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October 21, 2022

London Stock Exchange Group plc: Q3 2022 Trading Update

Broad based growth, sustained execution, guidance unchanged

David Schwimmer, CEO said:
“We have delivered another strong quarter, with good growth across all businesses. The consistency of delivery in recent quarters demonstrates the strength of our business model, generating quality recurring revenues from a range of services that are highly valued by our customers.

“Our strategy is working, delivering growth and increasing efficiency. We are investing organically for growth and completed the acquisition of TORA during the quarter to strengthen our offering in Trading & Banking. We are also making good progress on returning surplus capital to shareholders through our share buyback programme.

“With sustained execution, a broad base of businesses and leading market positions, we remain well positioned.”

Q3 2022 highlights

  • Strong growth continues across all divisions: total income excluding recoveries up 16.2% on a reported basis, to £1,905m. Up 5.9% on a constant currency basis, and up 7.0% adjusting for Ukraine and Russia conflict impact[1]
  • High-quality recurring revenue: like-for-like ASV growth continues to improve, up 5.8% in Q3 (up 280 basis points since Refinitiv acquisition in Q1 2021); driven by new sales and improved retention
  • Continued good progress on integration: revenue and cost synergies in line with targets
  • Active capital management:

- TORA acquisition completed, enhancing Trading & Banking Solutions in Data & Analytics; provisional clearance achieved for Quantile acquisition, expected to complete in Q4

- Share buyback: £235 million returned in Q3 as part of our active 12 month, £750 million share buyback programme

  • Well-positioned for further growth: strong progress, no change to guidance or targets

Note: Unless otherwise stated, variances refer to growth rates relative to Q3 2021 on a constant currency basis

This release contains revenues, cost of sales and key performance indicators (KPIs) for the three months ended 30 September 2022 (Q3), certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Throughout this document, revenues and cost of sales associated with the BETA divestment, completed on 1 July 2022, and the Borsa Italiana divestment, completed in H1 2021, have been classed as discontinued and are excluded from all periods. To reflect underlying performance, all constant currency variances compare the current and prior period at consistent exchange rates. For more information on accounting treatments and approach to FX please refer to the “Accounting and modelling notes” section below.

[1] Growth rates excluding the Ukraine / Russia conflict impact exclude income in the region and from sanctioned customers and related business from both periods

Q3 2022 summary

The deferred revenue accounting adjustment[1] was immaterial to growth rates in Q3.

 

 

 

 

 

 

Continuing operations

Q3 2022
£m

Q3 2021
£m

Variance
%

 

Constant Currency Variance
%

 

         

Trading & Banking Solutions

417

373

11.8%

 

1.0%

Enterprise Data Solutions

332

284

16.9%

 

6.2%

Investment Solutions

344

294

17.0%

 

4.7%

Wealth Solutions

71

61

16.4%

 

5.0%

Customer & Third-Party Risk Solutions

110

92

19.6%

 

8.5%

Data & Analytics

1,274

1,104

15.4%

 

4.1%

 

         

Equities

60

60

0.0%

 

1.2%

FX

68

56

21.4%

 

4.3%

Fixed Income, Derivatives & Other

241

193

24.9%

 

12.1%

Capital Markets

369

309

19.4%

 

8.6%

 

         

OTC Derivatives

103

86

19.8%

 

14.5%

Securities & Reporting

55

60

(8.3%)

 

(7.4%)

Non-Cash Collateral

25

24

4.2%

 

0.8%

Net Treasury Income

66

47

40.4%

 

30.7%

Post Trade

249

217

14.7%

 

10.4%

 

         

Other

13

9

44.4%

 

23.4%

Total Income (excl. recoveries)

1,905

1,639

16.2%

 

5.9%

Recoveries

80

90

(11.1%)

 

4.5%

Total Income (incl. recoveries)

1,985

1,729

14.8%

 

5.9%

Cost of sales

(289)

(227)

27.3%

 

12.4%

Gross Profit

1,696

1,502

12.9%

 

4.9%

[1] The deferred revenue adjustment is further explained in the “Accounting and modelling notes” section

Q3 2022 business highlights
Constant currency basis

  • Data & Analytics: revenues up 4.1%; up 5.4% excluding impact of Ukraine / Russia conflict, with good growth across all businesses. In particular:

Trading & Banking Solutions: up 1.0%; up 3.5% excluding impact of Ukraine / Russia conflict with an improved product offering reflected in stronger sales and continued good retention. First time contribution from acquisition of TORA.
Enterprise Data Solutions: up 6.2%; up 7.1% excluding impact of Ukraine / Russia conflict as investment in data content improved retention and sales growth; contribution of MayStreet’s low-latency capabilities.
- Investment Solutions: up 4.7%; continued strong growth across Benchmark, Indices and Analytics, up c.8% adjusting for prior year effects; resilient Asset-based revenues with encouraging product inflows.

  • Capital Markets: revenues up 8.6% with strong demand for our services and benefit of volatility at the end of the quarter. In particular:

Fixed Income, Derivatives & Other: strong performance at Tradeweb, with double-digit revenue growth across Rates, Credit, Equity and Money Market asset classes.

  • Post Trade: total income up 10.4% reflecting strong demand for clearing services; good performance in OTC markets as we helped customers manage their risk in an uncertain market environment. Higher Net Treasury Income (NTI) reflects increased cash collateral (up 45% yoy to €151 billion).
  • Cost of sales: up 12.4% reflecting strong SwapClear performance where revenue share arrangements are in place, additional cost of sales from acquisitions, and continued growth in Data & Analytics.

Share buyback programme

In August 2022, we announced a £750 million on-market share buyback programme through three tranches over a 12 month period. We made good progress in Q3, repurchasing 3.0 million shares for £235 million. The first tranche of £250 million (3.1 million shares) completed on 5 October 2022. The next tranche will commence on 1 December 2022.

Board appointment

William Vereker joined the Board as a Non-Executive Director with effect from 3 October 2022 and will also serve on the Risk, Remuneration and Nomination Committees. William brings a strong track record in the global financial services sector. His international experience in developing senior relationships, managing risk and organisational change will benefit the Group as we look to further capitalise on the trends shaping our industry.


Statutory[1] Q3 YTD results

Continuing operations

Q3 9m 2022
£m

Q3 9m 2021
£m

 

 

 

Trading & Banking Solutions

1,186

994

Enterprise Data Solutions

953

761

Investment Solutions

980

819

Wealth Solutions

202

163

Customer & Third-Party Risk Solutions

306

239

Data & Analytics

3,627

2,976

 

 

 

Equities

190

180

FX

191

147

Fixed Income, Derivatives & Other

708

521

Capital Markets

1,089

848

 

 

 

OTC Derivatives

294

255

Securities & Reporting

177

183

Non-Cash Collateral

74

70

Net Treasury Income

187

155

Post Trade

732

663

 

 

 

Other

25

22

Total Income (excl. recoveries)

5,474

4,510

Recoveries

246

238

Total Income (incl. recoveries)

5,720

4,747

 

 

 

Cost of sales

(793)

(619)

Gross Profit

4,927

4,128

[1] Statutory figures for 9 months to 30 Sep 2021 incorporate figures from Refinitiv for February to September 2021.

Pro-forma Q3 YTD results

 

 

 

 

 

 

 

 

Continuing operations

Q3 9m 2022
£m

Q3 9m 2021
£m

Variance
%

 

Constant Currency Variance
%

Constant Currency Variance (excl. deferred revenue adjustment) 1
%

 

 

 

 

 

 

 

Trading & Banking Solutions

1,186

1,118

6.1%

 

0.3%

(0.4%)

Enterprise Data Solutions

953

845

12.8%

 

7.0%

6.2%

Investment Solutions

980

854

14.8%

 

7.3%

6.8%

Wealth Solutions

202

184

9.8%

 

3.7%

3.2%

Customer & Third-Party Risk Solutions

306

267

14.6%

 

8.5%

7.6%

Data & Analytics

3,627

3,268

11.0%

 

4.7%

4.0%

 

 

 

 

 

 

 

Equities

190

180

5.6%

 

5.6%

5.6%

FX

191

166

15.1%

 

5.7%

5.5%

Fixed Income, Derivatives & Other

708

580

22.1%

 

15.0%

15.0%

Capital Markets

1,089

926

17.6%

 

11.5%

11.5%

 

 

 

 

 

 

 

OTC Derivatives

294

255

15.3%

 

12.9%

12.9%

Securities & Reporting

177

183

(3.3%)

 

(1.2%)

(1.2%)

Non-Cash Collateral

74

70

5.7%

 

4.3%

4.3%

Net Treasury Income

187

155

20.6%

 

17.2%

17.2%

Post Trade

732

663

10.4%

 

9.1%

9.1%

 

 

 

 

 

 

 

Other

25

24

4.2%

 

0.3%

0.3%

Total Income (excl. recoveries)

5,474

4,881

12.1%

 

6.6%

6.1%

Recoveries

246

268

(8.2%)

 

3.5%

2.7%

Total Income (incl. recoveries)

5,720

5,149

11.1%

 

6.4%

5.9%

Cost of sales

(793)

(679)

16.8%

 

8.6%

8.6%

Gross Profit

4,927

4,470

10.2%

 

6.1%

5.6%

 

[1] Excludes the deferred revenue adjustment further explained in the “Accounting and modelling notes” section

About London Stock Exchange Group

LSEG (London Stock Exchange Group) is a leading provider of financial markets infrastructure and a global supplier of data and analytics, news and index products.

We help businesses and economies fund innovation, manage their risk and create jobs by supporting customers at every point in the trade lifecycle – from making pre-trade decisions and executing those trades to raising capital and settlement.

With 23,000 people in 70 countries, we draw on 300 years of knowledge and experience to help drive financial stability, empower economies and enable sustainable growth.
 

Contacts

Investors
Peregrine Riviere
Chris Turner – Investor Relations
ir@lseg.com

Media
Lucie Holloway
Rhiannon Davies – Financial Communications
+44 (0) 20 7797 1222
newsroom@lseg.com