London Stock Exchange Group plc

Good morning, everyone, and welcome to LSEG's first quarter update. I'm here with David and Michel-Alain Mapp. He'll make some brief opening remarks on our Q1 performance, and then we'll open up to questions on the conference call line. So let me hand over to him right now.

Thanks, Peregrine. Good morning, everyone. I'm very happy to be talking to you for the first time after my first two months in the group. It has been quite an intensive onboarding. I've spent a lot of time in the business as well as joining David on investor roadshows. For me, the status is clear. We have a strong portfolio of businesses, a rapid pace of innovation, and a strategy that is well understood. Now it's time to execute. I'm excited about the potential of accelerating growth, and I also see the opportunity for improving margins and cash flows over the medium term, consistent with our guidance. I'm confident we will deliver all of that, and I'm already deeply engaged in making that happen. For 2024, we have started the year well, with a good performance across the group. There are some puts and takes across the business, but these are very much as expected. We remain well set for the rest of the year and are on track to deliver all of our guidance. Total income grew 7.3% on a constant currency basis. This includes 90 basis points of M&A benefit, mainly from Acadia in post-trade. Organic growth was 6.4% and I will actually refer to this metric through the rest of my comments. Growth was a little lower than in 2023, as expected. This mainly reflects the exceptional growth in post-trade in Q1 last year, plus some erosion from Credit Suisse. We saw a robust performance across all of our divisions, reflecting the strength of our product offerings and the benefits of our services to customers. Turning first to data and analytics. So this is the new DNA, reflecting the reporting changes we made at the start of this year. And we published 2023 numbers on this basis a few weeks ago. Overall, it represents just under half of the group. Organic growth was 4.3%. This compares to growth of 5.5% through 2023. As we highlighted at the full year result, our annual price increase was similar to what we achieved going into 2023, reflecting our investments in improving our products and services. In addition, our overall sales and retention performance was solid. As expected, we are now seeing a greater impact from the Credit Suisse cancellation in revenue growth. In addition, we renegotiated our relationship with another major investment bank at the start of the year. We moved from service-by-service contracts to a data access model, significantly extending the breadth of our relationship. In year one, this has resulted in a slight step down in revenue, but it will generate attractive growth and greater value over the full length of the new contract. Taking these two relationships together accounts for 1% of growth of DNA with a slightly bigger impact within data and feeds. Workflow's revenue was up 1.7%. Our underlying performance was consistent with the growth rates seen through 2023. We continued to make good progress on migrating customers from ICON to Workspace. We were able to retire our legacy SDC Platinum deals platform with all banking customers migrated to Workspace, which has SDC Platinum integrated. We have also maintained a strong pace of improvement and innovation. During the quarter, we made over 100 enhancements to the platform. In data and feeds, we had another solid performance, with growth of 6.8%. In Q1, we launched cloud-based real-time full-tick data, complementing our existing range of feed-based full-tick and real-time optimized services. And in analytics, we achieved 6.5% growth. It was primarily driven by demand for fixed income analytics. So you can see the pipeline of standalone innovation across the division is strengthening. And we are also making strong progress with Microsoft. Our first products, Meeting Prep and Open Directory, are now entering the pilot phase with customers. And our Leaper AI Insights platform is on the brink of commercialization. We are looking forward to bringing you feedback on these at the first half results. At the same time, we are accelerating the migration of our datasets to the Microsoft environment we have built. You can expect to hear more on the data intelligence services this will facilitate at our H1 in August. Turning now to our two new divisions, starting with FTSE Russell, our index business. FTSE Russell was a strong performer in Q1, with growth of 9.5%. The subscription line continued to grow well, up 6.2%, with some price benefits and good sales momentum. The reported slowdown in growth just reflects a one-off of around 3 million in the prior period which we reference at the time. Asset-based revenue was up 16.4%, combining new inflows, strong market performance, and a weaker comparable period in 2023. Risk intelligence continues its very strong trend, with growth of 12.5%, on top of similar levels of growth in the prior period. WorldCheck, our leading screening platform, remains a main driver, and we are also seeing good growth from our digital identity business. We had a busy start to the year in terms of new products. We launched a new platform in the quarter which consolidates third-party risk data, allowing customers to screen their supply chain and distribution networks effectively. And this month, we are launching a consumption-based pricing option for new customers for the first time. Let me turn now to ASV growth, which covers all the subscription business of the three divisions I just covered. ASV growth stood at 6.0% at the end of Q1. There are three main elements to the movement from Q4 6.7%. First price. As you know, the vast majority of our annual price increase lands in January. So given my earlier comments, in 2024, the price increase was equivalent to the one in 2023 and consequently was neutral to ASV growth from Q4 2023 to Q1 2024. Second, Credit Suisse. As you remember, we expected the impact to increase coming into 2024. And this accounted for half of the ASV slowdown quarter on quarter. Overall, we are now around halfway through the Credit Suisse impact on ASV. For the rest, this relates to the data access deal we struck at the start of the year with a large bank and which I mentioned earlier. It impacts on ASV and revenue in the year, but it will be a driver of growth in 2025 and beyond. Taking all this into account, we now expect ASV growth to be around these levels through the rest of 2024. Moving on to capital markets, this was a strong contributor to group growth in the quarter. Organic growth was 14.4%, consistent with the Q4 exit rate. TradeWeb was the main driver, with strong volumes and continued share gains, mostly in credit, including a record 17.6% share of fully electronic US high-grade bond volumes. This performance drove organic growth in our fixed income line of 21.3%, with total constant currency growth of 23%, including contributions from the acquisition of Yield Broker and Redfin. Earlier this month, we announced the acquisition of ICD, which brings a fourth leg to TradeWeb's business by opening up the corporate treasury channel. Its growth and margin profile is very similar to TradeWeb's and we think it makes an excellent and synergistic fit. Revenues in our equity business returned to growth, up 1.6%. In secondary markets, share gains for the LSE were offset by a decline in overall volumes. FX revenue was down 2.2%. Good volume growth in FX all was offset by a less favorable product mix towards short-dated FX swaps. We saw strong demand in Forward First Fixing, an innovative new product launched last year. Actually, 64 billion was traded using this protocol in Q1. Matching was affected by weakness in interbank volumes. Post-trade revenue grew 5% in constant currency and were flat on an organic basis, excluding the Acadia benefit. This actually represents a very robust performance despite the slowdown in headline growth. As you know, we faced various headwinds this year. The combined impact of the Euronext exit and last year's software migration revenue was circa 15 million in Q1, across OTC derivatives, securities and reporting, and NTI. In addition, March 2023, so exceptional volumes on the back of volatility created by the crisis around Credit Suisse and Silicon Valley Bank. Taking all of those into account, I think we can be very happy with the performance here. We put through price increases for both members and clients at the start of the year, reflecting the significant value we provide to the marketplace. In addition, we are successfully monetizing our post-trade data and analytics products. As expected, net treasury income declined a bit year on year, with strong yields more than offset by a fall in collateral balances. We are seeing some optimization here from clients, shifting collateral from cash to non-cash, and we expect this to continue. Finally, let me turn to capital allocation and financing. In March, we issued $1.25 billion of bonds, refinancing maturing debt. Given the move in interest rates, there is a significant step up in coupons to above 5%. And we have swapped the 10-year tranche to floating rate, which is more expensive in the short term. So this move will have a small impact on net financial expense in the year. Also in March, we participated in Blackstone's fourth placing, committing 500 million in a directed buyback. Blackstone holding is effectively now down to 4% from around 34% at the start of last year. We have a further 500 million to deploy as and when the opportunity arises. So to sum up. We have delivered another quarter of solid growth. We are trading through the expected headwinds well and continue to innovate and improve product and services for our customers. We are confident of delivering on guidance and we are fully on track to deliver on all revenue, margin, capex and cash flow targets as provided in November 2023 Capital Markets Day. I look forward to meeting more of you over the coming months. And with that, I will pass back to Peregrine for questions.

Thank you, Matt. Operator, please, would you open the line to questions now?