Deutsche Boerse Ag · XETR:DB1
Deutsche Boerse — Deutsche Börse Group — Investor Day (May 2019)
61 slides from Deutsche Boerse's investor day presentation, May 22, 2019
Slide 1: Investor Day 2019: “Roadmap 2020” – tangible progress achieved
Deutsche Börse Group 1 Investor Day 2019 “Roadmap 2020” – tangible progress achieved London, 22 May 2019
Slide 2: Agenda
Investor Day 2019 22 May 2019 Deutsche Börse Group 2 Agenda CEO perspective: strategy and “Roadmap 2020” progress Pre-trading: STOXX and Data Trading & clearing: Eurex, EEX and 360T Cash equities: Xetra Post-trading: Clearstream, GSF and IFS IT & new technologies CFO perspective: financials and guid
Slide 3: Key pillars of Deutsche Börse’s “Roadmap 2020” growth strategy
Investor Day 2019 22 May 2019 Deutsche Börse Group 3 Key pillars of Deutsche Börse’s “Roadmap 2020” growth strategy I II III Organic growth M&A Technology Exploit secular growth Scale through asset class Maintain leading opportunities consolidation IT position IV Execution discipline Strengthen exec
Slide 4: Good progress along all “Roadmap 2020” pillars
Investor Day 2019 22 May 2019 Deutsche Börse Group 4 Good progress along all “Roadmap 2020” pillars I ▪ Net revenue (+13%) and net profit (+17%) growth in 2018 Organic significantly above guidance growth ▪ For 2019 at least 5% secular net revenue growth and around 10% ✓ net profit growth expected; Q
Slide 5: Organic growth – midterm targets significantly exceeded in 2018
Investor Day 2019 22 May 2019 Deutsche Börse Group 5 IOrganic growth – midterm targets significantly exceeded in 2018; “Roadmap 2020” targets confirmed Net revenue growth target (organic) Net profit growth target (organic)1) €m €m >5% secular CAGR + cyclicality +10-15% ~1,140- ~3,000- 2018: CAGR 3,3
Slide 6: M&A – individual approach required for different external growth areas
Investor Day 2019 22 May 2019 Deutsche Börse Group 6 IIM&A – individual approach required for different external growth areas M&A focus on five growth areas Ingoing position M&A strategy Deutsche Börse is lagging behind Catch up with peers; Pre-trading 1 Data / Index in most dimensions: products, do
Slide 7: M&A – focused and disciplined approach yielded first results
Investor Day 2019 22 May 2019 Deutsche Börse Group 7 II M&A – focused and disciplined approach started in 2018 yielded first results M&A delivery since 2018 1 Data / Index ▪ Axioma acquisition strengthens Deutsche Börse’s pre-trading offering and improves access to the buy-side (April 2019) ✓ ▪ Acqu
Slide 8: M&A – Axioma acquisition serves as basis to create a leading index and analytics business
Investor Day 2019 22 May 2019 Deutsche Börse Group 8 IIM&A – Axioma acquisition serves as basis to create a leading index and portfolio / risk analytics business ▪ Transaction is fully in line with Deutsche Börse’s “Roadmap 2020” strategy ▪ Strengthens Deutsche Börse’s pre-trading offering and impro
Slide 9: Technology – capabilities in new technologies are growing steadily
Investor Day 2019 22 May 2019 Deutsche Börse Group 9 IIITechnology – capabilities in new technologies are growing steadily and first products will be ready in 2019 Four transformational technology trends ▪ First contract regarding public cloud operation has been Cloud and provision of services via s
Slide 10: Execution discipline – strengthened discipline along cost control and steering
Investor Day 2019 22 May 2019 Deutsche Börse Group 10 IV Execution discipline – strengthened discipline along cost control, financial steering and general management ▪ New executive board set-up completed in 2018 with stronger business and technology focus ▪ New segment structure with increased P&L
Slide 11: Diversified, scalable and resilient business portfolio serves as basis for further growth
Investor Day 2019 22 May 2019 Deutsche Börse Group 11 Diversified, scalable and resilient business portfolio serves as basis for further growth Pre-trading Trading & clearing Post-trading 11% 35% 54% STOXX Data Eurex EEX 360T Xetra Clearstream GSF IFS 5% 6% 34% 9% 3% 8% 26% 3% 6% Index Data Financia
Slide 12: Secular growth drivers fully intact despite dynamic environment
Investor Day 2019 22 May 2019 Deutsche Börse Group 12 Secular growth drivers fully intact despite dynamic environment Main drivers for secular growth Impact on the business Pre- Trading & Post- trading clearing trading Shift to central clearing ▪ Demand for liquid EU-based OTC CCP alternative ▪ Pull
Slide 13: Agenda
Investor Day 2019 22 May 2019 Deutsche Börse Group 13 Agenda CEO perspective: strategy and “Roadmap 2020” progress Pre-trading: STOXX and Data Trading & clearing: Eurex, EEX and 360T Eurex, EEX, 360T Cash equities: Xetra Xetra Post-trading: Clearstream, GSF and IFS Clearstream, IFS, GSF IT & new tec
Slide 14: STOXX (index) – Axioma transaction: combining unique strengths
Investor Day 2019 22 May 2019 Deutsche Börse Group 14 STOXX (index) – Axioma transaction: combining unique strengths and accelerating access to the buy-side Business overview and attractions Revenue structure STOXX / DAX + Axioma ▪ #4 global provider of rules-based strategies, bench- Pro forma1) mar
Slide 15: STOXX (index) – Axioma transaction: strong strategic rationale
Investor Day 2019 22 May 2019 Deutsche Börse Group 15 STOXX (index) – Axioma transaction: strong strategic rationale for highly complementary combination Vision Create a buy-side intelligence leader with open infrastructure Strategic rationale Analytics, indices, performance, risk, compliance, globa
Slide 16: STOXX (index) – Axioma transaction: new entity with unique entrepreneurial set-up
Investor Day 2019 22 May 2019 Deutsche Börse Group 16 STOXX (index) – Axioma transaction: new entity with unique entrepreneurial set-up Transaction highlights Simplified transaction structure ▪ Deutsche Börse to acquire Axioma for US$850 million cash / debt free and combine Deutsche General Axioma i
Slide 17: STOXX (index) – Axioma transaction: immediate joint opportunities
Investor Day 2019 22 May 2019 Deutsche Börse Group 17 STOXX (index) – Axioma transaction: immediate joint opportunities enable strong secular growth Joint tangible growth opportunities Net revenue guidance ▪ Accelerate penetration of investment managers €m with modern tools and analytics midterm (or
Slide 18: Data – global real-time distribution network for market data
Investor Day 2019 22 May 2019 Deutsche Börse Group 18 Data – global real-time distribution network for market data Business overview and attractions Secular growth opportunities ▪ Global real-time distribution network for data ▪ Further expansion of proprietary analytics and services with deep marke
Slide 19: Agenda
Investor Day 2019 22 May 2019 Deutsche Börse Group 19 Agenda CEO perspective: strategy and “Roadmap 2020” progress Pre-trading: STOXX and Data Trading & clearing: Eurex, EEX and 360T Cash equities: Xetra Post-trading: Clearstream, GSF and IFS IT & new technologies CFO perspective: financials and gui
Slide 20: Trading and clearing – benchmark across major asset classes
Investor Day 2019 22 May 2019 Deutsche Börse Group 20 Trading and clearing – benchmark across major asset classes 1 Eurex (financial derivatives) Index and equity Fixed income 2 EEX (commodities) 3 360T (foreign exchange) ▪ Largest European index and ▪ Largest European interest ▪ Leading European en
Slide 21: Eurex – number one in open interest ahead of global peers
Investor Day 2019 22 May 2019 Deutsche Börse Group 21 1 Eurex (financial derivatives) – number one in open interest ahead of global peers Open interest development against peers Product concentration at Eurex ▪ 18% increase in 2018 far above global peers ▪ 10% drop in product concentration contrasts
Slide 22: Eurex – one of the world’s largest derivatives exchanges and clearing houses
Investor Day 2019 22 May 2019 Deutsche Börse Group 22 1 Eurex (financial derivatives) – one of the world’s largest derivatives exchanges and clearing houses Business overview and attractions Net revenue breakdown 2018 ▪ Leading global venue 100% = €936 million Liquidity Global benchmark to trade Oth
Slide 23: Eurex – secular drivers help to grow and diversify product portfolio
Investor Day 2019 22 May 2019 Deutsche Börse Group 23 1 Eurex (financial derivatives) – secular drivers help to grow and diversify product portfolio Secular drivers and opportunities Growth dynamics in new products (Q1/2019) ▪ Shift to passive strategies accelerates buy-side demand for index trading
Slide 24: Eurex – growth in OTC clearing supports fixed-income expansion
Investor Day 2019 22 May 2019 Deutsche Börse Group 24 1 Eurex (financial derivatives) – growth in OTC clearing supports fixed-income expansion Secular drivers and opportunities Growth dynamics in OTC clearing Shift to central clearing ▪ Balance sheet and cost pressure drive demand for central cleari
Slide 25: EEX – leading European energy exchange with growing US business
Investor Day 2019 22 May 2019 Deutsche Börse Group 25 2 EEX (commodities) – leading European energy exchange with growing US business Business overview and attractions1) Net revenue breakdown 2018 Leading power trading platform worldwide 100% = €257 million ▪ #1 in European derivatives with 72% on-
Slide 26: EEX – increasing demand for more efficient on-exchange trading and clearing
Investor Day 2019 22 May 2019 Deutsche Börse Group 26 2 EEX (commodities) – increasing demand for more efficient on- exchange trading and clearing Secular drivers and opportunities Growth dynamics across power, gas and emissions Power spot Power derivatives ▪ Efficiencies of on-exchange CAGR 9% CAGR
Slide 27: 360T – top-ranked global FX platform
Investor Day 2019 22 May 2019 Deutsche Börse Group 27 3 360T (foreign exchange) – top-ranked global FX platform Business overview and attractions Net revenue breakdown 2018 ▪ Top-ranked global FX trading 100% = €79 million Liquidity platform with strong FX liquidity with >200 liquidity providers ▪ B
Slide 28: 360T – FX platform with multiple growth drivers
Investor Day 2019 22 May 2019 Deutsche Börse Group 28 3 360T (foreign exchange) – FX platform with multiple growth drivers Secular drivers and opportunities Growth dynamics in FX products ▪ Ongoing shift to electronic execution ADV; €bn Ongoing across regions and client segments +9% CAGR electroni-
Slide 29: Agenda
Investor Day 2019 22 May 2019 Deutsche Börse Group 29 Agenda CEO perspective: strategy and “Roadmap 2020” progress Pre-trading: STOXX and Data Trading & clearing: Eurex, EEX and 360T Cash equities: Xetra Post-trading: Clearstream, GSF and IFS IT & new technologies CFO perspective: financials and gui
Slide 30: Xetra – reference market for German equities and revenue enabler
Investor Day 2019 22 May 2019 Deutsche Börse Group 30 Xetra (cash equities) – reference market for German equities and revenue enabler across the value chain Business overview and attractions Net revenue breakdown 2018 ▪ Reference market for German equities with market 100% = €229 million share in D
Slide 31: Xetra – growth path with clear priorities beyond capturing cyclicality
Investor Day 2019 22 May 2019 Deutsche Börse Group 31 Xetra (cash equities) – growth path with clear priorities beyond capturing cyclicality Secular growth opportunities Net revenue guidance Win in the core €m midterm 0-5% CAGR t/o share of ▪ Expand reference market position with enhanced (from ~5%)
Slide 32: Agenda
Investor Day 2019 22 May 2019 Deutsche Börse Group 32 Agenda CEO perspective: strategy and “Roadmap 2020” progress Pre-trading: STOXX and Data Trading & clearing: Eurex, EEX and 360T Cash equities: Xetra Post-trading: Clearstream, GSF and IFS IT & new technologies CFO perspective: financials and gui
Slide 33: Post-trading – leading positions as CSD-Custodian in six product clusters
Investor Day 2019 22 May 2019 Deutsche Börse Group 33 Post-trading – leading positions as CSD-Custodian in six product clusters allow to benefit from secular industry drivers Clearstream Global Investment fund €718 million1) securities services financing €154 million1) Issuer CSD Eurobond Investor G
Slide 34: Clearstream – custody revenue stream combined with stable client cash deposit base
Investor Day 2019 22 May 2019 Deutsche Börse Group 34 Clearstream – custody revenue stream combined with stable client cash deposit base Product overview and development focus Net revenue breakdown 2018 Issuer CSD 100% = €718 million ▪ Singular issuance point for DE securities optimised 1) through n
Slide 35: Clearstream – Investor CSD roll-out is delayed
Investor Day 2019 22 May 2019 Deutsche Börse Group 35 Clearstream – Investor CSD roll-out is delayed due to competing priorities on client side and broadening client requirements deep-dive The Investor CSD is a long-term play that relies on 3 cornerstones … … that faces delays ▪ Shift of liquidity a
Slide 36: Clearstream – programme launched to capture full potential from secular growth
Investor Day 2019 22 May 2019 Deutsche Börse Group 36 Clearstream – programme launched to capture full potential from secular growth Cornerstones Net revenue guidance Product focus €m ▪ Strengthen excellence focus in four product areas midterm 5-10% CAGR t/o share of Regulatory compliance secular ▪
Slide 37: GSF – secular growth opportunities on the basis of extensive counterparty network
Investor Day 2019 22 May 2019 Deutsche Börse Group 37 GSF (global securities financing) – secular growth opportunities on the basis of extensive counterparty network Product overview and development focus Net revenue guidance Securities lending (48% of net revenue) €m ▪ Established and credible coun
Slide 38: IFS – leading infrastructure for the fund industry
Investor Day 2019 22 May 2019 Deutsche Börse Group 38 IFS (investment fund services) – leading infrastructure for the fund industry Business overview and key features Net revenue breakdown 2018 ▪ Leading provider of international fund order routing, 100% = €154 million administration, settlement and
Slide 39: IFS – strong secular growth opportunities
Investor Day 2019 22 May 2019 Deutsche Börse Group 39 IFS (investment fund services) – strong secular growth opportunities on the basis of service and regional expansion Secular growth opportunities Net revenue guidance New clients and funds €m ▪ Expansion of service to alternative funds midterm >10
Slide 40: IFS – strengthening growth potential through tactical bolt-on acquisitions
Investor Day 2019 22 May 2019 Deutsche Börse Group 40 IFS (investment fund services) – strengthening growth potential through tactical bolt-on acquisitions Swisscanto Funds Centre (April 2018) Ausmaq (May 2019) Description Description ▪ Distribution intermediation capabilities: distribution ▪ Specia
Slide 41: Agenda
Investor Day 2019 22 May 2019 Deutsche Börse Group 41 Agenda CEO perspective: strategy and “Roadmap 2020” progress Pre-trading: STOXX and Data Trading & clearing: Eurex, EEX and 360T Eurex, EEX, 360T Cash equities: Xetra Xetra Post-trading: Clearstream, GSF and IFS Clearstream, IFS, GSF IT & new tec
Slide 42: Innovation is in our DNA – technology at the core of Deutsche Börse’s success
Investor Day 2019 22 May 2019 Deutsche Börse Group 42 Innovation is in our DNA – technology has been at the core of Deutsche Börse’s success Selected technological milestones Key strengths of Deutsche Börse IT Deutsche Börse IT established its leading position by ▪ Infrastructure technology leader w
Slide 43: Deutsche Börse IT is in a position of strength to act on overarching trends
Investor Day 2019 22 May 2019 Deutsche Börse Group 43 Deutsche Börse IT is in a position of strength to act on overarching trends and maintain a market leading position Clients demanding an outstanding service, increased transparency and reliable systems Technology advancements (e.g. cloud, DLT) dis
Slide 44: Our vision is to be the leading technology provider
Investor Day 2019 22 May 2019 Deutsche Börse Group 44 Our vision is to be the leading technology provider Build up new technologies Establish strategic partnerships (cloud, distributed-ledger, with selected top companies automation, as well as big data complementing Deutsche Börse to and advanced an
Slide 45: Deutsche Börse IT has started an evolution of its core IT
Investor Day 2019 22 May 2019 Deutsche Börse Group 45 Deutsche Börse IT has started an evolution of its core IT – clear benefits to customers and business units visible Not exhaustive Key achievements Benefits of evolving the core IT IT Strong architecture strategy driving Increased flexibility and
Slide 46: Clearly defined innovation agenda
Investor Day 2019 22 May 2019 Deutsche Börse Group 46 Clearly defined innovation agenda Innovation agenda of Performance transformation centres of excellence (CoE) Deutsche Börse IT Focus today Distributed-ledger Automation Big data and ▪ Focus on quick technology advanced analytics and large-scale
Slide 47: We are committed to use public cloud as a driver for innovation and efficiency
Investor Day 2019 22 May 2019 Deutsche Börse Group 47 We are committed to use public cloud as a driver for innovation and efficiency ▪ Move now to benefit fast, work with market leaders, execute in waves over next years Cloud ▪ We expect speed, automation and resilience strategy ▪ We will invest a h
Slide 48: Tokenised economy on DLT / blockchain will redefine financial markets
Investor Day 2019 22 May 2019 Deutsche Börse Group 48 Tokenised economy on DLT / blockchain will redefine financial markets Tokenisation of assets ▪ Broad spectrum of assets can be Deutsche Börse … tokenised, e.g. financial instruments, real estate and art ▪ … is in a perfect position to lead the ma
Slide 49: Swiss market environment as basis for an integrated ecosystem offering
Investor Day 2019 22 May 2019 Deutsche Börse Group 49 Regulatory framework and product perspective of Swiss market environment as basis for an integrated ecosystem offering Ecosystem development Integrated offering ▪ Strategic partnership with Swisscom and Sygnum to jointly build and grow an ecosyst
Slide 50: Deutsche Börse IT will establish strong strategic partnerships
Investor Day 2019 22 May 2019 Deutsche Börse Group 50 Deutsche Börse IT will establish strong strategic partnerships to accelerate innovation and enable growth Key objectives for strategic partnerships Examples of already established partnerships Align roadmaps and co-invest into joint Accelerating
Slide 51: Agenda
Investor Day 2019 22 May 2019 Deutsche Börse Group 51 Agenda CEO perspective: strategy and “Roadmap 2020” progress Pre-trading: STOXX and Data Trading & clearing: Eurex, EEX and 360T Eurex, EEX, 360T Cash equities: Xetra Xetra Post-trading: Clearstream, GSF and IFS Clearstream, IFS, GSF IT & new tec
Slide 52: Strong net revenue growth in the past; confirmation of “Roadmap 2020” growth targets
Investor Day 2019 22 May 2019 Deutsche Börse Group 52 Strong net revenue growth in the past; confirmation of “Roadmap 2020” growth targets Net revenue development €m CAGR 2015-18: +8% CAGR 2017-20E (organic): >5% secular + cyclicality ~3,000- +13% 3,300 +8% +3% 2,770 2,389 2,462 2,220 M&A +2% +1% So
Slide 53: In 2018 solid delivery against midterm secular net revenue targets
Investor Day 2019 22 May 2019 Deutsche Börse Group 53 In 2018 solid delivery against midterm secular net revenue targets Net revenue development 2018 €m Secular Cyclical M&A Secular growth drivers ~145 Pre-trading 2,770 On track against ~500 total ~15 ▪ STOXX: active to passive investments opportuni
Slide 54: Midterm secular net revenue growth opportunities intact
Investor Day 2019 22 May 2019 Deutsche Börse Group 54 Midterm secular net revenue growth opportunities intact Growth expectation (organic) CAGR 2017-2020E Business segments (incl. cyclical growth) t/o secular growth Status secular growth Pre- STOXX (index business) >10% Very high ✓ trading Data 5-10
Slide 55: Strong cyclical net revenue growth contribution in 2018; outlook weakened
Investor Day 2019 22 May 2019 Deutsche Börse Group 55 Strong cyclical net revenue growth contribution in 2018; outlook on interest-rate related opportunities slightly weakened Description Volatility Interest Net revenue impact Achievement rates 2017-2020E (€m) 2018 (€m) ▪ Increase of market volatili
Slide 56: Business model has proven to be scalable
Investor Day 2019 22 May 2019 Deutsche Börse Group 56 In past years, Deutsche Börse’s business model has proven to be scalable Net revenue development Adjusted operating cost development €m €m +8% CAGR +13% +8% +3% 2,770 2,389 2,462 2,220 +2% CAGR +1% -1% +5% 1,042 1,049 1,040 1,096 2015 2016 2017 2
Slide 57: Ramp-up of structural performance improvement programme faster than planned
Investor Day 2019 22 May 2019 Deutsche Börse Group 57 Ramp-up of structural performance improvement programme (SPIP) faster than planned Ramp-up of operating cost savings and composition €m >100 (target: 100) ▪ Management delayering 90 ▪ Process automation and (target: 66) Staff cost digitisation (r
Slide 58: Cost savings will be reinvested into growth, new technology and regulation
Investor Day 2019 22 May 2019 Deutsche Börse Group 58 Cost savings will be reinvested into growth, new technology and regulation ▪ Majority of investments in Eurex Organic growth and Clearstream segments ▪ Transfer of majority of IT operations Cloud into the public cloud over time Reinvestment of co
Slide 59: Double digit net profit growth in the past; confirmation of 10-15% growth target
Investor Day 2019 22 May 2019 Deutsche Börse Group 59 Double digit net profit growth in the past; confirmation of 10-15% average annual growth target from 2017 to 2020 Net profit development €m CAGR 2015-2018: +12% CAGR 2017-2020E (organic): 10-15% ~1,140- 1,300 +17% +14% +6% 1,003 811 857 712 So fa
Slide 60: “Roadmap 2020” financial targets confirmed
Investor Day 2019 22 May 2019 Deutsche Börse Group 60 “Roadmap 2020” financial targets confirmed Growth targets 2017-2020 Capital management Net revenue: Secular growth of Dividend: 40-60% of net at least 5% on average per profit depending on business annum plus positive cyclical development and con
Slide 61: Disclaimer
Deutsche Börse Group 61 Investor Day 2019 Disclaimer Note with regard to forward-looking statements: This document contains forward-looking statements about future events and developments relating to Deutsche Börse AG. They are characterized by the use of words such as “assume”, “intend”, “expect”,