Source - LSE Regulatory
RNS Number : 9374L
London Stock Exchange Group PLC
25 April 2024
 

 Logo Description automatically generated

 

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
£m

Q1 2023
£m

Variance
%


Constant currency variance
%

Organic constant currency

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.

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.

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.

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

Equities returned to growth, up 1.6%, with gains in secondary trading partly offset by lower market activity.

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

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

 

 

Divisional non-financial KPIs

 

1.   Subscriptions1

 

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 division1,2

59%

15%

17%

9%

Data & Analytics1

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
3 months ended
31 March 2024

Closing rate at
31 March 2024

Average rate
3 months ended
31 March 2023

Closing rate at
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 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
TSTPPUGUCUPCGBC
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJ Bell logo

Related Charts

London Stock Exchange Group PLC (LSEG)

+84.00p (+0.90%)
delayed 16:43PM