Full Year 2024 London Stock Exchange Group PLC Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Russell Quelch - Redburn Atlantic - Analyst : Yeah. Hi, good morning, both David and MAP. Thanks for the detailed presentation. I wanted to ask a question on pricing and sales. So going back to the Q4 conference call, the S&P hosted a couple of weeks ago now, it was suggested that they had improved retention at full year client renewals. But they are seeing negative pressure on pricing and data and desktop from competition. I was just wondering, having completed your pricing round now, did you see the same dynamic or not? And as a follow up, how far through your back book are you in terms of developing enterprise sales contracts? Do we potentially see more large data deals being announced in 2025 as we did through the course of '24?

Question: Russell Quelch - Redburn Atlantic - Analyst : Super. Thank you so much.

Question: Bruce Hamilton - Morgan Stanley & Co LLC. - Analyst : Yeah, thanks. Good morning, guys, and thanks for taking my questions and for the presentation. I guess the -- I mean, there's been quite a lot of market focus given the departure of the Head of Data, so I was wondering if you could just provide some color. I mean, obviously the financial momentum in the business looks good, but just understanding that, given there's been quite a lot of movement in terms of senior heads within data since the Refinitiv deal was closed and within senior management more generally. And then just linked to that, in terms of any sort of contract losses that are sort of in line of sight, those are embedded in the guidance. Any color you can add there. I think there's been debate around UBS, for example. I know you don't like to talk about specific contracts, but any color that would be helpful. Thank you.

Question: Bruce Hamilton - Morgan Stanley & Co LLC. - Analyst : Great stuff. Thank you.

Question: Michael Werner - UBS Investment Bank - Analyst : Thank you, guys. Congrats on the results. Just a question on the index business. If you take a look at the constant currency organic growth rate within subscription revenues on FTSE Russell, it's been quite volatile throughout the year, it started around 8%, 9% Q1; 13%-ish Q2, Q3; and then it's dropped down, I think, back to around 9%, 8% in Q4. I was just wondering, how we should think about that. I mean, look, you know we've seen really good developments in this business in recent years. Are these -- should we look at kind of the average growth rate? Are there any kind of auditing fees or difficult comps there? And then, just as we look forward, how do you think about the strength of that business was driving this growth, in particular? Thank you.

Question: Kyle Voigt - KBW - Analyst : Hi, good morning, everyone. Maybe just a question in terms of the margin target out to 2026. I think it implies closer to 100 basis points of EBITDA to margin expansion in '26 versus the 50 to 100 basis point range for '25. Can you just clarify the main driver of that kind of slight acceleration in margin expansion that's expected in '26? And then, second part to the margin question is, really just as we think about a longer-term horizon, what's the right way to think about incremental margins of the business or more normalized expense growth rates as we move into 2027 and beyond as you're past the Refinitiv-related synergy realization?

Question: Kyle Voigt - KBW - Analyst : Perfect, thank you.

Question: Hubert Lam - Bank of America Securities - Analyst : Hi, good morning. Thank you for taking my questions. I just got one on Microsoft, so it's good to see good progress on the Microsoft partnership and the pipeline coming up. Maybe if you can share some feedback, from clients who've used them so far and also, when should we expect the upside from Microsoft benefits coming through in your growth numbers? Is it more the back end of this year or 2026, like how much of your guidance for '25 includes the Microsoft benefits or is it more of a driver for '26 and beyond? Thank you.

Question: Hubert Lam - Bank of America Securities - Analyst : Upside in growth.

Question: Hubert Lam - Bank of America Securities - Analyst : Okay, so it's taking all -- thank you.

Question: Hubert Lam - Bank of America Securities - Analyst : Yeah, so if I take this all together, then potentially there could be more growth in '26 versus '25 and then your guidance you've given '25.

Question: Hubert Lam - Bank of America Securities - Analyst : Yeah. Sounds good. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00AM, LSEG.L - Full Year 2024 London Stock Exchange Group PLC Earnings Call

Question: Enrico Bolzoni - JPMorgan - Analyst : Hi, thank you for taking my question. I was looking at slide 37 where you presented the pipeline of products coming this year. Just on my eye the fact that now you play quite soon in 2H, maybe I'm reading too much into that, but the launch of Open Directory and towards the end of last year, I think you were mentioning that this was a big project that and the target was to complete it by the very end of 2025. So looking at the slide looks that maybe things are moving a bit faster than expected. Is that fair? So could we see it perhaps already in 3Q? And related to that, can you share any insight or whether you have conversation with clients and there are a few clients that already told you, I don't know, I love your product. I'm just waiting for the Open Directory to be live and then, I would switch out of a competitor and move to LSEG. So I just wanted to understand how good of a visibility do you have on winning large accounts, large mandates once this project is featured live.

Question: Enrico Bolzoni - JPMorgan - Analyst : Thanks, and that's so -- sorry to go back on the first point, if I have to summarize your confidence that actually Teams will be live in 2H. Obviously, it's a gradual process, but is it fair to say it's very high? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00AM, LSEG.L - Full Year 2024 London Stock Exchange Group PLC Earnings Call

Question: Enrico Bolzoni - JPMorgan - Analyst : Yeah, in terms of being confident that actually this will be a product live --

Question: Enrico Bolzoni - JPMorgan - Analyst : Great. Thank you.

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : Good morning. Yes, my question is on SwapClear. I think during the presentation, you outlined the fact that there was some pricing benefit that aided OTC revenues grow. I'm just wondering if you could give us a bit of a quantification as to how much of an impact that has had. Also, if I think back over the past few years, it seems like there is a bit of a repricing cycle happening every three years or so. Is that something you can confirm and whether we should expect that going forward? And, secondly, if I could also ask -- my follow up on the division, I'm just wondering how we should think about the impact of EMIR 3.0 and potential upside on OTC derivatives. Thank you.

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : Yeah. No, I think, in one of your slides you -- on Post Trade and you say that OTC derivatives benefited from pricing increases at SwapClear. And I think if I reflect back over the past 10 years or so, it seems to me that every three years or so, that there's an increase in price, if that's the case, and if you can continue pricing up at that sort of cadence. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00AM, LSEG.L - Full Year 2024 London Stock Exchange Group PLC Earnings Call

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : Yeah.

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : Alright, thank you.

Question: Benjamin Goy - Deutsche Bank - Analyst : Hi, good morning. Maybe one on cash flow, and thanks for the guidance and more details. So it looks like a bit more than GBP200 million increases in '25. And looking at the revenue guidance and margin improvement, I would expect more than 3 times of that and hopefully one-offs come down. Maybe you can explain the moving parts here and whether it's conservative. And linked to that, looks like you would have more higher power for buybacks. How should we think about that? You mentioned H1. Is it conditional on larger M&A or you would also feel comfortable increasing leverage again within your guidance range, of course? Thank you.

Question: Benjamin Goy - Deutsche Bank - Analyst : Wonderful. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00AM, LSEG.L - Full Year 2024 London Stock Exchange Group PLC Earnings Call

Question: Andrew Coombs - Citi - Analyst : Good morning. Two follow-ups, please, one on Post Trade and one on Data & Feeds. If I come back to Arnaud's point on Post Trade, that business has grown -- the OTC derivative line, at least, is growing 11% year on year and 19% year on year in Q4, so incredibly strong. You flagged the SwapClear pricing change in February, and that's after two years. So I presume there will be no step change in pricing this year. I think your volumes are up 21%, notional cleared in SwapClear, so extremely strong. So just trying to think about this from a cyclical versus structural growth perspective. Would you expect some of the cyclical tailwinds to moderate this year, but perhaps the integration of Acadia, SwapAgent, Quantile under Post Trade Solutions still provide some structural growth? Can you give us your thoughts on trajectory from here for that line? And then the second one, Data & Feeds, almost the opposite way around and that you've gone from 9% growth year on year to 6% growth year on year, but that includes the Credit Suisse contract loss. You had the major client enterprise agreement signed at the start of last year. So should we expect that to improve and recover this year? Thank you.

Question: Andrew Coombs - Citi - Analyst : Yeah, 9% and 6%.

Question: Iulian Dobrovolschi - BN AMRO, ODDO BHF B.V. - Analyst : Hello, good afternoon, gentlemen. Thanks for taking my question. I have one on the CapEx guidance. So I was just wondering what are the new areas of investments, which were not part of the previous plan, given that forecast 10% CapEx relative to revenue of 2025? And I believe in the past, you were guiding for a high-single digit previously. So I'm just curious what has changed now. And maybe a quick follow-up on the capital allocation for 2025. It looks like you keep the door open for selective M&A. I would appreciate if you could comment a bit about the areas of potential targets for inorganic growth that you might consider for 2025.

Question: Iulian Dobrovolschi - BN AMRO, ODDO BHF B.V. - Analyst : Appreciate it. Thanks.

Question: Benjamin Bathurst - RBC Capital Market - Analyst : Good morning. My question is on workflows. You've seen sequential growth improvements there each quarter in 2024. I wonder, do you think the exit rate is sustainable into 2025? Or might we expect any noise around the sunsetting of Eikon in H1? And my follow-up of sorts is that you mentioned first generative AI capabilities in Workspace in H2 2025. And would -- can you clarify, will that be accessible to all Workspace users or just those with Copilot? Thank you.

Question: Ian White - Autonomous Research - Analyst : Oh yeah, thanks for taking my questions. Just -- firstly, just in terms of the -- some of the comments you made in relation to slide 27. Maybe you can say a bit more about the extent to which some of the new product innovations, especially the e-commerce platform, Data-as-a-Service and Meeting Prep showing evidence of providing the group with access to a slightly different type of clients to the large financial institutions. I'm thinking about corporates and smaller financial clients. To what degree are we seeing those newer items helping you in those groups, please? That's my main question. And just a follow-up, please, on the technology side. Can you just describe what is left to do on the journey to getting 70% of the engineering capability in sourced? Sort of how many more people you need to hire? Are there specific skills and capabilities that you sort of need to locate? Is it as simple as converting some existing contract relationships to permanent employees? Just some help understanding what actually needs to happen there, that would be great. Thank you.

Question: Ian White - Autonomous Research - Analyst : Thanks a lot. It's very helpful detail.