Ewout Steenbergen
Executive Vice President and Chief Financial Officer at S&P Global
Thank you, Doug. I want to start by emphasizing the successful execution we saw this quarter. With five of our six divisions posting pro forma revenue growth, it's already clear that we are more resilient, both operationally and financially as a combined company. With our larger scale and more diversified revenue streams, we're more insulated to volatility in the debt issuance market. As such, we were able to grow pro forma revenue and adjusted EPS year-over-year even during a period of sharp decreases in issuance. Doug highlighted the headline financial results. I will take a moment to cover a few other items. But as a reminder, when we discuss financial results from operations and cash flows, we're discussing those results on an adjusted pro forma basis as if S&P Global and IHS Markit were combined for the entirety of all periods presented, unless explicitly called out as GAAP.
Adjusted results also exclude the contribution from divested businesses in all periods. We have also made minor refinements to the recast pro forma financials for all four quarters of 2021, which can be found in the amended 8-K filed today. Adjusted corporate unallocated expenses declined from a year ago, caused by a combination of reduced incentive and fringe costs as well as the release of certain benefits accruals. Our net interest expense increased 5% as we increased gross debt, partially offset by lower average rates due to refinancings. The decrease in adjusted effective tax rate was primarily due to tax deductions related to stock-based compensation and merger-related optimization of capital and liquidity structure. As we introduced last year, we'll continue to disclose these three categories of non-GAAP adjustments to provide insights into the type of expenses that we are incurring related to the merger and the synergies we have discussed.
Transaction costs in the quarter were $281 million. These are costs related to completing the merger. They include legal fees, investment banking fees and filing fees. Integration costs in the quarter were $58 million. These are costs to operationalize the integration. They include consulting, infrastructure and retention cost. Cost to achieve synergies amounted to $88 million in the quarter. These are costs needed to enable expense and revenue synergies. They include lease terminations, severance, contract exit fees and investments related to product development, marketing and distribution enhancements. During the first quarter, the non-GAAP operating adjustments collectively totaled to $504 million, including a $1.3 billion gain on the sale of businesses and a $200 million contribution to the S&P Global Foundation, in addition to the merger-related items I mentioned.
Given the growth in expenses this quarter, we wanted to provide some insight into the drivers, many of which are transitional. Importantly, we expect expense growth to moderate as we progress through the year, even excluding the impact of cost synergies. In the first quarter, we recognized $8 million in additional T&E expenses as we saw a limited resumption of travel relative to the last two years. We also saw a $10 million increase in advertising expense associated with our Mobility division. Investments in growth initiatives contributed $28 million of the increase. We're specifically disclosing the increase from what we are calling a step-up impact in the quarter.
This relates to increases in expenses that we view as a reestablishment of baseline cost. The return of in-person events included several major conferences in the first quarter, as Doug mentioned. Together, these live events added more than $20 million of incremental expense relative to last year when these events were still virtual. Step-up costs also incorporate a comprehensive process to align compensation practices across our employee base. One of these changes is to harmonize the timing of annual merit increases to March from April. The pull-forward of the merit increase caused one month of impact in the first quarter that did not occur in the year-ago period. We also recognized $15 million in additional expense related to the ongoing cloud transition. Free cash flow, excluding certain items, was $701 million in the first three months of 2022.
Note that this is meant to reflect the estimated free cash flow of the combined company as if the merger were closed on January 1, 2022. We will provide some additional color on the drivers of our cash balance and our gross debt in the next few slides. Now turning to the balance sheet. Our balance sheet continues to be very strong, with ample liquidity. As of the end of the first quarter, we had cash and cash equivalents of $4.4 billion and debt of $11.4 billion. Our adjusted gross debt to adjusted EBITDA at the end of the first quarter was 2.57 times. As you can see, our cash balance declined sequentially to $4.4 billion. The single largest driver in the reduction was the $7 billion in cash paid to fund the first tranche of our 2022 $12 billion accelerated share repurchase program. We also received net proceeds from divestitures of $2.6 billion and net proceeds of $2.3 billion from the issuance of debt. Now to gross debt. We issued $5.5 billion of new debt in the first quarter, $3.5 billion of which has been allocated to refinancing existing debt.
After the quarter closed, we also made a final debt redemption payment of $600 million, which brought our adjusted gross debt leverage down to 2.47 times. Now I'd like to provide an update on our synergy progress. In the first quarter, we have achieved $23 million in cost synergies, and our current annualized run rate is $135 million. While we are already seeing significant progress in pipeline and customer conversations with only one month as a combined company, revenue synergies are negligible. The cumulative integration and cost to achieve synergies through the end of the first quarter is $365 million. Now let's turn to the division results and begin with Market Intelligence. Market Intelligence delivered revenue growth of 7%, with growth across all product lines. Expenses increased 8%, primarily due to factors I mentioned earlier: investments in technology, especially cloud transition costs, and continued investment in strategic initiatives like ESG.
Segment operating profit increased 5%, and the segment operating profit margin decreased 60 basis points to 29%. On a trailing 12-month basis, adjusted segment operating profit margin decreased 60 basis points to 30%. You can see on the slide our operating profit from the OSTTRA joint venture that complements the operations of our Market Intelligence division. The JV contributed $26 million in adjusted operating profit to the company. Because the JV is a 50%-owned joint venture operating independent of the company, we do not include the financial results of OSTTRA in the Market Intelligence division. Looking across Market Intelligence, there was solid growth in each category. And on a pro forma basis, Desktop revenue grew 7%, Data & Advisory Solutions revenue grew 12%, Enterprise Solutions revenue grew 2% and Credit & Risk Solutions revenue grew 8%.
As Doug discussed at length, Ratings faced a challenging issuance environment in the first quarter, with revenue declining 15% year-over-year. Expenses increased 7%, primarily due to compensation expense and information service costs, partially offset by lower occupancy costs. This resulted in a 25% decrease in segment operating profit and 820 basis points decrease in segment operating profit margin. On a trailing 12-month basis, adjusted segment operating profit margin decreased approximately 105 basis points to 62%. Nontransaction revenue increased 7%, primarily due to growth in fees associated with Surveillance and growth in CRISIL revenue. Transaction revenue decreased 31% on the soft issuance already discussed.
This slide depicts Ratings revenue by its end markets. The largest contributors to the decrease in Ratings revenue were a 21% decrease in Corporates and a 12% decrease in Structured Finance, driven predominantly by Structured Credit. In addition, Financial Services decreased 9%, Governments decreased 11% and the CRISIL and Other category increased 12%. And now turning to Commodity Insights. Revenue increased 14%. The return of in-person conferences, most notably CERAWeek and World Petrochemical Conference, drove 70% year-over-year growth in advisory and transactional services revenue. Excluding the impact of CERAWeek, revenue growth would have been 8% year-over-year. Global Trading Services had a great quarter, increasing 17%, mainly due to strong fuel oil and iron ore volumes.
As Doug noted earlier, GTS revenue often picks up when commodity prices become more volatile, which we certainly witnessed in the first quarter. Expenses increased 18%, primarily due to cost associated with the return of in-person conferences and headcount and compensation expense. Excluding the impact of CERAWeek, expenses would have increased 10% year-over-year. Segment operating profit increased 8%, and the segment operating profit margin decreased 210 basis points to 43%. The trailing 12-month adjusted segment operating profit margin decreased approximately 200 basis points to 43%. In addition to the exceptional quarter in Advisory & Transactional Services, we saw strong demand driving growth in Price Assessments and Energy & Resources Data & Insights. Growth was partially offset by a modest decrease in Upstream Data & Insights, though we note positive signs of inflection in the Upstream business.
But for the suspension of commercial operations in Russia, Upstream would have had its second consecutive quarter of positive ACV growth, which is a leading indicator for revenue. We also saw a dramatic improvement in retention in the Upstream business as retention rates improved by more than 10 full percentage points over the last 12 months. In our Mobility division, revenue increased 10% year-over-year, driven primarily by strength in Planning Solutions and Used Car offerings. Expenses grew 11% on increased advertising expense in the quarter and headcount growth in 2021 as the business restores capacity to better align with strong growth over the past 18 months. This resulted in an 8% growth in adjusted operating profit and 80 basis points of margin contraction year-over-year. On a trailing 12-month basis, the adjusted segment operating profit margin increased approximately 400 basis points to 39%. Dealer revenue increased to 12% year-over-year, benefiting from successful prior-year-period promotions and from retention rates that remain above pre-COVID levels.
Growth in manufacturing was 3% year-over-year related to the well-publicized supply chain challenges faced by automotive OEMs. Financials and Other increased 12%, driven primarily by strength in our insurance underwriting products. S&P Dow Jones Indices delivered strong revenue growth of 14% year-over-year, primarily due to gains in AUM linked to our indices. During the quarter, expenses increased 9%, largely due to strategic investments, increased compensation and IT costs. Segment operating profit increased 16%, and the segment operating profit margin increased 130 basis points to 69.3%. On a trailing 12-month basis, the adjusted segment operating profit margin increased approximately 10 basis points to 68%. Every category increased revenue this quarter. Asset-Linked Fees increased 15%, primarily from AUM-driven gains in ETFs, mutual funds and insurance. Exchange-Traded Derivative revenue increased 22% on increased trading volumes. Data & Custom Subscriptions increased 4%.
Over the past year, ETF net inflows were $286 billion, and market appreciation totaled $244 billion. This resulted in quarter-ending ETF AUM of $2.9 trillion, which is 22% higher compared to one year ago. Our ETF revenue is based on average AUM, which increased 24% year-over-year. Sequentially, versus the end of the fourth quarter, ETF net inflows associated with our indices totaled $68 billion, and market depreciation totaled $123 billion. Within our Engineering Solutions division, we saw 7% revenue growth, driven primarily by growth in nonsubscription offerings, most notably the Boiler Pressure Vessel Code, or BPVC, which was last released in August of 2021. Investment in growth initiatives and an increase in royalty expense led to a 5% increase in adjusted expenses. This resulted in segment operating profit growth of 17% and 160 basis points of year-over-year margin expansion. On a trailing 12-month basis, the adjusted segment operating profit margin contracted approximately 115 basis points to 20%.
Subscription revenue in Engineering Solutions increased 3% year-over-year, while nonsubscription revenue increased 60% over the same period. Now moving to our guidance. This slide depicts our new GAAP guidance, and this slide depicts our updated 2022 adjusted pro forma guidance. For revenue, we now expect a low single-digit increase year-over-year, reflecting the issuance environment, partially offset by the strength we are seeing in our non-Ratings businesses. We now expect corporate unallocated expense between $85 million and $95 million, approximately $30 million lower than our previous guidance on lower forecast incentive compensation and professional fees. Interest expense is expected in the range of $360 million to $370 million, down $10 million from prior guidance. This is due to a slightly lower average cost of debt than we initially expected. We expect capital expenditures of approximately $165 million and free cash flow, excluding certain items, in the range of $4.8 billion to $4.9 billion.
There is no change to our expectations for deal-related amortization, operating profit margin expansion or tax rate. This slide illustrates our guidance by division. For Ratings, we now expect revenue to decline low to mid-single digits and for margins to be in the low to mid-60s. This compares to previous guidance calling for low single-digit revenue growth and margins in the mid-60s. Our outlook for Other segments is unchanged from previous guidance. Overall, we are incredibly encouraged by the team's ability to execute so well even in the current macro environment. We're focused on the enormous long-term opportunity ahead of us as a combined company, and we are more confident than ever in our ability to execute against that opportunity. Our differentiated data, insights, analytics and services help our customers to thrive and accelerate progress.
And with that, let me turn the call back over to Mark for your questions.
