Deutsche Boerse Ag Namen

Good afternoon ladies and gentlemen and welcome to the Deutsche Beurse AG analyst and investor conference call regarding the second quarter of 2026. At this time all participants have been placed on listen-only mode and the floor will be open for questions following the presentation. The conference is being recorded. Let me now turn the floor over to Mr. Jan Strecker.

Welcome, ladies and gentlemen, and thank you for joining us today to review our financial results for the second quarter of 2026. Present on today's call are Stephan Leithner, our Chief Executive Officer, and Jens Schulte, Chief Financial Officer. Stephan and Jens will take you through the presentation, and following their remarks, we will open the lines for your questions. The presentation materials have been distributed by email and can also be downloaded from our Investor Relations website. The call is being recorded and a replay will be made available shortly after the conclusion of today's session. With that, let me now hand over to you, Stephan.

Thank you, Jan, and welcome everyone. The first half of 2026 exceeded our expectations on the treasury side and confirmed our strong core growth trajectory with broad-based secular revenue growth, accelerating operating leverage, and an upgraded full-year outlook. Let me take you through five key points and key themes that we really want to emphasize. The first key theme is our performance. You will recall that Q1 benefited from a significant increase in volatility, particularly in March. As we said at the time, we expected activity levels to normalize after that spike. This is exactly what we saw in Q2 and was fully consistent with our expectations. What is important is that Even in this more normalized environment and against a strong prior year quarter, we delivered 9% net revenue growth without the treasury result and 13% EBITDA growth on the same basis. Six of our eight business areas delivered net revenue growth in the quarter, demonstrating the breadth and balance of our portfolio. This speaks to the quality of our growth. The long-term trends we have been investing into for years continue to support our performance. For the first half as a whole, net revenue grew by 11% and EBITDA by 16% with our treasury results. This is a strong performance and shows the resilience and scalability of our model. On the treasury result in Q1 we said that we were beginning to see an inflection point. Q2 confirms that trend. The treasury results declined by only 1% at the group level. This is the inflection we have been signaling. As a result, the drag on total net revenue growth has almost faded, with overall growth reaching 7% in Q2. A strong performance? Let me come to the second point, the secular growth across our portfolio. In the first half, security services, financial derivatives and fund services have been the strongest contributors, with each of the three delivering mid-teens net revenue growth driven mainly by structural factors. Let me touch on each of the three. In security services, we continue to achieve broad-based growth across all key metrics, with assets under custody reaching record levels due to strong fixed-income issuance and elevated settlement activity driven by retail participation. Collateral management outstandings crossed the €1 trillion mark for the first time, a milestone that underscores the essential role of our infrastructure. Clearstream's role as a core part of European financial market infrastructure remains highly relevant in this environment. Let me come to the second big contributor. In the financial derivatives, Eurex delivered strong performance in fixed income, with net revenues up 27%. As part of that, OTC clearing net revenue grew 49%, driven not only by the active account requirements translating into real activity, but also by improved revenue quality. The key drivers remain intact. The build-out of the Euro yield curve ecosystem, regulatory requirements and efficiencies for our clients. Eurex is fully on track to deliver on its 2026 fixed income commitments. That's a far from self-fulfilling prophecy. I think it's really enormous hard work by the teams. The third area of a very significant double-digit contribution is the fund services. We continue to benefit from outsourcing and fund distribution and the gradual shift towards more capital markets-based retirement savings in Europe. Assets under custody reached new record levels again. Importantly, the strength across our portfolio more than compensated for slow activity in commodities, where volumes normalized after the exceptional Q1 and the well-known headwinds in the ESG business. This is exactly the benefit of our diversified business model When individual areas face temporary headwinds, the breadth of our portfolio ensures continued delivery of our plans. On ISS stocks, with the minority buyout now complete, we are setting the course for the next chapter. Last week, we announced the appointment of Ginny Gomez as the new CEO effective August 3rd. She brings deep expertise in technology, data, and AI, and is the right leader to drive the next phase of growth, and we are very grateful to Gary Retelny. Let me touch on the third theme, the operating leverage and capital returns. The first half again demonstrates the operating leverage of our model. This is supported not only by disciplined cost management, but also by the progress we are making on AI and digitization, our global location concept, and the one group operating model benefits, while at the same time continuing to invest in the areas that support long-term growth. This balance between savings, efficiency, scaling, and on the other side, investing is important. We are not reducing investments in the future of the business, but we are ensuring that revenue growth translates into stronger EBITDA growth. The first half shows that the model is working as intended. 3% underlying cost growth, only 2% staff cost, and I think we'll hear more on it from Jens in a minute. On capital returns during the quarter, we completed our 500 million euro share buyback program. At the time of our Q1 call, less than half had been executed. Buybacks are now an established element of our capital return framework, complementing our progressive dividend policy. The fourth theme I would really want to leave with you is the progress on the transformation aspects. The themes set out in our leading the transformation strategy continue to gain momentum. Starting with the broader European opportunity, I do not want to repeat the full strategic case we discussed last quarter. The key point for Q2 is that the policy momentum in Europe continues to move in a direction that is closely aligned with the strategic choices we have made over many years. This is closely connected to the themes behind our strategy. Deeper and more transparent capital markets, stronger market infrastructure, more retail participation, and more efficient financing of the real economy. We are structurally positioned to benefit from all of these developments. As a concrete step in Germany's broad agenda to modernize the financial system, strengthen capital markets, and mobilize private wealth, the government is actively reforming private pensions. The new Tax Advantage Retirement Savings Depot, the Altersforsorge Depot, and the Early Start Pension for Young People, the Frühstart Rente, are important steps towards broader capital markets-based savings. In addition, at the end of June, a fast-tracked legislative process was initiated to introduce a capital-based component to the state pension scheme, similar to what has happened many years ago in Sweden. Over time, this should further accelerate higher participation in capital markets with positive implications for our trading and post-trading services in equities and our fund offerings. At the European level, we see increasing support and momentum. The recent joint initiative from the six large European economies underlined the shared ambition to deepen and integrate European capital markets. Among their top five points, number one was to strengthen fund and retail distribution, spot on for our all-fund acquisition. The priorities are clear. Stronger support for transparent trading venues in order to reduce fragmentation, more resilient clearing infrastructure, higher retail participation, better mobilization of private capital. Each of these priorities, if implemented well, will deepen European capital markets and drive incremental activity through our platforms. The same is true as a third area for the European Commission's Market Integration and Supervision Package. We have spent years building integrated, technology-enabled and regulated market infrastructure. Taken together, the German Retirement Reform, the Savings and Investment Union, the E6 Initiative and the MISP, We see a more constructive long-term environment for European capital markets. Deutsche Börse is well positioned to contribute to these developments and to benefit from them. We've invested ahead of the curve and will continue to do so. That is what leading the transformation really means. Let me come to the second aspect of our transformational themes, turning to digital assets and tokenization. Here as well, the focus is, for us, on execution. We've been investing in regulated digital asset infrastructure for years. The incremental point this quarter is that tokenization is moving further from experimentation towards real institutional use cases. A key development is Clearstream's next generation digital securities infrastructure, which we unveiled during the quarter. This is an important step in our digital strategy. It is designed to support the issuance, settlement, custody, and servicing of digital securities in a regulated and scalable environment and to connect digital instruments with existing institutional market infrastructure. We are ahead of the curve. We are ahead of what we see in other markets. This is exactly where we believe Deutsche Börse can add value. Not by creating parallel, unregulated markets, but by bringing digital securities into trusted, resilient and regulated infrastructure. A concrete example from the last quarter is the recent tokenization commercial paper issuance by the European Investment Bank through our digital infrastructure. This is not a proof of concept. It has passed through all lifecycle steps, from issuance to settlement to custody. It is a real transaction with a leading supranational issuer that validates the strategic investments we have been making for years. It shows that leading institutional issuers are looking for trusted, regulated, and operationally robust infrastructure when they enter tokenized markets. Deirdre is well positioned in this space. Combined with our broader digital assets initiatives and our strategic investment in Karken, we are building a secure and compliant gateway for institutional clients. The regulatory environment in Europe, including Mika, plays to our strengths. Clients want innovation, but they want it within a trusted and regulated framework. That is exactly where Deutsche Börse can add value. So let me come to the fifth theme, our outlook. As always, we take a measured view. The post Q1 normalization played out as anticipated. The breadth of our first half performance reinforces our confidence. We are in a strong position to raise our targets. The treasury result is now expected to exceed €0.7 billion, lifting total net revenue to above €6.4 billion. Jens will take you through the details. So let me conclude. H1 was a strong first half. We delivered broad-based growth, demonstrated operating leverage, completed our buyback program, and continued to execute on our strategic priorities. Therefore, the main message that I really want to re-emphasize with you is straightforward. The business is performing well as a portfolio and proves its structural ability to grow. The strategy is progressing and the long-term environment for European capital markets remains constructive. At the same time, we continue to build the infrastructure needed for the next phase of market development from integrated European capital markets to regulated digital securities. We are confident in our trajectory, fully on track to deliver on our 2026 goals and building a foundation for sustained growth for 2028 and beyond. With that, let me hand it over to Jens.

Yeah, thank you, Stephan, and welcome, everyone. It's a pleasure to talk you through our financial results for the second quarter and first half of 2026. Let me start with the first half overview on page two. The 11% net revenue growth without the treasury result is precisely the kind of broad-based resilient performance that our business model is designed to deliver. This was fueled by continued unaligned secular trends across all four segments and it builds on the strong momentum we established in Q1. Notably, this top-line growth translated into bottom-line performance. EBITDA without the treasury result grew 5 percentage points ahead of revenue growth This is the operating leverage story we have been articulating and the first half demonstrates it clearly. The overall EBTA margin expanded to 61%. Operating costs for the first half increased by 4%. This includes around 20 million euros of exceptional costs related to the acquisition of all funds. Excluding these costs, underlying operating cost growth is fully in line with all guidance. Net profit attributable to Deutsche Börse shareholders increased 12% to €1.2 billion and cash EPS grew also 12% to €6.73. These strong overall numbers reflect the quality of our earnings growth. Turning to page 3, the Q2 stand-alone view. Net revenue without a treasury result grew 9%. This is a strong result considering the post Q1 market normalization that Stefan described and against a demanding comparison base. Q2 last year was itself a strong quarter with 10% net revenue growth without the treasury results driven by heightened market activity around the U.S. tariff situation at that time. The growth this quarter was broad-based and fueled by continuous underlying secular drivers. Operating costs increased by 4% to 644 million euros, but this included 7 million euros of exceptional costs related to the all-funds acquisition. Excluding these, underlying operating costs growth amounted to 3%, driven by inflation and investments, again, fully in line with our guidance. The treasury results stabilized at 205 million euros. As Stephan noted, the headwind has almost faded. In total, net revenue growth reached 7%. The financial result came in at negative 42 million euros. This includes the expected interest increase from the bond issuance we completed in March to finance the buyout of the ISS minority stake. EBITDA without the treasury results grew 13%, and cash EPS, the overall measure of all profitability, also increased 13% to 3 euros and 33 cents. Now let me turn into the segments, starting with investment management solutions on page 4. Before going into the details, I would note that FX headwinds for the segment have largely faded. On a constant currency basis, growth rates for both the segment and its two businesses would have been around 1 percentage point higher. In software solutions, net revenue grew 7% to €180 million, This was against the demanding comparison base. Q2 of 25 included a significant Tier 1 client win in the U.S. This quarter also reflects the back-end loader shape of the 26th delivery calendar that we flagged on the Q1 call. In addition, the signing of a Tier 1 EMEA client expansion moved from Q2 into Q3, and we expect this to close shortly. Together with the broader pipeline conversion, this supports double-digit growth for the full year. What is important is the quality and breadth of the underlying momentum. Any recurring revenue stood at 717 million euros, up 14% in constant currency, in line with our guidance and against strong prior year comparables. Growth in 26 is broader based than in 25, with incremental ARR spread across a wide range of land and expansion deals, rather than concentrated in a few landmark signings. The Americas delivered 25% ARR growth, confirming the structural momentum of the North American institutional market, and APEC accelerated to 20% ARR growth, anchored by significant expansion with an Asian sovereign wealth fund and new logos in Southeast Asia. SAIS net revenue grew 4% in Q2, against a strong prior year comparison that included substantial license fees from the last U.S. deal. The underlying recurring subscription engine remains fully intact, with SAAS representing 45% of the H1 revenue mix. On-premise net revenue grew 21%, boosted by a stronger than usual renewal cycle. On AI, roughly 15% of strategic R&D capacity is now dedicated to AI initiatives, following through on the roadmap we presented at the SimCorp Global Summit, This is already in production and delivering results, positioning AI both as a client value driver and as a scalability lever on the cost side. In ESG, headwinds from subdued demand increased moderately in Q2, particularly in market intelligence and corporate solutions, where prolonged sales cycles continued to weigh on net revenue. The political and legal environment around ESG-related services in some US states also remains difficult, leading to a modest increase in legal costs in the quarter. We expect this to continue in the second half and are managing these costs within our overall cost guidance. On the positive side, our ESG ratings and data business remain stable, underscoring the deep anchoring and continued relevance of all products. and Index grew 7% supported by record levels of assets under management in ETFs. This continues the trajectory we saw in Q1. Overall, the solid performance in software solutions and Index more than offset the ESG headwinds. Segment EBTA of 98 million euros reflected a higher prior year comparison base from financial investments and seasonal cross-phasing. Adjusting for these effects, the underlying EBTA trajectory remained positive. Turning to page 5, trading and clearing, net revenue without the treasury result grew 7%, and EBITDA without the treasury result increased 11%. These results demonstrate strong operating leverage, particularly given the normalization of market activity following the exceptional Q1. Financial derivatives was the standoff for Bohm again, with net revenue up 15%. The details tell a compelling story of broad-based strength. Fixed income derivatives, net revenue grew 27%, with all three pillars contributing strongly. This performance reflects the deepening of our Euro yield curve ecosystem, supported by record Eurozone sovereign issuance, divergent fiscal trajectories, driving demand for our non-German LTF futures, and growing institutional adoption across the curve. This is most visible in OTC Clearing, which delivered an exceptional quarter with net revenue up 49%. This performance reflects higher volumes, the active account requirement beginning to translate into real activity, and structural improvements in revenue quality, including a significant shift towards non-packaged volumes and adjusted partnership program terms. Importantly, where the EU buy-side activation rate has not yet increased materially, the onboarded client base has grown to over 2,500 and the number of active clients has approximately doubled to around 500 over the last 18 months. With 80% of onboarded clients not yet active, there remains significant room to grow and we are still in the early innings. In short-term interest rate derivatives, an important part of our overall yield curve offering, we saw an improvement in market share from the lows we experienced in March. We have redesigned our incentive framework, effective from July, and will review the overall still approach after the summer to calibrate our strategy. We continue to believe that the broader benefits of the active account requirements will also support the build-out of our still franchise over time. Repo continued to perform very well, with net revenue up 41% and outstandings reaching a record 1.4 trillion euros. The structural drivers remained firmly intact, declining ECB excess liquidity, rising sovereign issuance, and growing demand from public sector and buy-side entities. Equity derivatives saw more modest growth following the March volatility spike, but the quality of revenue improved. This growth was driven by a favorable product mix and the benefits of pricing measures we implemented earlier this year against the strong Q2 last year. Commodities experienced a significant normalization of activity in European power derivatives. As reflected in Q1, the exceptional performance driven by the surge in gas derivatives and innovative power market activity was unlikely to repeat with the same intensity. This is exactly what we are seeing. Hedging demand moderated as the geopolitical situation in the Middle East began to ease, and we also saw some financially driven participants reducing their risk exposure during the quarter. In addition, the lingering impact of higher collateral requirements weighed on trading activity, creating a further headwind for volumes. The long-term secular growth drivers of our commodities business remained firmly intact, Growing global power consumption, driven by electrification and data center demand, the energy transition, the continued shift of OTC onto exchanges, and our expanding global footprint. We remain on track to deliver on our leading the transformation targets for the commodities business. Cash equities trading benefited from ongoing demand for both European equities and ETFs, with net revenue up 9%. This was supported by continuous strong retail participation and the growing relevance of European equity markets and global portfolios, trends we view as structural rather than cyclical. And for ethics and digital assets, business achieved solid growth of 8% through client wins, despite the normalization of the FX market environment following the currency volatility we saw in Q1. Average daily volumes remained at all-time high levels, with June setting a new record, building on the milestone of crossing 200 billion euros for the first time in March. The structural client acquisition momentum remains intact, and this is a business where we continue to gain market share quarter by quarter. The treasury results in trading and clearing the client 7% to 50 million euros, reflecting the continued impact of lower margin fees because of higher netting efficiency for our clients. Overall, trading and clearing delivered a strong quarter. EBITDA growth significantly outpaced revenue growth, a powerful demonstration of the operating leverage embedded in this business. The details tell a compelling story. Structural growth and financial derivatives, resilient performance in cash equities and FX, fully compensating the anticipated normalization in commodities, which does not change the long-term trajectories. Now, moving on to fund services on page number six. Net revenue without the treasury result grew 14% and EBTA without the treasury result increased 20%. This marks another quarter of strong double-digit growth and impressive operating leverage in this business. Fund processing was the key driver with revenues up 19%. This growth was fueled by record levels of assets under custody, which reached 5 trillion euros, up 25% year over year, as well as higher settlement activity, which surged 23%. These are remarkable numbers that reflect the structural growth of this business. This performance is a direct result of our investments in our platform and our successful partnerships with global participants. These investments position us perfectly to capture the two powerful and reinforcing structural trends that Stefan described. The industry-wide shift towards outsourcing fund administration and the structural acceleration of capital markets-based retirement savings across Europe. The all-funds acquisition is progressing as planned, with the process of obtaining the required regulatory approvals fully on track. We continue to expect completion in the first half of 2017. Now turning to security services on page 7, which once again delivered an exceptional performance. Nash revenue without the treasury result grew 16%, while EBTA without the treasury result surged 27%. This is the strongest operating leverage across all our segments, and it underscores the scalability of Clearstream's platform. The growth was driven by record levels across all key metrics, Assets under custody reached €17 trillion, up 8%, driven mainly by international debt issuance. Settlement activity rose 14%, supported by elevated retail flows. And collateral management outstandings crossed the €1 trillion mark for the first time, reaching that level with 31% growth year-over-year. Patent demand for safe and efficient collateralization continues to propel this business forward. I also want to draw your attention to the important inflection point. The Treasury residing security services showed its first year-over-year growth since Q4 of 23, increasing 3%. This growth was driven by higher cash balances, which grew 70%, and by stabilizing interest rates. This is the turning point we have been signaling, and it is now confirmed in the numbers. As a result, total net revenue and security services grew 12%, reaching a new all-time high of 441 million euros. Finally, let me conclude with our updated outlook for 26 on page number 8. Our core guidance is confirmed. We continue to expect 5.7 billion euros of net revenue and 3.1 billion euros of EBITDA, both without the treasury results. With roughly a half of both targets delivered in the first half, we are tracking at the midpoint of our annual targets. The upgrade is on the treasury side. The treasury result for 2016 is now expected to exceed €0.7 billion, and this is driven by the changed global interest rate outlook and higher cash balances. Accordingly, total net revenue is now expected to exceed €6.4 billion and all in EBITDA to exceed €3.8 billion. Regarding operating costs, we continue to expect an increase of approximately 3% in 2026, excluding the exceptional costs related to the acquisition of all funds. To sum up, a strong first half with broad-based secular growth and expanding margins, combined with an improved treasury result outlook, gives us the confidence to upgrade our full-year guidance. We are firmly on track. That concludes our presentation. We look forward to your questions.

Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star, nine and pound key on your telephone keypad. We kindly ask all participants to limit their questions to one question per person. And the first question comes from Benjamin Gold from Deutsche Bank. The stage is yours.

Maybe just wanted to follow up questions on security services, given the continued strong performance there. Can you elaborate on the custody margin, which seems to be tracking higher now, the second quarter in a row, how sustainable this is? And then also on collateral management, you mentioned the one trillion was crossed. It was always a business that theoretically had significant opportunities. It still has one trillion with a 17, but what is driving the latest growth? acceleration and growth and data will be appreciated.

Thank you. I think first of all the question around the margin on the custody side is absolutely sustainable. I think we do not see any special effects from the cost or whatever. We're continuing to invest in the business in a solid way but there's no special effects so therefore I think it is a very positive development and represents the scaling benefit. Now, on the collateral management, I mean, that is a 30% increase in the quarter. The one trillion that you alluded to half year is a 20% growth on the revenues. I think what we just see is a heightened sense of sensitivity and awareness of the clients to the collateral optimization. That's what we really benefit on in a wider sense and we have also added in that context on our product side or we have improved our collateral basket creation tools and that gives us additional volumes.

Thank you, and I should have specified a revenue margin in custody, which seems to be higher as well, so we're going to capture better than your equity growth would suggest.

I think, Benjamin, that's always the result of the combination of having collateral management revenues and custody in one line item, and then comparing it to the custody assets, so if collateral management grows over proportionally, 31% in terms of the volumes, then The average revenue margin, of course, will come up within the custody business. On a standalone basis, we see stable to maybe slightly improving revenue margins.

Thank you.

Thank you very much. And the next question comes from Grace Dardan from Barclays.

Hey, thank you very much for taking my questions. Maybe if I could just ask two quickly. So firstly, the on-premises and SimCorp was stronger than certainly I was expecting given your SaaS focus. So how should we be thinking about the progression of the on-premises revenues going forward? Has anything there particularly changed? And then secondly, just on the kind of account activations, what's the catalyst to really get that moving from here? Thank you.

Grace, on the first question, as I alluded to, that quarter was an exceptional renewal cycle quarter for the on-premise business. The underlying strategic development is, of course, fully unchanged. So there is a full focus on driving SAS forward. SAS, as I said, we had a strong prior year comparison with a large U.S. client coming in, so that's basically made this growth rate look a little bit lower this quarter, and then the other one was a bit inflated by an exceptional cycle. But underlyingly, we continue to increase the share of SAAs, and on-premise revenues will initially decrease over time. And then on the second question, the account activation, so it's a combination of things, right? I mean, one topic is, of course, regulatory tailwinds, right? So, as you may have seen, the regulator, the ESMA, brought out a report reviewing the current activation, you know, cycle and where people stand and the compliance degrees and so forth. And that also leads us to think that there may be a stricter enforcement, you know, coming towards us over time than also creating some tailwinds. and the other thing is still simply that we believe we have a very competitive offering here, right? I mean, we believe that particularly through the clearing angle and cross bond and over time cross product margin, we believe that we should be able to win market share.

That's great. Thank you so much.

Thank you. And the next question comes from Michael Werner from UBS.

Thank you very much for the presentation.

I want to go back. I have one question. I want to go back to the security service business. You know, we did see, you know, as alluded to in the earlier question, you know, stronger revenue growth than, you know, custody revenue growth than asset owner custody growth, even if you exclude the collateral management revenues. We saw better settlement revenues as well versus the actual transactions. I think it was plus 23 versus plus 14. I'm just trying to figure out what's driving and again, you know, this is two really strong quarters from this division. I'm just trying to figure out, you know, is this, you know, really being driven just by, you know, greater issuance within fixed income and that comes with, you know, other fees and higher margin business. Is this, you know, where you're actually succeeding in Increasing the value add offerings to the clients there. I just want to get a little bit more color on what's been such a strong area. Thank you.

In picking up on both of your sub-questions in a way, the settlement in particular is something where the outperformance of the revenue development versus the volume is really driven by the activation that we see and continue to see on the retail side. I think that is an important driver. It is also influenced by the mix of our client base. As we have highlighted before, we do see many of the new brokers and those fresh and fast-growing players coming directly to us. So I think that's a very important element that helps in addition to the product mix itself.

Thank you very much. And the next questioner is Hubert Lam from Bank of America.

Hi, good afternoon. I just got one question. On commodities, you talked about the long-term drivers within that business. But in the near term, do you still expect to see pressure as you've seen this quarter? What do you think the drivers for an improvement in the near term? Thank you.

First of all, if you correctly say, Hubert, and thank you for the question, it's very important to underline that the key drivers of the business are fully in tech, and some of them are mid-term, but some of them are also driving the business more short-term, right? I mean, things such as renewable energy, for example, and the volatility it brings to the network, that is something that is, you know, something also impacting. On the short-term note, the increasing share of new customers, you know, financially driven or algo traders, Our continued expansion in Japan and a bit in the Nordics, our crypto derivatives clearing offering through our nodal exchange in the US. All of these things actually also have an impact on the short term, let alone on the midterm. So because of these things, we fully believe that the story is intact. Q2 we view as sort of an exceptional normalization after the first quarter, as we alluded to, because Some participants have basically hedged their positions for the rest of the year. Some participants reduced their positions, also partly maybe because they created losses in the first quarter. So this is sort of an overreaction that we're seeing at the moment from our perspective, and we basically assume that that's going to normalize throughout the rest of the year. Great. Thank you.

Thank you. And the next question comes from Arnaud Jubla from BNP Baribas.

Good afternoon. My question is on Simcorp. So we're seeing a divergence between the revenues and ARR growth and I think you've touched upon this during the presentation and during your capital markets day that we should expect this and revenue growth will continue to slow into 27 before catching up with ARR. But I was just wondering if you could give a bit more color in terms of where we are in that and maybe Maybe talk a bit more about mix of clients between on-premise and SaaS. Just how things are shaping up and if you're still very confident that revenue growth and ARR growth will eventually catch up.

First of all, on your last question, the mix, as we alluded to, is almost half-half. We're around the 45 percentage mark in terms of SSR's revenue share and then the remainder is on-premise and other components of our revenues. The underlying story is intact, and as you correctly alluded to, the revenue shift will be made as of the first of next year, and then ARR growth and accounting growth, particularly for the SAS part, but also overall will move more closely together. I think it's important to always keep in mind that even with that strategy over time unfolding, we will never have 0% on-premise and 100% SAS. There will always be clients that require on-premise, Offerings, think about sovereign institutions, for example, who just because of regulation cannot move into the cloud. So there will always be somewhat of a delta, but we are still fully on track to continue to close that gap next year with the accounting change.

I mean, one element that supports, for me, built on that is the entire AI sort of product offering. It creates a strong incentive to go into the cloud. because clearly the availability of the AI tools and the accessibility across SimCorp 1. And that's a big discussion we're having with many clients, especially after the Global Summit, which was a big success, as Jens alluded to. So I think this is an accelerator of the sort of SaaS story.

Great, thanks. Thank you. And Ian White from Autonomous Research has the next question. Please go ahead.

Thanks for the presentation and for taking my questions. Maybe we could talk in a bit more detail about the developments within ESG in the second quarter. Do you have clients cancelling corporate solutions services? And if so, what are they switching to? And just on proxy advisory, Are you seeing any contract cancellations or attempts to insource those services by the asset management clients, please? That's my main question. And maybe just as a small follow-up, we're starting to see inflation pick up both in Europe and the USA. In which parts of the business might that have some bearing on pricing discussions as we head into 2027, please? Thank you.

Let me take your first one, Ian. Thanks for addressing the proxy advisory. We generally see a very high renewal dynamics. That's very positive. There have been selected cases, some of them quite public, for reasons that are more related to the thematic public discussion on proxy. But overall, it's very clear that the offering and the depth of our data from the history is a powerful engine that drives the attractiveness of the ISS offering. If there is moves, then certainly also the belief of very big players to have an in-house AI capability is one of the angles that is potentially relevant there.

Sorry, in the second question on pricing, which business did I refer to?

The question was really for you guys. In which parts of the business would you start thinking about basically inflation I'm having a bearing on the price increases that you propose to clients for 2027. Where is that relevant to you, basically?

So overall, Ian, as you know, pricing in our growth trajectory plays only a minor role, right? So we're always guiding on average across the portfolio. Around 100 basis points. We do from time to time in the businesses review our pricing schedules, right, and also optimize those. We already shared, I think, with you guys, I think Thomas did that on the occasion of the Capital Markets Day, for example, that he had been doing so within Eurex at the end of last year, and that is also taking effect now. We're also working on the pricing schedules of a few of the other businesses, particularly within post-trading, but it's not that one big strategic push, so to speak. On average, pricing is one smaller lever, but it's not a key component of our growth.

Got it. Thank you.

Thank you. And the next question comes from Ben Bathurst from RBC Capital Marketers.

Thank you for picking up on this, Ben, because indeed it is the tangibility that I think makes the last few months

Quite exciting and positive. Let me on my three different angles that I talked about. The first one is really the domestic German sort of wider environment. I mean, there's the activation by end of the year of the Frühstartrente is the next leg. And then we will see into the first quarter of next year, the start of the public pension period. I do expect a process which will crystallize the outcome on both the Commission side as well as the E6 side in the course of September and October. and then you know that European legislative framework requires an negotiation between parliament and commission and the governments and that will take into Q1 but there's a lot of high pressure on that so I think we will know the pattern of the outcome in the end of the year it will be very clear and I'm very excited that they have picked up on some topics that were no-go for many years like enforcing more public trading venues This is a big change that is going to come because it's a clear sort of perception that that has overshot in the past. Now I think that the last and third element is a general process, progress on some of the digitization stories, and there I think in particular in autumn, the activation of the ECB's digital currency on the wholesale side, or the first module of that is going live in October, I think that will support especially many of the issuance activities that we have started to do, which so far we can do the securities leg digitally, but we lack the cash leg. So I think in that sense October for that and then as I said German legislation with the beginning of the year will be effective and not just conceptual and then the European Commission plan and outcome will be also clear in January and will power us for the next few years then.

That's great. Thank you for that.

And the last question comes from Oliver Caruthers from Goldman Sachs.

Hi there, good afternoon, Oliver Clevers from Goldman Sachs. I just have one question on the ARR in software solutions, please. I guess you've gone from 18% to 14% on a constant currency basis in two quarters. My understanding of this metric is it's effectively a function of your gross sales less any cancellations plus any pricing benefit. And I'm not asking you to give us the disclosure. or the building blocks here. But are you able to quantify the impact of the, I think, two big client wins you had last year, I think CalPERS and Lions Bernstein. I know they were big wins and good momentum, but just 400 basis points is quite a big headwind. I'm just trying to contextualize that in the context of the slowdown. Or perhaps another way, could you just confirm that there's been no change to either the cancellation rates or the pricing relative to the comparable period last year? Just again, just trying to frame the context of 18% to 14%. Thank you.

We can confirm to you there's no cancellation dynamics, so that's not at all an issue we encounter. There's also no reduced pricing power dynamics. That is not the case at all. I think it really comes down that on an ARR level, certainly, you know, some of those big clients can make a 2% or 3% difference in a single case. And, you know, we did speak a bit about one of the cases that slipped from Q2 to Q3. So, again, be assured that our teams were very bullish that they would get it done. As you also know, it's sometimes better from a pricing dynamics to not be pressurized to meet the quarter end or year end, but to properly negotiate the price and the contract. So, again, as I said, it's probably can be a 2% or 3% difference in AI if we really talk about a big client.

Thank you very much for your participation and have a good day and a good summer. Thank you.