Ewout Steenbergen
Executive Vice President and Chief Financial Officer at S&P Global
Thank you, Doug, and welcome to all of you on the call. Let me start with our fourth quarter financial results. Revenue increased 12%, adjusted corporate unallocated expense increased 38%, primarily due to increased incentive compensation, higher professional fees, and the timing of contributions to the S&P Global Foundation. Adjusted total expenses increased 9%, and I'll come back to this on the next slide.
Adjusted operating profit margin increased 120 basis points. Interest expense decreased 22%, primarily due to a reduction in FIN 48 interest expense accruals, and adjusted diluted EPS increased 16%. Total adjusted expenses for the full year increased 7%. For the fourth quarter, they increased to 9%. The fourth quarter increase was primarily due to elevated variable expenses, including incentives, commissions, and royalties as a result of strong 2021 financial performance. Severance charges related to management changes in the Indices business during the quarter, increased investments in growth initiatives, increased professional fees, and the resumption of T&E spending.
During the fourth quarter, the non-GAAP adjustments totaled to a net pretax loss of $131 million. They included $21 million for merger transaction cost, primarily legal fees, $42 million for merger integration cost, primarily consulting fees, retention bonuses, branding and technology integration costs. $51 million for merger costs to achieve, which will drive synergy benefits, they include lease impairments and restructuring charges. $4 million for acquisition and divestiture-related expenses. $8 million in gains from real estate sales, and $21 million in deal-related amortization.
This quarter, all four segments delivered increased revenue with Indices leading the way with an 18% increase. All four segments also delivered adjusted operating profit growth with Ratings leading the way with an 18% increase. Quarterly margins were mixed, but more importantly, all four segments reported a gain in adjusted operating profit margin for the year.
Each year, on our fourth quarter earnings call, we share the changes in our headcount. In 2021, headcount decreased 1% primarily for two reasons. The first is operational efficiencies. Much of the operational efficiencies were from automation. In fact, our people created 225 bots in 2021 with Market Intelligence leading the way with 167 bots. Cognitive automation and RPA generated over 600,000 hours of savings in 2021.
The second is pre-realized merger synergies. Because of the pending merger, it didn't make sense to backfill many positions when people left the Company in 2021. We estimate that there were about 150 S&P Global positions left unfilled, representing pre-realized synergies of approximately $25 million by year-end 2021.
This year, with the formation of Sustainable1, we added this as a new category. Many of the people in Sustainable1 were previously reported in other categories.
Platts was the area with the largest headcount increase at 11%, due to investments in several growth projects. Market Intelligence had the largest decrease at 6%, largely due to automation efficiencies and realignment to Sustainable1.
Last year, we shared this slide and estimated that we would invest $100 million on growth initiatives in 2021. We ended up investing $80 million. The primary reasons for the difference were the competing priorities due to the merger and the competitive labor market. We will share our 2022 investment spending plans after the merger is completed.
On our third quarter 2020 earnings call, we introduced a new $120 million productivity program to be completed over a two to three-year period. I'm pleased to report that only after 18 months, we have already largely completed the program. There are a few small procurement projects that are awaiting the close of the merger to take advantage of the increased scale of the combined Company. All our productivity efforts will now be focused on achieving the merger synergies.
Now turning to the balance sheet. Our balance sheet continues to be very strong with low leverage and ample liquidity. We have cash and cash equivalents of $6.5 billion and debt of $4.1 billion. Our adjusted gross debt to adjusted EBITDA improved since the end of last year to 1.8 times.
Free cash flow excluding certain items, was $3.5 billion in 2021, an increase of $217 million or 7% over the prior-year period. Because the share repurchase program was suspended due to the pending merger with IHS Markit, we only returned 21% of free cash flow to shareholders in 2021. After the merger is completed, we expect to significantly ramp up share repurchases.
Now let's turn to the division results. Starting with S&P Dow Jones Indices, the segment delivered 18% revenue growth, primarily due to gains in AUM linked to our indices and increased exchange-rated derivative activity. Our asset-linked revenue also included the benefit of a customer underreporting true-up.
In the fourth quarter, we reported a 28% increase in adjusted expenses, primarily due to severance, increased incentive compensation, commissions, and royalties; a 13% increase in adjusted segment operating profit and an adjusted segment operating profit margin of 65.7%, a decrease of 280 basis points. On a trailing four quarter basis, the adjusted segment operating profit margin increased 80 basis points to 69.9%.
S&P Dow Jones Indices delivered growth across all revenue channels this quarter. Asset-linked fees increased 18% with very strong gains in ETFs and mutual funds. Exchange-traded derivative revenue increased 30%. Data and custom subscriptions increased 10%. Activity at the CBOE increased in the fourth quarter with S&P 500 Index options activity increasing 47% and fixed futures and options activity increasing 18%. CME equity complex volume increased 15% with particular strength in E-mini S&P 500 options.
Ratings reported revenue increased 12%. Adjusted expenses increased 5%, primarily due to increased incentive compensation, wages and outside services. This resulted in an 18% increase in adjusted segment operating profit and a 300 basis point increase in adjusted segment operating profit margin.
On a trailing four-quarter basis, adjusted segment operating profit margin increased 180 basis points to 64.2%. Non-transaction revenue increased 7%, primarily due to fees associated with CRISIL, new entity credit ratings, and surveillance, partly offset by lower Rating Evaluation Service. As an aside, we added over 1,000 new entity credit ratings in 2021.
Transaction revenue increased primarily due to strength in investment-grade corporate bonds, bank loans, and structured products.
This slide depicts Ratings revenue by its end markets. The largest contributor to the increase in Ratings revenue was the 14% increase in corporates. In addition, financial services revenue increased 5%, structured finance increased 32%, governments decreased 11%, and the CRISIL and other category increased 14%.
On the right side of this slide, you can see the changes in revenue within structured products. The largest change was in CLOs, which increased 43%.
Turning to Platts. Revenue increased 12% or $26 million, including a $4 million commercial settlement. Approximately 14% of this growth was from new products. Core subscriptions increased 10%, and Global Trading Services increased 13%. The gains in GTS revenue were mainly from higher petroleum and iron ore volumes.
Adjusted expenses increased 16% primarily due to increased commissions, growth investments, cost of sales and incentives. Adjusted segment operating profit margin decreased 160 basis points to 50.1%. The trailing four-quarter adjusted segment operating profit margin increased 40 basis points to 55.1%.
Platts delivered excellent revenue growth in every category with notable increases in natural gas, power and renewables, and petrochemicals.
Market Intelligence delivered revenue growth of 8% or $42 million, with 34% of the growth coming from new products. Usage of our key market platforms increased 4% year-over-year, while year-ending active users increased 13% to 299,000 users.
Adjusted expenses increased 5% due to increased cloud hosting initiatives, royalties, incentives and commissions. Adjusted segment operating profit increased 15%, and the adjusted segment operating profit margin increased 200 basis points to 32.7%. On a trailing four-quarter basis, adjusted segment operating profit margin increased 190 basis points to 34.3%.
Looking across the Market Intelligence components. Desktop revenue grew 6%. During 2021, Market Intelligence rebranded its premier platform offering as Capital IQ Pro. The Capital IQ Pro platform combines the best of Capital IQ and SNL desktops with broad public fundamentals and deep industry data. In addition, the platform offers greater visibility into private companies and private markets as well as regulatory, supply chain, climate data and analytics, and ESG scores.
Data Management Solutions revenue grew 11%, and Credit Risk Solutions revenue grew 8%. Due to the pending merger, the Company will not provide guidance for 2022 at this time but will provide 2022 guidance for the combined company after the merger is completed. We continue to expect the merger to close this quarter.
In addition to the slides that we have reviewed on this call, there are additional slides in an appendix that can be downloaded from the Investor Presentations section of the Investor Relations website.
In conclusion, 2021 was a noteworthy year for S&P Global. We delivered strong financial results, realized significant growth, made considerable progress on merger preparation and synergy validation, and launched multiple innovative new products across the Company, including our Sustainable1 product offerings.
And with that, let me turn the call back over to Chip for your questions.
