London Stock Exchange Group Plc · LSE:LSEG
London Stock Exchange — H1 2022 Earnings Presentation
42 slides from London Stock Exchange's earnings presentation, Aug 5, 2022
Slide 1: Continued strong growth; well-positioned
LONDON STOCK EXCHANGE GROUP Continued strong growth; well-positioned H1 2022 results
Slide 2: Welcome
Welcome – Continued strong growth – David Schwimmer, CEO – Strong H1 2022 financial performance Anna Manz, CFO – Delivering and building in H1 David Schwimmer, CEO – Q&A 2
Slide 3: Delivering on our strategy in H1
Delivering on ☐ Strong and broad-based growth our strategy in H1 ☐ Realising benefits of accelerating integration ☐ Strong focus on execution to accelerate growth and scalability ☐ Further enhancing our customer offering 3
Slide 4: Strong H1 performance; delivering on our financial targets
Strong H1 performance; delivering on our financial targets DELIVERY IN H1 2022 TARGET Total income growth 7.0% (1) 10.2% growth on a headline basis 5-7% 2020-23 CAGR ✓ EBITDA 48.8% 50.4% EBITDA margin including non-cash At least 50% ✓ margin(2) FX-related balance sheet gain by exit 2023 Revenue syne
Slide 5: Well-positioned for the current environment
Well-positioned for the current environment Services more Diversified important than Interest rate across Multiple levers “Balance sheet ever in solving volatility geography, to manage light” business customer’s supports products and costs model business volume growth customers critical issues 5
Slide 6: A compelling proposition
A compelling proposition – High quality assets in growing markets – High proportion of recurring, diversified revenues – Strong focus on execution to accelerate growth and scalability – Active capital allocation; announcing £750m buyback – Investing for further growth 6
Slide 7: Strong H1 2022 financial performance
Strong H1 2022 financial performance Anna Manz, CFO
Slide 8: Delivering another strong half
Delivering ☐ H1 2022 progress across all divisions, continuing into H2 another ☐ Growing contribution from revenue synergies; accelerated delivery of cost strong half synergies ☐ On-track to deliver 5-7% revenue CAGR(1); margin guidance unchanged ☐ Robust cash generation supporting investment and sh
Slide 9: Strong revenue growth across all three divisions
Strong revenue growth across all three divisions +10.2% headline growth 7.0% constant currency growth(1) £3,569m [£3,537m] +8.6%(1) +13.4%(1) +5.0%(1) £3,240m [£3,356m] H1 2021 DataData & Analytics & Capital Markets Capital Post Trade Post Other revenue Other Ukraine/Russia FX & Other H1 2022 H1 202
Slide 10: Data & Analytics: accelerating subscription revenue growth
Data & Analytics: accelerating subscription revenue growth +5.3% +5.0% +5.1% Total D&A revenue growth +2.5% +3.5% Subscription revenue growth +2.4% 2020 2021 H1 2022 c.93% of Data & Analytics revenues are subscription-based All growth rates are stated on a pro-forma constant currency basis excluding
Slide 11: Annual Subscription Value growth continues to improve
Annual Subscription Value growth continues to improve +2.4% acceleration since acquisition(1) +5.4% +4.9% +4.6% +3.9% +4.0% +3.0% +4.1% +3.6% Q1 2021 H1 2021 Q3 2021 FY 2021 Q1 2022 H1 2022 ASV growth rate Impact of Ukraine/Russia conflict Constant currency, excluding recoveries. Organic ASV growth
Slide 12: Delivering revenue synergies
Delivering revenue synergies £40-60m(1) Anticipating delivery at the top end of target range in 2022 – Creating new products by combining Refinitiv’s data with FTSE Russell’s expertise in index construction – Cross-selling Enterprise Data products to £44m FTSE Russell customers £25m – Improving dist
Slide 13: Delivering on costs, margins and synergies
Delivering on ☐ Strong H1 margin performance; on track to deliver 2022 organic cost guidance costs, margins and synergies ☐ Strong delivery against our £400m cost synergy target(1); expect to realise £250m of run-rate savings this year ☐ Continuing to invest for growth ☐ Robust levers in place to ma
Slide 14: H1 2022 adjusted operating expenses
H1 2022 adjusted operating expenses £73m (£69m) +4.3% constant currency growth -4.9% (£24m) +5.3% £55m -1.7% +4.0% £1,433m £1,397m H1 2021(1) Ongoing Investment Cost synergies FX(3) H1 2022 operating costs for growth(2) 1,432 – H1 cost growth elevated by annualisation of investment in sales and resi
Slide 15: Confident in delivering target EBITDA margin
Confident in delivering target EBITDA margin 48.8%(1) – Continuing to invest to secure future growth 48.2% At least 50% – Well positioned with levers to pull to manage inflationary pressures 48.8% 47.2% 46.3% – Confident in delivering an EBITDA margin of at least 50% by end 2023 2021 1H 22 Target Ex
Slide 16: Simplifying our business and reducing costs
Simplifying our business and reducing costs Leveraging our global footprint • >65% of total new hires into lower cost locations in H1 2022(1) Taking a strategic approach to technology • Consolidating low latency real time data products onto a single efficient platform • Increasing the efficiency of
Slide 17: Capex guidance unchanged; delivering benefits of investment
Capex guidance unchanged; delivering benefits of investment Area Benefit to LSEG and its customers Financial benefits A consistent experience, making it easier for Revenue growth and cost Data platform customers and partners to access, distribute, and efficiency following roll-out with and cloud dev
Slide 18: Free cash generation weighted towards H2
Free cash generation weighted towards H2 (£117m) (£207m) (£483m) £1,338m £1,018m £531m (£458m) £73m Operating cash Net interest and Capex & Equity free Taxes paid Dividend Free cash flow flow(1) royalties paid other investments cash flow Expect full year free cash flow to exceed £1bn, plus proceeds
Slide 19: Creating value through active capital management
Creating value through active capital management Deploying capital for select organic and inorganic investments, and shareholder returns, while managing leverage. Key considerations Capital deployment – Target leverage range of 1.0-2.0x(1) – Organic deployment for growth, efficiency and resilience –
Slide 20: Investing and returning capital
Investing and returning capital 3.3x(1) ☐ Leverage of 1.9x including BETA 2.2x 2.1x disposal 1.0x – 2.0x(2) 1.9x 1.9x ☐ Enhancing our business through M&A – two transactions closed in H1 ☐ £750m returned to shareholders over next 12 months Dec-20 Jun-21 Dec-21 Jun-22 Target Pro forma leverage reduct
Slide 21: Full year guidance
Full year guidance – Expected to be towards the top of the previously stated £40-60m range on a run-rate basis Revenue synergies – On-track to deliver target of at least £225m run-rate synergies by end 2025 – Expect to deliver c.£100m run-rate cost synergies in 2022, taking total run-rate synergies
Slide 22: Delivering another strong half
Delivering ☐ H1 2022 progress across all divisions, continuing into H2 another ☐ Growing contribution from revenue synergies; accelerated delivery of cost strong half synergies ☐ On-track to deliver 5-7% revenue CAGR(1); margin guidance unchanged ☐ Robust cash generation supporting investment and sh
Slide 23: Delivering and building in H1
Delivering and building in H1 David Schwimmer, CEO
Slide 24: A leading global provider of financial markets infrastructure and data
A leading global provider of financial markets infrastructure and data Solving business critical issues through value-add services around the world – Customers include almost all top 100 global banks and three-quarters of top 100 asset managers(1) – >40,000 customers worldwide; 98% annual customer r
Slide 25: Uniquely positioned to create innovative products and services
Uniquely positioned to create innovative products and services Data & Analytics – Delivering competitive advantages by capitalising on the natural linkages across our business: – Customer advantages: Our global end-to-end proposition across asset classes is deepening and expanding our customer relat
Slide 26: Strong delivery in H1 2022 and building for the future
Strong delivery in H1 2022 and building for the future Integrating Building an 1 our world-class businesses 2 Driving growth 3 efficient and scalable platform – Partnering with customers – Driving product innovation – Connecting our businesses to create tailored solutions through the linkages in our
Slide 27: Partnering with customers to provide global solutions
Partnering with customers to provide global solutions Improving sales execution – Simplifying our sales approach to deliver further improvements; focusing more than 240 >350bps increase(1) Data & Analytics products around 9 core in product retention industry themes with our large customer segment –
Slide 28: Driving customer solutions through the natural linkages in our business
Driving customer solutions through the natural linkages in our business Solving regulatory requirements for customers – Drawing on proprietary data, our novel FRTB(1) solution was implemented quickly and proves a distinct solution for customers – Our ability to aggregate insight from across our busi
Slide 29: Connecting businesses to create a more seamless customer workflow
Connecting businesses to create a more seamless customer workflow Seamlessly linking Tradeweb and FXall – Customers face both currency and price risks when trading local currency Emerging Market Tradeweb FXall bonds >$1 trillion traded Global #1 dealer-to- daily(1) across client platform – By connec
Slide 30: Delivering innovative FX platforms to address customer needs
Delivering innovative FX platforms to address customer needs New FX trading venue in Singapore – Improving liquidity, reducing costs and simplifying workflow in non-deliverable FX forwards (NDFs) – Spanning the entire financial markets value chain from trade execution via Workspace through to an int
Slide 31: Positive customer reception to Workspace
Positive customer reception to Workspace Delivering on the rollout… …and feedback has been very positive Customer satisfaction(1) up >10% for: □ Over 50% of users now migrated onto □ Quality of search functionality Workspace from legacy solutions □ Ease of content sharing □ Workspace solution for al
Slide 32: Enhancing growth and creating shareholder value through strategic M&A
Enhancing growth and creating shareholder value through strategic M&A – GDC: globalises our Digital Identity & Fraud prevention capability in Customer & Third-Party Risk Solutions – MayStreet: significantly enhances the breadth of our low latency data offering in Enterprise Data – TORA(1): enhances
Slide 33: Delivering against our strategy and targets
☐ Strong H1 performance across all divisions Delivering against our ☐ Well positioned for the current environment strategy and targets ☐ Strong execution ☐ Active capital allocation ☐ Delivering on our strategy for growth 33 |HIGHLY RESTRICTED|
Slide 34: Investor Q&A
Investor Q&A , pt a¥ LSEG
Slide 35: Appendix
Appendix
Slide 36: Key performance indicators for H1 2022
Key performance indicators for H1 2022 ASV growth(1) Subscription revenue ESG AUM(2) ETF AUM ANALYTICS growth(1) DATA & $261bn $962bn +5.4% +5.0% +98% -8% TRADEWEB ADV UK Equity ADV FX ADV MARKETS CAPITAL Rates - Derivatives Credit - Cash £5.3bn $470bn $364bn $10bn +13% +3% +34% +5% POST TRADE SwapC
Slide 37: Sustainability is core to our strategy and embedded in our offering
Sustainability is core to our strategy and embedded in our offering Accelerating the transition to Enabling the growth of the Creating inclusive economic net zero green economy opportunity LSEG is a founding member of the FTSE Russell was named “ESG LSEG works with governments and Net Zero Financial
Slide 38: Geographically diversified revenues & costs
Geographically diversified revenues & costs Total Income by Geography(1) Total Income by Currency(1) Total Costs by Currency(2) 39% 46% 15% 57% 18% 17% 8% 48% 26% 10% 16% Americas EMEA Asia USD GBP EUR Other USD GBP EUR Other (1) H1 2022 total income including recoveries, on a constant currency basi
Slide 39: Divisional income by currency
Divisional income by currency(1) Data & Analytics Capital Markets Post Trade 64% 12% 13% 11% 58% 21% 20% 1% 19% 43% 36% 2% USD GBP EUR Other USD GBP EUR Other USD GBP EUR Other (1) H1 2022 total income by division - including recoveries, on a constant currency basis 39
Slide 40: LSEG H1 2022 – Results overview
LSEG H1 2022 – Results overview Pro-forma underlying Constant Constant Currency Variances are provided on a pro-forma and constant Pro-forma H1 2022 Variance 2 Currency Variance (excl. deferred currency basis. Unless stated otherwise, commentary is Continuing operations H1 2021 1 £m % Variance 3 rev
Slide 41: Quarterly income and gross profit progression
Quarterly income and gross profit progression 2021 2022 (1) £m Q1 Q2 Q3 Q4 2021 Q1 Q2 2022 Trading & Banking Solutions 372 373 373 375 1,493 378 391 769 Trading 297 297 296 296 1,186 298 308 606 Banking 75 76 77 79 307 80 83 163 Enterprise Data Solutions 279 282 284 296 1,141 304 317 621 Real-Time D
Slide 42: Contacts and further information
Contacts and further information Paul Froud London Stock Exchange Group plc Group Head of Investor Relations 10 Paternoster Square Tel: +44 (0)20 7797 1186 email: paul.froud@lseg.com London EC4M 7LS Chris Turner Investor Relations Senior Director Tel: +44 (0)77 6993 1614 For investor relations infor
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