Q3 Trading Update
19 October 2023
David Schwimmer, CEO said:
“LSEG delivered another quarter of strong, broad-based growth. By building compelling solutions that meet customers’ evolving business needs we have established a consistent track-record of growth in our Data & Analytics business. Our Capital Markets revenues accelerated in the third quarter, with ongoing innovation increasing Tradeweb’s share of global credit trading. Our Post Trade businesses also continue to grow strongly as customers look to our risk management services in an uncertain macro environment. We are confident that growth for the full year will be towards the upper end of the +6-8% guidance range.”
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Q3 2023 highlights
(All growth rates on a constant currency basis unless otherwise stated)
- Total income (excl. recoveries) +8.0%; on-track to deliver full year growth towards the upper end of the +6-8% guidance range
- Broad strength with Data & Analytics +7.2%, Capital Markets +6.2%, Post Trade +17.0%
- Organic Annual Subscription Value (“ASV”) growth +7.1%
- All 2023 guidance reiterated incl. EBITDA margin and capex
- £750m directed buyback completed in Q3; £1.5bn returned to shareholders since August 2022
This release contains revenues, cost of sales and key performance indicators (KPIs) for the three months ended 30 September 2023 (Q3). 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.
Q3 2023 investor and analyst conference call
LSEG hosted a conference call for its Q3 Trading Update for analysts and investors on 19 October 2023 at 10:00am (UK time). On the call was David Schwimmer (Chief Executive Officer), Anna Manz (Chief Financial Officer) and Peregrine Riviere (Group Head of Investor Relations). Listen to a replay of the conference call below.
- [Peregrine Rivière] Good morning, everyone,and welcome to LSEG's third quarter update.I'm here with David and Anna.Anna will make some brief opening remarkson our Q3 performance, and then we'll open upto questions on the conference call line.And with that, let me hand over to Anna.- [Anna Manz] Thanks, Peregrine. Good morning.It's been another good quarter.We're delivering strong, broad-based growth,and we're transforming the business.As we go through the numbers,our focus is usual on constant currency growth.Total income grew 8%,continuing the trend that we've seen in the first half,with good contribution from all three divisions.This puts us in good position to deliver growthtowards the upper end of the six to 8% guidance range.And we remain confident of deliveringon all of our other 2023 guidance as well.Data and Analytics was up 7.2% as stronger sales,better retention, and this year's higher price increaseall continue to drive growth.All of our data and analytics businessesmade a positive contribution to this growth.Trading and banking revenues were up 2.2%,with a similar level of organic growth to the first half.We continue to improve the functionalityof our trading and banking products.With over 200 updates to Workspace so far this year.Enterprise data grew 9%,supported by continuing strong growth for real-time data,particularly tick history and cloud-based services.The breadth and quality of our dataremains a key differentiator for PRS,which also grew strongly.Headline growth appears slightly slower,but this is all due to the one-off benefitfrom the Beta contract in Q2,and the annualization of the MayStreet acquisition.Underlying growth remains strong and consistent.Investment solutions grew 10%.Growth accelerated as our asset-based revenuesbenefited from inflows, and more favorable market levels.While strong demand for our flagship equity productshelped to drive double digit growthin subscription revenues.Our wealth business grew 3%,where we're seeing good demand for our data feeds,slightly offset by a slower periodfor our workflow business.And we're continuing to drive excellent momentumin our customer and third party risk business,where revenues grew 16%,with our cloud-based offering making it easier for customersto access our services,and integrate them into their workflow.Turning to ASV growth,which we've increased over 400 basis pointssince the Refinitiv acquisition.The third quarter saw a reversal of the timing differencesI spoke about at the half year,with ASV growth ending the quarter at 7.1%.You remember at the half year we talked about ASV growthincreasingly being driven by new salesas opposed to higher retention, which,as I said at the time, is a good thing.But as we track the impact of this month on month,we see that the metricis now fluctuating more than it's done historically.So while it remains indicative of future growth,it won't perfectly aligned from quarter to quarter.In the short term, we expect ASV to soften againaround the turn of the year,mainly reflecting the impact of Credit Suissethat we called out at the first half.That said, consensus expectationsfor data and analytics next year reflect this already.Meanwhile, we're continuing to make great progresswith Microsoft.Though we don't expect to see a benefitto revenue or ASV until 2025.Our joint global teams are building product as we speak,and we're gaining insight from some of our largest customersas we work closely with themthrough our Design Partner Program.Growth in capital markets division accelerated to 6.2%.A nice step up from the half year,and this was largely driven by Tradeweb.Revenues in our equity business were down 9%,reflecting continued weaknessin both primary and secondary markets.In FX, the buy-side activity that was weakeras we saw in the first half, persisted into Q3.Weighing on the performance of Fxall.Overall FX revenues were down a little over 3%.Growth at Tradeweb accelerated in the quarter,with strong performance across rates,credit, and money markets.Activity improved in Q3,as expectations around interest rates began to settle.And Tradeweb continues to take market share,supported by the healthy adoptionof new products and services.Share in investment grade and high yield credithit record highs in the third quarter.Post trade revenues grew 17%,or 9% on an organic basis.Headline growth in OTC derivatives was just over 30%.As we benefit from the recent acquisitionsof Quantile and Acadia.These businesses perform partof the post-trade solutions offering that we're building,and we're excited to share more with youon that At our upcoming investor event.On an organic basis, OTC derivatives grew 7%,where elevated swap clear volumesare continuing to drive good growth.This activity also supported net treasury income,which was up 9%.As market volatility has begun to normalize,we've seen cash collateral fall from the recent high levels.Cash balances currently stand around 110 billion euros,25% down from the end of last year.Let's turn briefly to capital allocation and financing.In September, we completed the directed purchaseof 9.5 million shares from the Blackstone-led consortium,taking total buybacks since August last yearto 1.5 billion pounds.Assuming full conversion of the options written,the consortium shareholding now stands at around 11%,down from around 34% at the start of the year.In September, we made a successful returnto the bond markets,raising 1.4 billion euros to repay the remaining term loanfrom the Refinitiv acquisition in 2021.We'll be continuing with refinancing activityin the months ahead.So to sum up, we've delivered another quarter of 8% growth.In fact, organic growth has actually picked up a bitfrom the 6.5% in H1 to 7% in Q3.We're on course to achieve total income growthtowards the upper end of our six to 8% guidance.And we're confident in deliveringon all of our other targets.As we invest in the long-term growth of the business,we're excited about the opportunities ahead,and we're looking forward to discussing these with youin more detail at our upcoming investor event in November.And with that, I'll pass back to Peregrine for questions.- [Peregrine Rivière] Thanks, Anna.Judith, please would you open the line to questions?Thank you.- [Judith] Thank you, sir.Ladies, gentlemen, if you'd like to ask a question,please signal by pressing star one on your telephone keypad.A confirmation tone will indicatethat your line is in the question queue.You may press star two to exit the question queue.We will take our first question from Michael Werner of UBS.- [Michael Werner] Thank you very much, Anna,for the the comments.Just two questions from me please.First on pricing, as we think about pricing going into 2024,you know, inflation remains elevated.I believe, you know, from what I've heardin commentary from management in the past,you guys feel quite emboldened about the productthat you guys are delivering,the investments that you're making.So just thinking about how we should think about pricingas we go into '24, and ultimately, you know,are these discussions happening now,is this something that, you know,tends to get wrapped up in December?Just also would like to know the timing there.And then second, I think the last timeyou guys reported results, there was some questionsfrom some of your peers about slowing sales cycle,and weakening pipelines.You guys made it very clear that that was not the case.You were not seeing that at all.I just wanted to confirm that was still the casethat you are not seeing any slow down there.Thank you.- [Anna Manz] Thanks Michael, so with respectto the first question on pricing,as we've said before,we track customer satisfaction very closely.And as we improve our products and the customer experience,that gives us confidence to continue to take price.So the way I'd think about pricing in 2024is it will be likely at a similar levelthan we've seen in 2023.And we're working our way through the pricing processas normal at the moment.And on your second question,we track as we shared at the half year,a good number of sales metrics.And I would say where we sit at the end of Q3,they're all looking in really good shape.Our net sales was exactly where we expected it to beversus our plan, our sales cycle metriccontinued robust, as did our deal size, win rate,all of the things that we tracked.So feeling good at the end of the quarter.The only area as I've mentioned that will impact ASVlooking a little bit forward is Credit Suisse,and I've called that one out before.- [Michael Werner] Thank you very much.- [Judith] Thank you, the next questioncomes from Hubert Lamb of Bank of America.- [Hubert Lamb] Hi, good morning.It's Hubert Lamb from Bank America.Just a couple of questions, firstly on Tradeweb.You've had a good quarter for Tradeweb,driven by strong growth there,because of the rates uncertainty.How do you think about growth therewhen rates start to stabilize?Do you expect a slow down when this happens in Tradeweb?That's the first question.And second question is on the FCA wholesale market study.Just wondering what your thoughts are on it,given the concerns and report around competitionand concentration risks,particularly in data and indices, thank you.- [David Schwimmer] Sure. Thanks Hubert.So on your first question with respect to Tradeweb.Yeah, they did have a very good quarter.We're really pleased with how they're doing,and ongoing discussions in a number of areasas our partnership continues to grow.You know, I don't want to speculateon what the forward looks likein terms of the interest rate environment,and I would say Billy and Sarahand the team there are a better placedto give any indication on how they might be thinkingabout that, but what I would point outis just the continuing innovation,and the continuing growth in their market share,across a number of different products.We saw, and Anna just touched on this,the high market share levels in the credit product area.And that's just an example of how they continueto improve in drive innovation across their product suite,which we're very pleased with.Your second question on the wholesale market studywith the FCA, as you would've seen,I think beginning of September,they did not make a referral to the CMA.And so they're still working through their analysis.And I think we'll hear from them in the spring of next year,and we'll continue to monitor that.But at this point, really nothing further to say.And, you know, we always work closely with the FCA,we consult on in all their consultationsand participate and they're trying to be helpfulas possible, but we don't anticipate anything dramaticcoming out of this, but we'll see in the spring.- [Hubert Lamb] Great, thank you. Thank you.- [Judith] The next questioncomes from Johannes Thormann of HSBC.- [Johannes Thormann] Good morning everybody.Johannes Thormann, HSBC,some questions from my side as well.First of all, you had a very strong performancein your post trade business this quarter,and give you what has after the one in the previous,what has driven the strength in the OTC derivatives?And also looking at like last markets on the cash side,what has been driving the securities and reporting,as you don't break down the single compliments anymore?And secondly, on the collateral balances,the cash balances you hold,is this a new level we should factor into our model,or do you think this is just the seasonal slowdown?What's your take on that one?And last but not least if you could commenton the conversion of the limited voting shares recently.Thank you.- [Anna Manz] Should I do the first three effects?- [David Schwimmer] Sure, and then, I'm sorry,I didn't catch the last question.The conversion of the?- Limited voting. - Limited voting shareswe've seen where, what has triggered this,and why did you do this?- [Anna Manz] So, just to work through those questions.The first one around, what's driven the performancein OTC derivatives?I mean it two things.Firstly, we've seen the benefit of the Quantileand Acadia acquisitions,and that has helped drive overall growth.But actually just on the core business,the organic growth was still very solid at 7.3%.And that's been driven by the levels of market volatilitythat we've seen in the market.So strong performance there.In terms of securities and reporting,what you're seeing there is strength in RepoClearas the majority of of that growth.We also get a slight benefitfrom the Euro nets dirty termination fee,but that's just, you know, a handful of million.And then finally, with respect to cash collateral,we've seen, I've been saying for some time nowthat the levels have been very elevated.And I've been saying that they, you know,therefore should come downas we see a reduction in the levelof volatility in the market.And I think that's what we're seeing.We're seeing a bit of a reversion to more normal levelsas the level of interest rate volatility reduces.I think the secondary thing we're seeing,and this is very much a minor impact,is that as the levels of volatility reduce,we see banks better managing their collateral,and therefore a bit of a shift to non-cash collateralaway from cash.- [David Schwimmer] If I just pick up on the limitedvoting shares, yeah, you are right, Johannes,the Blackstone consortium have takentheir kind of ordinary shares if you like,up to, I think 9.5%.They did a bit of that beforewhen they sold earlier in the year.And I think that's just part of their ongoing process.Nothing to be read into that either way.- [Johannes Thormann] There's nothing conversion premiumor anything else to be paid for?- Nothing at all. - Yeah.- [David Schwimmer] It's a straight conversion.- [Johannes Thormann] Okay.- [David Schwimmer] Thanks Johannes.- [Judith] The next question comes from Andrew Coombsoff Citi.- [Andrew Coombs] So good morning.If I could just ask about data and analyticsrevenue trajectory, please.You've printed a 7.1% ASV today.I appreciate your commentaryaround the Credit Suisse contract dropping out,but at the same time, looking into next year,it looks like you could have an FX tailwindof about a percentage point.And so perhaps you could just comment on consensus,expectations of 6% revenue growth in data analyticsnext year compared to that healthier ASV metric today,and some of those other moving parts I just said.Thank you.- [Anna Manz] Sure, so you are absolutely right.Data analytics is growing a little over 7%.And RSV metric at the end of Q3 is 7.1.Credit Suisse, we've called out before,but just to remind you of that,will have an impact on revenue.And that will be less than 1% of data and analytics revenue.And that revenue impact for Credit Suissewill show up in '24 and '25,albeit just to manage your expectations,the ASV impact is likely to impact us earlier than that,not quite sure when, but sometimearound the turn of the year we should start to see that.So with respect to consensus expectations,look, consensus doesn't actually quite reflectthe most current FX, but if you work all of that through,consensus is in largely in the right placelooking forward for data and analytics.So we should see this sort of level of sustained performanceadjusting for Credit Suisse.- [Andrew Coombs] Thank you.- [Judith] The next questioncomes from Kyle Voigt of KBW.- [Kyle Voigt] Hi, good morning.Two questions from me.So the first you mentioned cloud-based serviceshelping to drive growthin both the enterprise data,and customer and third party risk businesses.Just wondering if you could remind us,as a greater percentage of your new salestransitions towards cloud,do you realize incremental revenuesor margin pickups as those transition,or is the primary benefit here just the better distributionand sales potential of being in the cloud?That's the first question.Second question, you know, you've done a numberof smaller acquisitions over the past year or two.I call that Quantile, Acadia, and others.Just wondering if you could help us understandhow those acquisitions are growing in aggregate.So are those acquisitions in aggregategrowing faster organically than the company as a whole?Or maybe anything to help kind of frame that.Thank you.- [David Schwimmer] Thanks Kyle, so I thinkprobably the best way to thinkabout the shift of some of our services to the cloudis that it pretty fundamentally changeshow they are used by our customers.And so, if we make, so for example,when we've made some of our realtime data availablein the cloud, that has in many wayschanged the customer base,because in the past you had to have our hardware,our servers on your trading floorto access our real time data.Now we make it available through cloud distribution,and it's accessible to different kinds of customers.Corporates, for example,who might not even have a trading floor,but want to track a complex supply chain,or something along those lines.Similarly, in our customer and third party risk business,the cloud availability has just made our workflowseasier to embed in our customers' daily activity.So we've seen the usage go up dramaticallyin a number of different areas.We don't take a sort of a one-to-one correlation in,we don't have a one-to-one correlationin terms of incremental revenue for incremental usage,but it is banded and it does go up over time.So we see the benefits of that.If Anna wants to comment on the cost ramifications of that,feel free, but I don't think there's much moreto the shift to the cloud beyond that.You wanna touch on the acquisitions?- [Anna Manz] Yeah, sure.So with respect to the acquisitions,they're all relatively small, early stage acquisitionsthat are, yes, fast growth.But the way I look at them is not just around the growthof the acquired company in isolation.Actually, they're all very additive to the portfolioas a whole, so to give you an example,what TORA gives usis an order and execution management capabilitywithin our workflow, within Workspace.So that increases the whole value of the offering,rather than should be looked at as growth in isolation.And I would say exactly the same is true for example,with respect to MayStreet, where again,we're rounding out our real time offering,and increasing our capabilities.So we're very pleased with them.- Very helpful, thank you. - Thanks Kyle.- [Judith] Thank you, the next questioncomes from Ben Bathurst of RBC.Please come ahead.- [Ben Bathurst] Good morning too from me, if I may.Firstly, could you confirm what the group income growthfor the nine months was, ex Acadia?Presumably it's somewhere between the 8%constant currency growth and the 6.7% organic,but I just wondered if you could providethe specific number for the nine months,given that's the basis you're guiding on for the full year.And then secondly, you mentioned in the releasethat you're on track to launch new productswith Microsoft in H2 '24.I know it might be early, but I wondered if you couldjust say yet what those products are likely to be.Thank you. - You wanna do the first one?And I'll take the second. - Yeah, sure.I don't have the exactnumber off the top of my head.I'm sure the IR team can help you with that.Acadia is, you know, not materialin the overall size of the group.So I would be pointing you to lookingat the overall organic growth.And you can see also the constant currency growthas a whole, you know, and that is giving it to us.Do you want to? - I think it'd beprobably in the order of 7.5% would be my, you know,which is in the upper half of the range of six to eight.So it'd be very close, 7.5% would be my expectation.And then Ben, on your second questionaround Microsoft product,very pleased with the progress we're makingin the broader partnership.And we're very much on track for the deliveryin this second half of '24, which is the timeframethat we indicated back in Decemberwhen we announced the partnership.You should expect to see a product in the different areasthat we have talked about,IE the embedding of our data and analyticsand workflow in the Microsoft Teamsand productivity suite.The usage of our data and the movement of our datainto the Microsoft Azure environment,and the usage of Fabric,which will make a much more attractive,integrated environment for the usage of our data.And then the analytics as a service,and modeling as a service.So the the different product areasthat we have talked about, very consistent,good progress being made,and we look forward to rolling that out.- Thank you. - Thank you Ben.- [Judith] Our next question comes from Benjamin Goyof Deutsche Bank.- [Benjamin Goy] Yes. Hi, good morning.Two questions please from my side.So first on FX, still down year on year on organic basis,I know it wasn't ideal quarter,but I think we are not seeing the catch up,yet with its peers.So just wondering where we are standingon the dealer to client initiative,and whether that should help to drivesome gross momentum there?And then secondly, I might have missed it,training and banking solutions.The organic growth we saw in the third quarter,is that all pricing driven,or also some volume contract effect?Thank you. - I'll touch on the first,and then. - Yeah, sure.- [David Schwimmer] So just, and Anna touched on thisin her remarks, but with respect to the FX business,a significant part of our business relates to the buy side.Asset managers, et cetera, where it's franklyin normal times a very strong part of the franchise.And there is some correlation therein terms of the level of volumes in the equity space,where on a global basis, we've seenrelatively subdued volumes,and I think we've seen this at our peersor our competitors as well.And so that is part of the driver.I think, you asked about the rollout of our new initiative.I assume you're referring to our new platformin terms of FX, that's actually going very well.We have a, I expect a November launchof our non-deliverable forward platform,which has generated a lot of anticipationand excitement in the market.There's a lot of client testing ongoing,and we look forward to that arrival in November.- [Anna Manz] And with respect to trading and banking,yes we do see the benefit of price flowing through there,but we're also seeing improved net sales.- [Benjamin Goy] Oh, good. Thank you.- [David Schwimmer] Thank you.- [Judith] Our next question comes from Otto Gilbertof BNP Paribas.- Yeah, good morning, it's an honor sure be here.A couple of questions from me, please.Firstly, could you give us a quick updateon the rollout of Workspace,and specifically when we gonna see that happenacross the sell side and banks.Second, ESG,I think you talked about that beingan area of potential upside in data.We're seeing a bit of a slowdown in growthhere amongst your peers.I'm just wondering whether an initiativeis hitting some roadblocks, thanks.- [David Schwimmer] Sure, I know, so the rolloutof Workspace continues to go very well.At the half year we talked about,I believe the fact that we were over 50%,and that we were looking forward to completing substantiallyall of that by the end of next year.I think we also refer to the fact that we would beend of life-ing Icon in 2025.So that is still the plan,and everything is moving along there as we continueto work with our customers on the migration from Iconto Workspace for a number of those customers.And then on ESG,and this is again similar story in terms of the consistency,where we have talked about the factthat we have ESG capabilitiesembedded in a number of different parts of our business.It's an area where we continue to invest,it's an area where we continue to see customer interest.And just, I'll put one statistic out there.When we have a industry leading ESG corporate data set,which came with the acquisition of Refinitiv,when we acquired it, it had metrics going back 17 yearsor so for 450 metrics per company in about 10,000 companies.We now have that up to about 15,000 companies.My point just being that we continue to invest in the area,and we continue, probably more importantly,to see the customer interest in those areas.And we have it embedded in a lot of different productsacross the organization, including flood risk type metricsin our mortgage analytics.So we have noted the environment,but there continues to be an interestin these kinds of products.And you know, I expect to see that, you know,this does feel like more of a fundamental shiftfrom an investor perspectiveas opposed to a short-term cyclical change.- [Judith] And does that conclude your questions?Our next question comes from Enrico Bolzoni of JP Morgan.- [Enrico Bolzoni] Hi, good morning.Thanks for taking my question.Just so one question, one clarification.On the clarification, I think, Anna, you were mentioningthat for next year in terms of pricing increase, you expect,I didn't understand if you meantthat you expect similar prices to 2023,or actually you expect a similar price increasein terms of inflation impact in 2024compared to the increase in '23.And then my second question,I was wondering whether you have any visibilityin terms of your market share in the industry?If you see that you're winning market share,I'm referring specifically to data analytics,and if so, is there any specific area within data analyticswhere you see that you are growing very strongly,not just in absolute terms,but also relative to some of your peers?Thanks.- [Anna Manz] Yes, so in terms of price increase,maybe to just make sure that it's clear.In 2023 we achieved broadly a slightly over 3% price yield.And I guess what I'm, which was higherthan historic price yieldstaken by Refinitiv over multiple previous years.What I'm saying around 2024 is I think we're seeingthe levels of customer engagement and satisfaction,that we'd see a similar level of price yield in 2024as we saw in 2023.- [David Schwimmer] And then on your market share question,maybe the simplest, I'm not gonna go product by product,maybe the simplest way to think about thisis the growth rate of each of the businesses.And when we spoke about the growth rate of the sectorat our capital markets day in summer of '21,we referred to a four to 6% growth ratefor the sector, for the industry.It's probably up a little bit on that since then,purely based on inflation.But if you look across our businesses,and where we've got businesses growing at 9% or 10%,or 15 or 16%, I think it's fair to think about thoseas areas where we are growing market share.So hopefully that helps.- [Judith] Thank you, our next questioncomes from Ian White of Autonomous Research.Please go ahead.- [Ian White] Hi, morning, thanks for taking my questions.Two from my side please.First of all on pricing, I wanted to just askabout the thinking regarding SwapClear please.I think I'm right in saying that the membership fees there,basically around change now,I think its up for four or five yearsthat haven't even been inflation adjusted.So is there something that might be reviewed thereover the next 12 months, or so?Obviously given the trends we've seenin many other businesses basically in this sector.And just secondly, on data and analytics,just noting the commentary and the release todayaround some of the challenges on the workflow sidein the wealth segment.Can you just set out for us please,what's kind of distinct about maybe the problemsor challenges you're seeing in that marketthat means we shouldn't extrapolate thatto maybe challenges with Workspace in other partsof the business, please, kinda what's different,I guess about those challenges in wealth?That would be interesting, thank you.- [David Schwimmer] Sure, so on your first questionon SwapClear pricing, so there are,and this has been in placesince the early days of SwapClear,there tends to be a multi-year contractual arrangementwith a consortium of banks that have been involvedwith SwapClear really since the early days,going back 15 years or so.And that is renegotiated every few years.And so, there's no pricing changeto that business year over year.That tends to be renegotiated every several years.Again, we feel very good about that business,feel very good about both the partnershipwith those member institutions, with our customers.And you can see in the results of that businessit's performing very, very well.And your question on wealth, I wouldn't overstate this.We have talked in the pastabout the fact that our desktop offering for wealthhas been better received in Asia,and has had some challenges in the North American market.And so the comments Anna was making earlier,I think are just very consistent with that.But no broader read across in terms of the receptivityto the Workspace offering in other segments.Workspace continues to roll out very well.We have the customer satisfaction scores that we track,those are continuing to go up,we continue to improve the product.I think we've put out close to 200 updatesin the first half of this year.And so it's getting better and better,and our customers are seeing that and appreciating that.- [Ian White] Helpful. Thank you.- [Judith] Thank you, the next questioncomes from Russell Quelch of Redburn Atlantic.- [Russell Quelch] Yeah, hi, thanks for having me on.I've got a few questions.My line did cut out in the middle,so if any of these are repeat, please just say.Firstly, following on from Andrew's initial questionregarding ASV, just wanted to get your thoughtson the resilience of the ASV growthin data analytics going into 2024,and potentially even 2025,given the improvement in retention will naturally cap out,and ASV growth will become more reliant on new sales growth.Do you think you'll have the products in the market in 2024to support ASV growth above 7%?That's the first question.Second question would be,could you remind us of the timing of Anna's departure?And in terms of the incoming CFO,will the incoming CFO be given free reignto reassess spending priorities when they join,even if a new three year strategyhas been communicated at the upcoming investor day?And if I can squeeze one more.And in terms of M&A, obviously David,you spoke about mid-sized bolt M&A dealpotential deal potentially back in Q1,you increased your leverage target ratio in Q2,yet you really haven't executed a material M&A in 2023.So is this something we should still be expectingat the back end of this year,and potentially, how quickly would you expectany M&A to be to acquitted each guest, please?Thank you.- [David Schwimmer] Sure, and you wanna take the first one,I'll do the other two?- [Anna Manz] Yeah, so let me touch on ASV,but I mean, really, I think your questionis around revenue outlook.So let me touch on ASV first.I mean firstly, I mean what you're hearing from meis this is a more volatile measure than it was.And it's more volatile because of the nature of,the more new sales that we have.It just moves that point in time measure arounda little bit month on month.So to bear that in mind.Second thought, we've been clearabout the impact of Credit Suisse,which will impact ASV, and revenue.ASV impact will be around sometimetowards the end of this year, early next year.The revenue impact will be felt over 2024 and '25.It will be less than one point of DNA growth.If you strip that all to one side for a minute,I would say we're very happywith the underlying consistency of revenue growththat we should see in DNA,and feel we have a good pipelineof activity to support that.You know, including the revenue synergiesthat we benefit from as a result ofthe Refinitiv acquisition.So you know, as I said earlier,I feel good about where consensus is for DNA at the moment.- [David Schwimmer] And on your next two questions.First of all, with respect to Anna,we are fortunate to have Anna with usthrough May of next yearif we find that necessary.I would say that our search process is going very well,excellent candidates and excellent process.So we will update the market in due course on that.And then to your specific questionas to whether a new CFO would come inand reassess spending priorities,so the numbers that we have, the planning, the budget,these are about our whole executive team,these are not just about Anna.So I wouldn't expect with any change in our CFOthat you see any meaningful change in our strategy,in our numbers, in our planning,or to use your phrase, in our spending priorities.And then on the last question on M&A,so I believe the comments you were referring to,I actually probably made before we had closed on Acadia.We have closed on Acadia in the first half of this year,and excellent acquisition, which plays very wellinto our post-trade solution strategy,which we can talk more about at our capital markets eventin a few weeks.I think no broader change in terms of our approachwith respect to M&A, or frankly with respectto capital allocation more broadly.Yes, we did take up the leverage range slightly.That was really more of a recognition of where we were,and a recognition by the rating agenciesof the diversification and robustness of our business model.No shift in terms of our capital allocation policy,no shift in terms of our intentions.And then specifically with respect to M&A,you should expect us to continue evaluating opportunitiesand to be thoughtful about opportunitiesthat we see out there.We'll do modest sized M&A if it makes strategicand financial sense.- [Russell Quelch] Great, thanks so much.- [David Schwimmer] Thank you.- [Judith] Our next question comes from Tom Millsof Jefferies.- [Tom Mills] Hi, good morning.And my line also cut out,so apologies if I'm (talking indistinctly).But on pricing, you've spoken on the callabout the number of products enhancementsyou continue to roll out.And then I guess there's the broader pointabout the considerable pricing discountcompetitors that you guys have consistently flaggedacross their Affinitiv platform.So I'm just trying to square that against the commentabout pushing through a similar level of pricingfrom the 1st of January, 2023.3% is a nothing,and it's more than you've been able to do in the past,but it feels like you need to be able to doa bit more than that to claw back pricing discountversus competitors.So how should we think about that?Are you trying to be tactical in the waythat you stagger the price increasesto align with when Microsoft capabilities are embeddedor are you getting more pushbackfrom customers on price increases?And then, the second question is on consensus expectations,on interest costs over the next year or two.Do those look reasonable to you at this point,or do you see some upside riskas you find those instruments, thanks very much.- [Anna Manz] Sure, so maybe our philosophy on pricing.We build medium term partnerships with our customers.That is the deep power of our business,and the embeddedness of our products.And in that context, you'll always see us take pricefollowing the improvements in the incremental valuethat our customers are seeing.And so what you've seen us do, is after a decadeof call it 2% price increases,last year in the context of significant improvementsin our existing product suite and our customer services,we took a higher level of price.And you'll see us do that again in 2024.Now your question about closing the gap.The biggest gap to the competitive setis in Workspace.And that is an area that as we roll out Microsoft products,that will be a material enhancement,you'll see us price them at a different level,in a different way.So what we're talking about is the annual price increaseon our existing product set being at the same levelas we were at last year, reflecting the improvementswe're making in that product set.But as we roll out new and better products,it will be priced differentially,reflecting the value that it creates for the customers.And then with respect to interest costs,I guess what I would say here is,as I look at the two bonds that are maturing next year,so I think there's $500 million in April,and 500 million euros in September.If you were to price those bondson a like for like basis today, interest rates,those two are both sub 1%, it's kind of 4% higher.So I would think about thatas you look at the future interest costs.- [David Schwimmer] And maybe just one more pointon your first question with respect to pricing.I wouldn't get overly focused on,or hung up on the 3% number.That is the yield across the portfolio.The price rise that Anna was referring tothat is roughly similar to the price risethat we saw in 2023, meaningfully higher than that.And so you just gotta keep in mind there is a distinctionbetween the overall yieldon the pricing across the portfolio,where we have a number of customerswith different kinds of arrangements,multi-year arrangements, et cetera.Compared to the the headline price rise.- [Tom Mills] Thanks very much, David.That's very helpful.- [David Schwimmer] Yep. Thank you.- [Judith] Thank you, there are no further questionsfrom the conference lines.I'll now hand over to the presentationback to Peregrine Rivière,Group Head of Investor Relations.- [Peregrine Rivière] Thanks very much.Thanks everyone for joining the call.and we look forward to catching up with youin four weeks time.(upbeat theme tune)
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