IHS MARKIT: Management Discussion and Analysis of Financial Position and Results of Operations (Form 10-Q)


The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is intended to help the reader understand the
financial condition and results of operations of IHS Markit Ltd. ("IHS Markit,"
"we," "us," or "our") as of and for the periods presented. The following
discussion should be read in conjunction with our 2020 Annual Report on Form
10-K and the Condensed Consolidated Financial Statements and accompanying notes
included in this Quarterly Report on Form 10-Q. References to 2021 are to our
fiscal year 2021, which began on December 1, 2020 and ends on November 30, 2021.

Executive Summary

Business Overview

We are a world leader in critical information, analytics, and solutions for the
major industries and markets that drive economies worldwide. We deliver
next-generation information, analytics, and solutions to customers in business,
finance, and government, improving their operational efficiency and providing
deep insights that lead to well-informed, confident decisions. We have more than
50,000 business and government customers, including 80 percent of the Fortune
Global 500 and the world's leading financial institutions. Headquartered
in London, we are committed to sustainable, profitable growth.

In order to better serve our customers, we are organized into the following four industry-focused segments:

•Financial Services, which includes our financial Information, Solutions, and
Processing product offerings;
•Transportation, which includes our Automotive and Maritime & Trade product
offerings;
•Resources, which includes our Upstream and Downstream product offerings; and
•Consolidated Markets & Solutions, which includes our Product Design, Economics
& Country Risk, and TMT benchmarking product offerings.

Our recurring revenue streams represented approximately 88 percent of our total
revenue for the nine months ended August 31, 2021. Our recurring revenue is
generally stable and predictable, and we have long-term relationships with many
of our customers.

For the nine months ended August 31, 2021, we have focused our efforts on the following actions:

•Increase in geographic, product, and customer penetration. We believe there are
continued opportunities to add new customers and to increase the use of our
products and services by existing customers. We plan to add new customers and
build our relationships with existing customers by leveraging our existing sales
channels, broad product portfolio, global footprint, and industry expertise to
anticipate and respond to the changing demands of our end markets.

•Introduce innovative offerings and enhancements. In recent years, we have
launched several new product offerings addressing a wide array of customer
needs, and we expect to continue innovating using our existing data sets and
industry expertise, converting core information to higher value advanced
analytics. We also intend to continue to invest across our business to increase
our customer value proposition.

•Improve efficiency, productivity, and financial strength. We are striving to
strengthen our operational excellence by consistently improving productivity and
efficiency, particularly as we continue to work through the effects of the
COVID-19 pandemic. We also continue to build on our strong financial foundation,
balancing capital allocation between returning capital to shareholders
(targeting an annual capital return of 50 to 75 percent of our annual capital
capacity through share repurchases and cash dividends) and completing mergers
and acquisitions, focused primarily on targeted transactions in our core end
markets that will allow us to continue to build out our strategic position. The
merger agreement with S&P Global restricts our ability to purchase our shares
and therefore our share repurchase program is currently suspended through
November 2021, other than for the repurchase of shares associated with tax
withholding requirements for share-based compensation; consequently, our cash
balance is higher than we would typically strive to maintain.

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On November 29, 2020, we, S&P Global Inc., and Merger Sub entered into an
agreement and plan of merger, which was subsequently amended on January 20,
2021, pursuant to which Merger Sub will merge with and into IHS Markit, with IHS
Markit surviving such merger as a wholly-owned, direct subsidiary of S&P Global.
The merger intends to bring together a unique portfolio of highly complementary
assets, as well as innovation and technology capability to accelerate growth and
enhance value creation. At the completion of the merger, each IHS Markit share
that is issued and outstanding (other than dissenting shares and shares held by
IHS Markit in treasury) will be converted into the right to receive 0.2838 fully
paid and nonassessable shares of S&P Global common stock, and, if applicable,
cash in lieu of fractional shares, without interest, and less any applicable
withholding taxes. If the merger is completed, IHS Markit shares will cease to
be listed on the New York Stock Exchange and IHS Markit shares will be
deregistered under the Securities Exchange Act. The merger was approved by IHS
Markit and S&P Global shareholders on March 11, 2021, but is still subject to
antitrust and regulatory approval requirements, as well as other customary
closing conditions. As a result of regulatory feedback, we decided to sell our
Oil Price Information Services; Coal, Metals and Mining; and Petrochem Wire
businesses (collectively, "OPIS group") and have entered into an agreement to
sell the OPIS group to News Corp for approximately $1.15 billion in cash. The
sale is expected to be completed at the close of the merger between IHS Markit
and S&P Global. We currently anticipate closing the merger with S&P Global
during the calendar fourth quarter of 2021.

Key performance indicators

We believe that revenue growth, Adjusted EBITDA (both in dollars and margin),
and free cash flow are key financial measures of our success. Adjusted EBITDA
and free cash flow are financial measures that are not prepared in accordance
with U.S. generally accepted accounting principles ("non-GAAP").

Revenue growth. We review year-over-year revenue growth in our segments as a key
measure of our success in addressing customer needs. We measure revenue growth
in terms of organic, acquisitive, and foreign currency impacts. We define these
components as follows:

• Organic – We define organic revenue growth as the total revenue growth from continuing operations for all factors other than acquisitions and foreign currency movements. We drive this type of revenue growth through value realization (pricing), expanding the portfolio share of existing clients through upselling and cross-selling efforts, securing new clients, and selling. new or improved product offerings.

•Acquisitive - We define acquisitive revenue as the revenue generated from
acquired products and services from the date of acquisition to the first
anniversary date of that acquisition. This type of growth comes as a result of
our strategy to purchase, integrate, and leverage the value of assets we
acquire. We also include the impact of divestitures in this metric.

•Foreign currency - We define the foreign currency impact on revenue as the
difference between current revenue at current exchange rates and current revenue
at the corresponding prior period exchange rates. Due to the significance of
revenue transacted in foreign currencies, we believe that it is important to
measure the impact of foreign currency movements on revenue.

In addition to measuring and reporting revenue by segment, we also measure and
report revenue by transaction type. Understanding revenue by transaction type
helps us identify and address broad changes in product mix. We summarize our
transaction type revenue into the following three categories:

•Recurring fixed revenue represents revenue generated from contracts specifying
a relatively fixed fee for services delivered over the life of the contract. The
initial term of these contracts is typically annual (with some longer-term
arrangements) and non-cancellable for the term of the subscription, and may
contain provisions for minimum monthly payments. The fixed fee is typically paid
annually or more periodically in advance. These contracts typically consist of
subscriptions to our various information offerings and software maintenance,
which provide continuous access to our platforms and associated data over the
contract term. Subscription revenue is usually recognized ratably over the
contract term or, for term-based software license arrangements, annually on
renewal.

•Recurring variable revenue represents revenue from contracts that specify a fee
for services, which is typically not fixed. The variable fee is usually paid
monthly in arrears. Recurring variable revenue is based on, among other factors,
the number of trades processed, assets under management, or the number of
positions we value. Most of these contracts have an initial term ranging from
one to five years, with auto-renewal periods thereafter. Recurring variable
revenue was derived entirely from the Financial Services segment for all periods
presented.

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•Non-recurring revenue represents consulting, services, single-document product
sales, perpetual license sales and associated services, conferences and events,
and advertising. Our non-recurring products and services are an important part
of our business because they complement our recurring business in creating
strong and comprehensive customer relationships.

Non-GAAP measures. We use non-GAAP financial measures such as EBITDA, Adjusted
EBITDA, and free cash flow in our operational and financial decision-making. We
believe that such measures allow us to focus on what we deem to be more reliable
indicators of ongoing operating performance (Adjusted EBITDA) and our ability to
generate cash flow from operations (free cash flow). We also believe that
investors may find these non-GAAP financial measures useful for the same
reasons, although we caution readers that non-GAAP financial measures are not a
substitute for U.S. GAAP financial measures or disclosures. None of these
non-GAAP financial measures are recognized terms under U.S. GAAP and do not
purport to be an alternative to net income or operating cash flow as an
indicator of operating performance or any other U.S. GAAP measure. Throughout
this MD&A, we provide reconciliations of these non-GAAP financial measures to
the most directly comparable U.S. GAAP measures.

•EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are used by securities
analysts, investors, and other interested parties to assess our operating
performance. For example, a measure similar to Adjusted EBITDA is required by
the lenders under our revolving credit agreement. We define EBITDA as net income
plus or minus net interest, plus provision for income taxes, depreciation, and
amortization. Our definition of Adjusted EBITDA further excludes primarily
non-cash items and other items that we do not consider to be useful in assessing
our operating performance (e.g., stock-based compensation expense, restructuring
charges, acquisition-related costs and performance compensation, exceptional
litigation, net other gains and losses, pension mark-to-market, settlement, and
other expense, the impact of equity-method investments and noncontrolling
interests, and discontinued operations).

•Free Cash Flow. We define free cash flow as net cash provided by operating
activities less payments for acquisition-related performance compensation and
capital expenditures.

Non-GAAP measures are frequently used by securities analysts, investors, and
other interested parties in their evaluation of companies comparable to us, many
of which present non-GAAP measures when reporting their results. These measures
can be useful in evaluating our performance against our peer companies because
we believe the measures provide users with valuable insight into key components
of U.S. GAAP financial disclosures. For example, a company with higher U.S. GAAP
net income may not be as appealing to investors if its net income is more
heavily comprised of gains on asset sales. Likewise, excluding the effects of
interest income and expense moderates the impact of a company's capital
structure on its performance. However, non-GAAP measures have limitations as an
analytical tool. Because not all companies use identical calculations, our
presentation of non-GAAP financial measures may not be comparable to other
similarly titled measures of other companies. They are not presentations made in
accordance with U.S. GAAP, are not measures of financial condition or liquidity,
and should not be considered as an alternative to profit or loss for the period
determined in accordance with U.S. GAAP or operating cash flows determined in
accordance with U.S. GAAP. As a result, these performance measures should not be
considered in isolation from, or as a substitute analysis for, results of
operations as determined in accordance with U.S. GAAP.

Global operations

Approximately 40 percent of our revenue is transacted outside of the United
States; however, only about 20 percent of our revenue is transacted in
currencies other than the U.S. dollar. As a result, a strengthening U.S. dollar
relative to certain currencies has historically resulted in a negative impact on
our revenue; conversely, a weakening U.S. dollar has historically resulted in a
positive impact on our revenue. Our largest foreign currency exposures for
revenue are the British Pound, Euro, and Canadian Dollar.

Results of operations

Total income

Revenue for the three and nine months ended August 31, 2021, increased 10
percent and 9 percent compared to the three and nine months ended August 31,
2020. The table below displays the percentage change in revenue due to organic,
acquisitive, and foreign currency factors when comparing the three and nine
months ended August 31, 2021 to the three and nine months ended August 31, 2020.
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                                                                                     Change in Total Revenue
                                                                                                                      Foreign
                                                                   Organic                Acquisitive                Currency
Third quarter 2021 vs. Third quarter 2020                                  9  %                       -  %                    1  %
Year-to-date 2021 vs. Year-to-date 2020                                    8  %                       -  %                    1  %



Organic revenue growth for the three and nine months ended August 31, 2021,
compared to the three and nine months ended August 31, 2020, was led by strong
performance in the Transportation segment as the economic environment continues
to recover from the pandemic. Financial Services segment organic revenue growth
continued to be solid. We continue to experience negative organic revenue growth
in the Resources segment, albeit very minimal in the three months ended August
31, 2021, and CMS segment organic revenue growth benefited from Boiler Pressure
Vessel Code ("BPVC") sales associated with the BPVC release in the third quarter
of 2021.

Foreign currency had a slight positive effect on revenue growth for the three
and nine months ended August 31, 2021, compared to the three and nine months
ended August 31, 2020. Due to the extent of our global operations, foreign
currency movements could positively or negatively affect our results in the
future.

Revenue by Segment
                                         Three months ended August 31,               Percentage               Nine months ended August 31,                Percentage
(In millions, except percentages)           2021                  2020                 Change                    2021                  2020                 Change
Revenue:
Financial Services                   $         489.7          $   445.6                       10  %       $       1,467.6          $ 1,325.1                       11  %
Transportation                                 347.4              298.9                       16  %               1,003.2              839.3                       20  %
Resources                                      207.9              208.2                        -  %                 631.4              652.8                       (3) %
CMS                                            135.5              120.5                       12  %                 379.6              363.4                        4  %
Total revenue                        $       1,180.5          $ 1,073.2                       10  %       $       3,481.8          $ 3,180.6                        9  %


The percentage change in revenue for each segment was due to the factors described in the following table.

                                                                                                     Change in revenue
                                                    Third quarter 2021 vs. Third quarter 2020                               Year-to-date 2021 vs. Year-to-date 2020
                                                                                           Foreign                                                                   Foreign
                                            Organic              Acquisitive               Currency                Organic                 Acquisitive               Currency
Financial Services                                8  %                      1  %                   1  %                     9  %                      1  %                   1  %
Transportation                                   15  %                      -  %                   1  %                    18  %                      -  %                   2  %
Resources                                        (1) %                      -  %                   1  %                    (4) %                      -  %                   1  %
CMS                                              11  %                      -  %                   1  %                     4  %                     (1) %                   1  %



Financial Services revenue for the three and nine months ended August 31, 2021,
compared to the three and nine months ended August 31, 2020, experienced
broad-based organic growth. Within our Information product offerings, organic
revenue growth was led by strong demand for our pricing, reference data, and
valuation offerings, as well as continued growth in our equities regulatory
reporting and trading analytics platforms. Within our Solutions product
offerings, organic growth continued to benefit from robust market activity in
equities and loan markets, combined with a broad-based rebound of investment by
our customers in our software solutions and our corporate actions and regulatory
and compliance offerings. Within our Processing product offerings, organic
revenue growth was driven by steady market activity in loan markets versus the
same period last year.

Transportation revenue for the three and nine months ended August 31, 2021,
compared to the three and nine months ended August 31, 2020, experienced very
strong organic revenue growth. The dealer-facing portion of our automotive
offerings experienced strong growth across CARFAX and automotiveMastermind, as
we built back from the effects of the pandemic in 2020. Other parts of our
automotive offerings, such as products supporting OEMs, parts manufacturers, and
banking and insurance clients contributed organic revenue growth, albeit at a
more stable pace. Our automotive product offerings continue to provide the
largest contribution to Transportation revenue, and our diversification in used
and new car product offerings allows for balanced opportunities for growth.

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Resources revenue declined for the three and nine months ended August 31, 2021,
compared to the three and nine months ended August 31, 2020, respectively, with
our Upstream product offerings continuing to be negatively impacted by
constrained industry capital expenditure spend. The Upstream declines have been
partially offset by the return of our CERAWeek energy conference, which we held
virtually in March 2021, and organic growth from our Downstream offerings. We
believe our Resources annual contract value ("ACV"), which represents the
annualized value of recurring revenue contracts, bottomed in the first quarter
of 2021, and we expect growth throughout the rest of 2021. ACV increased $7
million in the quarter and has declined 3 percent on a trailing annual basis.

CMS revenue for the three and nine months ended August 31, 2021, compared to the
three and nine months ended August 31, 2020, increased largely due to sales
associated with the biennial release of the BPVC in the third quarter of 2021
and recurring organic growth.

Revenue by Transaction Type
                                Three months ended August 31,                   Percentage change                   Nine months ended August 31,                    Percentage change
(in millions, except
percentages)                       2021                  2020               Total              Organic                 2021                  2020      
        Total              Organic
Revenue:
Recurring fixed             $        860.0           $   796.2                    8  %               7  %       $      2,521.6           $ 2,355.5                    7  %               6  %
Recurring variable                   170.0               153.0                   11  %               8  %                525.5               457.8                   15  %              12  %
Non-recurring                        150.5               124.0                   21  %              20  %                434.7               367.3                   18  %              17  %
Total revenue               $      1,180.5           $ 1,073.2                   10  %               9  %       $      3,481.8           $ 3,180.6                    9  %               8  %

As a percent of total
revenue:
Recurring fixed                         73   %              74  %                                                           72   %              74  %
Recurring variable                      14   %              14  %                                                           15   %              14  %
Non-recurring                           13   %              12  %                                                           12   %              12  %



Recurring fixed revenue organic growth increased 7 percent and 6 percent for the
three and nine months ended August 31, 2021, respectively, compared to the three
and nine months ended August 31, 2020, largely due to our Transportation and
Financial Services recurring offerings, partially offset by a decline in our
Resources recurring offerings. Recurring variable revenue was composed entirely
of Financial Services revenue, which continued to experience strong performance.

The non-recurring organic revenue increases for the three and nine months ended
August 31, 2021, compared to the three and nine months ended August 31, 2020,
were primarily driven by continuing strength in our Financial Services Solutions
offerings, more normal activity in our Transportation offerings, the return of
our annual conference events, and the BPVC release. These increases were
partially offset by lower transactional content purchases for Resources Upstream
offerings for the nine months ended August 31, 2021.

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Operating Expenses

The following table shows our operating expenses and the associated percentages
of revenue.
                                       Three months ended August 31,             Percentage               Nine months ended August 31,               Percentage
(In millions, except percentages)         2021                 2020                Change                    2021                  2020                Change
Operating expenses:
Cost of revenue                     $       425.7           $  385.6                      10  %       $      1,266.7           $ 1,189.7                       6  %
SG&A expense                                285.6              258.7                      10  %                871.1               833.0                       5  %
Total cost of revenue and SG&A
expense                             $       711.3           $  644.3                      10  %       $      2,137.8           $ 2,022.7                

6%

Depreciation and amortization
expense                             $       145.1           $  147.6                      (2) %       $        447.2           $   442.3                       1  %

As a percent of revenue:
Total cost of revenue and SG&A
expense                                        60   %             60  %                                           61   %              64  %
Depreciation and amortization
expense                                        12   %             14  %                                           13   %              14  %


SG&A Cost of Revenue and Fees

In managing our business, we evaluate our costs by type (e.g., salaries and
benefits, facilities, IT) rather than by income statement classification. The
increases in cost of revenue and SG&A expense were largely due to the
normalization of our business activities in 2021, compared to the strict cost
control measures we employed in 2020 at the onset of the COVID-19 pandemic.

Within our cost of revenue and SG&A expense, stock-based compensation expense
decreased by approximately $3 million and $41 million for the three and nine
months ended August 31, 2021, respectively, compared to the three and nine
months ended August 31, 2020, which was largely due to lower employer tax
impacts associated with the lower level of stock option exercises in 2021.

Depreciation and amortization

For the three and nine months ended August 31, 2021, compared to the three and
nine months ended August 31, 2020, depreciation and amortization expense changed
nominally, but decreased as a percentage of revenue due to our strong revenue
growth.

Restructuring and depreciation charges

Please refer to Note 8 to the Condensed Consolidated Financial Statements in
this Quarterly Report on Form 10-Q for a discussion of costs associated with our
cost-reduction initiatives. During the three and nine months ended August 31,
2021, we recorded approximately $2.5 million and $11.2 million, respectively, of
direct and incremental costs associated with restructuring and impairment
charges, compared to $12.1 million and $97.9 million, respectively, of
restructuring and impairment charges for the three and nine months ended August
31, 2020. The 2020 charges included employee severance and the abandonment or
partial abandonment of various office locations around the world.

Costs related to the acquisition

Please refer to Note 9 to the Condensed Consolidated Financial Statements in
this Quarterly Report on Form 10-Q for a discussion of costs associated with our
integration and other acquisition-related activities. During the three and nine
months ended August 31, 2021, we recorded approximately $24.4 million and $70.8
million, respectively, of direct and incremental costs associated with
acquisition and divestiture activities.

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Other Expense (Income), Net

Other income for the nine months ended August 31, 2020 includes an approximate
$372 million gain on sale related to the A&D business line divestiture in
December 2019. Please refer to Note 2 to the Condensed Consolidated Financial
Statements in this Quarterly Report on Form 10-Q for additional discussion about
the divestiture.

Segment Adjusted EBITDA
                                         Three months ended August 31,             Percentage               Nine months ended August 31,               Percentage
(In millions, except percentages)           2021                 2020                Change                    2021                  2020                Change
Adjusted EBITDA:
Financial Services                    $       240.7           $  225.9                       7  %       $        711.4           $   662.6                       7  %
Transportation                                167.1              153.6                       9  %                484.5               373.2                      30  %
Resources                                      83.6               86.4                      (3) %                249.2               272.8                      (9) %
CMS                                            37.5               31.0                      21  %                 92.3                95.4                      (3) %
Shared services                               (13.3)             (10.7)                                          (37.6)              (32.2)
Total Adjusted EBITDA                 $       515.6           $  486.2                       6  %       $      1,499.8           $ 1,371.8                       9  %

As a percent of segment revenue:
Financial Services                               49   %             51  %                                           48   %              50  %
Transportation                                   48   %             51  %                                           48   %              44  %
Resources                                        40   %             41  %                                           39   %              42  %
CMS                                              28   %             26  %                                           24   %              26  %



For the three and nine months ended August 31, 2021, compared to the three and
nine months ended August 31, 2020, Adjusted EBITDA increased primarily due to
strong Transportation revenue performance and solid Financial Services revenue
growth, as well as our continued cost containment efforts in the current
COVID-19 pandemic environment, although all segment margins have been impacted
as certain temporary cost containment measures have ended. We continue to focus
our efforts on organic revenue growth and cost management to improve overall
margins. Financial Services segment Adjusted EBITDA continued to increase due to
organic revenue growth, although the associated margin declined because of
increased investment in segment product offerings. The increase in Adjusted
EBITDA for the Transportation segment was primarily due to organic revenue
growth, which improved substantially compared to the prior year, when it was
negatively impacted by the pandemic. Resources Adjusted EBITDA and associated
margin decreased due to the organic revenue decline as a result of the COVID-19
pandemic, and CMS Adjusted EBITDA and margin increased for the three months
ended August 31, 2021 as a result of in-quarter organic revenue growth and BPVC
sales, while Adjusted EBITDA and margin for the nine months ended August 31,
2021 was negatively impacted by mix shift.

Provision for income taxes

Our effective tax rate for the three and nine months ended August 31, 2021 was
30 percent and 25 percent, compared to 20 percent and 6 percent for the three
and nine months ended August 31, 2020. The higher 2021 tax rates are primarily
due to the change in U.K. tax rates described below, as well as U.S. minimum tax
impacts of approximately $16 million and $50 million for the three and nine
months ended August 31, 2021, respectively. The 2021 tax rates are partially
reduced by tax benefits associated with R&D tax credits of approximately $19
million and $19 million, and excess tax benefits on stock-based compensation of
approximately $4 million and $28 million, for the same respective periods.

On June 10, 2021, the U.K. enacted an increase in corporation tax rate from the
current 19 percent to 25 percent, effective from April 1, 2023. Due to our
fiscal year end, the higher tax rate will be phased in, resulting in a U.K.
statutory rate of 23 percent for our fiscal year ending November 30, 2023 and 25
percent for subsequent fiscal years. Accounting Standards Codification ("ASC")
Topic 740, "Income Taxes," requires that we remeasure our deferred tax assets
and liabilities and recognize the effect of the tax law change in the period of
enactment. We recorded a tax expense of approximately $26 million for the three
and nine months ended August 31, 2021 to remeasure our U.K. deferred taxes for
the tax rate change.

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The varying 2020 rates are primarily due to excess tax benefits on stock-based
compensation of approximately $13 million and $89 million and the tax-efficient
divestiture of the A&D business line (U.K. share sales are exempt from tax) of
approximately $10 million and $48 million, respectively, partially offset by
U.S. tax reform impacts of approximately $6 million and $38 million and a 2020
U.K. tax rate change that resulted in incremental tax of approximately
$23 million for the three and nine months ended August 31, 2020.

EBITDA and Adjusted EBITDA (non-GAAP measures)

The following table shows the reconciliations of our net income to EBITDA and Adjusted EBITDA for the three and nine months ended. August 31, 2021 and
August 31, 2020.

                                                Three months ended August 31,             Percentage               Nine months ended August 31,       

Percentage

(In millions, except percentages)                  2021                 2020                Change                    2021                  2020                Change
Net income attributable to IHS Markit Ltd.   $       161.3           $  162.9                      (1) %       $        469.6           $   719.6                     (35) %
Interest income                                       (0.1)              (0.2)                                           (0.2)               (0.8)
Interest expense                                      54.8               57.7                                           165.7               178.9
Provision for income taxes                            71.7               39.9                                           159.6                48.9
Depreciation                                          54.8               54.5                                           170.2               162.0
Amortization                                          90.3               93.1                                           277.0               280.3
EBITDA                                       $       432.8           $  407.9                       6  %       $      1,241.9           $ 1,388.9                     (11) %
Stock-based compensation expense                      52.7               56.0                                           168.4               209.8
Restructuring and impairment charges                   2.5               12.1                                            11.2                97.9
Acquisition-related costs                             20.7                3.8                                            59.3                 6.6
Acquisition-related performance compensation           3.7                4.9                                            11.5                 9.6

Loss (gain) on sale of assets                            -                0.4                                            (0.2)             (370.5)
Pension mark-to-market and settlement
expense                                                  -                  -                                               -                30.0
Adjusted EBITDA impacts from equity-method
investments and noncontrolling interest                3.2                1.1                                             7.7                (0.5)

Adjusted EBITDA                              $       515.6           $  486.2                       6  %       $      1,499.8           $ 1,371.8                       9  %
Adjusted EBITDA as a percentage of revenue            43.7   %           45.3  %                                         43.1   %            43.1  %



Our Adjusted EBITDA performance for the three and nine months ended August 31,
2021, compared to the three and nine months ended August 31, 2020, increased
primarily because of organic revenue growth without proportionate growth in
expense as we continue to focus on cost management activities as a result of
COVID-19 and the current economic environment. Adjusted EBITDA margin decreased
slightly for the three months ended August 31, 2021, compared to the prior year
period, as our business activities began normalizing from the effects of the
pandemic and certain temporary cost containment measures have ended, as well as
a slight shift in product offering mix. Adjusted EBITDA margin for the nine
months ended August 31, 2021, compared to the prior year period, is largely
unchanged.

Financial Condition
(In millions, except           As of August 31,        As of November 30,
percentages)                         2021                     2020                 Dollar change               Percentage change
Accounts receivable, net      $         857.8          $          891.7          $        (33.9)                                 (4) %
Accrued compensation          $         188.6          $          206.1          $        (17.5)                                 (8) %
Deferred revenue              $         939.7          $          886.2          $         53.5                                   6  %



The decrease in accounts receivable was primarily due to the reclassification of
MarkitSERV and OPIS group accounts receivable to assets held for sale, while the
deferred revenue increase was primarily due to year-over-year organic revenue
growth. Accrued compensation decreased primarily due to the 2020 bonus payout
made in the first quarter of 2021, partially offset by the current year accrual.

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Liquidity and Capital Resources

As of August 31, 2021, we had cash and cash equivalents of $337.9 million. Our
principal sources of liquidity include cash generated by operating activities,
cash and cash equivalents on the balance sheet, and amounts available under a
revolving credit facility. We had approximately $4.88 billion of debt as of
August 31, 2021, consisting primarily of $235.0 million of revolving facility
debt and $4.67 billion of senior notes. As of August 31, 2021, we had
approximately $1.01 billion available under our revolving credit facility.
Subject to certain exceptions, the merger agreement with S&P Global restricts
our ability to borrow more than $500 million in the aggregate without the prior
consent of S&P Global. We do not believe this restriction will impact our
liquidity to meet our ongoing working capital and capital expenditure needs.

Our interest expense for the three and nine months ended August 31, 2021,
compared to the three and nine months ended August 31, 2020, decreased primarily
because of lower floating interest rates in 2021 compared to the prior year, as
well as decreased borrowings on our revolving facility debt.

Our Board of Directors approved a quarterly cash dividend of $0.20 per share in
each of the first three quarters of 2021, which resulted in approximately $238.8
million of cash payouts in the nine months ended August 31, 2021. Our Board of
Directors approved quarterly cash dividends of $0.17 per share in each of the
first three quarters of 2020, which resulted in approximately $203.0 million of
cash payouts during 2020.

Our Board of Directors has authorized a share repurchase program of up to $2.5
billion of IHS Markit common shares through November 30, 2021, to be funded
using our existing cash, cash equivalents, marketable securities, and future
cash flows, or through the incurrence of short- or long-term indebtedness, at
management's discretion. This repurchase program does not obligate us to
repurchase any set dollar amount or number of shares and may be modified,
suspended, or terminated at any time without prior notice. Under this program,
we are authorized to repurchase our common shares on the open market from time
to time, in privately negotiated transactions, or through accelerated share
repurchase agreements, subject to availability of common shares, price, market
conditions, alternative uses of capital, and applicable regulatory requirements,
at management's discretion. The merger agreement with S&P Global restricts our
ability to purchase our shares and therefore our share repurchase program is
currently suspended through November 2021, other than for the repurchase of
shares associated with tax withholding requirements for share-based
compensation.

Our Board of Directors has separately authorized, subject to applicable
regulatory requirements, the repurchase of our common shares surrendered by
employees in an amount equal to the exercise price, if applicable, and statutory
tax liability associated with the vesting of their equity awards, for which we
pay the statutory tax on behalf of the employee and forgo receipt of the
exercise price of the award from the employee, if applicable. Such repurchases
have been authorized in addition to the share repurchase program described
above.

Based on our cash, debt, and cash flow positions, we believe that we will have
sufficient liquidity to meet our ongoing working capital and capital expenditure
needs. Our future capital requirements will depend on many factors, including
the number and magnitude of future acquisitions, amount of share repurchases and
dividends, the need for additional facilities or facility improvements, the
timing and extent of spending to support product development efforts,
information technology infrastructure investments, investments in our internal
business applications, and the continued market acceptance of our offerings.
Given current market conditions as a result of COVID-19, we are focused on
maintaining higher levels of liquidity and capital structure flexibility. We
maintain a solid balance sheet, investor grade rating, a well-positioned debt
maturity ladder, and a strong diversified bank group. We expect to continue to
operate within our capital policy target range of 2.0x-3.0x gross leverage.

Cash flow

                                                 Nine months ended August 

31,

(In millions, except percentages)                  2021                  2020              Dollar change               Percentage change

Net cash flow generated by operating activities $ 1,037.2 $ 800.5 $ 236.7

                                  30  %
Net cash (used in) provided by investing
activities                                   $       (445.0)         $    255.6          $       (700.6)                               (274) %

Net cash used in financing activities $ (381.0) $ (1,027.0) $ 646.0

                                 (63) %



The increase in net cash provided by operating activities was primarily due to
the negative impact of 2020 cash payouts for acquisition-related performance
compensation associated with the aM acquisition described in Note 2, pension
contributions associated with the distribution and transfer of pension
liabilities, payroll tax payments on stock option exercises, and tax payments
associated with divestiture activities. Improved working capital in 2021 also
contributed to the growth in net cash provided by our operating activities.
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Contents

The decrease in net cash provided by investing activities was primarily due to
the sale of the A&D business line in the first quarter of 2020, as well as the
current year acquisition of Cappitech and investment in Gen II.

The decrease in net cash used in financing activities is mainly due to the decrease in share buybacks in 2021, compared to 2020, of $ 750 million, partially offset by higher proceeds from the exercise of stock options in 2020 and higher dividend payouts in 2021.

Free cash flow (non-GAAP measure)

The following table reconciles our measure of non-GAAP free cash flow to the free cash flow generated by operating activities.

                                                          Nine months ended August 31,
(In millions, except percentages)                           2021                   2020              Dollar change              Percentage change
Net cash provided by operating activities            $        1,037.2          $    800.5
Payments for acquisition-related performance
compensation                                                        -       

75.9

Capital expenditures on property and equipment                 (220.0)             (211.8)
Free cash flow                                       $          817.2          $    664.6          $        152.6                                 23  %



The increase in free cash flow was primarily due to increased operating
performance and working capital balances, as well as the absence of one-time
pension and tax payments that were paid in the prior year. The payments for
acquisition-related performance compensation are associated with the exercise of
put provisions by aM equity interest holders, as further described in Note 2.
Our free cash flow has historically been positive due to the robust cash
generation attributes of our business model, and we expect that it will continue
to be a significant source of funding for our business strategy of growth
through organic and acquisitive means.

Credit facility and other debts

Please refer to Note 6 to the Condensed Consolidated Financial Statements in
this Quarterly Report on Form 10-Q for a discussion of the current status of our
debt arrangements.

Share Repurchase Programs

Please refer to Note 14 to the condensed consolidated financial statements of this Quarterly Report on Form 10-Q and Part II, Section 2 of this Quarterly Report on Form 10-Q for a discussion of our share repurchase programs.

Off-balance sheet transactions

We do not have any off-balance sheet transactions.

Critical accounting policies

Our management makes a number of significant estimates, assumptions, and
judgments in the preparation of our financial statements. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations-Critical Accounting Policies and Estimates" in our 2020 Annual Report
on Form 10-K for a discussion of the estimates and judgments necessary in our
accounting for revenue recognition, business combinations, goodwill and other
intangible assets, income taxes, and stock-based compensation.

Recent accounting positions

Please refer to Note 1 to the condensed consolidated financial statements to this Quarterly Report on Form 10-Q for a discussion of recent accounting statements and their expected effect on our business.

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