London Stock Exchange Group plc: Q3 2024 Trading Update
Strong Q3 performance, extending our track record of broad-based growth; further strategic progress
David Schwimmer, CEO said:
"We delivered a particularly strong quarter, with healthy growth in our subscriptions business and very strong performance in our high-quality volume-based businesses.
"We are executing successfully on our strategy, delivering multiple new products in Q3. The ongoing transformation of our business with faster product innovation and more powerful solutions is driving higher user engagement and better outcomes for our customers. Our partnership with Microsoft continues to make strong progress and our product timetable is on track.
"We are confident of continued growth as we look forward to 2025."
| Q3 2024 highlights | |
| (All growth rates on an organic constant currency basis unless otherwise stated) | |
| · | Strong growth: Total income (excl. recoveries) +9.5% constant currency and +8.7% organic |
| · | All divisions contributing to growth: Data & Analytics +4.6%, FTSE Russell +9.2%, Risk Intelligence +10.4%, Capital Markets +22.4%, Post Trade +4.8% |
| · | ASV growth in-line with guidance: Period-end ASV growth of +6.0% consistent with guidance; continue to expect ASV growth to remain around 6% for the rest of the year |
| · | High cadence of product innovation: Launched global cloud-based DataScope offering, new Main Market for UK equities, multiple Workspace enhancements, SOFR futures clearing for FMX |
| · | Product development with Microsoft progressing well: On track to deliver against our product timetable |
| · | Acquiring 8.3% of LCH Group, taking ownership to 94.2%: Agreement to acquire further minority interest in LCH Group for €433 million |
This release contains revenues, cost of sales and key performance indicators (KPIs) for the three months ended 30 September 2024 (Q3). Constant currency variances are calculated on the basis of consistent FX rates applied across the current and prior year period (GBP:USD 1.243 GBP:EUR 1.150).Organic variance is calculated on a constant currency basis, adjusting the results to remove disposals from the entirety of the current and prior year periods, and including acquisitions from the date of acquisition with a comparable adjustment to the prior year. Certain columns and rows may not add due to the use of rounded numbers for disclosure purposes.
Q3 2024 summary
(Commentary on performance is on an organic constant currency basis, unless otherwise stated)
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| Q3 2024 | Q3 2023 | Variance | | Constant currency variance | Organic, constant currency variance % |
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| Workflows | 472 | 465 | 1.5% | | 3.2% | 3.2% |
| Data & Feeds | 465 | 443 | 5.0% | | 6.1% | 6.1% |
| Analytics | 55 | 55 | 0.0% | | 5.2% | 5.2% |
| Data & Analytics | 992 | 962 | 3.1% |
| 4.6% | 4.6% |
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| Subscription | 156 | 141 | 10.6% | | 13.1% | 13.1% |
| Asset-based | 71 | 73 | (2.7%) | | 1.8% | 1.8% |
| FTSE Russell | 227 | 214 | 6.1% |
| 9.2% | 9.2% |
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| Risk Intelligence | 131 | 123 | 6.5% |
| 8.5% | 10.4% |
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| Equities | 60 | 55 | 9.1% | | 8.5% | 8.5% |
| Fixed Income, Derivatives & Other | 341 | 259 | 31.7% | | 35.3% | 27.3% |
| FX | 67 | 61 | 9.8% | | 12.8% | 12.8% |
| Capital Markets | 468 | 375 | 24.8% |
| 27.7% | 22.4% |
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| OTC Derivatives | 148 | 125 | 18.4% | | 18.4% | 18.4% |
| Securities & Reporting | 55 | 64 | (14.1%) | | (11.1%) | (11.1%) |
| Non-cash collateral | 28 | 27 | 3.7% | | 5.3% | 5.3% |
| Net treasury income | 66 | 70 | (5.7%) | | (5.5%) | (5.5%) |
| Post Trade | 297 | 286 | 3.8% |
| 4.8% | 4.8% |
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| Other | 2 | 7 | (71.4%) | | (75.1%) | (75.1%) |
| Total income (excl. recoveries) | 2,117 | 1,966 | 7.7% |
| 9.5% | 8.7% |
| Recoveries | 89 | 88 | 1.1% | | 2.6% | 2.6% |
| Total income (incl. recoveries) | 2,206 | 2,054 | 7.4% |
| 9.2% | 8.4% |
| Cost of sales | (283) | (282) | 0.4% | | 3.8% | 3.6% |
| Gross profit | 1,923 | 1,772 | 8.5% |
| 10.0% | 9.2% |
| Total income (excluding recoveries) was up 9.5% including M&A, and 8.7% on an organic basis. | ||
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| · | Data & Analytics was up 4.6% reflecting continued strong retention, good sales and a contribution from pricing consistent with the first half. | |
| o | Workflows was up 3.2%, with particular strength in FX, commodities and banking users. The continuous improvement to our offering is resonating with customers, reflected in good retention, sales and competitive displacements. We remain on track to sunset Eikon in the first half of next year. |
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| o | Data & Feeds was up 6.1%, driven by continued innovation and expansion in both our Real Time and Pricing and Reference Services. We launched Snowflake access to our leading DataScope product in Q3, with further expansion into other cloud environments to follow. The first datasets in our Data as a Service (DaaS) initiative entered into external pilot in Q3, with broader customer availability anticipated by year end. |
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| o | Analytics was up 5.2%, primarily driven by growth in Yieldbook's fixed income analytics and loan data. |
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| · | FTSE Russell was up 9.2%. Subscription revenues remained strong, growing 13.1%, driven by demand for flagship equity indices and benchmarks. Growth in asset-based revenues, up 1.8%, slowed sequentially mainly due to adverse mix effects but also reflecting the termination of an ETF contract in the period. FTSE Russell added Asian and European interest rate benchmarks to LSEG's ecommerce platform in Q3, demonstrating its continued innovation and natural linkages with the broader group. |
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| · | Risk Intelligence was up 10.4% driven by strong business momentum and customer demand in our screening business, World-Check. |
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| · | Annual Subscription Value (ASV): Period-end organic ASV growth was 6.0%, consistent with guidance. We saw a small incremental impact from Credit Suisse cancellations in the quarter. As previously communicated, we continue to expect ASV growth to remain around 6% for the rest of the year. |
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| · | Capital Markets was up 22.4%, with positive growth across all venues and a particularly strong contribution from Tradeweb. |
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| o | Equities was up 8.5% as the LSE continued to gain share against a backdrop of strong market activity. July saw the successful launch of the new Main Market, helping to ensure the continued competitiveness of the UK market. |
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| o | Fixed Income, Derivatives & Other was up 27.3% with another record quarter for Tradeweb. Strong institutional client activity drove growth in interest rate revenues, supported by Tradeweb's innovative trading protocols and an uncertain macroeconomic outlook. Credit volumes also grew strongly reflecting increased client adoption of execution tools like request-for-quote (RFQ) and portfolio trading. Tradeweb continues to increase its share of US investment grade and high yield trading, reaching 17.7% and 7.8% respectively. In August Tradeweb closed the acquisition of the corporate money market platform Institutional Cash Distributors (ICD), adding Corporates as a fourth client channel alongside Institutional, Wholesale and Retail. |
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| o | FX was up 12.8% as the elevated market volatility and geopolitical uncertainty in the quarter supported growth in both interbank volumes on Matching and dealer-to-client volumes on FXall. |
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| · | Post Trade was up 4.8% with very strong volume-driven growth at SwapClear more than offsetting the impact from completion of the Euronext migration in the quarter. As previously highlighted, the Euronext exit will have a greater impact on Q4 growth. Net treasury income was unchanged from the previous quarter, with collateral levels stabilising after recent declines. In September, LCH entered into the clearing of SOFR futures, supporting FMX's launch in the space. |
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| · | Group cost of sales was up 3.6%, below the growth rate in revenue reflecting business mix and the partially fixed nature of the costs. |
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| · | Gross profit was up 9.2%, with growth slightly ahead of total income (excl. recoveries) as a result of the lower growth in cost of sales. |
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Capital allocation
In September, LSEG agreed to acquire an additional 8.3% of LCH Group from minority shareholders for €433 million. This will take LSEG's ownership of LCH Group to 94.2%. The transaction is expected to close shortly.
Also in September, we successfully raised c.£575 million across two debt instruments as part of the ongoing financing of the group: a €600 million bond and a $100 million private placement, with coupons of 2.75% and 4.00% respectively and 3-year maturities.
Q3 investor and analyst conference call:
LSEG will host a conference call for its Q3 Trading Update for analysts and investors today at 10:00am (UK time). On the call will be David Schwimmer (Chief Executive Officer) and Michel-Alain Proch (Chief Financial Officer).
To access the webcast or telephone conference call please register in advance using the following link:
To ask a question live you will need to register for the telephone conference call here:
https://registrations.events/direct/LON470060
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Contacts: London Stock Exchange Group plc
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Investors
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| Peregrine Riviere / Chris Turner Neha Kasabia / Tom Ferguson |
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| Media | |
| Lucie Holloway / Rhiannon Davies | +44 (0) 20 7797 1222 |
Additional information can be found at www.lseg.com.
Divisional non-financial KPIs
1. Subscriptions1
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| Q3 2024 | Q3 2023 |
| Annual subscription value growth (%) 2 | 6.0% | 7.1% |
| Subscription revenue growth (%) 2, 3 | 6.1% | 6.8% |
1 Subscription revenues in Data & Analytics, FTSE Russell and Risk Intelligence
2 Organic, constant currency variance
3 12-month rolling constant currency variance
2. FTSE Russell
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| Q3 2024 | Q3 2023 | Variance % |
| Index - ETF AUM ($bn): | | | |
| - Period end | 1,433 | 1,099 | 30.4% |
| - Average | 1,358 | 1,134 | 19.8% |
3. Capital Markets
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| Q3 2024 | Q3 2023 | Variance |
| Equities |
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| Secondary Markets - Equities |
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| UK Value Traded (£bn) - average daily value | 4.1 | 3.3 | 24.2% |
| SETS yield (bps) | 0.70 | 0.73 | (4.1%) |
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| Fixed income, Derivatives and Other | | | |
| Tradeweb average daily volume ($m)4 | | | |
| Rates - cash | 496,603 | 361,421 | 37.4% |
| Rates - derivatives | 801,512 | 491,837 | 63.0% |
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| Credit - cash | 15,251 | 12,980 | 17.5% |
| Credit - derivatives | 27,338 | 16,955 | 61.2% |
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| FX | | | |
| Average daily total volume ($bn) | 495 | 433 | 14.3% |
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4 Q3 2023 volumes revised from previous reporting to align LSEG reporting methodology with Tradeweb methodology
4. Post Trade
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| Q3 2024 | Q3 2023 | Variance |
| OTC | | | |
| SwapClear | | | |
| IRS notional cleared ($trn) | 418 | 315 | 32.7% |
| Client trades ('000) | 1,091 | 779 | 40.1% |
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| ForexClear | | | |
| Notional cleared ($bn) | 9,755 | 7,207 | 35.4% |
| ForexClear members | 39 | 38 | 2.6% |
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| Securities & Reporting | | | |
| EquityClear trades (m) | 249 | 331 | (24.8%) |
| Listed derivatives contracts (m) | 39.1 | 54.2 | (27.9%) |
| RepoClear - nominal value (€trn) | 79.9 | 78.1 | 2.3% |
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| Collateral | | | |
| Average non-cash collateral (€bn) | 204.4 | 180.1 | 13.5% |
| Average cash collateral (€bn) | 108.0 | 124.2 | (13.0%) |
Foreign Exchange
The majority of LSEG revenues are in US dollars followed by sterling, euro and other currencies.
| | USD | GBP | EUR | Other |
| Total income by division1,2 | 58% | 16% | 17% | 9% |
| Data & Analytics1 | 62% | 9% | 15% | 15% |
| FTSE Russell | 70% | 22% | 3% | 5% |
| Risk Intelligence | 63% | 9% | 16% | 12% |
| Capital Markets | 62% | 16% | 19% | 2% |
| Post Trade | 25% | 39% | 34% | 2% |
1 Total income includes recoveries
2 Percentage splits based on Q3 YTD 2024
Due to rounding, income percentages may not add to 100%.
Spot / Average Rates
| | Average rate | Closing rate at | Average rate | Closing rate at |
| GBP : USD | 1.300 | 1.341 | 1.266 | 1.221 |
| GBP : EUR | 1.183 | 1.199 | 1.163 | 1.153 |
For definitions of technical terms - refer to the Glossary contained in the 2023 Annual Report, page 255.
Organic, constant currency growth rates
| | Q1 2024 | Q2 2024 | Q3 2024 | | Q3 YTD 2024 |
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| Workflows | 1.7% | 3.1% | 3.2% | | 2.7% |
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| Data & Feeds | 6.8% | 5.5% | 6.1% | | 6.1% |
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| Analytics | 6.5% | 3.8% | 5.2% | | 5.1% |
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| Data & Analytics | 4.3% | 4.3% | 4.6% |
| 4.4% |
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| Subscription | 6.2% | 13.2% | 13.1% | | 10.9% |
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| Asset-based | 16.4% | 14.1% | 1.8% | | 10.5% |
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| FTSE Russell | 9.5% | 13.5% | 9.2% |
| 10.8% |
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| Risk Intelligence | 12.5% | 10.4% | 10.4% |
| 11.1% |
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| Equities | 1.6% | 6.2% | 8.5% | | 5.4% |
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| Fixed Income, Derivatives & Other | 21.3% | 27.9% | 27.3% | | 25.5% |
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| FX | (2.2%) | 3.9% | 12.8% | | 4.8% |
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| Capital Markets | 14.4% | 20.6% | 22.4% |
| 19.1% |
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| OTC Derivatives | 0.1% | 6.6% | 18.4% | | 8.1% |
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| Securities & Reporting | (0.5%) | 2.5% | (11.1%) | | (3.1%) |
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| Non-cash collateral | 6.5% | 5.4% | 5.3% | | 5.7% |
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| Net treasury income | (2.6%) | (14.7%) | (5.5%) | | (7.8%) |
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| Post Trade | (0.1%) | 0.1% | 4.8% |
| 1.6% |
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| Other | (43.9%) | (48.6%) | (75.1%) | | (55.1%) |
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| Total income (excl. recoveries) | 6.4% | 7.8% | 8.7% |
| 7.7% |
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Total income and gross profit by quarter
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2023
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| 2024 | |||||||||
| £m | Q1 | Q2 | Q3 | Q4 | FY | | Q1 | Q2 | Q3 |
| YTD | |
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| Workflows | 488 | 473 | 465 | 477 | 1,903 | | 479 | 479 | 472 |
| 1,430 | |
| Data & Feeds | 446 | 454 | 443 | 467 | 1,810 | | 465 | 472 | 465 |
| 1,402 | |
| Analytics | 56 | 55 | 55 | 52 | 218 | | 55 | 55 | 55 |
| 165 | |
| Data & Analytics | 990 | 983 | 962 | 996 | 3,931 |
| 999 | 1,006 | 992 |
| 2,997 | |
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| Subscription | 139 | 136 | 141 | 147 | 563 | | 144 | 153 | 156 |
| 453 | |
| Asset-based | 66 | 71 | 73 | 71 | 281 | | 74 | 81 | 71 |
| 226 | |
| FTSE Russell | 205 | 207 | 214 | 218 | 844 |
| 218 | 234 | 227 |
| 679 | |
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| Risk Intelligence | 120 | 121 | 123 | 128 | 492 |
| 131 | 132 | 131 |
| 394 | |
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| Equities | 59 | 57 | 55 | 56 | 227 | | 60 | 60 | 60 |
| 180 | |
| Fixed Income, Derivatives & Other | 269 | 246 | 259 | 294 | 1,068 | | 318 | 317 | 341 |
| 976 | |
| FX | 66 | 62 | 61 | 62 | 251 | | 61 | 64 | 67 |
| 192 | |
| Capital Markets | 394 | 365 | 375 | 412 | 1,546 |
| 439 | 441 | 468 |
| 1,348 | |
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| OTC Derivatives | 126 | 134 | 125 | 132 | 517 | | 138 | 141 | 148 |
| 427 | |
| Securities & Reporting | 64 | 63 | 64 | 63 | 254 | | 62 | 65 | 55 |
| 182 | |
| Non-cash collateral | 26 | 27 | 27 | 27 | 107 | | 28 | 28 | 28 |
| 84 | |
| Net treasury income | 73 | 77 | 70 | 69 | 289 | | 69 | 65 | 66 |
| 200 | |
| Post Trade | 289 | 301 | 286 | 291 | 1,167 |
| 297 | 299 | 297 |
| 893 | |
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| Other | 9 | 6 | 7 | 7 | 29 | | 5 | 3 | 2 |
| 10 | |
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| Total income (excl. recoveries) | 2,007 | 1,983 | 1,966 | 2,053 | 8,009 |
| 2,089 | 2,115 | 2,117 |
| 6,321 | |
| Recoveries | 93 | 96 | 88 | 93 | 370 | | 93 | 92 | 89 |
| 274 | |
| Total income (incl. recoveries) | 2,100 | 2,079 | 2,054 | 2,146 | 8,379 |
| 2,182 | 2,207 | 2,206 |
| 6,595 | |
| Cost of sales | (288) | (284) | (282) | (289) | (1,143) | | (289) | (299) | (283) |
| (871) | |
| Gross profit | 1,812 | 1,795 | 1,772 | 1,857 | 7,236 |
| 1,893 | 1,908 | 1,923 |
| 5,724 | |
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