• Revenue Growth: Up 8.4% overall, 7.7% on an organic basis.
• Equity-Free Cash Flow: Increased to GBP2.2 billion.
• Operating Margin: Improved by 80 basis points to 48.8%.
• Data & Analytics Growth: 4.5% organic growth.
• Capital Markets Growth: Nearly 18% growth, driven by Tradeweb's performance.
• Post Trade Growth: Slight growth despite headwinds.
• ASV Growth: 6.3% as of year-end 2024.
• Tradeweb Average Daily Volume: $2.2 trillion, up 37% excluding ICD.
• Adjusted Operating Profit (AOP) Growth: 9.5% increase.
• Adjusted EPS (AEPS) Growth: 10% increase.
• Dividend Increase: Final dividend up 12.2% to 89p.
• Share Buybacks: GBP1 billion deployed in 2024.
• Net Debt to EBITDA: 1.7 times leverage.
• 2025 Revenue Growth Guidance: 6.5% to 7.5% expected.
• 2025 EBITDA Margin Guidance: Improvement of 50 to 100 basis points.

• Warning! GuruFocus has detected 6 Warning Signs with LDNXF.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• London Stock Exchange Group PLC (LDNXF) reported strong revenue growth of 8.4% for 2024, with an organic growth rate of 7.7%.
• The company achieved an 80 basis point improvement in operating margin, demonstrating efficient growth.
• Equity-free cash flow increased significantly to GBP2.2 billion, supporting shareholder returns and future investments.
• Capital Markets division experienced exceptional growth, nearly 18%, driven by Tradeweb's record performance.
• The integration of Tradeweb data into FTSE Russell progressed well, enhancing product offerings and market reach.

Negative Points

• The loss of the Euronext business impacted Post Trade growth, despite a strong performance in 2023.
• There were concerns about senior management turnover, particularly in the Data & Analytics division.
• The company faced challenges with contract losses, including the UBS-Credit Suisse consolidation.
• Interest expenses increased due to higher refinancing costs, impacting net financial expenses.
• The effective tax rate rose to 24%, influenced by the UK corporation tax rate increase.

Q & A Highlights

Q: Did LSEG experience any pricing pressure in data and desktop segments similar to competitors? A: David Schwimmer, CEO, stated that LSEG did not experience the same pricing pressure as competitors. The company has a diversified business model across buy-side, sell-side, and corporates, which has helped maintain stability. Enterprise sales contracts are a small part of the business, and while there are ongoing discussions, nothing specific was announced.

Q: Can you provide insights on the departure of the Head of Data and any potential contract losses? A: Schwimmer explained that leadership changes are natural and part of the company's transformation. The departure of the Head of Data was for other opportunities, and there are no significant contract losses affecting guidance. The business continues to perform well despite industry chatter.

Q: What is driving the volatility in FTSE Russell's subscription revenue growth? A: Michel-Alain Proch, CFO, noted that FTSE Russell had strong demand for its flagship equity index and benchmark products. Quarterly fluctuations are due to strong sales performance comparisons from the previous year and normal sales variations.

Q: What are the main drivers for the expected margin expansion in 2026? A: Proch explained that the margin expansion is driven by operating leverage, particularly through the insourcing of engineering resources and automation projects. The company aims for a 250 basis point margin improvement by 2026, with incremental benefits from automation expected in 2026.

Q: When will the benefits from the Microsoft partnership be reflected in growth numbers? A: Schwimmer indicated that while products are rolling out in 2025, significant growth impact is expected in 2026 and beyond. The partnership is expected to enhance product functionalities and drive usage, contributing to future growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.