Euronext Nv Unsp/Adr

Hello and welcome to Uranus Q2 2024 results. My name is Alicia and I will be your coordinator for today's event. Please note this goal is being recorded and for the duration of the goal, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the goal. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to Stefan Bunja, CEO and Chairman of the Managing Board of Euronext, joined by Giorgio Modica, CFO. Thank you.

Good morning, everybody, and thank you for joining us this morning for the Euronext Second Quarter 2024 Results Conference Call and Webcast. I am Stephan Boujna, CEO and Chairman of the Managing Board of Euronext, and I will start with the highlights of this second quarter. Giorgio Modica, the Euronext CFO, will then develop the main business and financial highlights of the second quarter of 2024. As an introduction, I would like to highlight three main points. First, the Euronext diversified business model continues to drive strong top-line growth. We have delivered plus 12.2% revenue growth in Q2 2024 compared to Q2 2023, and that brings revenue and income to a new record level of €412.9 million. This very good performance was driven by solid growth in non-volume related businesses, combined with strong growth in clearing, especially in fixed income. Second, thanks to continued cost control in the inflationary environment, we increased or adjusted EBITDA by close to plus 12% year-on-year to $256.8 million, and we grew or adjusted EBITDA margin by plus 3.5 points to 62.2%. Third, we are entering the last phase of the Borset and Enneagroup integration. In May, we have migrated the MTS production data center to our core data center in Bergamo. In July, we have successfully migrated the clearing of Euronext commodity derivatives to Euronext Clearing. And this successful first phase paced the way for financial derivatives clearing migration, the very final step of our 2024 strategic plan, which would be accomplished and delivered in September 2024. This last step will complete our integration across our value chain and will deliver on the last remaining targeted synergies to reach $115 million of run rate EBITDA synergies in relation to the acquisition of the Vosay-Tenay Group. So we have been more efficient than anticipated in delivering this integration, and we plan to limit cumulative implementation costs to €130 million by the end of 2024, compared to €160 million announced in 2021. In Q2 2024, we also pursued a strategic bolt-on acquisition to further diversify Euronext Business Standard. Of course, as you may have seen it a few weeks ago, the acquisition of global rate set systems, in short, GRSS, positioning Euronext as a leading player now in the calculation and administration of interbank offered rate indices. This acquisition will strengthen the growth of Euronext non-volume related revenues. Lastly, we have continued to innovate for the benefit of the effectiveness of European capital markets for our clients. In July, we pioneered with the launch of your next wireless network or new microwave service. With this new offering, we became the first exchange in Europe to offer plug-and-play order entry in London via microwave technology to significantly enhance the speed of order transmission and offer unparalleled improvement in latency. Also, our midpoint match initiative focused on dark trading is continuing its ramp-up with increasing volumes month after month. Let me give you a quick overview of the performance in the second quarter of 2024 on slide four. As mentioned earlier, Euronext reported a very strong second quarter of 2024, posting revenues of plus 12.2% year-on-year, up to $412.9 million. This growth was supported by three main drivers. Non-volume-related revenue posted a strong performance overall, notably in listing in advanced data services. We remained the first listing venue in Europe, with 14 listings representing 40% of European activity. A third of those 14 companies were coming from countries outside of EUR-Lex footprints. Advanced data services was driven by increased demand for fixed income and electricity data. Second, our trading revenue grew by plus 20.7%. This was driven by another record quarter of fixed income trading revenue growing by 40.7%, fueled by the ongoing volatility. It was also boosted by positive dynamics in cash equity trading, as well as in diversified trading as commodity derivatives, power, and fixed income trade, and forex trading. Post-trade, combining clearing and CSE revenues grew by plus 16.9%. Euronext clearing performance continued to benefit from the expansion of Euronext clearing to cash markets across Europe, and dynamic fixed income and commodities clearing activities as well. Euronext security has also posted a very strong plus 9.4% increase in revenue this quarter, thanks to growth in custody and insurance. This translated into non-volume-related revenue accounting for 58% of the total Q2 revenues and covering 153% of underlying operating expenses, including DNA. As everyone appreciated, the share of non-volume-related revenue is slightly lower this quarter year-on-year due to the strong dynamic this quarter of our trading and clearing activities described earlier. We're continuing our trademark discipline approach to cost management. Due to 2024 underlying operational expenses excluding DNA, which 156.1 million, and this is in line with the underlying cost guidance of 625 million for the full year excluding DNA. Everyone understands that those numbers include OPEX to invest in organic growth projects to be deployed in the second part of the year. Consequently, our adjusted EBITDA grew by plus 18.8% to 256.8 million. Euronext adjusted EBITDA margin increased by 3.5 points to 62.2%. And this strong performance led to a plus 19% increase in adjusted EBS at 1.59 euro per share and to an adjusted net income of 165.2 million. On a reported basis, Our EPS for the second quarter increased by plus 21.7% to 1.37 euro. Our net debt to last 12 months adjusted the bid average 1.8 times at the end of June 2024. And this was impacted by the payment of our 2023 dividend of 257.3 million to shareholders at the closing of the, and also the impact of the closing of the acquisition of GRSS. As I mentioned earlier, we are now entering in the final phase of the Borsa-Italian Group integration and our growth for impact 2024 strategic plan. At the end of June 2024, we reached 84.2 million of community run rate EBITDA synergies out of the target to 115 million by the end of 2024. In May, we have migrated the MTS production data center to our core data center in Bergamo. This strategic move enables customers to access MTS market trading and data services through the same facilities as all your next trading venues, enhancing efficiencies in European capital markets. And numbers benefit from reduced latency, from the highest safety standards, and from the reduction of their carbon footprint thanks to the facilities in Bergamo that is powered by self-produced green energy. Most importantly, a few days ago, we have successfully migrated the clearing of UNX commodity derivatives to UNX Clearing, completing the first phase of our derivatives clearing migration. As of today, we only have one single remaining step ahead of us to complete the integration of the POSA-Italian Group, and this is the expansion of UNX Clearing to all financial derivatives listed on European markets that will be completed in September 2024, and this will be the final step to achieve the targeted delivery of 115 million of community-run-rate EBITDA synergies at the end of 2024. This will contribute to the integration of the European post-trade landscape to the benefit of our clients. Furthermore, the expansion of our clearinghouse will unleash new innovation capabilities and strategic organic growth opportunities for our clients. And I'm looking forward to sharing with you those innovation initiatives on our Capital Markets Day on the 8th of November 2024 in Paris. Finally, thanks to the efficient management of our integration projects, we now expect the cumulative implementation cost of the Borsa Italiana Group until the end of 2024 to reduce to 130 million, and this is 20 million less than guided in May 2022, and 30 million less than this 160 million announced in 2021. Everyone appreciates that over the past few years, our targeted EBITDA for the integration of Borsa Eternel Group increased from 60 million to 150 million. And over the recent years, the implementation cost to deliver those numbers decreased from 160 million to 130 million. So I now give the floor to Giorgio Modica for the review of our second quarter of 2024.

Thank you, Stefan, and good morning, everyone. Let's now, however, look at the strong performance of the second quarter of 2024. I'm now on slide seven. Total revenue reached 412.9 million euros, up 12.2% compared to last year, out of which 58% are non-volume-related revenues. We reported solid growth in both our non-volume-related businesses and trading activities across all asset classes. Six-income trading continued to be a key contributor to top-line growth. Let me deep dive into the drivers of this strong performance, starting with listing on slide 8. Listing revenue was 58.4 million euros, up 5.9%, driven by the strong performance of debt listing and of Euronext corporate services. Euronext sustained its leadership in equity listing in Europe with 14 new listings in the second quarter of this year. On the debt side, we reinforced our leadership worldwide with around 57,000 bonds listed on our platform. Euronext Corporate Service continues to deliver a solid growth with revenues of 12.8 million euros, up 8.8% compared to the same quarter last year. Slide 9 illustrates how data and investor services activity continue to drive growth this quarter. Advanced data services reached 60 million of revenues, up 5.4%, driven by the solid demand for fixed income and power trading data, as well as the continuous strong demand from retail. Revenues include one month of consolidation of GRSS, which was acquired at the beginning of June. Investor services reported €3.3 million in revenues in this quarter of 2024, representing a 17.7% increase compared to the second quarter of 2023, thanks to the successful commercial expansion of the franchise among the global largest investment managers. On the other hand, technology solutions reported €25.4 million of revenues, down 7%, mainly due to the termination of the double-run connectivity revenues following the completion of the migration of Italian cash and derivative markets to OPTIX, creating synergies and efficiency for clients. Moving now to slide 10, Euronext's trading revenues reached €142.7 million this quarter, up 20.7%. As mentioned earlier, this strong growth in our trading revenues was driven by a good performance across almost all asset classes, and especially fixed income trading. Cash trading revenue grew 13.8% to 74.2 million euros, reflecting increased volatility. Cash trading volumes grew 10.7% compared to the same quarter last year. Cash revenue capture averaged 0.53 basis points, despite the average order size remains still very high. Cash equity market share averaged 66%. Derivative trading revenue increased 6.6% to 13.9 million euros in the second quarter of 2024, reflecting higher financial derivative volumes with ADV up 10.8% and they continued very strong performance of commodity derivative volumes up 40.2% versus last year. Average revenue capture on derivative trading reached 0.32 euros per lot, affected by a higher share of equity future in the volume mix. Lastly, FX trading grew 28.7%, 7.9 million euros of revenues in the second quarter of 2024, supported by the favorable volatility environment. Continuing the review of our trading activity, I'm now moving on slide 11. Fixed income trading grew 40.7% and reached another record at 35.6 million euros in the second quarter of 2024. Our fixed income franchise continued to be supported by the favorable interest rate environment and good market volatility. It was especially driven by the strong performance of MTS Cash, with ADV up 67.7% year-on-year to 36.3 billion euros. MTS Repo recorded 449 billion of term-adjusted ADV. Power trading revenue grew to 11.1 million euros in the second quarter of 2024, up 30.1 percent compared to the same quarter last year this record performance was mainly driven by our intraday market with add up 91.3 percent i now conclude business review without post trade activity on slide 12 clearing revenue was up 33.2 percent to 39.2 million euros reflecting the increased activity in equity clearing following the expansion of Euronext clearing to the cash market in Belgium, France, Ireland, the Netherlands, and Portugal, and higher clearing revenues from the dynamic commodities and fixed income activity. Net treasury income amounted to 13.8 million euros in the second quarter of 2024, stable level compared to the same quarter last year. Lastly, revenue from custody, settlement, and other post-trade activity reached 69.7 million euros. This is a 9.4% increase year-on-year, reflecting growing assets under custody, which reached more than 7 trillion euros, and a dynamic issuance activity and higher settlement activity. On a like-for-like basis and at current currencies, custody, settlement, and other post-trade activity revenue was up 9.3%, compared to the second quarter of 2023. Moving on with the financial review of the quarter, starting with the EBITDA breach on slide 14. Euronext adjusted EBITDA for the quarter was up 18.8% to 256.8 million euros, mainly thanks to an increase of 43.8 million euros of revenues at constant perimeter, offset only by 3.7 million euros of additional costs. The underlying operational expenses excluding depreciation and amortization increased 2.7% compared to the second quarter of 2023, reflecting continued cost discipline. This translated into an adjusted EBITDA margin of 62.2%, up 3.5 points compared to the second quarter of 2023. Non-underlying costs for the quarter were 6.9 million euros. I would like to take this opportunity as well to confirm our 2024 guidance for underlying costs excluding DNA at 625 million euros. Moving now to net income on slide 15, adjusted net income this quarter was strongly up at 165.2 million euros, which represents an increase of 15.6 percent compared to the second quarter of 2022, and despite the sale of our stake in LCH in the third quarter of 2023. This reflects the strong EBITDA growth in this second quarter of 2024, and they continued high interest rate environments, which led to an increase in net financing income of 5.3 million euros. Depreciation and amortization were 47.9 million euros, 13.7% higher than in the second quarter of 2023 due to the completion of many migration projects and the related start of the amortization of CAPEX linked to those projects. Income tax for the second quarter of 2022 was 55.7 million euros. This translated into an effective tax rate of 27% for the quarter. Minority interest were up due to the excellent financial performance of Norpool and MTS. As a result, reported net income increased 18.2% to 141.7 million euros and adjusted EPS basic was up 19% in the second quarter of 2024 at 1.59 euro per share. I now conclude with some consideration on cash flow and leverage. In the second quarter of 2024, Euronext reported a net cash flow from operational activity of €111.5 million compared to €139 million in the second quarter of 2023, reflecting the movement in working capital related to Norfolk, and Euronext clearing CCP activities, which accounted for minus 41.1 million euros this quarter. Excluding the impact on working capital from Euronext clearing and Norpool CCP activities, net cash flow from operation activity accounted for 61% of EBITDA in the second quarter of 2024. Net debt to adjusted and reported EBITDA was at 1.8 times at the end of the quarter, impacted by the payment of the dividend and the acquisition of JRSS, as mentioned by Stefan. And with this, I would like to give back the floor to Stefan Buchner.