London Stock Exchange Group plc

Good morning and welcome to the LSEG Q3 results. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session through the phone lines and instructions will follow at that time. I would like to remind all participants that this call is being recorded. I'll now hand over to David Schwimmer, CEO of LSEG and Michel-Alain Proch, CFO to begin the presentation. Please go ahead.

Good morning. Thanks for joining the call. I'm here with Matt, our CFO and Peregrine Head of Investor Relations. We continue to deliver very strong growth. Revenue is up 8.8% in the third quarter and 8.6% year to date. All our businesses are contributing to this growth. Markets continues its outstanding year. With our sustained investment ensuring it's well positioned to help customers navigate the ongoing economic and political uncertainty. Our subscription business is accelerated, growing at 6.6% in Q3, up from 6.3% at H1, and on track to deliver 6.5% for the full year. We are raising 2026 guidance again to reflect this continuing strength. We now expect full year revenue of at least 8%, putting us on track for the strongest year of growth since 2018. We're also raising our guidance for EBITDA margins and cash generation. Matt will walk you through those in a moment. Taken together, our revised guidance speaks to a business that is growing faster, is more profitable, and is generating more cash than anticipated at the start of the year. Our strong cash generation gives us significant flexibility in capital allocation, combining bolt-on M&A and significant cash returns to shareholders. I've spoken before about the culture of innovation we've embedded at Elsec and the pace of product development this is driving. Last week, we announced a partnership with NVIDIA that will reduce the time for customers to analyze our massive tick history data set from days to minutes. and last month we launched World Check Resolve, a new AI layer which reduces false positives by around 75% and saves our customers a lot of manual checking. Where we have these leading positions, we continue to invest to maintain that gap and drive growth. On AI, we're driving adoption at scale. 95% of our top 200 customers are now using our AI solutions. I'll come back to this in a moment. As you will have seen, we have had two really exciting developments this week. On Monday, TradeWeb announced its acquisition of Trumid, a high-growth electronic credit trading marketplace. Billy and Sarah have already taken investors through the logic of this deal, but I'll recap this briefly later. And this morning, we have confirmed the acquisition of Octus, a leader in the provision of credit solutions in the illiquid and private credit space, backed by highly proprietary data. This deal fits squarely within our criteria in terms of both strategic fit and financial discipline. It's highly complementary to our existing fixed income product suite and enhancing to growth. Much more on that later. Finally, on capital allocation, we have made record returns to shareholders this year, returning 3.4 billion pounds in the first nine months. With 800 million pounds remaining on our current buyback program in Q4 and Q1 of next year, We're on track to return around 10% of our market cap in total since January of this year. We also have capacity for an additional billion to billion and a half in 2027. We built a business capable of partnering with customers through the whole trade lifecycle and data value chain across multiple asset classes. trading and data are ever more intertwined as financial markets grow and increase in sophistication reinforcing our strategy and strengthening our position it's inevitable that the external environment will evolve whether that's asset prices issuous trends market volatility or gdp growth but the balanced and diversified nature of our subscription and transaction revenues and our alignment with multiple long-term growth drivers position us to perform well in almost any environment. You can see the power of this all-weather business model in the steady and accelerating growth on this slide. Before I hand the map, let me update you on the significant progress we're making in the delivery of our AI solutions and how they're resonating with our customers. You'll recall our focus for this year was rolling out solutions and driving customer adoption. With 95% of our largest customers using at least one of our AI solutions and 80% of our top 50 customers using two or more, we've made real progress in driving adoption in Q3. We had 47,000 users of Workspace AI Search at the end of Q3 and have just passed the 50,000 mark. User engagement with the product also continues to deepen with the average queries per user up 30%. Crucial to this success are the ongoing enhancements we're making, including scheduled queries through Microsoft Copilot, a bespoke library of user prompts, and greater export functionality. I'll say everywhere continues to build. Over two-thirds of our largest customers and over 300 in total have now connected or are onboarding to our MCP. But our customer engagement on Enterprise AI goes far beyond just MCP. As highlighted at the first half, Customers increasingly want to access our AI-ready data via multiple distribution channels, including APIs, cloud platforms, and traditional bulk feeds. Overall, we saw a 50% increase in AI-related commercial discussions in Q3. And 80% of AI license sales involved the customer buying new or additional data sets. With new AI distribution channels, our customers want more of our data. AI is enhancing the value of our data, showing that our data and analytics business is more valuable in an AI world. With that, let me hand over to Matt to take you through our financial performance in more detail.

Thank you, David, and good morning to all of you. As you just heard, we delivered another strong financial performance in the third quarter. Organic revenue up 8.8%. Data and analytics was up 5.2% as our ongoing innovation and investment in contents drives demand across our solutions. Data and feeds continue to be particularly strong, up 7.5%. FTSE Russell was up 10.2% with subscription revenues re-accelerating as we said it would. We continue to see sustained demand for our screening and identity verification services in risk intelligence, which grew 9.8% in Q3. Taken together, our subscription businesses grew 6.6%, a good acceleration from the 6.3% in the first half. Our market division is sustaining its very strong performance, up over 12% with strength across all the businesses. OTC Derivatives was the standout performer with continued strength at Swap Clear and almost 30% growth in client volumes in Q3. We continue to work with the industry to drive adoption of our post-trade solution for uncleared OTC products, signing four new members to trade agents in the quarter. TradeWeb also grew strongly, benefiting from sustained innovation and investment against a backdrop of shifting interest rate expectations that drove 22% growth in volumes in Q3. Finally, cost of sales grew below revenues benefiting from the change to the swap clear agreement we made at the end of 2025. As a result, we delivered almost 10% growth in gross profit for the quarter. Turning to our subscription revenues, we are well on track to deliver full year subscription growth of around 6.5%, an acceleration from the 6% growth in 2025. These revenues are highly recurring, typically around 93% annually, and that brings good visibility. New sales made in previous quarters feed through to revenues once the product is installed and activated, and we have a good line of sight to these timelines too. The ongoing investment we make into content, capabilities and distribution is reflected in product pricing and annual increase in LSEC data access agreement, representing 18% of DNA revenues. And over time, AI revenues will make a growing contribution to the subscription revenues with a long runway for growth. Turning now to our markets division, which has seen another outstanding quarter. Volume interest rate swaps on our trading and clearing platforms were very strong in Q3, as customers turned to our solution amidst economic and political uncertainty. These dynamics also supported strong volumes across fixed income, equities and FX, as you can see on this slide. Putting market conditions to one side and taking a long-term view. These are leading businesses with strong structural growth drivers. Our sustained investment is helping drive this growth by developing new solutions and expanding reach. Through this strategy, we have delivered a 5-year CAGR of over 9%. Turning to our full year guidance, most of which we are raising once more. On revenues, we expect organic revenue growth in 2026 to be at least 8%. This is a meaningful increase to the guidance we issue at H1. We are raising our margin guidance again, expecting between 100 and 120 basis points of improvement this year. This reflects our continued strong top-line performance and our focus on efficient management and delivery of operating leverage. We reiterate our CAPEX guidance at 9.5%. And finally, our guidance for free cash flow that already reflected the highly cash-generative nature of our business model. but we think we can do even more this year and now expect equity free cash flow to be at least 2.8 billion pounds. As David said earlier, our strong cash generation is allowing us both to execute on M&A when it makes sense and return cash to shareholders. And you can see on this slide that we have returned a record amount of capital to shareholders this year. and we are on track to return around 10% of our market capitalization in a little over 12 months. With that, I will hand back to you, David.