a small base, we see some positive momentum in second-party opinion. So good momentum. We're clearly investing in it.

There's a lot of market demand, and we would expect that positive momentum in ESG to continue.

Trevor Romeo -- William Blair and Company -- Analyst

That's great. And then, maybe a somewhat related follow-up. The Inflation Reduction Act that's been proposed out there has pretty significant climate investments and tax credits for the clean energy industry. So would you see something like that if it actually were to get passed kind of having any demand on either the commodity insights business or the ESG business?

Doug Peterson -- President and Chief Executive Officer

It's something that's still, obviously, in discussion in Washington. Generally speaking, infrastructure bills, something like this, which is going to be geared toward the climate sector, could see some benefit as the financing gets into the market. But this could take a while before we really start seeing it layer into the market.

Trevor Romeo -- William Blair and Company -- Analyst

OK. Understood. Thank you very much.

Doug Peterson -- President and Chief Executive Officer

Thanks, Trevor.

Operator

Thank you. The next question is from Craig Huber with Huber Research Partners. You may go ahead.

Craig Huber -- Huber Research Partners -- Analyst

Great. Thank you. My first question, on commodity insights, curious, in the second quarter, what percent of the revenues there were fossil fuel-based by the end customer? And then along the same lines there, when are you guys expecting peak oil use globally? And then I have a follow-up.

Doug Peterson -- President and Chief Executive Officer

On the first question about the fossil fuel-based, I don't have the answer. We'll have to get back to you on that. But just remember that across the business, a large part of our complex relates to -- it relates to energy. But in addition, we've seen some great opportunities to increase our knowledge across the group.

As an example, we issued a special study on copper, which even though copper isn't a fossil fuel, copper is going to be a necessary component for the energy transition. So we'll have to get back to you to the answer on the fossil fuel question.

Craig Huber -- Huber Research Partners -- Analyst

And then also, can you talk a little bit about the market intelligence area, the health of your customers there right now given the market volatility? What's the sales pipeline looking like? Just talk about that, please.

Doug Peterson -- President and Chief Executive Officer

Yeah. The commodity insights business actually, despite knowing that the price of oil is quite high, is a healthy pipeline right now. There's a lot of demand for information, as I mentioned, the special copper study we've done. We have been deploying a whole new set of energy transition products.

So even if there's been some concerns in some of the traditional areas, some of the consumers of oil and gas might have a little bit more stress, the overall market is still very robust with the energy industry itself in a strong position. The commodity industries are looking for a lot of new insights, information and data. And then, we're being able to find new opportunities to mix and match our data across the entire company. As an example, we've launched some new indices through the Index business, which relate to commodities data.

So we're finding a lot of opportunities across the company to mix and match products. We see a strong growth pipeline.

Craig Huber -- Huber Research Partners -- Analyst

Great. Thanks, Doug.

Doug Peterson -- President and Chief Executive Officer

Thanks. Thanks, Greg.

Operator

Thank you. Our next question is from Owen Lau with Oppenheimer. You may go ahead.

Owen Lau -- Oppenheimer and Company -- Analyst

Good morning and thank you for taking my questions. Could you please give us an update on your ability to pass through some of the inflationary costs to your customers through repricing in each segment? Thank you.

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Hello, Owen. Let me give you some further insights on that. So when we think about pricing, we always first start to think about the value we generate for our customers. So that's the starting point.

And as you know, our products are very valuable. They are important particularly in a current environment with high volatility, a lot of economic uncertainty. Our research, our data sets, our insights, all the consumption of it is even higher in the current period of time. And then, we also know our base products itself are very valuable for our customers.

So that is always the starting point before we start to think about pricing. Obviously, in a high inflationary environment, it's fair to consider passing on a part of our cost price increases to our customers if that is appropriate and balanced in relation to what I said before. And we're doing that selectively. So think about custom and data subscriptions in Index, there, we have made some changes.

And also, we have made a list price change in the ratings business now starting on August 1, so a midyear change also for the ratings fees. So those are a couple of examples, but always in the context of finding the right balance for the company and thinking about the health of the company, the retention levels and the interest of our customers from a medium- and long-term perspective.

Owen Lau -- Oppenheimer and Company -- Analyst

Got it. That's helpful. And then, on the dealer revenue in your mobility segment, I think it was quite strong, up 10% year over year. Could you please talk about maybe the driver of that strength from CARFAX and also the sustainability of this growth? And then more broadly, could you please also talk about the retention rate of the mobility business?

Doug Peterson -- President and Chief Executive Officer

Yeah. Thanks, Owen. This is a business that is benefiting tremendously from all of the disruption in the supply chain in the automotive manufacturing sector. The dealers right now are really in a high need for information about the used car sector, which is where the most movement is going.

They're working very closely with the manufacturers and the OEMs on programs about providing discounts, providing incentives for new car sales. So the dealers right now are in the middle of a very high demand, a low product environment. And so, CARFAX has been benefiting across the board. So all the CARFAX businesses, as well as automotiveMastermind, there were a couple of new products that were launched.

One is called an EyeQ, spelled E-Y-E-Q, product, which provides a balance between the manufacturing and the dealer segment to look at how incentives and discounts are provided. So this is an area where CARFAX has been tremendously benefited by this difficult environment, and it's really the dealers that have the highest demand.

Owen Lau -- Oppenheimer and Company -- Analyst

Got it. Thank you very much.

Doug Peterson -- President and Chief Executive Officer

Yeah. Thanks, Owen.

Operator

Thank you. The next question is from Jeff Meuler with Baird. You may go ahead.

Jeff Meuler -- Robert W. Baird and Company -- Analyst

Yeah, thank you. I see that you have your third straight quarter of upstream data ACV growth adjusted for Russia-Ukraine. I guess my question, is it continuing to accelerate? Or can you just give us any sense of the order of the magnitude of the growth in that business given, obviously, revenue is lagging?

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Jeff, in fact, this is the third consecutive quarter that we are seeing ACV growth in the upstream business. Of course, a bit impacted by the Russia situation. So think about it more in a revenue growth of around 3.5% if you exclude that Russia impact for the quarter itself for revenues in the upstream business. So I would call this a turnaround.

This is a business that had a very difficult period for the last few years, but coming out of it in a very strong way. Clearly, the overall situation in the energy markets are helping this business. The levels of capex that are going into this industry are going up. So very, very positive momentum, and we would expect that also to continue in the near future.

Jeff Meuler -- Robert W. Baird and Company -- Analyst

OK. And then, Ewout, I get that you're saying the adjustments in terms of segment margin guidance are small. I get that. I guess, are the adjustments driven by the pricing or the inflationary pressure that you're seeing? Or is there also some reallocation of corporate costs because of the lower revenue outlook in the ratings segment that get absorbed into those other segments?

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

No changes with respect to financial reporting, allocations and so on. Actually, allocations are coming down because of the synergies, of course, also helped by the management actions that we highlighted. So what you're seeing is actually really a very mixed set of reasons what is happening in the different businesses. So I was speaking about the assumptions, for example, in the Index business with respect to the AUM level staying flat in our assumption for the second half of the year, the impact of Russia in commodity insights, offset by a strong commercial momentum.

So a very different set of reasons for each of the segments. But I think overall, these impacts are relatively small. I think the main area, of course, that you are seeing is the impact of the outlook for ratings, where we are not assuming any improvement in the issuance environment for the second half of the year compared to what we've seen in the more recent past. But five of our six divisions, from our perspective, performing very well, quite resilient, are seeing good, healthy revenue growth and strong margin expansion.

And we think margin expansion in this environment is actually a really positive that we can deliver to our shareholders.

Jeff Meuler -- Robert W. Baird and Company -- Analyst

OK. Thank you.

Operator

Thank you. The next question is from George Tong with Goldman Sachs.

George Tong -- Goldman Sachs -- Analyst

Hi. Thanks. Good morning. I wanted to go back to your issuance outlook.

You're forecasting a 30% to 45% decline in billed issuance for this year. Can you clarify if your updated guidance assumes that issuance trends will mirror performance we've seen in June and July? Or if you're assuming issuance over the remaining five months will be similar to the first seven months of the year, effectively calling a bottoming in issuance performance year-to-date?

Doug Peterson -- President and Chief Executive Officer

Yeah, George, the second half of the year's assumption is that it's similar to June and July. If you actually look at any year, the second half of the year always has lower level of issuance than the first half of the year. If you think about it, you've got the summer months in there; you've got July and August, which are always quite slow; and then you've got some holidays toward the end of the year in the US market, which are also quite slow. So we're expecting that there will be -- the issuance level will be similar to what it's been in the last couple of months.

George Tong -- Goldman Sachs -- Analyst

OK. And is that on an absolute dollar basis of issuance? Or is that seasonally adjusted looking at year over year growth trends?

Doug Peterson -- President and Chief Executive Officer

Both.

George Tong -- Goldman Sachs -- Analyst

OK. Got it. And then, as a follow-up, maybe going back to commodity insights, you're calling for mid-single-digit growth, and that outlook was unchanged from your prior outlook. You mentioned Russia, of course, being a headwind.

But can you talk about other moving pieces in the business? I would have expected commodity insights potentially to benefit more from some of the commodity prices we've seen.

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

George, so if we look at the underlying components and the sales activity, we're actually seeing record sales levels over the last few quarters for commodity insights, clearly highlighting the benefit of the combined business we are now having, the benefit of where are the commodity prices today. Net-net, that's a good situation for our customers. The benefits we are seeing from some of the revenue synergies, although it's early and the numbers are low, that is clearly a benefit. And then, of course, on top of that, also the focus on energy transition, which leads to additional investments.

And we have, of course, an incredible level of expertise around that that we can help our customers. So across the board in each of the categories, if it is advisory and transactional, if it is upstream, price assessments and the resource data and insights, I think all of that is looking very positive. Yes, there is a little bit of the impact of Russia, 10 months of impact this year because that impact started more or less in March, then you will see a little bit of impact for two months next year, then we will be lapping that. And then, I think all the underlying drivers of positive momentum will continue.

George Tong -- Goldman Sachs -- Analyst

Got it. Thank you.

Doug Peterson -- President and Chief Executive Officer

Thanks, George.

Operator

Thank you. Our next question is from Shlomo Rosenbaum with Stifel. You may go ahead.

Shlomo Rosenbaum -- Stifel Financial Corp. -- Analyst

Hi, thank you. I cut out a little bit, and so I'm not sure if you addressed this in prior discussions. But in the mobility segment, very strong demand in CARFAX because of used cars and the like. If you would see -- if we start to see some improvement in supply chain over the next year or so, do you expect that we're going to see a little bit of a balancing out and some of the other areas will do better? Or do you expect that we're going to start to see just not seeing the same kind of growth that we saw beforehand in terms of CARFAX?

Doug Peterson -- President and Chief Executive Officer

Yeah. Thanks, Shlomo. We think that this mobility segment has a many -- has a very high growth trajectory ahead of it. If you look at a couple of different factors, one that I described earlier relates to the used car environment where right now, there's very low production of new automobiles which is taking place, which means that there is a need for dealers to have product.

They don't have product right now. So when they get it, they can sell it. They can sell at a premium. They need the data and the analytics, whether it's from automotiveMastermind or it's the CARFAX product.

So there's a high demand right now for that. And the dealer's approach to working with customers is not going to go away even as the global production starts coming back. And there's going to be a revolution taking place in the transmission system, which will move toward electric vehicles. So the dealer approach is going to stay quite important.

We think the manufacturing approach could actually benefit from much higher growth of production. You see that we think that the global production will start continuing to increase over the next few years, going up even up to 9% in 2023 in the slide that we produced. There's another area which we think has some opportunities for growth, which is financials. And we've been producing some new products for the financial sector.

We talked about one of them earlier, which is some credit information for the insurance industry, as well as the financial services industry on the automotive sector. So across the board, we think this is a segment which is going through a lot of change. There's a lot of disruption taking place, and it's an opportunity for us to be at the middle of that to provide the data and the insights and the analytics that dealers and manufacturers and financial institutions need to make informed decisions.

Shlomo Rosenbaum -- Stifel Financial Corp. -- Analyst

OK. Great. And then, Ewout, this is just maybe a housekeeping one, but what was the ending share count, not the average share count in the quarter, but kind of the ending share count? And should we expect that to be very different next quarter in terms of kind of finishing up the ASRs? Just trying to figure out to make sure we're -- at least I'm modeling the share count appropriately.

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Shlomo, we put a specific slide in the appendix to help you with your question and where you can see the decline of the overall share count over the period of this year. So we started with 360 -- sorry, 356 million of combined shares after the issuance of shares for the IHS Markit shareholders. That has come down to 339 million most recently. We expect about 5 million of shares to be delivered as a true-up for the $8.5 billion ASR.

That will be ended soon. Then we will enter into the new $2.5 billion ASR. The upfront delivery of that would be something like 6 million of shares. So somewhere later this month, we will have those also taken out.

So you could say about 25% of the shares that were issued for the IHS Markit have already then been removed in a period of six months, which we think is phenomenal. And then, of course, we get the true-up of the new ASR of $2.5 billion and the shares that will be delivered for the 1 million at the end of the year. So that is the decline, but more details you can find in the appendix of the slide to help you and all your colleagues with the modeling.

Shlomo Rosenbaum -- Stifel Financial Corp. -- Analyst

Thank you.

Doug Peterson -- President and Chief Executive Officer

Thanks, Shlomo.

Operator

Thank you. The next question is from Andrew Steinerman with J.P. Morgan. You may go ahead.

Andrew Steinerman -- J.P. Morgan -- Analyst

Hi. I just wanted to go back to slide 31, market intelligence where -- or desktop, which is where I want to focus, was up 6%. And you did mention strong new sales and renewals. I know this is an area where you're adding content and data to Cap IQ Pro.

I just wanted to know how much of this is kind of market-driven versus your kind of product upgrade-driven? And do you expect momentum in your desktop business in the second half of the year?

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Andrew, we are very pleased with the trends we are seeing with respect to desktop, very stable business, growing in a steady way. We see good commercial momentum. We see good user satisfaction levels. And that is translating in high retention, nice growth of annualized contract value, pickup of price increases based on the enterprise approach we are doing with respect to our contracts.

And then, also user count and usage of the products is going up. Satisfaction level, also better. Think about page loads that are going much faster than we had in the past. So overall, we like what we are seeing in desktop, growing nicely, steadily and good commercial momentum and great customer satisfaction around it.

Andrew Steinerman -- J.P. Morgan -- Analyst

Thank you. Appreciate it.

Doug Peterson -- President and Chief Executive Officer

Thanks, Andrew.

Operator

Thank you. We will take our final question from Russell Quelch with Redburn. You may go ahead.

Russell Quelch -- Redburn -- Analyst

Yeah. Thank you for having me on. I appreciate it. To be on the current catch-up buyback, can you just lay out your priorities for the use of excess capital? Should we be expecting bolt-ons in the second half of this year? And if we should, perhaps what areas do you believe you're light in terms of data and product suite? Thanks.

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

So I would say this in the following way. And by the way, thank you for joining the call, and thank you for initiating your coverage on S&P Global. We are looking at continued return of capital. We have our specific targets with respect to our capital management philosophies, and we will continue to execute on that.

We're very happy that we will continue with the $12 billion share buyback despite lowering our adjusted free cash flow for the full year. We have sufficient ability to complete the $12 billion. And then, we'll continue with returning capital to our shareholders next year with the at least 85% of free cash flow. We have no plans with respect to large M&A at this moment.

Maybe some small tuck-in and bolt-ons where we can find some nice additions to our propositions, think about ESG. But otherwise, no changes with respect to the plans, the philosophy, and the targets will continue on the path that you're used to see from us.

Russell Quelch -- Redburn -- Analyst

Thank you. I'll leave it there. Thanks for your comments.

Doug Peterson -- President and Chief Executive Officer

Thanks, Russell. Well, as we close the call, I want to thank everyone again for joining it, for your questions and for your support. As I said at the beginning of the call, it's incredible to see that within just five months how much stronger and resilient we are as a new company with S&P Global and IHS Markit. We have a very robust Integration Management Office in place, we call it the IMO.

We're partnering with all of the businesses together with a new management team to create value and to ensure that we can create this unified vision to deliver S&P Global. None of the progress would be possible without the commitment and really hard work of our people. They've done a fantastic job, and I do want to thank them again for their effort as they've been working for over a years and a half, two years to get ready for this deal and down the last five months to really make sure it's moving along. I'm really pleased that all of us has come together to do such a great job so far, and we want to continue to deliver.

I hope that everyone has an enjoyable summer, and I want to thank everybody for joining the call today. Thank you very much.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Mark Grant -- Senior Vice President, Investor Relations

Doug Peterson -- President and Chief Executive Officer

Ewout Steenbergen -- Executive Vice President and Chief Financial Officer

Ashish Sabadra -- RBC Capital Markets -- Analyst

Manav Patnaik -- Barclays -- Analyst

Alex Kramm -- UBS -- Analyst

Toni Kaplan -- Morgan Stanley -- Analyst

Hamzah Mazari -- Jefferies -- Analyst

Jeff Silber -- BMO Capital Markets -- Analyst

Faiza Alwy -- Deutsche Bank -- Analyst

Trevor Romeo -- William Blair and Company -- Analyst

Craig Huber -- Huber Research Partners -- Analyst

Owen Lau -- Oppenheimer and Company -- Analyst

Jeff Meuler -- Robert W. Baird and Company -- Analyst

George Tong -- Goldman Sachs -- Analyst

Shlomo Rosenbaum -- Stifel Financial Corp. -- Analyst

Andrew Steinerman -- J.P. Morgan -- Analyst

Russell Quelch -- Redburn -- Analyst

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