Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues increased by 7.6% in the first half of 2024, with growth across all business lines.
- Strong cash flow growth supported significant shareholder returns, including a GBP1 billion share buyback and a 15% increase in the interim dividend.
- The partnership with Microsoft is progressing well, with new products expected to be available by year-end.
- FTSE Russell had a very strong first half, with broad-based growth in both equity and fixed income franchises.
- The company achieved a 50 basis point improvement in H1 margins, demonstrating a focus on efficiency and discipline.
Negative Points
- The Post Trade division faced challenges, including the impact of the loss of the Euronext business.
- The due diligence business continues to be impacted by a shortage of IPOs in the Asian market, particularly in Hong Kong.
- Net finance expenses increased by GBP30 million in H1 due to higher coupons on refinanced debt and front-loaded share buybacks.
- The effective tax rate rose from 23.7% to 24.8%, influenced by last year's increase in the UK corporation tax rate.
- The integration of Credit Suisse's impact on ASV is expected to continue into H2 and possibly into H1 2025, posing a headwind to growth.
Q & A Highlights
Q: Could you remind us what the residual headwinds related to Credit Suisse are and if they will be materially complete by year-end?
A: We expect the impact from Credit Suisse to be around 100 basis points on ASV, with 50 basis points already behind us and the remaining 50 basis points expected in H2 or possibly extending into H1 2025. We maintain our guidance of around 6% ASV growth for the year.
Q: Are there other mutually beneficial partnerships you are exploring to enhance your data analysis capabilities?
A: We have a dedicated team focused on partnerships, and we consistently look for opportunities to collaborate. This approach aligns with our open access philosophy and helps us leverage our distribution capabilities.
Q: Can you give us an idea of whether displacements are more common among clients with multiyear strategic partnerships or smaller clients?
A: Displacements are occurring in both segments. Enterprise agreements with large clients incentivize broader service adoption and cost reduction, while smaller clients also see value in our end-to-end offerings.
Q: How do you plan to monetize the upcoming tools and innovations, particularly those from the Microsoft partnership?
A: Monetization will come through price realization, increased consumption, and new licenses. Enhanced products like Workspace will see price adjustments, while Data & Feeds will benefit from increased consumption due to easier data access. New licenses will be introduced for new products.
Q: What is the outlook for FX clearing in light of new regulations?
A: The core business of ForexClear is performing well, with growth in volumes and new members. Our smart clearing service, which optimizes capital and margin in FX forwards, is gaining traction and providing significant capital efficiencies.
Q: Can you help us think about the pacing of margin expansion from here?
A: We are comfortable with the consensus on margin improvement. We have strong levers in place, such as resource cost management and non-personnel cost optimization, which will support margin expansion over time.
Q: What is resonating with clients in terms of the value proposition of Workspace and other workflow products?
A: Clients appreciate the continuous improvements in Workspace, including better data integration, enhanced interfaces, and partnerships like the one with Dow Jones. These factors collectively drive displacements and customer satisfaction.
Q: How should we think about the phasing of revenue growth in 2025?
A: Revenue growth will accelerate after 2024, driven by improvements in Post Trade and the monetization of investments in Data & Analytics and Workspace. The full impact of these initiatives will be more pronounced in 2025 and beyond.
Q: How do you view your data capabilities within private markets, and would you consider inorganic growth in this area?
A: We have significantly increased our coverage of private companies and continue to invest in this dataset. While we are always looking to improve, we evaluate both organic and inorganic growth opportunities based on strategic and financial discipline.
Q: Can you provide more detail on the cost synergy targets and the remaining integration costs?
A: We are on track to achieve GBP1.4 billion in total integration costs by the end of 2024, with the remaining GBP200 million split between CapEx and OpEx. Most of these costs will be realized by the end of this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
