IHS Markit Ltd. (NASDAQ:INFO) Q2 2017 Earnings Conference Call Transcript

Jun 27, 2017 • 08:00 am ET


IHS Markit Ltd. (NASDAQ:INFO) Q2 2017 Earnings Conference Call Transcript


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Lance Uggla

4% as we continue to benefit from improving end markets and operational changes made within our product design, ECR and TMT businesses. Resources organic revenue growth was 5% as our upstream energy business continues to improve and our mid and downstream businesses remain strong.

As we discussed on our Q1 call, we held our annual CERAWeek conference in the beginning of March with record attendance and revenue which contributed to strong Q2 results. We are confident in our low single digit organic revenue growth outlook for 2018. We expect sustained global GDP growth and market dynamics to support our oil price forecast in the $65 to $75 range for the remainder of the year. However, we expect CapEx spend for IOCs to remain relatively tight as companies will remain budget focused, on shoring up their balance sheets and rewarding shareholders. 2019 should see a bigger increase in CapEx.

M&A update. In Q2, we also announced the acquisition of Ipreo and the planned divestiture of our MarkitSERV business. We are excited about the acquisition of Ipreo, which is compelling from both the strategic and financial perspective as it will help us shift our longer term growth curve higher and expand our addressable markets with limited incremental risk.

Strategically, we know the Ipreo business well and it is highly complementary to our existing financial service business, which we believe limits the risk. Ipreo will increase the size of our addressable markets including our presence in the primary and secondary capital markets as well as the alternative sector, a large and underpenetrated market with long-term double-digit growth prospects.

Financially, Ipreo has been a strong double-digit revenue grower and is expected to be accretive to our organic growth, allowing us to increase our long-term company goal from 4% to 6% up to 5% to 7%. The acquisition is also expected to be modestly accretive to our earnings in 2019 and will ramp from there. As we said on our Ipreo acquisition call, we are confident in our ability to deliver to Ipreo financial commitments and have multiple levers to ensure this happens including revenue growth from known market expansions, growth initiatives and revenue and cost synergies.

Finally, the sale process for our MarkitSERV business has kicked off in earnest. And we expect a robust process, given the early indications of interest. We expect to announce the sale in Q4.

And with that, I'll turn the call over to Todd.

Todd Hyatt

Thank you, Lance. We were pleased with Q2 revenue and the continuation of positive trends from the back half of last year. Organic revenue growth of 8% was above the upper end of our long-term range due to organic recurring revenue growth of 6% and outsized growth of 15% in our non-recurring businesses due in large part to strong growth in our events and our automotive recall offerings.

Looking at segment performance. Transportation revenue growth was 22%, including 14% organic, 7% acquisitive and 2% FX. Organic revenue growth was comprised of 12% recurring and 19%