London Stock Exchange Group Plc · LSE:LSEG
London Stock Exchange — FY2023 Earnings Presentation
37 slides from London Stock Exchange's earnings presentation, Feb 29, 2024
Slide 1: 2023 results
SEG 2023 results MX LSEG
Slide 2: Faster growing, more efficient, returning capital
Faster growing, more efficient, returning capital +8.3% Total Income1 growth in 2023 Strong performance in 2023 +6.5% organic revenue • Accelerating, broad-based growth CAGR 2020-232 +110bps • Achieving all Refinitiv acquisition targets underlying margin improvement3 • Driving efficiency and cash ge
Slide 3: Accelerating growth and continued transformation
Accelerating growth and continued transformation Anna Manz, CFO
Slide 4: Today's key messages
Today’s key messages Track record of FY23 performance reflects performance: strong, accelerating consistently delivering growth against our targets Strong cash flow, funding Upgraded medium-term investment and capital guidance established returns 4
Slide 5: Delivering on all Refinitiv acquisition targets
Delivering on all Refinitiv acquisition targets Total income EBITDA Revenue Cost growth margin synergies synergies Target 5-7% 50% £350 - 400m >£400m 2020PF - 2023 CAGR by exit 2023 run rate by end run rate by end of 20253 of 20254 Progress Organic income growth ‘Like for like’ basis2: Run rate - De
Slide 6: Strong income and EBITDA growth in 2023
Strong income and EBITDA growth in 2023 Constant £m 2023 2022 Growth currency growth Total income excl. recoveries 8,009 7,428 7.8% 8.3% Adjusted EBITDA 3,777 3,550 6.4% 8.6% Adjusted EBITDA margin 47.2% 47.8% Adjusted depreciation, amortisation & (915) (822) 11.3% 10.7% impairment Adjusted operatin
Slide 7: FX items and tax rate impacting AEPS
FX items and tax rate impacting AEPS Constant £m 2023 2022 Growth currency growth Adjusted operating profit 2,862 2,728 4.9% 7.9% Adjusted net finance expense (170) (160) 6.3% Adjusted tax expense (625) (540) 15.7% Adjusted effective tax rate 23.2% 21.0% Adjusted profit attributable to: Equity holde
Slide 8: Strong income growth across divisions
Strong income growth across divisions £m 8.3% growth1 17.4% 6.1% 7.3% 8,009 7,428 2 3 2 2022 Data & Capital Post Trade FX & Other 2023 Analytics Markets Growth rates on a constant currency basis unless otherwise stated 1. Growth rate for total income excl. recoveries 2. Total income excluding recove
Slide 9: All Data & Analytics businesses performing well
All Data & Analytics businesses performing well £m 7.3% growth 16.4% 7.9% 4.4% 9.3% 3.3% 5,267 4,944 1 1 2022 Trading & Enterprise Investment Wealth Customer & FX 2023 Banking Data Solutions Solutions Third-Party Risk Growth rates on a constant currency basis unless otherwise stated 1. Total income
Slide 10: Retention, sales and price driving ASV growth
Retention, sales and price driving ASV growth +370bps increase since acquisition 6.9% 6.7% 6.7% 6.2% 4.6% 3.0% Mar-21 2021 2022 2023 H1 2023 H2 2023 ASV growth rate Impact of Ukraine / Russia conflict 2023 Annual subscription value (ASV) growth is a constant currency point-in-time year-on-year organ
Slide 11: Capital Markets: ongoing strength in Fixed Income
Capital Markets: ongoing strength in Fixed Income £m 6.1% growth 12.1% (8.8%) (1.9%) 1,546 1,459 2022 Equities FX Trading Fixed Income, FX 2023 Derivatives & Other Equities FX Trading Fixed Income Market conditions impacting Weaker market volumes Record transaction volumes activity impacting revenue
Slide 12: Post Trade: strong performance in uncertain rate environment
Post Trade: strong performance in uncertain rate environment £m 17.4% growth (11.5% organic) 12.8% 28.9% 7.0% 7.5% 13.9% organic 1,167 991 2022 OTC Securities & Non-Cash Net Treasury FX 2023 Derivatives Reporting Collateral Income OTC Derivatives Securities & Reporting Net Treasury Income One-off te
Slide 13: Operating expenses: 5.3% organic cost growth
Operating expenses: 5.3% organic cost growth £m 5.3% organic growth 4.0% 2.4% 4.6% (3.3%) 2.9% 3,474 3,140 1 2022 operating FX Ongoing Investment for Cost synergies Acquisitions 2023 operating cost base operating costs growth 2 cost base Growth rates on a constant currency basis unless otherwise sta
Slide 14: EBITDA margin in line with guidance
EBITDA margin EBITDA EBITDA margin in line with guidance margin excl. FX-related items 2022 47.8% 46.9% 2023 47.2% 47.7% 0.3% 0.5% 0.5% 0.7% 1.1% 0.5% 47.8% 47.7% 48.0% 47.2% 1 2022 FX M&A Microsoft Underlying 2023 FX-related 2023 Items 2023 2 adjusted partnership business adjusted items margin excl
Slide 15: Non-underlying items mainly relate to Refinitiv integration
Non-underlying items mainly relate to Refinitiv integration £m 2023 2022 Adjusted operating profit 2,862 2,728 Transaction costs (85) (85) Integration, separation & restructuring costs (247) (304) Profit on disposal & remeasurement gains 69 156 Depreciation, amortisation & impairment of intangibles
Slide 16: Highly cash generative business model: strong free cash flow
Highly cash generative business model: strong free cash flow £m 493 361 64 [1,538] 118 217 1,031 2,143 3,223 1,793 948 2 2023 Profit Depreciation, Other Working 2023 Net interest Other items Taxes paid Capex 2023 Equity from amortisation operating capital Operating paid free cash flow 1 continuing &
Slide 17: Deploying our strong cash flow for growth and shareholder returns
Deploying our strong cash flow for growth and shareholder returns Share buyback Capex £1.2bn of buybacks Progress in organic completed in 2023. investment strategy Further £1bn in 2024 M&A Dividends1 Completion of Acadia and Total dividend of Yieldbroker acquisitions; 115.0p, up 7.5% buyout of LCH S
Slide 18: 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 19: In summary
In summary Strong track record of performance: delivering against all our targets Highly cash generative Confident in delivering business model with medium-term guidance disciplined capital allocation 19
Slide 20: Transforming our business
Transforming our business David Schwimmer, CEO
Slide 21: Transforming our business
Transforming our business 1. Delighting customers 2. Deepening and scaling relationships 3. Delivering product excellence and new solutions …realising our goal of “mid-to-high single-digit organic growth, accelerating after 2024" 21
Slide 22: Delighting customers
1. Delighting customers Customers recognise the transformation of our business and power of our solutions They’re happier …with a better …and superior service experience… Self-service tools mean 300bps increase in % customers feeling C C ~13% fewerC customer product satisfaction informed about our q
Slide 23: Deepening and scaling relationships
2. Deepening and scaling relationships 15% year-over-year Top 250 accounts – growth in average Strategic structured sales approach deal size engagement with Targeted sales resourcing largest customers Single, solution-focussed sales approach +700bps increase in win rates1 Optimising delivery: >10,00
Slide 24: Powerful growth engines over the long term
3. Delivering product excellence and new solutions Powerful growth engines over the long term Leading businesses, strong track records, continuing structural tailwinds Strong market positions, investing to transform customer experience Partnering to transform our industry Entering new markets and as
Slide 25: Leading businesses, strong track records: Enterprise Data
Leading businesses, strong track records, continuing Customer case study: Large Asian bank structural tailwinds Enterprise Data, 9.3% growth Return of a large customer lost in 2017 Drivers of growth in 2023 ► Multi-year investment in content – fixed income, evaluated • Asian bank switched away from
Slide 26: Leading businesses: Tradeweb
Leading businesses, strong track records, continuing structural tailwinds Delivering further growth with LSEG Tradeweb, 12.1% growth1 Drivers of growth in 2023 FTSE Russell partnership: more powerful ► Gaining share and driving electronification in credit – fixed income benchmarks US high grade shar
Slide 27: Trading & Banking: Workspace
Strong market positions, investing to transform customer experience Customers with multiple desktops are much more likely to use Workspace Trading & Banking, 3.3% growth as their primary platform1 Eikon Drivers of growth in 2023 ► Accelerating pace of innovation – over 380 Workspace 18% updates, int
Slide 28: Investment Solutions, 7.9% growth
Strong market positions, investing to transform customer experience Investment Solutions, 7.9% growth Accelerating growth in subscription revenues1 Drivers of growth in 2023 11.5% ► Broadening and deepening customer usage – esp. Russell, GEIS, WMR and LIBOR transition products 9.4% 9.4% ► Greater co
Slide 29: Post Trade: largest benchmark transition in history
Partnering to transform our industry: Post Trade Post Trade, 17.4% growth (11.5% organic) Drivers of growth in 2023 In 2023 we delivered ► Innovating new clearing solutions – FX SmartClearing, NDF matching the largest benchmark ► Expansion of customer base – DBS, UOB, Induslnd, EU pension transition
Slide 30: Partnering to transform our industry: Post Trade
Partnering to transform our industry: Post Trade 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 revenues2; >€1.2bn today vs. ~€380m in 2013 50.9% $21tn 49.1% solutions to acute r
Slide 31: Partnering to transform our industry with Microsoft
Partnering to transform our industry with Microsoft Building innovative Delivering ahead of Agile partnership, solutions, plan, first products flexing to embrace revolutionising available1 in H1 2024 opportunities as they industry workflow emerge ► Hundreds of LSEG and ► Meeting Prep ► Developments
Slide 32: Monetising the opportunity
Monetising the opportunity Clear commercial framework Expanding our addressable market – We get paid for consumption of: – An additional £50bn segment of the Data & Analytics value chain: ► Our data ► Data & Feeds: incl data management services, ► Our intellectual property and products machine ready
Slide 33: Driving growth and transformation
Driving growth and transformation Broad-based, Transforming our accelerating growth business for growth, in 2023 agility and scalability Focused delivery of Active capital ambitious medium-term management and targets shareholder returns 33
Slide 34: Appendix slides
Appendix slides
Slide 35: EBITDA margin – 2023 margin on constant perimeter
EBITDA margin – 2023 margin on constant perimeter 0.5% 1.4% 0.7% 0.5% 50.3% 50.0% 47.2% 1 2023 reported FX Russia / Ukraine war Acquisitions Microsoft partnership 2023 margin 2023 exit rate 2 adjusted margin impacts & disposals investment on constant guidance perimeter basis 1. 2023 FX-related items
Slide 36: Quarterly revenue progression
Quarterly revenue progression £m Q1 Q2 Q3 Q4 2022 Q1 Q2 Q3 Q4 2023 Trading & Banking Solutions 378 391 417 426 1,612 425 412 404 415 1,656 Trading 298 308 330 339 1,275 336 325 319 326 1,306 Banking 80 83 87 87 337 89 87 85 89 350 Enterprise Data Solutions1 303 317 332 354 1,306 347 357 345 362 1,41
Slide 37: Contacts and further information
Contacts and further information 37
London Stock Exchange Group — FY2023 Earnings Presentation on 6ix