NZX Limited · NZX:NZX
NZX — Investor Day (November 2024)
41 slides from NZX's investor day presentation, Nov 7, 2024
Slide 1: NZX Investor Day
NZX Investor Day 7 NOVEMBER 2024
Slide 2: Who you will be hearing from today
Who you will be hearing from today Mark Peterson Graham Law Anna Scott NZX Chief Executive Chief Financial and Corporate Officer Smart Chief Executive Lisa Turnbull Jeremy Anderson Nick Morris NZX Wealth Technologies Chief Executive GM, Listings, Information Services and GM, Cash & Derivatives Envir
Slide 3: Today's Agenda
Today’s Agenda Important notice This investor presentation should be read in conjunction with NZX's other periodic and continuous Welcome & Introduction 10.30am disclosure announcements, and the financial statements in the 2024 Interim Report, which provides additional information on many areas cove
Slide 4: Delivering resilient and scalable growth
Delivering resilient and scalable growth Mark Peterson Chief Executive Officer
Slide 5: Interconnectivity
We operate under a strategic framework with interconnected businesses driving scale and operating leverage for shareholders and • Assist NZ to grow and improve its that help New Zealand grow productivity • Three connected and complimentary businesses • Capital Markets – round out our product offerin
Slide 6: In 2024 the business is larger with more diverse revenue streams
In 2024 the business is now larger and has more diverse revenue streams – which makes it more resilient through cycles 2017 HY Revenue 2024 HY Revenue Smart Smart Markets Wealth Technologies Other Markets Wealth Technologies Other (Smartshares) (Smartshares 4% 7% 2% 11% 52% 18% 37% 68% 2017 HY Reven
Slide 7: What you will hear today
What you will hear today Capital markets A tightly managed business which is through the bottom of the Structural tailwinds to support future organic growth, will make cycle and has new product and economic upside with the appropriate investment to improve market presence, a more meaningful operatin
Slide 8: Capital Markets
Capital Markets Jeremy Anderson Nick Morris
Slide 9: Capital market activity is turning
While public markets have faced challenging times, capital market activity is turning - each $1b of capital raised and listed generates ~$380k of revenue to NZX Total Capital Raised and Listed and Total Market Cap $25 $250 Billions Billion $20 $200 Total Capital Raised Total Market Cap $15 $150 $10
Slide 10: New Zealand has a low market capitalisation to GDP ratio
New Zealand has a low market capitalisation to GDP ratio. This provides a significant growth opportunity which we are focused on. Renewed team focus... …to capture opportunities New leadership in Listings team building on Total addressable market by number of companies origination model and focus on
Slide 11: As interest rates fall, trading volumes are recovering
As interest rates start to fall, we are seeing a recovery in trading volumes Each $bn in traded value is ~$210k in additional trading NZX Dark: delivering liquidity and price improvement and clearing fee revenue* 6 months to October 31st $800 14% Thousands $30 6.00% Billions $700 12% $25 5.00% $600
Slide 12: Initiatives underway to open up NZX's secondary market
Initiatives underway to further open up NZX's secondary market Buy-side support* New Participants New Participant types and New trading vendor streamlined ruleset Global best practice Cash & Derivatives Market Makers/Liquidity providers platform Upgraded depository Cash Market Stock Depository Clear
Slide 13: Dairy derivatives partnership with SGX delivering structural growth
Dairy derivatives partnership with SGX delivering structural growth Since migration to SGX: The opportunity ahead is inline with other global commodity Average daily volume +95% Open interest +143% CAGR +30% derivatives markets which trade a multiple of the underlying market 800,000 180,000 Annual v
Slide 14: Key Messages
Key Messages Broaden Participation Develop Policy and Technology and Product Customer Growth Leverage Partnerships Page 14
Slide 15: Smart - Anna Scott
smart Nalavemyorolas
Slide 16: Our brand change is a foundational step in our growth plans
Our brand change is a foundational step in our growth plans. This consolidates a wide range of funds, products & services from a single trusted source Smartshares Limited Increased market awareness and sales focus - both direct and through partner distribution channels 16
Slide 17: Smart has multiple complementary business areas
Smart has multiple complimentary business areas, giving multiple sources of positive FUM flows FUM $bn 2024 H1 FUM Quay St KiwiSaver Quay St Smart ETFs Smart Super Smart Funds Smart KiwiSaver 17
Slide 18: Delivering investment choice
Delivering investment choice Smart offers a wide range of fund building blocks... • Equity funds • Bond funds • Geographic exposures • Thematics • Multi-asset • Passive Index & Active …. with funds covering... • Dividend / Income / Growth • Large / Mid / Small Cap • ESG • Financials Global • Resourc
Slide 19: Total Addressable Market Tailwinds
Total Addressable Market Tailwinds KiwiSaver FUM $bn • Retail:1 $175b market to grow at 7.7% CAGR. TAM to grow 1.7x by 2029 • ETFs: 1 Low penetration vs global benchmarks • KiwiSaver: 1 $110b market to $200b by 2029 • NZ wealth accumulation: 2 3-7x bigger in real terms by 2050 Source: 1. NMG Researc
Slide 20: Drivers for growth in profitability
Drivers for growth in profitability Price • Fund product range to Price meet customer demand (net of fund • Omni-channel distribution Volume costs) (FUM) • Competitive fees & value proposition Volume • Market share: Upside from ~2% (KiwiSaver, Funds, Quay St) Costs Costs • Single operating model syn
Slide 21: Investing for growth
Investing for growth Via 2025 & 2026 investments in… Brand & Vision New brand, new vision A common Smart goal (Smartshares + SuperLife) Growth & sales in ETFs, Quay St & KiwiSaver Customer Direct to retail including tools for customer service Distribution channels & intermediaries Product Manufactur
Slide 22: NZX Wealth Technologies
NZX Wealth Technologies Lisa Turnbull
Slide 23: NZX WT is driving scale with growth in FUA and revenue
NZX WT is driving scale with growth in FUA and Revenue off an increasingly flat cost base Funds under administration Revenue 5-YR CAGR +41% 5-YR CAGR +50% EBITDA 5-YR CAGR +47% Revenue EBITDA (rhs) Page 23
Slide 24: The NZXWT strategy is working
The NZXWT strategy is working - growth and increased scale reflects a strong delivery record, a high customer conversion rate and a robust contracted pipeline Annual Recurring Revenue (ARR) $m NZX acquire Amadeus Operating legacy platform Focus on acquiring large foundation Developed a new platform
Slide 25: A strong focus on profitable growth - lifting ARR & FUA
A strong focus on profitable growth – lifting ARR & FUA Custody & Operations Service Funds under Technology Only Clients Funds under administration 5-YR administration 5-YR CAGR +42% CAGR +4% • Significant growth in Custody and Operations service leveraging scale with • Another large Saas onboarding
Slide 26: Path to scale and dominance in the $190bn TAM
We will continue path to scale and dominance in the $190bn TAM Why we are growing • Building our customer base Total Addressable Market leveraging our superior proposition in a high-cost environment driving users to seek greater efficiencies and move from legacy systems that are at the end of life (
Slide 27: Strong delivery record and robust contracted pipeline
The NZXWT strategy is working - growth & increased scale reflects a strong delivery record, a high customer conversion rate and a robust contracted pipeline Current Contracted Clients – impact of future migrations Active pipeline of prospects Contracted FUA and ARR (September 2024) Page 27
Slide 28: NZX WT delivering positive cashflow with contracted clients through FY25/26
NZX Wealth Technologies is delivering positive cashflow and has contracted clients through FY25/26 with a strong pipeline and conversion record Monthly Revenue & Cashflow 2020-2024 5-YR Revenue CAGR +41% Contracted Clients 2025-2026 2-YR Revenue CAGR +39% Revenue Actual (5 Year CAGR 41%) Revenue Con
Slide 29: NZX WT future CAPEX levels depend on client migrations
NZX WT future CAPEX levels are dependent on the number of new client migrations and are expected to tail off as market share increases The amortisation profile lags the CAPEX profile by a few years Indicative CAPEX profile is based on: • Migration of contracted clients through FY25/26; • Conversion
Slide 30: Key Messages
Key Messages 01 02 Strong growth to date Increased delivery cadence 03 04 Approaching cashflow Pipeline strong with a good positive and focusing on conversion history optimising revenue Page 30
Slide 31: NZX Value Proposition
NZX Value Proposition Graham Law CF & CO
Slide 32: Key revenue metrics tracking well; updated Operating Earnings guidance
The key revenue metrics are tracking well, and we have updated Operating Earnings (excluding integration and restructure costs) guidance 2024 key revenue metrics YTD Sept 2024 YTD YoY% Revenue impact Capital listed and raised Capital: $11.4 billion (11.1)% ✓ Total value traded / cleared Value Traded
Slide 33: CAPEX is starting to diminish
CAPEX – is starting to diminish. The impact into Net Profit will lag by a few years (e.g. due to the NZX WT amortisation bubble) Trading, Clearing and PP&E and Other Energy Systems Software • CAPEX driven by specific system • CAPEX now normalise levels life cycles • Reflecting the normal life cycle
Slide 34: Underlying Net Profit and EPS expected to grow
Underlying Net Profit and Earnings Per Share expected to grow in the coming years with: i) growth of operating activities, and ii) the impact of investing activities diminishing NPAT NPAT NPAT NPAT NPAT / EPS Driver Impact Impact Impact Impact FY25 FY26 FY27 FY28 Operating Activities • Markets • Mar
Slide 35: Group cashflow generation improves sooner than Net Profit
Group cashflow generation improves sooner than Net Profit and Earnings per Share, providing options CF Impact CF Impact CF Impact CF Impact Cash Flow Driver FY25 FY26 FY27 FY28 Operating Activities • Operating Earnings • Markets, Smart and NZX WT all improving operating earnings • Integration / Rest
Slide 36: NZX's share price movement in FY24
NZX’s share price movement in FY24 Page 36
Slide 37: SOTP is greater than the current share price
We continue to believe the SOTP is greater than the current share price, driven by i) Cash Flow growth; including ii) NZX WT approaching cashflow positivity; followed by; iii) Growth in underlying Net Profit and Earnings Per Share in the coming years Sum of the Parts - information Share Price To ass
Slide 38: Key Messages
Key Messages 01 02 Operating Earnings Net Profit / Earnings Per Share • FY24 – revenue drivers and operating earnings upgrade • Underlying Net Profit and Earnings Per Share expected to grow in the coming years with: • FY25 and beyond: i. growth of operating activities, and • Markets – cycle and new
Slide 39: Wrap Up
Wrap Up Mark Peterson Chief Executive Officer
Slide 40: What you have heard today
What you have heard today Capital markets A tightly managed business which is through the bottom of the Structural tailwinds to support future organic growth, will make cycle and has new product and economic upside with the appropriate investment to improve market presence, a more meaningful operati
Slide 41: Thank you
> Thank you The information provided is a guide only and intended for general information purposes. It does not constitute investment advice Any representation or statement expressed in this information is made in good faith on the basis that NZX Limited (NZX) of any of ts related companies is nol a