Ewout Lucien Steenbergen
Executive Vice President and 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 unless explicitly noted otherwise. We're pleased with the financial performance of the business in the second quarter. The clear indicator is that the secular tailwinds continue to drive growth across our largest products, though some minor headwinds impact smaller parts of the business. Adjusted earnings per share increased 11% year-over-year. This growth was driven by a combination of 4% revenue growth and a 6% reduction in fully diluted share count, partially offset by approximately 100 basis points of operating margin compression. Excluding the impact of Engineering Solutions in all periods but including approximately $10 million from this year's tuck-in acquisitions, revenue growth would have been 7%. Revenue in the quarter was driven by growth across all remaining divisions, including Ratings, which saw a pickup in issuance activity in the quarter.
While the debt markets remain a challenging environment for issuers, this is the third quarter in a row of sequential improvement. As Doug mentioned, we also saw acceleration in revenue growth across Market Intelligence and Indices with continued impressive growth in Commodity Insights and Mobility. We will walk through the divisions in more detail in a moment. Adjusted expenses were up 6% year-over-year, which we'll also discuss in more detail. Turning to our strategic growth initiatives. Sustainability and energy transition revenue increased 17% to $70 million in the quarter driven by climate and physical risk products and CI's energy transition products. We continue to see a shift in customer appetite away from buying pure ESG scores and towards more purchases of raw data, which we believe will benefit S&P Global in the long run. We consistently hear from customers that our Trucost dataset is higher quality than the data from many competitors.
And the breadth of our offerings across the commodity markets and ESG indices will contribute to strong growth for multiple years. That said, we are seeing some signs of adverse market sentiment, particularly from large financial institutions in the United States that are impacting our revenue growth in the short term as others in the space have also called out. We believe these headwinds are temporary while the growth drivers are secular. Even though sustainability and energy transition revenue currently represents only a low single-digit percent of our total revenue, it is an important strategic driver of long-term growth. We will continue to make the necessary investments in people, data, product development and partnerships to drive long-term growth. Given the uncertainty around the regulatory landscape and the political climate, particularly in the U.S., we can no longer confidently reiterate the previous 2026 target of $800 million in sustainability and energy transition.
We'll continue to report this metric on a quarterly basis. And we will assess the potential for long-term revenue contribution from these important products as the market continues to evolve. Private market solutions revenue increased 5% to $106 million driven by strong growth in Market Intelligence products for private markets, offset by declines in Ratings private markets revenue. Vitality revenue, which is the revenue generated by innovation through new or enhanced products from across the organization, was $343 million in the second quarter, representing a 14% increase compared to prior year. Now turning to synergies. In the second quarter of 2023, we recognized $144 million of expense savings due to cost synergies. And our annualized run rate exiting the quarter was $574 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 second quarter and an annualized run rate of $68 million. Turning to expense growth. Total adjusted expenses increased 6% year-over-year as we are beginning to lap the proactive expense management actions taken last year. We saw a $23 million favorable impact from FX in the quarter. And the divestiture of Engineering Solutions was favorable by $50 million. We also generated incremental cost synergies that lowered expense growth by approximately $80 million relative to last year. As you will recall, we lowered accruals for incentive compensation in the second quarter of last year. This was done to reflect the headwinds we were facing, predominantly in our Ratings business. Incentive compensation resets each year.
So we're seeing the natural increase in those expenses beginning this quarter. Incentive compensation and commissions were the largest single contributor to expense growth in the second quarter. The year-over-year impact of incentive compensation will be a similar driver of expense growth in the third quarter, though we expect expense growth to moderate meaningfully in the fourth quarter as the comparison becomes more favorable. The year-over-year impact of the reset of incentive compensation was a key driver of expense growth in each of our divisions. And we expect to see the same quarterly phasing in our division margin results in the third quarter and fourth quarter as well. Lastly, we continue to invest to drive long-term growth. And that was reflected this quarter. Core investment growth represents the investments we are making in strategic initiatives, people, cloud as well as the incremental investments we are making to fund our AI development at Kensho and within the divisions.
Most importantly, we continue to expect approximately 50 to 100 basis points of adjusted operating margin expansion for the full year. Now let's turn to the division results. Market Intelligence revenue increased 6%, driven by strong growth in Data & Advisory Solutions and Enterprise Solutions. Desktop grew 4% in the second quarter, driven by strong subscription growth as ACV growth outpaced revenue growth in the quarter, though this was offset by some modest softness in nonrecurring sales. Renewal rates remained strong in the mid- to high 90s. Data & Advisory Solutions and Enterprise Solutions both benefited from solid growth in subscription-based offerings. Credit & Risk Solutions continues to see strong new sales for RatingsXpress and RatingsDirect products as well as double-digit growth in Credit Analytics. Adjusted expenses increased 7% year-over-year due to the drivers previously discussed. Operating profit increased 4% and the operating margin decreased 70 basis points to 32.3%.
On a trailing 12-month basis, margins improved to 220 basis points. As we mentioned last quarter, 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. Last quarter, we signaled that we may come in at the low end of our previous guidance range. We're not trying to signal deterioration since April, though we do see modestly elevated risk to the back half. Given the heightened uncertainty, particularly within sustainability and energy transition, we're taking the formal step at this point to modestly lower the guidance by 50 basis points on revenue and operating margin.
Now turning to Ratings. In the second quarter, we saw a spike in issuance activity, particularly in May, which from a seasonality perspective is a very important month for debt markets. Revenue increased 7% year-over-year. This marks the third quarter in a row of sequential improvement in transaction revenue as we saw investment-grade and high-yield activity pick up. Non-transaction revenue increased 4% primarily due to annual fees and growth in CRISIL, though non-transaction growth was tempered by continued declines in ICR revenue. Adjusted expenses increased 12%. This resulted in a 4% increase in operating profit and a 180 basis point decrease in operating margin to 57.7%. On a trailing 12-month basis, margins are still impacted by last year's revenue declines.
We raised our billed issuance assumption for 2023 and expect issuance to increase in the range of 4% to 8%, reflecting the stronger issuance trends in the first half. Our outlook for transaction revenue for the full year has improved somewhat, though some of this is offset by non-transaction revenue due to greater weakness in ICR than we initially anticipated. The net result is a one point increase in our Ratings revenue guidance range. And we now expect Ratings revenue growth of 5% to 7%. While we expect expense growth to moderate as we progress through the year, we are reiterating our margin guidance. And now turning to Commodity Insights. Revenue growth increased 8%, driven by double-digit growth in both Price Assessments and Energy & Resources Data & Insights. Growth was tempered somewhat by declines in the Upstream business. Upstream Data & Insights declined approximately 2% year-over-year.
While subscription ACV growth is positive, we have deprioritized one-time sales in Upstream as we focus on higher-quality recurring revenue products. As such, we are lowering our expectations modestly for Upstream for the full year and now expect that business line to be flat to down slightly for the full year compared to our previous expectation for low single-digit growth. Price Assessments and Energy & Resources Data & Insights grew 12% and 11%, respectively, compared to prior year, driven by strong performance in crude oil and fuels and refining products and strong commercial momentum in subscription products across both business lines. Advisory and Transaction revenue also grew 12%, driven by strength in Global Trading Services and strong performance in conference revenue in the quarter. Adjusted expenses increased 5%. Operating profit for CI increased 12% and operating margin improved 160 basis points to 45.6%. Trailing 12-month margins have improved 220 basis points.
We see stronger trends for our benchmarks, data and insights. And we enjoy a position of trust in the commodity markets. We continue to expect strong subscription growth through the second half. And there is no change to our outlook for revenue or margins. In our Mobility division, revenue increased 10% year-over-year, driven by continued new business growth in CARFAX, the contribution from Market Scan within the Dealer segment and strong underwriting volumes in the Financials and Other business line. Dealer revenue increased 12% year-over-year, driven by the continued benefit of price increases within the last year and new store growth, particularly in CARFAX for Life and used car subscription products. Manufacturing grew 5% year-over-year, driven by elevated recall activity and continued strength in marketing solutions. Financials and Other increased 9% as the business line continues to see healthy underwriting volumes and a favorable pricing environment similar to last quarter.
Adjusted expenses increased 13% due primarily to the drivers I discussed previously but also due to the inorganic contribution to expenses from the Market Scan acquisition. This resulted in a 5% increase in adjusted operating profit and 160 basis points of operating margin contraction year-over-year. Trailing 12-month margins have contracted 60 basis points. As we noted last quarter, we expect the Market Scan 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. And our guidance for Mobility for the full year is unchanged. Turning to S&P Dow Jones Indices. Revenue increased 3% primarily due to strong growth in exchange-rated derivatives volume and data subscriptions, partially offset by a modest decline in asset-linked fees.
Asset-linked fees were down 1% year-over-year primarily driven by mix shift into lower-priced index ETF products, partially offset by market appreciation and modest year-over-year net inflows. Importantly, this decline was due to mix shift, not due to price concessions or renegotiated contracts. Exchange-rated derivatives revenue increased 17% on increased trading volumes across all key contracts. Data & Custom Subscriptions increased 3% year-over-year, driven by continued strength in end-of-day contract growth. During the quarter, expenses increased 15% year-over-year due to reasons previously discussed. Operating profit in Indices decreased 2%. And the operating margin decreased 330 basis points from last year's high-water mark to 68.6%. Trailing 12-month margins have contracted 30 basis points. As reflected in today's results, we've seen market appreciation, though mix of AUM is playing an increasingly important role in asset-linked fees' revenue.
And net inflows remain somewhat unpredictable in the near term. All of this is reflected in our new higher guidance range. As we mentioned last quarter, our continued investments to drive long-term growth as well as the timing of expense recognition will impact the quarterly phasing of our margins. We expect relatively high expense growth in Indices in the third quarter as well before expense growth moderates in the fourth quarter. This will ultimately allow us to deliver margins within the new higher guidance range of 67.5% to 68.5%. Now let's move to the latest views from our economists, who are forecasting global GDP growth of 2.9% in 2023. We're no longer calling for a global recession, though we do expect lower-than-normal economic activity through the remainder of the year. We continue to expect inflation above the target rates of central banks and energy prices like crude oil to remain above historical averages as well. As we consider how all of this will ultimately impact our financial performance in 2023, let's turn to our guidance.
This slide represents our GAAP guidance for headline metrics. Adjusted guidance for the company reflects the results through the first half as well as our most recent views on the macroeconomic environment and market conditions. Our full year guidance is largely unchanged on a consolidated basis as outperformance in Ratings and Indices is offset by slightly lower expectations for Market Intelligence as we've begun to signal last quarter. We have provided the granular guidance on corporate unallocated expense, deal-related amortization, interest expense and tax rate in the supplemental deck posted to our IR site. The final slides in this deck illustrate our revenue and margin guidance by division, reflecting the drivers that I mentioned previously.
In conclusion, we're pleased with the results from the second quarter, particularly with a return to strong double-digit growth in both Ratings transaction revenue and our adjusted diluted EPS. With multiple variables at play in the markets, we're encouraged by the fact that the tailwinds tend to impact the largest parts of our business while the headwinds are impacting relatively small contributors to our financial results. It takes tremendous effort from many talented people to deliver results like these. And I would like to thank my colleagues around the world for their relentless drive to power global markets. We're looking forward to delivering a strong second half of the year. And with that, I would like to invite Edouard Tavernier, President of S&P Global Mobility, to join us.
And I will turn the call back over to Mark for your questions.
