Q3 2024 London Stock Exchange Group PLC Trading Statement Call Transcript

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

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : Yeah, good morning. Just if I could start with SwapClear. It looks like the revenues went broadly -- went up broadly in line with the volumes there, showing a bit lesser pricing compression than what we're used to seeing. I know you don't give the full disclosure, but normally there's a bit less -- a bit more pricing elasticity. I'm just wondering if you could unpack that division a bit more for us to understand a bit more the dynamics around volume growth and revenue upside. And my second question --?

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : Yeah, yeah. So really strong revenue growth in SwapClear, which is linked to revenues. Historically, we've seen volume upside lead to some revenue upside, but not the beta that we've seen this time around. So it seems as though you're capturing a bit more pricing. I'm just wondering if there's something going on there and if this is sustainable? My second question is on LCH. Really attractive price there. I'm just wondering, with 6% minority left, is there a mechanism or process in place to buy out the remaining? And my third question is on Workspace. I mean, I think normally you have pricing discussions in the summer with the agreements in place for pricing in 2025. Is there any color you can give us on how those went and what sort of pricing we should be expecting coming through in 2025?

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : Similar yield, do you mean similar pricing increase?

Question: Benjamin Bathurst - RBC Capital Markets - Analyst : I've got three questions, if I may. Starting with a couple on Data & Analytics. I wonder, can you comment on Q3 Workspace net sales relative to Q2? I think at the time, you said net sales were the strongest in that quarter for many years. Would you say they were at similar level in Q3? Or perhaps did they increase further? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 9:00AM, LSEG.L - Q3 2024 London Stock Exchange Group PLC Trading Statement Call And then could you update on which markets where you're seeing the Workspace product gain the most traction? Is there a particular user group or geography where the proposition is resonating best currently? And then thirdly, just on market growth. You gave illustrative growth CAGRs for your markets at the CMD in November last year. I just wondered, are you still comfortable with those market growth assumptions out to 2025? Or might you be minded to move those around at all now for the benefit of the actual year's information that you now have?

Question: Hubert Lam - BofA Securities - Analyst : I've got three questions. Firstly, can you talk about the FTSE Russell contract loss? Can you discuss like more why it happened and any impact on earnings from this going forward? That's the first question. Second one is on Workspace. Maybe I missed it in your -- but when should we expect the introduction of Open Directory and Teams in Workspace? Is this more just by the year-end? Or is this something that's expected to happen in the first half of next year? And lastly, just in terms of pricing. I know you're saying that the yields won't change for this year. But when should we expect the uptick in terms of pricing, which would, I guess, bridge the gap between where Workspace is today versus some of your other competitors? Should we expect a bigger pricing increase in '25? And then maybe it's a bit too early to figure out -- to know how much it's going to be, but should we just expect it to be higher than what you expect for '24? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 9:00AM, LSEG.L - Q3 2024 London Stock Exchange Group PLC Trading Statement Call

Question: Hubert Lam - BofA Securities - Analyst : Yeah. Yeah, I guess for next year -- I guess, in the beginning of next year, you -- I think you said the pricing increase is similar to this year, which is, I think, about 3%, if you can confirm that. And I guess when --? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 9:00AM, LSEG.L - Q3 2024 London Stock Exchange Group PLC Trading Statement Call

Question: Hubert Lam - BofA Securities - Analyst : 3.5%. Okay. And I guess, we should assume like a bigger price increase into year after as the Microsoft updates come through?

Question: Russell Quelch - Redburn Atlantic - Analyst : Hey, good morning. A couple of questions here. The first topic is around ASV growth, please. So of the 40 basis points sequential fall in ASV growth, how much of that was CS/UBS incremental impact in the quarter? I was wondering if there were any sales made in the quarter where you did again some discounting, which had a negative impact on growth or not, if there's any change in the underlying sales environment. And maybe were there any sales made in this quarter where you've made the sale, but you're unable to sort of install the product, so we've got to wait for that impact to come in ASP growth in future quarters? That's my first question with three parts to it. The second question is around Tradeweb, please. So you spoke previously of greater or increased integration with Tradeweb, working together on new product opportunities. Can you maybe provide an update on where you're at with those -- or with that process? Are there any new products we should be expecting, co-developed products in 2025? And maybe timing of any future rollout? Thanks.

Question: Russell Quelch - Redburn Atlantic - Analyst : And MAP, just to clarify, so there was no incremental impact from additional discounting or no change in the underlying sales environment for that impact?

Question: Benjamin Goy - Deutsche Bank AG - Analyst : Two questions from my side as well, please. First, staying with ASV. Essentially unchanged expectations for the final quarter of 2024. Just trying to understand whether you assume a more pronounced impact of Credit Suisse in the quarter or more spread out over the next three quarters of the remaining impact. And then on Workspace and the Microsoft cooperation, if you can help us to understand the single sign-on end of this year and Open Directory from second half, if you think about revenue growth and the potential it has with MS Teams integration? How do you think the phasing is then following the second half '25? How quickly can it go? Should we first expect churn to fall and then net sales to increase? Any thoughts around that would help. Thank you.

Question: Iulian Dobrovolschi - BN AMRO - ODDO BHF B.V. - Analyst : Hi, good morning, gentlemen. Thanks for taking my question. I have two. Just to start with the first, a quick one on the Microsoft as well. Before going probably like in too much of detail, can you just probably highlight two of the commercial successes you already had on the couple of pilots that you're probably already doing with some of your customers? And then the second one is on the Data-as-a-Service initiative. So this is your initiative to penetrate the unvented data and analytics market. So it seems that you've already made quite some steps into this direction in Q3. So running a bit of a pilot with a few customers and potentially we can expect more as of Q4 going forward. Now can you please talk a bit about your opportunity set in Data as a Service broadly? And what sort of economics do you expect to generate from this initiative in the short term?

Question: Iulian Dobrovolschi - BN AMRO - ODDO BHF B.V. - Analyst : No, no, that was great. Just maybe a follow-up on the Microsoft stuff. So given the feedback that you've got from the clients, I was just wondering, did you already also discuss with them, let's say, the pricing of potential product? Or are you still more or less in the discovery phase on this end?

Question: Ian White - Bernstein Autonomous LLP - Analyst : Firstly, just on the ETF contract cancellation. I think I'm right that this looks like quite a rare example of a large US product manufacturer opting switch to a smaller niche index provider and seemingly being content to lose the Russell brand from its products. I think historically that's been very unusual for FTSE Russell specifically and the index industry more broadly, that the brand power is generally quite strong versus the sort of smaller competitors. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 9:00AM, LSEG.L - Q3 2024 London Stock Exchange Group PLC Trading Statement Call So I guess just in that context, why shouldn't we read into this that there might be some weakening of that sort of competitive advantage that FTSE Russell has had? Can you just provide any more detail around the decision that the client has made there that helps us to understand sort of why we should be sort of relatively sanguine about that and viewing it as a one-off? That's question one, please. And then secondly, just on the Workspace migration. Can you just clarify, are you seeing the same appetite to migrate from Eikon to Workspace and indeed the sort of positive feedback that you've noted to us previously across the whole user base? I'm particularly interested, are front office or full service Eikon customers migrating as quickly as the middle and back-office users, please, in terms of how that's progressed so far? Thanks.

Question: Johannes Thormann - HSBC - Analyst : Good morning, everybody. Some questions from my side as well, please. First of all, on the Post Trade participation, you're moving in different directions for LCH and Euroclear. Could you comment on the strategic rationale for selling the stake in Euroclear, which has been announced by -- or has been in the press? And probably also in this respect, just on participations or major stakes, any plans to increase your stake in Tradeweb? Secondly, on the Workspace migration, coming back, can you share how many customers in percentage terms, relatively rough numbers at least, have been migrated so far? And then it seems that the migration is taking a bit longer because earlier you said you will sunset Eikon early 2025. Now we talk about H1. And is this -- are there some delays? And last but not least, just on the cost of sales. They reflect the FTSE Russell impact also in another way. Is this current level now a good run rate for the next quarters? Or should we rather look at the previous quarter level?

Question: Michael Werner - UBS Investment Bank - Analyst : Thanks very much, guys. Two questions from me, please. First, we've seen really strong revenue growth from the overall group business this year and it's been accelerating throughout the quarters. And I think in the first nine months, it's around 7.7%. Previously, you have guided to accelerating revenue growth in 2025 versus 2024. So I just want to confirm that, that's still the case given the nearly 8% growth that we have seen to date. And then second, maybe just diving a little bit closer into FTSE Russell on the subscription side. Again, a very good quarter in terms of growth at 13% on a constant currency basis. Can you just give us a little bit of color what's driving some of that growth? Is it fixed income? Is it certain regions, certain types of customers? Maybe the collaboration with Tradeweb? Any color there would be really helpful.

Question: Bruce Hamilton - Morgan Stanley & Co LLC. - Analyst : Hi, morning. Thanks for taking my questions. Just digging a bit further on Microsoft as you've given quite a lot of color on the sort of rollout in terms of sort of enhancements to Workspace effectively. But taking a step back, I think when you've looked at the sort of growth path, has Data as a Service always struck you as the bigger incremental revenue opportunity? And is that something in terms of feedback with clients that would be the case? Or is it sort of similar when we compare that to the initial product rollout? And then linked to that, in terms of the migration of data sets to the cloud, what's the sort of -- obviously, that started. But what sort of time frame for getting that done? And then final question. Just given the dynamism in product evolution, any sort of emerging use cases that you can mention that you're perhaps excited about but haven't said too much about thus far with Microsoft? Thank you.

Question: Oliver Carruthers - Goldman Sachs Group, Inc. - Analyst : Oliver Carruthers from Goldman Sachs. Just one question for me on Meeting Prep. I guess, this is just one product or add-on, but it's obviously an interesting and tangible AI use case for financial services. And it seems like the debate on AI has become a little bit more nuanced in the last six months or so. So it would be kind of great, David, to hear your perspective on how your customers are thinking about these kind of AI-enabled cases for their workflows in terms of driving efficiency, particularly as you work through the pilot phases here and near commercialization with this one product. Thank you.

Question: Oliver Carruthers - Goldman Sachs Group, Inc. - Analyst : That's very clear. Thanks, David. So it sounds like the appetite to collaborate and participate in this is there. But the kind of complexity and delivery is, I guess, a kind of very important topic as you navigate this, which obviously has kind of barrier to entry implications as well.