REG - LondonStockExGroup - LSEG Q1 2024 Trading Statement
25/04/2024 07:00
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RNS Number : 9374L London Stock Exchange Group PLC 25 April 2024
London Stock Exchange Group plc: Q1 2024 Trading Update
Good start to the year, driven by solid performance across the business
David Schwimmer, CEO said:
"We have started the year well, delivering another quarter of solid growth
consistent with our plans. We drove the strongest performances in FTSE
Russell, Risk Intelligence and Tradeweb, and our Equities business returned to
growth. The rapid pace of innovation continues, with new product launches
across LSEG throughout 2024.
"We continue to make strong progress in our Microsoft partnership, with a
number of products expected to be in external pilot or general release this
half. We are now picking up the pace of migrating our datasets onto the
Microsoft platform, which will transform access to our data for customers. We
look forward to further progress in the rest of the year."
Q1 2024 highlights
(All growth rates on an organic constant currency basis unless otherwise
stated)
● Solid growth: Total income (excl. recoveries) +7.3% incl. M&A, +6.4%
organic.
● Robust performance from all divisions: Data & Analytics +4.3%, FTSE
Russell +9.5%, Risk Intelligence +12.5%, Capital Markets +14.4%, Post Trade
revenues flat reflecting strong prior year comparator.
● Organic Annual Subscription Value (ASV) growth +6.0%: good underlying growth
from strong retention, robust sales and pricing, partly offset by increasing
impact of Credit Suisse losses, as expected, plus initial step-down from entry
into an attractive multi-year contract renewal with another major bank.
Organic ASV growth expected to remain around these levels throughout 2024
despite further Credit Suisse impact.
● Active capital allocation: £500 million directed buyback completed in Q1,
targeting £1 billion of total buybacks in 2024; refinancing of $1.25 billion
in 3-year and 10-year bonds; acquisitions of ICD by Tradeweb and minority
stakes in LCH Group.
● Further strong progress in partnership with Microsoft: delivering first
products in H1; successful ongoing migration of datasets to our cloud-based
data platform.
● Confident of continued growth and improving profitability: on track to deliver
all financial guidance provided in November 2023's Capital Markets Day.
This release contains revenues, cost of sales and key performance indicators
(KPIs) for the three months ended 31 March 2024 (Q1). Certain columns and rows
may not add due to the use of rounded numbers for disclosure purposes. To
reflect underlying performance, all constant currency variances compare the
current and prior period at consistent exchange rates. Organic variance is
calculated on a constant currency basis, adjusting the results to remove
disposals from the entirety of the current and prior year periods, and
including acquisitions from the date of acquisition with a comparable
adjustment to the prior year.
Q1 2024 summary
Q1 2024 Q1 2023 Variance( Constant currency variance( Organic constant currency
£m
£m ) % ) %
variance
%
Workflows 479 488 (1.8%) 1.2% 1.7%
Data & Feeds 465 446 4.3% 6.8% 6.8%
Analytics 55 56 (1.8%) 6.5% 6.5%
Data & Analytics 999 990 0.9% 4.0% 4.3%
Subscription 144 139 3.6% 6.2% 6.2%
Asset-based 74 66 12.1% 16.4% 16.4%
FTSE Russell 218 205 6.3% 9.5% 9.5%
Risk Intelligence 131 120 9.2% 12.5% 12.5%
Equities 60 59 1.7% 1.6% 1.6%
Fixed Income, Derivatives & Other 318 269 18.2% 23.0% 21.3%
FX 61 66 (7.6%) (2.2%) (2.2%)
Capital Markets 439 394 11.4% 15.5% 14.4%
OTC Derivatives 138 126 9.5% 11.8% 0.1%
Securities & Reporting 62 64 (3.1%) (0.5%) (0.5%)
Non-Cash Collateral 28 26 7.7% 6.5% 6.5%
Net Treasury Income 69 73 (5.5%) (2.6%) (2.6%)
Post Trade 297 289 2.8% 5.0% (0.1%)
Other 5 9 (44.4%) (43.9%) (43.9%)
Total Income (excl. recoveries) 2,089 2,007 4.1% 7.3% 6.4%
Recoveries 93 93 - 3.8% 3.8%
Total Income (incl. recoveries) 2,182 2,100 3.9% 7.1% 6.3%
Cost of sales (289) (288) 0.3% 3.9% 2.8%
Gross Profit 1,893 1,812 4.5% 7.6% 6.9%
Total income (excluding recoveries) was up 7.3% including M&A, and 6.4% on
an organic basis.
● Data & Analytics was up 4.3% reflecting continued strong retention, good
sales and a contribution from pricing consistent with the previous year.
Overall Data & Analytics growth was impacted by cancellations related to
Credit Suisse as expected, and by entry into an enterprise-wide LSEG Data
Agreement (LDA) with a major bank securing a multi-year period of attractive
growth and greater long-term value following an initial step down in revenue.
Our partnership with Microsoft continues to make good progress with a number
of products expected to be in external pilot or general release this half and
the ongoing migration of content sets into our cloud-based data platform.
o Workflows was up 1.7% with growth across Trading, Banking, Investment
Management and Wealth customers. The roll-out of Workspace continues to
progress well and, following the successful migration of banking users, we
retired the legacy SDC Platinum platform in Q1, creating a more seamless and
integrated experience for customers and driving increased usage.
o Data & Feeds was up 6.8%, driven by continued innovation and expansion in
both our Data and Feeds offerings. In Q1 we launched our first cloud-based
service offering customers access to full tick data in real time, further
broadening our extensive range of real time services. Demand for our data
content remains strong, especially in fixed income following targeted
investment over recent years.
o Analytics was up 6.5%, primarily driven by growth in Yieldbook's fixed income
analytics and loan data.
● FTSE Russell was up 9.5%, with inflows and more favourable year-on-year market
trends driving a stronger contribution from asset-based revenues (+16.4%).
Strong demand for flagship equity products continued to support good growth in
underlying subscription revenues, adjusting for one-time revenues in the prior
year period.
● Risk Intelligence was up 12.5% driven by strong business momentum and customer
demand in our screening business, World-Check. Growth in our digital identity
and fraud businesses continues to build as the expansion in distribution
partnerships over recent years feeds though to increased usage.
● Annual Subscription Value (ASV): Period-end organic ASV growth of 6.0%
reflects an increasing impact from Credit Suisse contract losses, as expected,
plus the near-term step-down following entry into an attractive long-term
agreement with a major bank noted above. We expect ASV growth to remain around
these levels throughout 2024 despite further Credit Suisse cancellations.
● Capital Markets was up 14.4%, driven by growth at Tradeweb
o Equities returned to growth, up 1.6%, with gains in secondary trading partly
offset by lower market activity.
o Fixed Income, Derivatives & Other was up 21.3% with a record quarter for
Tradeweb. Average Daily Volume (ADV) of $1.9 trillion in Q1 reflected
continued share gains, including a record 17.6% share of fully electronic US
high-grade bond volumes, complemented by strong market activity across
Tradeweb's global asset classes. Tradeweb also expanded its capabilities in
algorithmic execution in Q1 with the acquisition of R8fin.
o FX was down 2.2%. Good volume growth in FXall was offset by a less favourable
product mix. We saw strong demand for our innovative Forward First Fixing
capability launched last year, with $64 billion traded using the automated
multi-dealer trading protocol in Q1. Matching was affected by weakness in
interbank volumes.
● Post Trade was flat on an organic basis, and up 5.0% in constant currency
including the benefit of the Acadia acquisition. Underlying OTC Derivatives
revenues grew strongly driven by higher clearing volumes and price increases
for LCH members and clients, with realised organic growth flat due to the £8
million of one-time revenues from reference rate reform in the prior year
period. Net Treasury Income was slightly lower (-2.6%) with higher treasury
margins largely offsetting the impact of a 21.5% decline in cash collateral
balances. Following the acquisition of minority interests in Q1, our ownership
of LCH Group rose to 85.9%.
● Group cost of sales was up 2.8%, below the growth rate in revenue reflecting
business mix and the partially fixed nature of the costs.
● Gross profit was up 6.9%, with growth slightly ahead of Total Income (excl.
recoveries) as a result of the lower growth in cost of sales.
Capital allocation
In March we participated in the further placing of LSEG shares by the former
Refinitiv shareholders, committing £500 million to a directed buyback. During
the course of 2024 we intend to return an additional £500 million in
buybacks, similarly targeted at the Blackstone-led consortium, and are seeking
the requisite shareholder approvals at today's AGM.
In March, we successfully issued a total of $1.25 billion in 3-year and
10-year bonds, using the proceeds to repay maturing bonds and commercial
paper.
In April, Tradeweb announced the acquisition of ICD, a cash management
platform for Corporate Treasurers, adding a new customer vertical with
attractive cross-sell opportunities.
Q1 investor and analyst conference call:
LSEG will host a conference call for its Q1 Trading Update for analysts and
investors today at 8.30am (UK time). On the call will be David Schwimmer
(Chief Executive Officer) and Michel-Alain Proch (Chief Financial Officer).
To access the webcast or telephone conference call please register in advance
using the following link:
https://www.lsegissuerservices.com/spark/LondonStockExchangeGroup/events/72b128c8-0a48-4bef-bfa6-dc423a0e1850
(https://www.lsegissuerservices.com/spark/LondonStockExchangeGroup/events/72b128c8-0a48-4bef-bfa6-dc423a0e1850)
To ask a question live you will need to register for the telephone conference
call here:
https://registrations.events/direct/LON594689
(https://registrations.events/direct/LON594689)
Contacts: London Stock Exchange Group plc
Investors
Peregrine Riviere / Chris Turner - Investor Relations ir@lseg.com (mailto:ir@lseg.com)
Media
Lucie Holloway / Rhiannon Davies - External Communications +44 (0) 20 7797 1222
newsroom@lseg.com (mailto:newsroom@lseg.com)
Additional information can be found at www.lseg.com (http://www.lseg.com)
Divisional non-financial KPIs
1. Subscriptions(1)
Q1 2024 Q1 2023
Annual Subscription Value growth (%) (2) 6.0% 7.6%
Subscription revenue growth (%) (2, 3) 6.6% 5.5%
( )
( 1) Subscription revenues in Data & Analytics, FTSE Russell and Risk
Intelligence
(2) Organic, constant currency variance
(3) 12-month rolling constant currency variance
2. FTSE Russell
Q1 2024 Q1 2023 Variance
%
Index - ETF AUM ($bn):
- Period end 1,328 1,077 23.3%
- Average 1,255 1,063 18.1%
2. Capital Markets
Q1 2024 Q1 2023 Variance
%
Equities
Secondary Markets - Equities
UK Value Traded (£bn) - Average Daily Value 3.9 4.0 (2.5%)
SETS Yield (bps) 0.71 0.69 2.9%
Fixed income, Derivatives and Other
Tradeweb average daily volume ($m)
Rates - Cash 461,826 362,707 27.3%
Rates - Derivatives 798,871 508,675 57.0%
Credit - Cash 17,418 11,497 51.5%
Credit - Derivatives 17,502 20,806 (15.9%)
FX
Average daily total volume ($bn) 456 463 (1.5%)
3. Post Trade
Q1 2024 Q1 2023 Variance
%
OTC
SwapClear
IRS notional cleared ($trn) 406 379 7.1%
Client trades ('000) 912 845 7.9%
ForexClear
Notional cleared ($bn) 8,287 6,225 33.1%
ForexClear members 38 36 5.6%
Securities & Reporting
EquityClear trades (m) 268 473 (43.3%)
Listed derivatives contracts (m) 54.0 62.6 (13.7%)
RepoClear - nominal value (€trn) 74.4 77.9 (4.5%)
Collateral
Average non-cash collateral (€bn) 197.1 175.7 12.2%
Average cash collateral (€bn) 110.5 140.7 (21.5%)
( )
Foreign Exchange
The majority of LSEG revenues are in US dollars followed by sterling, euro and
other currencies.
USD GBP EUR Other
Total Income by division(1,2) 59% 15% 17% 9%
Data & Analytics(1) 63% 8% 15% 14%
FTSE Russell 72% 20% 3% 5%
Risk Intelligence 64% 9% 16% 12%
Capital Markets 62% 17% 20% 2%
Post Trade 27% 38% 34% 2%
(1) Total income includes recoveries
(2) Percentage splits based on Q1 2024
Due to rounding, income percentages may not add to 100%.
Spot / Average Rates
Average rate Closing rate at Average rate Closing rate at
3 months ended
31 March 2024
3 months ended
31 March 2023
31 March 2024
31 March 2023
GBP : USD 1.268 1.263 1.214 1.238
GBP : EUR 1.168 1.170 1.132 1.135
For definitions of technical terms - refer to the Glossary contained in the
2023 Annual Report, page 255.
Total income and gross profit by quarter
2023 2024
£m Q1 Q2 Q3 Q4 FY Q1
Workflows 488 473 465 477 1,903 479
Data & Feeds 446 454 443 467 1,810 465
Analytics 56 55 55 52 218 55
Data & Analytics 990 983 962 996 3,931 999
Subscription 139 136 141 147 563 144
Asset-Based 66 71 73 71 281 74
FTSE Russell 205 207 214 218 844 218
Risk Intelligence 120 121 123 128 492 131
Equities 59 57 55 56 227 60
Fixed Income, Derivatives & Other 269 246 259 294 1,068 318
FX 66 62 61 62 251 61
Capital Markets 394 365 375 412 1,546 439
OTC Derivatives 126 134 125 132 517 138
Securities & Reporting 64 63 64 63 254 62
Non-Cash Collateral 26 27 27 27 107 28
Net Treasury Income 73 77 70 69 289 69
Post Trade 289 301 286 291 1,167 297
Other 9 6 7 7 29 5
Total Income (excl. recoveries) 2,007 1,983 1,966 2,053 8,009 2,089
Recoveries 93 96 88 93 370 93
Total Income (incl. recoveries) 2,100 2,079 2,054 2,146 8,379 2,182
Cost of sales (288) (284) (282) (289) (1,143) (289)
Gross Profit 1,812 1,795 1,772 1,857 7,236 1,893
( )
( )
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