October 19, 2023
London Stock Exchange Group plc: Q3 2023 Trading Update
Continued delivery of our transformation
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.”
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 summary
| Continuing operations | Q3 2023 £m |
Q3 2022 £m |
Variance % |
Constant Currency Variance % |
Organic Variance % |
|---|---|---|---|---|---|
| Trading & Banking Solutions | 404 | 417 | (3.1%) | 2.2% | 2.3% |
| Enterprise Data Solutions | 345 | 332 | 3.9% | 9.% | 9.0% |
| Investment Solutions | 357 | 344 | 3.8% | 9.5% | 9.5% |
| Wealth | 69 | 71 | (2.8%) | 2.6% | 2.6% |
| Customer & Third-Party Risk | 123 | 110 | 11.8% | 16.3% | 16.3% |
| Data & Analytics | 1,298 | 1,274 | 1.9% | 7.2% | 7.2% |
| Equities | 55 | 60 | (8.3%) | (8.6%) | (8.6%) |
| FX | 61 | 68 | (10.3%) | (3.3%) | (3.3%) |
| Fixed Income, Derivatives & Other | 259 | 241 | 7.5% | 12.7% | 12.3% |
| Capital Markets | 375 | 369 | 1.6% | 6.2% | 6.0% |
| OTC Derivatives | 125 | 103 | 21.4% | 25.9% | 7.3% |
| Securities & Reporting | 64 | 55 | 16.4% | 13.7% | 13.7% |
| Non-Cash Collateral | 27 | 25 | 8.0% | 8.6% | 8.6% |
| Net Treasury Income | 70 | 66 | 6.1% | 9.1% | 9.1% |
| Post Trade | 286 | 249 | 14.9% | 17.0% | 9.2% |
| Other | 7 | 13 | (46.2) | (42.0%) | (42.0%) |
| Total Income (excl. recoveries) | 1,966 | 1,905 | 3.2% | 8.0% | 7.0% |
| Recoveries | 88 | 80 | 10.0% | (1.3%) | (1.3%) |
| Total Income (incl. recoveries) | 2,054 | 1,985 | 3.5% | 7.6% | 6.6% |
| Cost of sales | (282) | (289) | (2.4%) | 3.8% | 2.7% |
| Gross Profit | 1,772 | 1,696 | 4.5% | 8.2% | 7.3% |
Total income (excluding recoveries) was up 8.0% year-on-year in Q3, and 7.0% on an organic basis.
Data & Analytics was up 7.2% with improving sales, rising retention and this year’s higher annual price increase all contributing to growth. Organic ASV growth remains broadly around the level seen in Q1 and Q2, ending September 2023 at +7.1%. We continue to make very good progress building new products with Microsoft and are on target to launch with customers in the second half of 2024.
- Trading & Banking was up 2.2% with growth in both Trading and Banking revenue. Q3 revenue excludes NEST, an Indian broking solution that recorded revenue of £11m in 2022, which we sold effective 30 June 2023. Organic growth of 2.3% in the quarter is consistent with the growth delivered in the first half. Customers continue to benefit from the rollout of new functionalities and greater workflow integration, continuing into Q4 with the anticipated connection of Workspace and our leading dealer-to-client FX platform, FXall.
- Enterprise Data was up 9.0%. Demand for our leading Real-Time data services remains strong, with particularly good growth in our cloud-based services and tick-history data. The breadth and quality of data in Pricing and Reference Services (PRS) continues to differentiate our offering and helped drive growth in Q3.
- Investment Solutions was up 9.5%, accelerating from H1 2023. Asset-based revenue returned to positive growth (+8.3%) driven by inflows and more favourable year-on-year market levels. Subscription revenue in Benchmark Rates, Indices & Analytics also grew strongly (+11.4%) driven by demand for flagship equity products.
- Wealth was up 2.6%, as good growth in data feeds offset lower growth in the workflow business.
- Customer and Third Party Risk was up 16.3%. World-Check, our risk intelligence screening business, continued to show excellent business momentum driven by customer demand and the benefits of cloud migration.
Capital Markets was up 6.2%, driven by growth at Tradeweb.
- Equities was down 8.6%, reflecting subdued market volumes in both primary and secondary markets.
- FX was down 3.3% reflecting lacklustre industry volumes which particularly impacted our dealer-to-client platform, FXall. Activity in interbank markets was more robust and our FX Matching spot platform continued to see positive volume growth. Our Singapore-based NDF trading platform is expected to commence trading in Q4.
- Fixed Income, Derivatives & Other was up 12.7% with Tradeweb performing strongly across rates, credit, and money markets. Volumes accelerated in Q3, partially offset by a skew in activity towards lower-fee short-duration instruments. Tradeweb’s share in both investment grade and high yield credit rose to all-time highs in Q3, reflecting strong client adoption of new trading protocols, including AllTrade and portfolio trading.
Post Trade was up 17.0%, and 9.2% on an organic basis. OTC Derivative revenues rose 7.3% organically as activity in SwapClear continued to be supported by market volatility. Net Treasury Income was up 9.1% as a higher margin offset lower cash collateral balances. Cash collateral continued to moderate towards the quarter end, following a prolonged period of very heightened levels.
Group cost of sales was up 3.8%, below the growth rate in revenue reflecting the partially fixed nature of the costs.
Capital allocation
In September we completed the acquisition of 9.5 million limited voting ordinary shares at £78.94 per share from the Blackstone-led consortium, utilising the shareholder approval granted at our AGM in April 2023. This takes cumulative share repurchases (both directed and non-directed) since August 2022 to £1.5 billion.
In September, we successfully returned to the debt capital markets, issuing €1.4bn of 3-year and 7-year bonds, with proceeds used to repay the remaining term loan entered into as part of the Refinitiv acquisition in 2021. The net effect is to extend the average maturity of our financing
Capital Markets Event
We are hosting a Capital Markets event in London on 16 (afternoon/evening) and 17 November 2023. The plenary sessions will be webcast live and further information can be found at:
https://www.lseg.com/en/investor-relations/capital-markets-days-2023
Registration for in-person attendance for the event is now closed.
Q3 investor and analyst conference call:
LSEG will host a conference call for its Q3 Trading Update for analysts and investors today at 10am (UK time). On the call will be David Schwimmer (Chief Executive Officer) and Anna Manz (Chief Financial Officer).
To access the webcast or telephone conference call please register in advance using the following link:
To ask a question live you will need to register for the telephone conference call here:
Contacts: London Stock Exchange Group plc
Investors
Peregrine Riviere / Chris Turner – Investor Relations
ir@lseg.com
Media
Lucie Holloway / Rhiannon Davies – External Communications
+44 (0) 20 7797 1222
newsroom@lseg.com
Additional information can be found at www.lseg.com.
About LSEG
LSEG (London Stock Exchange Group) is a leading global financial markets infrastructure and data provider, playing a vital social and economic role in the world’s financial system.
With our open approach, trusted expertise and global scale, we enable the sustainable growth and stability of our customers and their communities. We are dedicated partners with extensive experience, deep knowledge and a worldwide presence in data and analytics; indices; capital formation; and trade execution, clearing and risk management across multiple asset classes.
LSEG is headquartered in the United Kingdom, with significant operations in over 60 countries across EMEA, North America, Latin America and Asia Pacific. We employ 25,000 people globally, more than half located in Asia Pacific. LSEG’s ticker symbol is LSEG.
