Revenues Up, Profit Down for IHS Markit in 2016 Third Quarter

The financial data and information company announced a drop in Q3 income due to merger-related costs.

IHS Markit Ltd. (NASDAQ:INFO), a leading financial data provider which was formed in July 2016 as a merger between IHS and Markit, has just announced its most recent financial results for the third quarter ending August 31, 2016, which were emblematic of higher revenues and lagging profits, according to a IHS Markit statement.

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For Q3 2016, IHS Markit revealed that revenues pointed higher, coming in at $724.6 million, a jump of 30 percent YoY from $557.9 million in Q3 2015.

Year over year, revenues uptick was driven by recurring fee revenues which increased 22 percent YOY, and also includes contributions from net organic growth and acquisitions related synergies. Third quarter revenues for the financial services segment (composed entirely of legacy Markit business) was $157 million, compared to $150 million in Q3 2015.

In terms of IHS Markit’ operating income for Q3 2016, the figure reversed the narrative, having yielded a loss of $31.7 million – this represents a drop of -154 percent YoY from a $59.1 million profit in Q3 2015. The London-based organization attributed the loss to the recognition of $105 million of merger-related costs and higher levels of stock-based compensation expense.

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Furthermore, IHS Markit reported diluted earnings per share (EPS) of -$0.09 in Q3 2016, down by a factor of -138 percent YoY from $0.24 in Q3 2015. Excluding the merger-related impact, adjusted EPS in the quarter was $0.45, up nearly 10 percent compared to $0.41 in the prior-year period.

Another area of strength for the quarter was the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA), which orchestrated a rise up to $269.0 million in Q3 2016, up 50 percent YoY from $ 179.6 million in Q3 2015.

Fiscal 2016 Guidance

IHS Markit provided its outlook for the fiscal year ending November 30, 2016. The company anticipates the following metrics:

  • Total revenue growth to the range of $2.735 billion to $2.765 billion;
  • Adjusted EBITDA in a range of $975 million to $995 million; and
  • Adjusted EPS in a range of $1.72 to $1.78 per diluted share.

Jerre Stead, Chairman and CEO of IHS Markit, commented on the quarterly results: “We are off to a strong start with our integration efforts, giving us confidence in achieving our synergy targets. I am very proud of the colleagues of IHS Markit who are working so well together with our focus on delighting our customers daily.”

“We continue to manage the business well given the challenging energy end-market and will utilize the financial levers afforded to us from the merger to deliver upon our financial commitments through 2017 and beyond,” added Todd Hyatt, IHS Markit chief financial officer in an accompanying statement.

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