IHS Markit Ltd. (INFO) Q2 2021 Earnings Call Transcript

IHS Markit Ltd.  (NYSE: INFO) Q2 2021 earnings call dated Jun. 23, 2021.

Corporate Participants:

Eric Boyer — Investor Relations

Lance Uggla — Chairman of the Board and Chief Executive Officer

Jonathan Gear — Executive Vice President and Chief Financial Officer

Edouard Tavernier — Executive Vice President, Transportation

Adam Kansler — President – Financial Services

Brian Crotty — Executive Vice President, Global Energy and Natural Resources

Analysts:

Kevin Mcveigh — Credit Suisse — Analyst

Gary Bisbee — Bank of America Merrill Lynch — Analyst

Jeffrey Meuler — Robert W. Baird — Analyst

Andrew Steinerman — J.P. Morgan — Analyst

Hamzah Mazari — Jefferies — Analyst

Adam Farley — Stifel Financial Corp — Analyst

George Tong — Goldman Sachs — Analyst

Toni Kaplan — Morgan Stanley — Analyst

Jeff Silber — BMO Capital Markets — Analyst

Andrew Nicholas — William Blair — Analyst

Andrew W. Jeffrey — Truist Securities — Analyst

Douglas Arthur — Huber Research — Analyst

Manav Patnaik — Barclays — Analyst

Presentation:

Operator

Thank you for standing by and welcome to the Second Quarter 2021 IHS Markit Earnings Conference Call. [Operator Instructions]. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the call over to Eric Boyer. Please go ahead.

Eric Boyer — Investor Relations

Good morning and thank you for joining us for the IHS Markit, Q2 2021 earnings conference call. Earlier this morning, we issued our Q2 earnings press release and posted supplemental materials to the IHS Markit Investor Relations website. Our discussion on the quarter are based on non-GAAP measures or adjusted numbers, which exclude stock-based compensation, amortization of acquired intangibles and other items. IHS Markit believes non-GAAP results are useful in order to enhance understanding of our ongoing operating performance, but they are a supplement to and should not be considered in isolation from or as a substitute for GAAP financial information.

As a reminder, this conference call is being recorded and webcast and is a copyrighted property of IHS Markit. Any rebroadcast of this information in whole or in part without the prior written consent of IHS Markit is prohibited. This conference call, especially the discussion of our outlook, may contain statements about expected future events that are forward-looking and subject to risks and uncertainties. Factors that could cause actual results to differ materially from expectations can be found in IHS Markit’s filings with the SEC and on the IHS Markit website.

After our prepared remarks, Lance Uggla, Chairman and CEO; and Jonathan Gear, EVP and Chief Financial Officer will be available to take your questions.

With that, it is my pleasure to turn the call over to Lance.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thank you, Eric. Thank you for joining us for the IHS Markit Q2 earnings call. We had another very strong quarter. Q2 revenue was $1.18 billion with organic growth of 13%. Adjusted EBITDA of $517 million and margin of 43.8%, up 30 basis points year-over-year, FX adjusted and up 80 basis points now year-to-date. Adjusted EPS of $0.81 — or $0.81 up 17% over the prior year.

So overall, we’re pleased with the first half of our year which puts us in an excellent position to raise our full year guidance today. In terms of core industry verticals, let me first start with our Financial Services segment which had another strong quarter with 9% organic growth in Q2. Within the division, Information performed solidly with organic growth of 5%. Contributors included increased demand for our pricing, reference data and valuations offerings as well as continued growth in our equities, regulatory reporting and trade and analytics platforms.

Solutions had an excellent quarter with 15% organic growth, and they continue to benefit from robust market activity in equities and loan markets combined with a broad based rebound of investment, customers in our software solutions and our corporate actions and regulatory and compliance offerings.

Finally, our Processing business grew 6% organically strengthened loans and derivative performance as expected. For the full year, we still expect Financial Services to be in the 7% to 8% organic growth range.

Now moving on to Transportation, which had organic revenue growth of 39% in Q2. Now you’ll recall that the basis for comparison, the second quarter of 2020 was depressed by significant pricing concessions that we granted our customers at the height of the COVID related lockdowns, as well as by particularly challenging trading conditions in the automotive market. However, there is more to this quarter than a low comparison.

I’m pleased to say that this quarter’s performance also reflected strong underlying organic growth right across the transportation businesses. Our dealer businesses that includes CARFAX and Mastermind are once again experiencing rapid growth. In a retail environment, that’s marked by a shortage of inventory both used and new and by rapidly escalating used car prices, our products are critical in helping dealers acquire and sell more cars at the right price, in the right time.

Demand for our predictive solutions, volumes planning, powertrain emissions compliance, supply chain and technology are all accelerating as the industry grapples with multiple supply chain disruption and as it faces major strategic decisions related to the technology mega trends. Those include the connected car, autonomous driving and electrification. Our marketing audience and measurements business is rapidly expanding its footprint with automotive market tiers.

And recently, we announced a wide-ranging partnership with Nielsen, which we are very excited about. And finally, our Maritime and Trade business continued to deliver strong performance. This has been the result of a very focused product strategy and disciplined execution over multiple quarters. We also hosted a successful virtual TPM conference in March. So for the full year, we now expect transportation organic growth to be higher, and in the 14% to 16% range, which is up from our previously noted 13% to 15% range. This represents a healthy underlying high single-digit growth rate, excluding the favorable year-over-year comparison due to the pandemic.

Moving on to Resources where our organic growth was flat in Q2. Our Resources business performance was as expected with recurring revenue consistent with Q1 and non-recurring revenue benefiting from the return of both CERAWeek and the World Petrochemical conferences. As expected, our ACV experienced slight positive growth in Q2, which we believe should accelerate in the back half, providing a stronger foundation for our 2022 recurring revenue.

Our downstream organic revenue growth performed as expected and should accelerate throughout the rest of the year. Downstream is now 50% of the overall division and upstream 50%, that’s a 10% shift year-over-year. In 2021, we continue to expect organic revenue results within resources to improve compared to 2020 and to be down year-over-year in the low single digits as upstream improves and downstream continues its growth trajectory.

Finally, CMS organic revenue growth was in line with our expectations up 1% for the quarter. We expect improving results continuing across CMS throughout the year. For the full year, we expect CMS to deliver mid single-digit organic growth. The only update we have on the merger is what S&P Global recently disclosed that we expect the deal to now close in calendar Q4.

And now, I’ll turn the call over to Jonathan.

Jonathan Gear — Executive Vice President and Chief Financial Officer

Great. Thank you, Lance.

Q2 highlights included revenue organic growth of 13%, adjusted EBITDA growth of 14%, GAAP net income and EPS both had a growth of 122% and adjusted EPS had growth of 17% year-over-year. Regarding revenue, our Q2 revenue was $1.18 billion with total growth of 15%. Organic growth in the quarter was 13%, which included recurred organic growth of 10% and nonrecurring organic growth of 41%. This increase was driven by strong underlying growth in financial services and transportation, as well as benefiting from favorable year-over-year comparisons due to the impact of COVID on some of our transportation and resources businesses.

Moving on to segment performance, our Financial Services segment drove organic growth of 9% including 7% recurring in the quarter. Solutions in particular had strong performance, delivering 15% organic growth, primarily from strength in capital market issuances, corporate actions and reg and compliance offerings, while Information had 5% growth driven by pricing and valuations in our equities, regulatory reporting and trading analytics platforms.

Processing had a 6% organic increase driven by volumes, primarily in loans. Our Transportation segment delivered organic growth of 39% in the quarter. This included growth of 38% recurring as Q2 continued to have strong growth within our CARFAX and automotiveMastermind businesses and accelerated growth within our Maritime and Trade business. Non-recurring revenue increased by 41% primarily driven by strong performance in CARFAX consumer and dealer transactions, core automotive insights and Maritime and Trade events.

Our Resources segment remained flat, which is comprised with 8% recurring decline and 73% nonrecurring increase. Q2 organic ACV increased by $2 million in the quarter and our trailing 12 month organic ACV is down 8% as we have now cycled through our subscription renewals since the North American energy market was severely impacted at the end of Q1 last year. We had great success with our entirely virtual CERAWeek and World Petrochem conferences and we continue to see strong demand in our downstream businesses, particularly in our products and services to support energy transition and energy market supply chains. Our CMS segment had 1% organic growth, including 2% recurring and a decrease of 10% non-recurring.

Moving now to profits and margins; Adjusted EBITDA was $517 million, up $63 million versus prior year. Adjusted EBITDA grew 14% with a margin of 43.8%, down 40 basis points and up 30 basis points FX adjusted. Moving to our segments. Financial Services’ Adjusted EBITDA was $238 million with a margin of 48.2%, down 300 bps [Phonetic] — to 320 bps FX adjusted. Financial Services margins reflects a return to more normal margin levels post COVID. Transportation’s adjusted EBITDA was $171 million with a margin of 49.6%, up 870 bps FX adjusted. We do expect margins to moderate in forward quarters as we see more expense tied to revenue growth.

Resources’ adjusted EBITDA was $91 million with a margin of 41.4%, a decrease of 210 bps FX adjusted, as a result of lower revenue. CMS adjusted EBITDA was $29 million with a margin of 23.3% down 520 bps FX adjusted. This quarter’s decrease was driven primarily by the return to more normal margins compared to the prior year in addition to a mix shift. We do expect margins to continue to improve in the back half of the year.

Moving now to net income and EPS. Net income was $159 million and GAAP EPS was $0.40. Adjusted EPS was $0.81, an increase of 17% over prior year. Our GAAP tax rate was 26% and our adjusted tax rate was 20%. Q2 free cash flow was $301 million and our trailing 12-month free cash flow conversion has increased to 56%.

Turning to the balance sheet, our Q2 ending debt balance was $5.0 billion and represented a gross leverage ratio of approximately 2.6 times on a bank covenant basis and 2.5 times net of cash. We closed the quarter with $217 million of cash and our Q2 undrawn revolver balance was approximately $917 million.

In the quarter, we paid off our $250 million, 364-day term loan. Our Q2 weighted average diluted share count was 400.7 million shares. As we mentioned in Q4, the merger agreement with S&P Global restricts our ability to purchase our shares and therefore our share repurchase program is currently suspended, other than for the repurchase of shares associated with tax withholding requirements for share-based compensation.

Moving to guidance, we had a strong first half of the year and are adjusting and raising our guidance ranges. We are raising revenue guidance to $4.635 billion, to $4.675 billion with organic growth of 7% to 8%. Approximately $30 million of this increase is due to changes in FX rates, which are benefiting revenue negative [Phonetic] to margin percentage, but neutral to adjusted EBITDA. Adjusted EBITDA is being raised to $2.02 billion to $2.03 billion with adjusted EBITDA margin expansion of approximately 100 basis points adjusted for FX. Adjusted EPS is being increased to $3.15 per share to $3.17 per share. Finally, we expect cash conversion in the mid-60s as we lap our 2020 one-time cash impacts.

And with that, I will turn the call back over to Lance.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thanks, Jonathan. We had another strong quarter as our end markets continue to recover and the teams have executed at a high level. We remain very confident in our ability to deliver strong results for the year as represented by our updated guidance. And operator, we’re now ready to open the lines for questions.

Questions and Answers:

Operator

[Operator Instructions]. Our first question comes from Kevin McVeigh with Credit Suisse. Your line is open.

Kevin Mcveigh — Credit Suisse — Analyst

Great, thanks. Hi, good morning, everybody.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Hi, Kevin.

Kevin Mcveigh — Credit Suisse — Analyst

Hey, how are you? Hey, really, really great numbers in transportation and obviously easier comp, but what’s interesting to me is, we read a lot about constrained inventories, things like that, so it seems like the numbers would have been that much stronger if not for even if there is more inventory out there. Any puts and takes you’d call out in particular Lance or Jonathan just because you gained some really amazing number there.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Yeah. Why don’t I start and then we’ll pass it over to Edouard actually, because he is on with us. But I think the biggest thing is, is — and Edouard can build on this some more, if you took out 2020, what you really want to look at is recurring revenue growth ’19 to ’21. And that’s a mid to upper teens number. So that’s the blow away number, from my perspective, the team has done an amazing job. That comes down with non-recurring revenue, and if you take the overall quarter ’19 to ’21, it’s high-single digits and that’s right in line if you look back to ’18, ’19 etc.

So my view is the teams’ recovered, they’ve done the maximum they can, they’ve innovated into new products, they worked virtually well. I really think it’s been a stellar performance for them. But Edouard, do you want to add a little bit to that in terms of just your own — your own color on the numbers?

Edouard Tavernier — Executive Vice President, Transportation

Yes, absolutely. Thank you, Lance. [Technical Issues] Can you now? Okay, cool. Thanks Kevin for the question. And just to build on what Lance said, good call-out on the inventories. So the industry is still in a process of recovery. And you’re right, in this current environment, both dealers and car makers have less of a need to spend on marketing and that does create a headwind for some of our products.

On the other hand, I would say that the dealers in particular are currently seeing higher margins that they’ve ever recorded and we know customers do well, that’s obviously a good thing for us. So you sort of have a balance sort of headwinds and tailwinds. But the takeaway for me is that either in market environments like today’s auto industry, I think we’re showing that our products are critical, must have products that are helping dealers and car makers sell more cars. And also in the case of dealers, acquire used cars in a really tough kind of used car market.

So that’s a big deal for us, and I’m really happy with how the business have been flowing in response.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thanks, Edouard. Next question.

Operator

Our next question comes from Gary Bisbee with Bank of America. Your line is open.

Gary Bisbee — Bank of America Merrill Lynch — Analyst

Hey, good morning. I guess on Financial Services, you know, continues to do quite well. A two part question. How important is issuance in the last couple of quarters across equity and debt markets and outside of the issuance benefit, what else would you call out that continues to do quite well here? Thank you.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Okay. Maybe I can start and then I’ll hand it over to Adam. I guess, first off, yeah, if I look at financial services in high single digits, and I just — to me that’s a super strong quarter, so a great performance.

I’d say that one thing I’d call out which if you were following Markit — then IHS Markit over the years, we always view our solutions business is having double-digit growth opportunities, and for a little while that slipped into high-single digits. It’s been throughout ’19, ’20 and now ’21, we’ve started to see that recover and that’s a 15% [Phonetic] solution sort of growth, albeit, some of it’s non-recurring, but what’s really important is that solutions growth brings and draws recurring revenue. So a really super performance by the Solutions team.

Adam, do you want to add in terms of issuance, etc?

Adam Kansler — President – Financial Services

Yeah. I mean, one of the nice things about our business is the diversification of the asset classes in which we operate and the — and the types of businesses that we have. So a strong issuance market. It gives us a bit of a lift, but in other market environments where you see volatility, we have other platforms or other businesses that respond well in those environments. So you do have a bit of a balance.

Heavy issuance market like we saw in Q1 in particular, you know, that’s started to moderate a bit into Q2. It gives us some amount of lift, but across the portfolio, the core is really the strength in our pricing, our valuations, continued growth in demand for those products and as Lance mentioned, our solutions, we made a significant investment over the last couple of years and we’re winning some pretty significant mandates and that’s fueling growth. I think that will be an area of continued growth for us certainly over the mid-term.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thanks, Adam. Next question.

Operator

Our next question comes from Jeff Meuler with Baird. Your line is open.

Jeffrey Meuler — Robert W. Baird — Analyst

Yeah. Thank you. On the — the macro around connected cars that you called out in the prepared remarks, obviously not new, but I guess what’s the — what’s the strategy for CARFAX or IHS Auto to collect connected car data in real time or near real-time? And I guess how important is that to you kind of intermediate to long-term as you defend your position or look to find new sources of revenue?

Lance Uggla — Chairman of the Board and Chief Executive Officer

Edouard, you want to take that one?

Edouard Tavernier — Executive Vice President, Transportation

Yes, sure. So, thank you, Jeff, and great question. So over time availability [Phonetic] of connected car data is going to get bigger, cargo is going to get much better and we see a couple of opportunities for us both in terms of access to data to supplement what we do today and also new business models.

Today, we are running a number of POCs across our business both on the contract side of the business to figure out like what can we get from that — from that basis and how can we supplement our existing sources, but also buildings that dataset into work for car makers such as dealer network optimization, dealer network design.

So, an exciting opportunity for us. We see connected car data as being a critical source for us in the future. Right now, availability is limited, coverage is very light, and there are still some significant question marks around access to [Indecipherable] data who owns that data which will have to play out over the next two or three years.

So let’s continue to watch this space together on the floor [Phonetic] but it will take two or three years for connected car data to emerge as something that we can really leverage.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thanks, Edouard. Next question.

Operator

Our next question comes from Andrew Steinerman with J.P. Morgan. Your line is open.

Andrew Steinerman — J.P. Morgan — Analyst

Hi, Lance. I just wanted to hear a little bit more specifically about what will drive the recovery at IHS’ resources ACV for the balance of the year. Surely, I recognize Brent oil is back into $70s, but just give us a sense of kind of where and why IHS is seeing additional subscription revenue coming into ACV.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Okay. Okay. Probably Brian can give you a real good detail and more granular. So, I’ll pass it over to you, Brian.

Brian Crotty — Executive Vice President, Global Energy and Natural Resources

Yeah. So what we’re seeing is there’s a really high demand right now for our clean tech, carbon, biofuels, crop science and our agri group and plastics for chemicals. And we — what we’ve done this year is we have new or expanded offerings in all those areas. So we’re just seeing that segment of the business really take off.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Okay, thanks. Thanks, Brain. [Technical Issues] that I mentioned that, think back [Technical issues] merger 60-40, now for the first time ever 50% downstream with a, we having a 10% quarter. It really the diversification is much, much better. And we’ll continue to balance the set of assets with the energy transition and the team’s done a good job. Thank you. Next question.

Operator

Our next question comes from Hamzah Mazari with Jefferies. Your line is open.

Hamzah Mazari — Jefferies — Analyst

Hey, my question is more related to the S&P merger. Could you maybe Lance talk about any integration pre-planning that’s going on? Maybe you could touch on employee morale. Clearly the deal closes, as you mentioned in Q4, but how is employee morale shaping up in terms of culturally and with that integration, anything you can touch on — any color you can provide there from a pre-planning process and also from an employee morale perspective. Thank you.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Right, okay. Well, the — a year, so we’ll be a year December 1 to that final quarter. So it is a long time. But I have to say, you know, the team really got motivated together through COVID. So I just think the firm rallied around COVID and culturally improved and delivered great results. And that carried us through most of the last year.

Like anything, we worry that over time you can get a merger fatigue, but we haven’t noticed that at all. I think S&P has done a great job working with my teams on pre-merger planning and because we probably had an extra three months or four months, they really have rolled up their sleeves and just went deeper.

The other thing you should know is we don’t have that much of an employee morale issues. Because our energy team is completely different. You know the Platts Opus overlap is going to create a sale that’s been announced. So even within Opus people are excited about the fact that they’ll be doing something new again. So that’s not an issue. There is no overlap with our upstream and downstream businesses into Platts really. The financial services, Adam is going to be leading that and you know, it’s an exciting integration given lots of opportunities.

Automotive, transportation, no real need [Phonetic] for overlaps, so Edouard is leading that. Sally is leading alliances and building a new team across S&P. So I think the teams are all highly motivated. Where the overlap is of course in the services and we did a really good job. Both firms have treated their employees very well through this merger period. And so we haven’t had a lot of people at all leaving the firm. And I feel — I feel my teams have done a exceptional job and are still highly motivated.

Jonathan has been leading the IMO from our side. So maybe he can add a little bit additional color to that.

Jonathan Gear — Executive Vice President and Chief Financial Officer

Sure. Lance will do, I think just as you asked [Phonetic] your question, which [Phonetic[ is — there has been some very intensive integration planning going on really going back to December 1st when we announced this. And teams have being stood up across all the different functions, all the different areas of course being careful not to jump the gun, but really get ahead on the integration, integration planning.

And in that process I think a couple of things have come out. First, I think as we identified synergies at that — when we announced a deal, we’ve taken the last few quarters to really begin to certify exactly the path to two of those synergies, and I think we’re increasing confidence on how to get there. And the second thing culturally to your question, it’s been a great opportunity for the teams to really work with one another and get to know each other and get to know their future colleagues extremely well. And I think what’s come out of it is certainly Lance and I knew from our discussions in the fall is the values of the two firms are very, very similar. And I think as the two teams have got to know each other it has been relieving, if you will for them to get to know that their — colleague who’s going to be work were their people that they want to work with.

So we’re making great progress both culturally as well as the integration planning and we should be well set up when we close.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thanks, Jonathan. Next question.

Operator

Our next question comes from Shlomo Rosenbaum with Stifel. Your line is open.

Adam Farley — Stifel Financial Corp — Analyst

Hi. This is Adam on for Shlomo. What level of cost were re-introduced to the business through the reopenings? And how might this sort of impacted margins in the quarter?

Lance Uggla — Chairman of the Board and Chief Executive Officer

Jonathan, you want to do that one?

Jonathan Gear — Executive Vice President and Chief Financial Officer

Sure. So it’s a like a couple of different areas where we do. So if you recall last year, Q2 call last year when we were entering COVID we took some significant cost reductions, some of those were permanent, so those permanent cost savings happen to be permanent. They haven’t crept back in. But some were certainly temporary. There was impact on executive salaries, few other things we did we pulled back on marketing spend for example CARFAX given that the dealers have shipped down to North America.

And so those costs and we sort of built it into our plan into our guidance this year those costs have been — have been reversed. And so it does create a — I’ll call it somewhat odd dynamic on the absolute margin of the segment level. In transportation for example where we took significant cost reductions in Q2 of last year, you see a significant year-on-year margin accretion which is a little bit of false economy [Phonetic] I would say, you should see that normalize going forward.

But those would be the main cost that have come back in. Then of course we continue to invest in the business and where we see strong performance, make sure we make investments to fund future growth. But the key thing I would call out is really you’re seeing the year-on-year reversal of some of those temporary cost reductions from last year.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thanks, Jonathan. Next question.

Operator

Our next question comes from George Tong with Goldman Sachs. Your line is open.

George Tong — Goldman Sachs — Analyst

Hi, thanks. Good morning. You increased your full-year guidance for organic revenue growth given strength in transportation. How do you expect your updated guide to flow through to your fiscal 2022 outlook given current trends in each of your segments?

Lance Uggla — Chairman of the Board and Chief Executive Officer

Yeah. I think I’ll let Jonathan add after me. But you know, I think the key thing that I think people should look at is, it’s a very — we’re half — over halfway through our fiscal year. We’ve given you a very narrow $40 million of revenue guidance, and an even narrower EBITDA guidance. And if you look at our track record over the last many years, we don’t miss our guidance. So the fact is, we’ve given you a very accurate picture for this year, flowed all the way through into earnings.

Of course, we also feel that our strong mid to upper single digit revenue profile as a firm is one that’s very intact and we expect that to continue. And so, I don’t see us changing the percentage of revenue growth expected into 2022, 2023, 2024, but that’s not to say that as we go into those years, if we have strong first, second quarter, we don’t have any issue with raising our view forward. And we’d love to beat our guidance. But I don’t see us changing across the mix of our businesses.

So high — mid to high single-digit revenue growth in ’22 off of our closing ’21 numbers. Jonathan, do you want to add anything else to that?

Jonathan Gear — Executive Vice President and Chief Financial Officer

No. But maybe there is a couple of comments to add to yours Lance, I mean, first off, we did give our 2021 guidance this time last we’re coming out of all the noise of COVID. I’m actually really proud of the team that dealt [Phonetic] with all the uncertainties back then. We are landing the plane kind of as we expected, and as Lance has alluded to great, great performance by the team.

But I would say George, in terms of raising the guidance this time obviously we’re doing them on the back of what we saw in first half of the year and what we’re seeing going forward. I think at this point we’re not prepared to really give formal guidance for 2022. We’ll be back to our normal, normal cadence obviously it might rather be in a position of strength, as in the year it’s been in a position of weakness. But as Lance was saying, I think at this point no new news in terms of changes to future growth. We’ll surely get back to you later in the year once we finalize our plans.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thanks, Jonathan. Next question.

Operator

Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.

Toni Kaplan — Morgan Stanley — Analyst

Thank you. I wanted to ask about ESG. What do you think about the $70 million of ESG revenue, it spans across a number of different areas, emissions, data supply chain, solar wind, hydrogen, etc. I guess, who’s competing against you in these areas? And are there any capabilities or data sets that you don’t have right now that you would like to? Thank you.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Yeah, that’s a good question, Toni. Thanks for that. So we — I think where IHS Markit standalone has an edge in ESG is clearly around the E. And scope 123 emissions science-based targets, the challenges of — for corporations, governments who will want to regulate coming out of the COP26. These are — these were areas where we have real substantive detail, climate analytics. We have data that plays into climate analytics, so location data around energy assets. Our Maritime and Trade Group have very detailed supply chain footprints for all the Maritime fleet. We have some great new products and services that play into research and development around E.

So I think we have a competitive edge as IHS Markit in E. When you marry that with S&P Global, I actually think the combination gets even stronger, and they do have the RobecoSAM, Trucost and other assets that are very, very valuable in terms of competing with the likes of MSCI, FTSE, the LSE Group, various providers of ESG ratings and scores that are much more driven off the public knowledge S&G versus the E. So I think our combination is going to give us a competitive edge and give us a lot of opportunity to grow into. And I think across S&P Global and IHS Markit, this is a very strong double-digit growth engine for at least a decade. Because, you know there is $1.5 trillion a year being spent on climate change now and that number is expected to grow to something like $4.5 trillion.

And so, I think we’ve got lots to offer, and we’ll watch this space closely. Next question.

Operator

Our next question comes from Jeff Silber with BMO Capital Markets. Your line is open.

Jeff Silber — BMO Capital Markets — Analyst

Thank you so much. This is actually a follow-up from Hamzah’s question on your internal workforce. You said you have not had a lot of people leave since the merger announcement. That’s great. I’m assuming you’ve been hiring since, if you could just confirm the size of your workforce has increased since the merger announcement. And if so, how difficult is it to find these people, and are you having to pay higher than normal wages? Thanks.

Lance Uggla — Chairman of the Board and Chief Executive Officer

I’ll take, and let the team add to this one. So I’ll go to Jonathan or if he wants to pass it to any of the division heads, he can. We are definitely hiring and we’re definitely with the growth numbers we’re growing and in many cases, we’re growing into new spaces in our — in the markets we operate in.

So, I haven’t seen us having any challenges to hire, and of course in a merger, we make sure that we retain our people and look after them. So I don’t notice anything that stands out from my perspective, but if any of the division heads want to add anything in terms of hiring etc, maybe you can start, Jonathan, if you know our overall employment growth across the Group year-over-year. And then if any of the division heads want to add.

Jonathan Gear — Executive Vice President and Chief Financial Officer

Sure. Maybe I’ll just give a general overview and then the division heads can supplement as they like. So first Jeff to your point is first, the attrition we’re seeing kind of year-to-date has been very much in line with what we normally see. And so, no [Indecipherable] there. We are growing and you’re absolutely right, we are growing and investing in all the different businesses that Adam, Edouard and Brian lead.

In particular, growing in India, it has always been a growth sector for us. India is a hot market. It’s always — what we’re very, very attractive employer, it’s always a challenge for you to find great people. I would say that the challenge we have finding people this year really is not that different from other years. It’s always — you look to attract the best people and pull them in. It’s never easy but we always find a way to get it done. So we are growing.

Certain markets are hotter than other markets, certain segments particularly in technology, data science, etc, the usual places you expect. Now always difficult, but I wouldn’t say dramatically different this year from prior years. But happy to open them to the division leads to add some more color.

Edouard Tavernier — Executive Vice President, Transportation

[Speech Overlap]. I’ll just add something to what Jonathan said. I would say it’s in pockets, right. I think it’s a great question. Technology is one of those pockets. We may have seen in some places an uptick in attrition, and we have struggled to hire great tech talent in some locations. And so our strategy here is to diversify kind of sources of talent, but as you know, we are actively engaged in globalizing our talent footprint and that’s helping us. And I think in some cases adjusted wages, but actually by and large, we’re finding the talent we need.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Adam, do you want to add anything or Brian?

Adam Kansler — President – Financial Services

Yeah, no, the only comment, maybe I’d make Lance is we — obviously we’re operating in a competitive job market. We put a lot of attention into our internship and our early careers programs where we brought large groups of young people into the firm, and that pipeline — that pipeline gives us great strength forward. That’s a real investment in the future of the firm. And I think that’s a place where we’ve seen real progress both in our diversity and equality as well as just bringing great talent that continues to join and progress within our firm.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Okay. Brian, anything?

Brian Crotty — Executive Vice President, Global Energy and Natural Resources

No. I mean, I think I agree. I’m seeing the same things that Edouard and Adam are — and definitely our internship programs really helped onboard good talent as those does our grad. So, I think we’re firing on all cylinders there.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Yeah. No, it’s great. And we have over 250 interns and 250 graduates joining. So, you know, that fuels a lot of our growth and manages our expenses. Okay, next question.

Operator

Our next question comes from Andrew Nicholas with William Blair. Your line is open.

Andrew Nicholas — William Blair — Analyst

Great. Thanks for taking my question. I know it’s a smaller piece of the business, but I was wondering if you could speak a bit to the performance of CMS in the quarter. And what the medium-term outlook looks like for that segment? I think recurring revenue held up decently well throughout the past, kind of year plus, and I know, you get some non-recurring revenue from the boiler pressure, vessel codes in the back half of this year, but excluding that, do you think CMS can get into the mid-single-digits range, longer-term? And if so, what are the primary drivers to getting there? Thank you.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Yeah, I’ll start that. Jonathan can add if he needs to. But, you know, we’ve really retooled CMS toward mid-single-digit growth. We called it out in this quarter that we expect the full-year to be mid-single-digits. So, you know, again I think you guys have, you know, strong confidence in the numbers we give you, and we expect to hit them.

So, but you know, long term organic growth means you do it over and over and over again, and then people give you that valuation expectation. And CMS has been, you know, in need of retooling and building out our tech platform. The team has done a great job. They are seeing demand, and that’s flowing through to, you know, better recurring revenue.

So, I think the team has done a great job. I think moving from low up to mid-single-digits is step one. And we expect that the team will be able to do that through this year and then again into next year. Jonathan?

Jonathan Gear — Executive Vice President and Chief Financial Officer

Great, Lance. Yeah, maybe just a few things I would add, because if you look at CMS, there are really two divisions or two major divisions in it. One is product design, one is our economic and country risk. So within product design, it has been a multi-year investment back in technology and in new platforms and products, and we’re beginning to see that lift take place that drives, as Lance said, not a single year, but kind of a multi-year sustainable organic growth.

We do certainly see as we look at first half of the year and then look at what’s building in the second half of the year, we do see a path for that to get to mid-single-digit second — for the full year based on what we’re seeing. That we think should be a sustainable growth rate.

On the economic company risk that Adam mentioned, there has been some significant investments in terms of new products and new packaging around how we get much more of a persona based approach with our products there. And similar story where those investments were made to, kind of end of last year early this year, and we’re seeing the benefit in our growth through our pipeline, we expect to see that lift second half of the year.

So, it’s on a reported basis, our lowest growth rate first half of the year, we would expect it to get to mid-singles by the end of the year.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Thanks, Jonathan. Next question.

Operator

Our next question comes from Andrew Jeffrey with Truist Securities. Your line is open.

Andrew W. Jeffrey — Truist Securities — Analyst

Hi, thank you. Good morning, everybody. Appreciate taking the question. Just wondering a little bit, Lance, you know, the transportation business has been fantastic and it sounds broad based. Some of what you described in terms of the end market dynamics feels a little bit like peak cycle. I just wonder if you could address that next year, obviously, comparison side, assuming supply chains loosen up a little bit, used car prices perhaps normalize, anything we need to think about, you know, in terms of 2021 as being sort of an exceptional year that sets up just a tougher, you know, sort of macro backdrop for transportation next year?

Lance Uggla — Chairman of the Board and Chief Executive Officer

Right. Well, I guess since the merger of IHS and Markit, you know that’s — I got used to that question every single quarter. So, about 20 quarters of that same question. So it’s a good — it obviously is a good question because it’s the one that’s on the mind of all of our analysts. And I think what you should be really looking at is high single digit growth for transportation. And it does that time and time again in a very diversified way. And sometimes it’s used car markets, sometimes it’s new car markets. Sometimes it’s marketing and advertising, sometimes it’s — you know, supply chain and predictive analytics.

And so when everything’s ticking, we can peek into double digits, but in general, I look at transportation, say it’s a strong high single digit performer with ample opportunity in its markets to maintain that. And it’s not reliant on new or used car sales alone, but many things that are actually needed by the automotive suppliers and the OEMs, regardless of the environment we’re in.

So they all need to market for the cars, they all need to spend their incentives, they all need to measure their emissions, they all need to order parts and study the supply chains, they all need to do R&D and look into the future car, the connected car, the electrification of vehicles, next will be hydrogen. So, there’s always stuff to be done. Then we get on the dealer floor, and the marriage of CARFAX and Mastermind and helping dealers sell cars in a connected digital world, those types of tools become even more important.

And so, I think, you know, you can expect more of the same in that high-single-digit range for transportation. But, you know, this is an outsized quarter that’s catching up from, you know, a COVID period where, you know, really the comparison, you know, it’s exciting to get to say 39% we actually teased the team that it wasn’t 40%, because it would have been a nicer number to shout out.

But the fact is, it’s really a high single digit consistent growth scenario where the teams recovered really well. I’m all in there. I think that was our final question operator?

Operator

We do have a question from Doug Arthur with Huber Research. Your line is open.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Okay. Go ahead, Doug.

Douglas Arthur — Huber Research — Analyst

Yeah, thanks. I’ll make it quick.

Lance Uggla — Chairman of the Board and Chief Executive Officer

No, it’s okay.

Douglas Arthur — Huber Research — Analyst

Lance, last just on the ACV turning up, would you — I mean, you’ve given various updates on your kind of pendulum swinging there on ACV. Is it sort of as expected at this point or is it a little ahead of schedule?

Lance Uggla — Chairman of the Board and Chief Executive Officer

No, I’d say as expected. We’re definitely not ahead of schedule. But, you know, what I’d really like is the continued shift to a division that’s highly diversified like financial services, like transportation where we’ve got strong diversification across, you know, many facets of global economies that are, you know dealing with energy transition, new sources of energy, circular economy and demands waste. This division is with its expertise and chemicals to agricultural business. The continued need for — you know, 90 million, 100 million barrels a day of oil, oil price is at $70, when it wasn’t long ago, they were sub-$50.

So, you know, this team is always in thought leadership in center stage. And, yeah, we’ve had — it’s been one of the toughest divisions as we’ve come out of — had to go through COVID. But, you know, we’re back to, you know, an expected, probably low-to-mid single-digit growth year in 2022 for energy.

And, you know, 2022 could be the first year where, you know, you’ve got CMS, you’ve got energy in the mid-single-digits, and you’ve got transportation and financial services in high-single-digits. You know, that’s kind of, that’s the home run and we’re going to deliver this firm very strong into the S&P Global strategic merger.

I think that might be the final question, but let me know operator.

Operator

Our final question is from Manav Patnaik with Barclays. Your line is open.

Manav Patnaik — Barclays — Analyst

Thank you.

Lance Uggla — Chairman of the Board and Chief Executive Officer

Okay. Hi, Manav.

Manav Patnaik — Barclays — Analyst

Hi Lance. Sorry. I just wanted to unpack maybe, I’ll keep it quick that low-to-mid single-digit growth you talked about resources. Can you just help break it down? You know, clearly, everyone’s talking about energy transition going well, but that’s probably, you know, a smaller part of the business. And I just wanted to understand how you guys see the dynamics between, you know, obviously, oil prices going up, but the energy companies still pressured in the zero carbon world or whatever. So, you know, how do you see those moving pieces there?

Lance Uggla — Chairman of the Board and Chief Executive Officer

Yeah. I think the easiest thing to do is you take 50% of that division, and you call it high-single-digits. You know, agriculture had a 10, you know, chemicals has been consistently mid-to-high single-digits, Opus has been consistent mid-to-high single-digits, even occasional quarter in double digits. And then you go to upstream and if you really want to be tough on upstream, you know, you could say it’s flat, and that’s your — you know, your low single-digits. Upstream recovering though, off of the price concessions, etc to be low to mid single-digits puts the whole division at, you know, 5% to 7%.

And so, you know, I don’t think it’s a tall order to see those types of revenue growths in 2022. And, you know, we’re well set up for that. And the demand around, you know, just understanding energy related assets in a world of — driven by regulatory change, climate change, investor perceptions and demands, I actually think our team’s roles to help energy market participants navigate these forward challenges, I think there’s a lot of growth.

We saw it, you know, CERAWeek virtually, you know, I was shocked at the turnout and the — you know, the needs of the teams to engage market participants in thought leadership. We saw the same in the world petrochemical conference, and our Maritime and Trade, which is more around supply chain and the trade analytics.

So, I really — yeah, I guess I just, you know I’m not a crazy optimist, but I think that, you know, when we say mid, you know, single-digits we mean it, and I think that Brian and the team, you know, have navigated COVID very well. But it was tough, it was the toughest division to run from a strategic point of view through this challenging period. It just had the most moving parts and the team, you know, I have to say, you know, they don’t have the highest results, but you know, from me, I’d give them a badge of honor. So, great job.

We’ll end there. I think operator, I’ll try it one more time, unless somebody came in for another question. I think we’re finished.

Operator

There are no further questions.

Lance Uggla — Chairman of the Board and Chief Executive Officer

I’ll turn it back to Eric.

Eric Boyer — Investor Relations

Great. We thank you for your interest in IHS Markit. This call can be accessed via replay at 855-859-2056 or International dial-in 404-536-3406, conference ID 9174115, beginning in about two hours running through June 30th, 2021. In addition, the webcast will be archived for one year on our website. Thank you and we appreciate your interest and time.

Operator

[Operator Closing Remarks].