London Stock Exchange Group Plc · LSE:LSEG
London Stock Exchange — H1 2024 Earnings Presentation
43 slides from London Stock Exchange's earnings presentation, Aug 1, 2024
Slide 1: H1 2024 results
s- SEG H1 2024 results Ros LSEG
Slide 2: Strong commercial, strategic and financial progress in H1
Strong commercial, strategic and financial progress in H1 +7.6% Total Income1 growth in H1 Delivering on all fronts in H1 2024 2024 +6.4% ASV growth at H1 2024 • Positive contribution from all business lines +50bps underlying margin • Rapid pace of innovation; Workspace regularly improvement2 displa
Slide 3: A clear pathway to delivery
A clear pathway to delivery Michel-Alain Proch, CFO
Slide 4: Key messages
Key messages Strong portfolio of assets; multiple growth opportunities Beginning to deliver on margin potential Strong cash generation, pathway to further improvement Confident in delivering our guidance 4
Slide 5: Strong H1 growth; acceleration in Q2
Strong H1 growth; acceleration in Q2 (GBP million) Q1 Q2 H1 2024 total income ex. recoveries 2,089 2,115 4,204 2023 total income ex. recoveries 2,007 1,983 3,990 Reported growth 4.1% 6.7% 5.4% Organic growth1 6.4% 7.8% 7.1% 1. Constant currency organic growth. 5
Slide 6: Delivering broad-based growth in H1
Delivering broad-based growth in H1 Growth Organic growth1 (GBP million) H1 2024 H1 2023 vs H1-23 vs H1 2023 Data & Analytics 2,005 1,973 1.6% 4.3% FTSE Russell 452 412 9.7% 11.5% Risk Intelligence 263 241 9.1% 11.5% Capital Markets 880 759 15.9% 17.4% Post Trade 596 590 1.0% 0.0% Total2 4,204 3,990
Slide 7: Data & Analytics: product investment driving growth
Data & Analytics: product investment driving growth £m 6.2% 5.1% 2.4% 2,005 1,973 1 H1 2023 Workflows Data & Feeds Analytics M&A FX H1 2024 Workflows Data & Feeds Analytics Enhanced offering driving higher Strong new product pipeline in Improving underlying retention retention and displacements; key
Slide 8: Driving performance in FTSE Russell and Risk Intelligence
Driving performance in FTSE Russell and Risk Intelligence £m £m 15.2% 11.5% 9.7% 452 263 412 241 1 H1 2023 Subscription Asset-based FX H1 2024 H1 2023 Organic M&A FX H1 2024 FTSE Russell Risk Intelligence Continued strong demand for flagship equity indices Strong regulatory and risk-driven demand fo
Slide 9: Robust ASV performance
Robust ASV performance 6.7% 6.4% 6.2% 6.4% 6.0% 4.6% 3.0% Mar-21 2021 2022 2023 H1 2024 Q1 2024 Q2 2024 ASV growth rate Impact of Ukraine / Russia conflict H1 2024 Broad-based acceleration Offset by known headwinds in 2024 Long-run improvement driven by better retention and Credit Suisse cancellatio
Slide 10: Capital Markets: all businesses contributing to growth
Capital Markets: all businesses contributing to growth £m 24.5% 0.8% 3.9% 880 759 H1 2023 Equities Fixed Income, Foreign Exchange M&A 1 FX H1 2024 Derivatives & Other Equities Fixed Income Foreign Exchange Confidence returning to equity Strong market activity at Tradeweb. Stronger dealer-to-client v
Slide 11: Post Trade: building on record performance in 2023
Post Trade: building on record performance in 2023 £m 6.0% -8.9% 3.3% 1.0% 596 590 1 H1 2023 OTC Derivatives Securities & Non-cash Net treasury M&A FX H1 2024 Reporting collateral income OTC Derivatives Securities & Reporting Net treasury income Higher clearing volumes and price Strong RepoClear vol
Slide 12: Strong growth in EBITDA; improving AEPS performance
Strong growth in EBITDA; improving AEPS performance Growth % vs H1 2023 £m H1 2024 H1 2023 Reported Constant ccy Total income excl. recoveries 4,204 3,990 5.4% 7.6% Gross profit 3,801 3,607 5.4% 7.5% Adjusted EBITDA 2,040 1,888 8.1% 8.4% Adjusted EBITDA margin 48.5% 47.3% Adjusted depreciation, amor
Slide 13: Improving cost control
Improving cost control Growth % vs H1 2023 (GBP million) H1 2024 H1 2023 Reported Constant ccy Organic1 Cost of sales 588 572 2.8% 5.5% 4.9% Staff costs 1,102 1,038 6.2% 8.5% 7.5% As a % of total income ex recoveries 26.2% 26.0% IT costs 309 296 4.4% 6.7% 6.4% As a % of total income ex recoveries 7.
Slide 14: Delivering margin expansion
Delivering margin expansion +20bps +50bps +30bps Other operating costs Resource costs +10bps +10bps +40bps +40bps -20bps -10bps 48.5% 48.0% 47.5% 47.3% +50bps underlying operating leverage H1 2023 FX-related Rebased FX 2 H1 2023 Staff cost Third-party IT cost Other 3 H1 2024 FX-related H1 2024 items
Slide 15: Net finance expense affected by refinancing
Net finance expense affected by refinancing (GBP million) H1 2024 H1 2023 Interest expense on bank balances and other borrowings, net of derivative interest (157) (101) Bank deposit and other interest income 77 49 Net lease interest expense (9) (7) Interest differential and foreign exchange losses (
Slide 16: Tax rate impacted by increase to the UK corporate rate
Tax rate impacted by increase to the UK corporate rate (GBP million) H1 2024 H1 2023 Reported income taxes (225) (114) Reversal in income tax on amortisation of intangibles arising from acquisition (141) (124) Rate change on non-underlying attributes1 44 (44) Transactions, integration and similar co
Slide 17: Adjusted earnings per share
Adjusted earnings per share +8% CAGR 174.0p 167.4p 160.9p 138.0p H1 2021 H1 2022 H1 2023 H1 2024 17
Slide 18: Non-underlying items: Refinitiv integration costs tracking as expected
Non-underlying items: Refinitiv integration costs tracking as expected £m H1 2024 H1 2023 Adjusted operating profit 1,563 1,434 Transaction cost credit/(costs) 10 (64) Integration, separation & restructuring costs (114) (119) Profit on disposal & remeasurement gains 8 69 Depreciation, amortisation &
Slide 19: Highly cash generative business model: strong free cash flow
Highly cash generative business model: strong free cash flow (GBP million) H1 2024 H1 2023 Operating cash flow 1,501 1,200 Net interest (42) (44) Net taxes paid (203) (52) Capex (454) (462) Other items1 (41) (50) Equity free cash flow 761 592 Equity free cash flow: +29% vs H1 2023 1. Includes divide
Slide 20: Deploying our strong equity free cash flow for growth and shareholder returns
Deploying our strong equity free cash flow for growth and shareholder returns Dividends - £424m1 Interim dividend of 41.0p, up 14.8% M&A - £206m Closed r8fin acquisition and increased LCH stake Share buyback - £1.0bn £1bn of buybacks completed in H1 1. Represents £424m cash dividends paid in H1 2024
Slide 21: Medium-term guidance: accelerating growth, good cash conversion
Medium-term guidance: accelerating growth, good cash conversion Revenue EBITDA Margin Capex1 Cash Conversion Mid-to-high single- Underlying Remain around Cumulative free digit organic margin to increase current levels of cash flow to C C C C growth annually, over time 11-12% of income2 exceed adjust
Slide 22: Strong commercial, strategic and financial progress
Strong commercial, strategic and financial progress David Schwimmer, CEO
Slide 23: Delivering strong commercial, strategic and financial progress in H1
Delivering strong commercial, strategic and financial progress in H1 1. Strong commercial progress 2. Driving growth across our business 3. Accelerating growth with Microsoft 23
Slide 24: Targeted use of enterprise agreements
Targeted use of enterprise agreements 1. Strong commercial progress Enterprise agreements give customers efficient access to our global footprint, superior breadth and depth of data, improved desktop solutions and multi-asset class capabilities They’re targeted… …customers prefer …and they accelerat
Slide 25: Scaling how we serve our smaller customers
Scaling how we serve our smaller customers 1. Strong commercial progress Building faster, better and more scalable services for our smaller customers Expanding global support hubs Deploying our ecommerce platform Optimising delivery: 4 new global customer Expanding offering: new Risk Intelligence se
Slide 26: Stable sales cycle and end-market demand
Stable sales cycle and end-market demand 1. Strong commercial progress Sales cycle Deal size Win rate Sales pipeline Stable Stable Stable Increasing Average time to close Average deal size Maintained LSEG win Continued growth since slightly shorter in H1 vs. unchanged vs. 2023 rate vs. 2023; 700bps
Slide 27: Strengthening our advantage in Data & Feeds
Strengthening our advantage in Data & Feeds 2. Driving growth Investing in Pricing and Reference Services1 Expanding Real-Time distribution ► 10-fold increase in debt corporate action ► Industry leading low latency offering; over data: 21 events across 900k securities 70 new feeds added in H1 ► ESG
Slide 28: Enhancing the Workspace experience
Enhancing the Workspace experience 2. Driving growth Continuous innovation is delivering an ever-stronger customer proposition 1 245 +16% ~300bp Workspace Increase in primary Increase in updates in H1 usage vs. Eikon retention last 2yrs A step-change in functionality for banking users in H1 A compel
Slide 29: Bringing powerful simplicity and scale to Analytics
Bringing powerful simplicity and scale to Analytics 2. Driving growth From a disjointed set of ~300 models and analytics …to a single API for all …bringing substantial benefits across a disparate estate LSEG analytics products… to LSEG and our customers Mortgage analytics Much quicker and easier to
Slide 30: Delivering for customers, displacing competitors
Delivering for customers, displacing competitors 2. Driving growth Case study: Asia Pacific asset manager Select customer wins in H1 Asian quant fund: Company-wide adoption of LSEG’s Workflows, Data & Feeds and AlphaDesk Analytics solutions ► Seamless Portfolio management end-to-end Large US bank: a
Slide 31: Tradeweb – powering an industry growth flywheel
Tradeweb – powering an industry growth flywheel 2. Driving growth Modernising markets Improving risk management ► New trading protocols, e.g. Portfolio trading, ► Transaction Cost Analysis RFM1 ► AiPrice3 ► Enhanced automation tools, e.g. AiEX2 partnership ► FXall integration ► FTSE Russell ► Data d
Slide 32: Multi-year growth potential in Post Trade
Multi-year growth potential in Post Trade 2. Driving growth A decade of delivery from LCH1 in Partnering to build industry cleared products solutions for uncleared products ► Three-fold increase in ► Pressing customer need for 2 revenues; >€900m 2023 vs. ~€250m in 2013 51.6% $18tn 48.4% solutions to
Slide 33: Launching new data services in H2 2024
Launching new data services in H2 2024 3. Accelerating growth with Microsoft From: Current industry norms To: Access to the full breadth Delivering: Significant customer benefits of our data from a single cloud- based architecture ► Step-change in data discoverability ► Hard to find data ► Customer
Slide 34: Many of our key datasets available via DaaS over the next 18 months
Many of our key datasets available via DaaS over the next 18 months 3. Accelerating growth with Microsoft 2024 The initial DaaS offering will include: ESG Continuous expansion and innovation ► All 8 migrated datasets Company Fundamentals ► Further expansion with another 12+ datasets added in 2025; ►
Slide 35: Accelerating growth with Microsoft
3. Accelerating growth with Microsoft 35
Slide 36: Multiple means of monetisation
Multiple means of monetisation 3. Accelerating growth with Microsoft Clear commercial framework Price realisation on enhanced products ► E.g. Meeting Prep, Open Directory enhancing value of Workspace – We get paid for consumption of: ► Our data Increased consumption on existing data ► Our intellectu
Slide 37: Strong commercial, strategic and financial progress
Strong commercial, strategic and financial progress Strong, broad-based Active capital growth; higher margins management and shareholder returns Continuous innovation Microsoft partnership; delivering better first commercial customer solutions launches in H2 2024 37
Slide 38: Ros LSEG
Ros LSEG
Slide 39: Appendix
Appendix
Slide 40: H1 2024 condensed consolidated income statement
H1 2024 condensed consolidated income statement Integration, Non-underlying separation, Amortisation loss attributable restructuring Profit on and impairment Non-underlying to non- H1 2024 and transaction disposal of of software and finance Non-underlying controlling H1 2024 (GBP million) P&L costs
Slide 41: Net debt profile – by currency
Net debt profile – by currency Operating net debt as of 30 June 2024 (GBP million) Total USD EUR GBP Other 2024 Bonds 424 424 2025 Bonds 424 424 2026 Bonds 1,387 1,387 2027 Bonds 814 392 422 2028 Bonds 1,210 788 422 2029 Bonds 422 169 253 2030 Bonds 1,098 603 495 2031 Bonds 984 984 2033 Bonds 419 41
Slide 42: Net debt profile – fixed vs floating
Net debt profile – fixed vs floating Operating net debt as of 30 June 2024 (GBP million) Total Fixed rate Floating rate N/A 2024 Bonds 424 424 2025 Bonds 424 424 2026 Bonds 1,387 791 596 2027 Bonds 814 814 2028 Bonds 1,210 1,210 2029 Bonds 422 422 2030 Bonds 1,098 495 603 2031 Bonds 984 984 2033 Bon
Slide 43: Contacts and further information
Contacts and further information 43
London Stock Exchange Group — H1 2024 Earnings Presentation on 6ix