Ewout Steenbergen
Executive Vice President, Chief Financial Officer at S&P Global
Thank you, Doug. As a reminder, the financial metrics that we will be discussing today refer to non-GAAP adjusted metrics for the current period and for our 2023 adjusted guidance and non-GAAP pro forma adjusted metrics in the year-ago period, unless explicitly called out as GAAP.
For the first quarter of 2023, adjusted earnings per share increased 9% year-over-year. This growth was driven by a combination of 3% revenue growth, 100 basis points of operating margin expansion and an 8% reduction in the fully diluted share count. This is an excellent example of strong execution and prudent capital management combining to create long-term shareholder value and we're pleased with the start to 2023.
Revenue growth in the quarter was driven by growth in Market Intelligence and strong performance in Commodity Insights and Mobility. This was offset by a lower issuance environment compared to the first quarter of last year, though issuance improved sequentially from the fourth quarter. We'll walk through the divisions in more detail in a moment.
Adjusted expenses were up only 1% year-over-year, driven by cost synergies and other operational efficiencies. Adjusted operating profit increased 5% year-over-year, as margins expanded to 46.2%. I'm pleased to report a sustainability and energy transition revenue increase of 27% to $69 million in the quarter, driven by strong demand in sustainability products in MI's climate and physical risk products and CI's energy transition products.
Private market solutions revenue remained at the $100 million level as growth in products from Market Intelligence were offset by declines in Ratings due to the timing of private market issuance. We still expect growth in private markets this year to be in line with the targets laid out at Investor Day. Vitality revenue, which is the revenue generated by innovation through new or enhanced products from across the organization, was $326 million in the first quarter, representing a 17% increase compared to prior year.
Synergies are a key contributor to expense savings and margin expansion this quarter. In the first quarter of 2023, we recognized $131 million of expense savings due to cost synergies and our annualized run rate exiting the quarter was $552 million. And we continue to expect our year-end run rate to be approximately $600 million. We continue to make progress on our revenue synergies as well, with $17 million in synergies achieved in the first quarter and an annualized run rate of $52 million.
Turning to strategic capital allocation, we remain committed to disciplined capital management, including investing for long-term growth and returning excess capital to shareholders. We executed a $500 million Accelerated Share Repurchase program or ASR in the first quarter and we plan to launch a new $1 billion ASR in the coming weeks, leveraging the proceeds of the Engineering Solutions divestiture and cash on hand.
We have been able to take advantage of market dislocations over the last year to repurchase shares at attractive prices, which allowed us to reduce our fully diluted share count by 8% over that time period. Since the close of the merger last year, we have been able to repurchase more than 31% of the shares issued to complete the merger with IHS Markit. We continue to invest in organic growth as well and remain on track to invest $150 million in our 2023 strategic projects.
Now let's turn to the division results. Market Intelligence revenue increased 5%, driven by strong growth in data and advisory solutions and credit and risk solutions and favorable commercial conditions overall. That's improved 3.5% in the first quarter, driven in part by strong demand for new content and capabilities supported by the merger, though growth was tempered somewhat by a continuation of the modest softness in financial services that we called out last quarter.
Renewal rates remain strong in the mid-to-high 90s. Data and advisory solutions and enterprise solutions both benefited from solid growth and subscription-based offerings. Credit and risk solutions benefited from strong new sales for Ratings Express and Ratings Direct products. Adjusted expenses were roughly flat year-over-year as increases in compensation expense, cloud spent and T&E were offset by cost synergies and lower occupancy costs. Operating profit increased 16% and operating margin increased 300 basis points to 32%.
Looking at the remainder of 2023, we know the comparisons will get easier as we progress through the year and we continue to expect improvements in those products within enterprise solutions that depend on capital markets activity. We also expect revenue synergies to begin positively impacting results in the back half of the year. We continue to recognize significant cost synergies as well and remain confident in our ability to deliver accelerating growth and full year margin expansion in Market Intelligence. While we are not changing the formal guidance ranges for revenue or adjusted operating margin, we do see increased uncertainty in the markets and within the banking sector specifically. As such, we may come in closer to the low end of these ranges.
Now turning to Ratings. Despite being down year-over-year, we're encouraged by the improvement we have seen in the issuance environment relative to last quarter. Revenue decreased 5% year-over-year. However, this is the second quarter in a row of sequential improvement in transaction revenue as investment-grade and high yield showed pockets of strength in the quarter, particularly in January and February.
Non-transaction revenue declined 4% and 2% on a constant currency basis, primarily due to declines in initial issuer credit rating and rating evaluation surface, partially offset by growth in CRISIL. Adjusted expenses decreased 3%, driven by lower occupancy costs and outside surfaces expenses, partially offset by higher compensation expense. This resulted in a 6% decrease in operating profit and an 80 basis points decrease in operating margin to 58.3%.
We raised our billed issuance assumption for 2023 and expect issuance to increase in the range of 3% to 7%, reflecting the stronger issuance trends in the first quarter. We expect to see an improvement in full year transaction revenues compared to our initial expectations, though we expect the upside to be offset by slightly lower contribution from non-transaction due to ICR and RES headwinds.
And now turning to Commodity Insights, revenue growth accelerated to 9% despite a very high comparison last year. Excluding the impact of the CERAWeek conference, revenue growth for Commodity Insights would have been approximately 6% year-over-year. Growth was partially offset by the loss of revenue related to Russia, which contributed $11 million in the first quarter of 2022.
Advisory and transactional services increased 28% in the quarter, primarily due to CERAWeek official record attendance coupled with strong sponsorship sales. Upstream data and insights declined approximately 1% year-over-year, and subscription growth was offset by reduced one-time sales relative to last year. As we noted last quarter, we continue to expect low single-digit revenue growth in upstream for the full year.
Price assessments and energy resources data and insights, both grew 8% compared to prior year, driven by strong performance in crude oil products and continued commercial momentum. Adjusted expenses increased 3% primarily due to higher event costs driven by conferences, T&E and compensation, partially offset by realization of cost synergies and lower consulting spends. Excluding the impact of CERAWeek, expense growth would have been only 1%.
Operating profit for CI increased a very strong 17% and operating margin improved 310 basis points to 46.1%. We expect Commodity Insights to continue to benefit from strong demand in price assessments and other subscription offerings, as well as the continuation of secular trends around energy transition and sustainability. As we saw from the incredible growth at CERAWeek, there remains a remarkable opportunity to further our leadership in the energy sector and in commodities more broadly. And we will continue to invest to capture that opportunity and drive multiyear profitable growth.
In our Mobility division, revenue increased 10% year-over-year, driven by continued new business growth in CARFAX, strong recall activity and growth within planning solutions products. The MarketScan acquisition contributed approximately 1 point of revenue growth in the quarter and is recognized in the dealer category. Dealer revenue increased 10% year-over-year, driven by price increases and new store growth, particularly in CARFAX for Life and used car subscription products. Manufacturing grew 11% year-over-year, driven by our planning products and recall activity. Financials and other also increased 11% as the business line continues to benefit from strong underwriting volumes and a favorable pricing environment.
Adjusted expenses increased 8% due to year-over-year increases in headcount, investment in software, and additional cloud usage, partially offset by lower incentive compensation expense. This resulted in a 14% increase in adjusted operating profit and 130 basis points operating margin expansion year-over-year. As we expected, we've seen expense growth rates moderate from fourth quarter, and we continue to expect margin expansion this year. We expect the MarketScan acquisition to contribute approximately 150 basis points of revenue growth in the full year, though we expect it to be modestly dilutive to adjusted margins in 2023. All of this is reflected in our updated guidance.
Turning to S&P Dow Jones Indices, revenue increased 1%, primarily due to strong growth in exchange-traded derivative volumes, offset by declines in asset-linked fees. Asset-linked fees were down 6%, primarily driven by lower AUM in ETFs, which decreased 4% from the year-ago period as price depreciation more than offset slightly positive year-over-year net inflows.
Exchange-traded derivatives revenue increased 30% on increased trading volumes across key contracts, including an approximately 59% increase in S&P 500 index options volume. Data and custom subscriptions was flat on the quarter, though excluding the impact of some minor reclassification of revenue as outlined on the slide, growth would have been 5% year-over-year, driven by strong demand for end-of-day and real-time data feeds.
During the quarter, expenses decreased 7% year-over-year, driven by realization of cost synergies, lower bad debt expense and timing of discretionary spends, which was partially offset by continued strategic investments. Operating profit in indices increased 4% and operating margin improved 250 basis points to 71.8%.
As reflected in today's results, indices will continue to face headwinds in asset-linked fees as the year-over-year depreciation in underlying asset prices impacts the division on a lagged basis. Exchange-traded derivative revenue was well above our earlier expectations, though these volumes can be volatile and difficult to predict. We continue to invest to achieve the 2025 and 2026 target for 10%-plus growth in indices. And we expect those investments as well as the timing of certain expenses to drive margins for the full year back within the guidance range.
In Engineering Solutions, we saw 2% revenue growth and 4% adjusted expense growth. As noted in our materials, we now expect to close the divestiture of Engineering Solutions next week. We're updating our guidance to reflect the accelerated timeline relative to our initial expectation for a June 30 close. I've had the pleasure of overseeing the Engineering Solutions division since the merger closed, and I would like to thank them for the incredible dedication and professionalism the teams have consistently demonstrated. We're confident that they will be a strong addition to KKR and wish them all the best.
Now let's move to the latest views from our economists who are forecasting global GDP growth of 2.7% in 2023. While GDP growth is expected to be positive, our guidance still assumes a mild recession in the middle of the year and a modest recovery as we exit 2023. We continue to expect inflation above the target rates of central banks and energy prices like crude oil to remain above the historical averages as well. This creates favorable commercial conditions for many of our businesses, though it also contributes to volatility in the issuance environment, as we have been discussing over the last year.
As we consider how all of this will ultimately impact our financial performance in 2023, let's turn to our guidance. Now that we have some certainty around the timing of the Engineering Solutions divestiture, we can introduce initial GAAP guidance. Adjusted guidance for the company reflects the first quarter results as well as the updated view on the macroeconomic environment, issuance trends, equity valuations and other key drivers, as previously outlined.
Our full year guidance now assumes that strong revenue performance in the first quarter is offset by a lower revenue contribution from Engineering Solutions due to the accelerated timing of the divestiture. The only change to our consolidated full year adjusted guidance is in adjusted free cash flow, which has been reduced by approximately $100 million, primarily driven up by updated assumptions around cash taxes related to the R&D tax credit.
We have provided granular guidance on corporate unallocated expense, due related amortization, interest income and tax rate in the supplemental deck posted to our IR site, though these are unchanged from prior guidance. The final slides in this deck illustrate our revenue and margin guidance by division, reflecting the drivers that I mentioned previously.
In conclusion, despite the continued uncertainty in the macro environment, we've had a solid start to 2023 and remain confident about the outlook for the rest of the year. Before we open up for Q&A, I want to reiterate how excited we are as a management team when we consider the incredible opportunities we have to drive growth and innovation and the secular trends that continue to benefit our business from key investment areas like energy transition and private markets through the inspiring breakthroughs that our Kensho team has driven in artificial intelligence and large language models.
It's a privilege to discuss the many ways we plan to create long-term shareholder value in the coming years. It's also a privilege to share this stage with leaders like Saugata Saha, President of Commodity Insights; and Dan Draper, CEO of S&P Dow Jones Indices, both of whom we would like to invite to join us for Q&A.
And with that, we'll turn the call back over to Mark for your questions.
