Euronext Nv Unsp/Adr

Good morning and welcome to the Euronext Q4 and full year 2024 results. My name is George. I'll be your coordinator for today's event. Please note that this call is being recorded and for the duration of the conference, your lines will be in listen-only mode. However, you'll have the opportunity to ask questions towards the end of the presentation and this can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. And I'll hand over to your host today, Mr. Stéphane Bougna, CEO and Chairman of the Managing Board of Euronext. Please go ahead, sir.

Good morning. Good morning, everybody, and thank you for joining us this morning for the Euronext fourth quarter and full year 2024 results conference call and webcast. I am Stéphane Bougna, CEO and Chairman of the Managing Board. of Euronext and I will start with the highlights of 2024 and the fourth quarter. Giorgio Morica, the Euronext CFO will then develop the main business and financial highlights for the fourth quarter of 2024. As an introduction, I would like to highlight three points. First, we delivered double digit top line growth in Q4 and full year 2024. And this is the results of the diversification of our business model and the successful expansion of our clearinghouse across Europe. Over the previous plan, we have created a very strong group present all over the value chain, and we are now more than ever well positioned to capture growth opportunities in the future. The second message is that for the first time ever, we have exceeded the significant threshold of $1 billion in adjusted EBITDA. which is another testament of our operational excellence and cost discipline. Our full-year 24 adjusted EPS grew close to 20% year-on-year to €6.59 per share. Third, in 2025, we are building the foundations and we are investing to achieve our 2027 targets. 2025 will be an investment year. We have already made some major progress in the delivery of our strategic priorities and we announced the contemplated acquisition of Nasdaq's Nordic Power Futures business subject to applicable regulatory approvals. This announcement is a major accelerator for our Nordic and Baltic Power Futures market, which is expected to go live in June 2025. And clients will be able to test our offering as soon as March 2025 in a few weeks time. Today, we are also very pleased to announce to our clients one of the most significant innovations in financial derivatives in recent years, the launch of cash-tested mini-futures on European government bonds. The mini-futures will be available for trading from September 2025. Finally, we have made a major step in the expansion of our repo-clearing franchise through strategic collaborations with Euroclear to enhance UNX Clearing's collateral management offering. Let me now give you a quick overview of the full year 2024 highlights on slide four. Euronext delivered double-digit revenue growth in 2024, thanks to its diversified revenue profile. Full year 24 revenue grew by plus 10.3% year on year, up to 1,626.9 million. This growth was supported by three main drivers. First, Non-volume related, the revenue amounted to 58% of the total revenue and posted a very strong overall performance. Custody and settlement revenue grew by plus 8.7% year-on-year to 270.5 million, driven by higher assets and the custody dynamic settlement activity and very strong growth of value-added services. Advanced data services revenue grew by plus 7.5% to 241.7 million, driven by growing demand for diversified data sets and a very dynamic retail usage. It was also supported by the diversification of our offering with the acquisition of GRSS, a leading service provider to benchmark administrators. Listing revenue grew by plus 5.1% to $231.9 million, despite headwinds from the Norwegian coronavirus depreciation. The growth was driven by the strong performance of our corporate solution business, and very resilient listing revenue. We remain the first listing venue in Europe with 53 new equity listings and 14,700 newborn listings in 24. Second, our trading revenue grew by plus 14.2%. And this was driven by record results in fixed income trading, in forex trading, in power trading, in agricultural commodities trading, and very positive dynamic in cash trading, which we continue to see in the beginning of 2025, as you may have seen with our January numbers and the numbers we release every day. Third, we clearly see the benefits of the European expansion of our clearinghouse. Clearing revenue grew by plus 19% year-on-year to 144.3 million. This strong performance also reflects the dynamic fixed income and commodities clearing activity. net treasury income grew by plus 21.8% to $56.8 million. Our underlying expenses, excluding DNA, were at $620.5 million, totally in line with our revised cost guidance of $620 million of underlying expenses excluding DNA, and less than the $625 million originally targeted at the beginning of the last year. This is the result of our continued cost discipline. This is the result of synergies which offset growth, investment, and acquisition impact. Consequently, our full year 2024 adjusted EBITDA grew by plus 16.4% compared to 2023 to exceed 1 billion euro. Euronext adjusted EBITDA margin increased by plus 3.3 points to 61.9%. This strong performance led to a 19.7% increase in adjusted net income to 682.5 million. Adjusted EBITDA was at 6.59 euros per share, up plus 19.6% year-on-year. We are pleased to propose a dividend of 292.8 million for 2024 at our AGM in May 25, and this represents an increase of plus 14% year-on-year. This represents 50% of our reported net income, totally in line with our capital allocations policy. As you know, we have launched a 300 million share repurchase program in November 24, of which 65.3% have already been completed. The shares bought back as part of the program will be canceled and excluded from the dividend payment. So the proposed dividend per share will be communicated closer to the AGM in accordance with the final number of shares following the completion of the share buyback. Reported net income increased by plus 14% in 2024 to 485.6 million euro, despite the negative comparison base related to the 41.6 million capital gain that we received in 2023 for the disposal of the 11.1% stake in LCHSA. And reported EPS for 2024 increased by plus 16.7% to 5.65 euro. This also reflects our lower share count due to the share repurchase program performed in the second semester of 2023. Let me now give you a very quick overview of the fourth quarter of 2024 on slide five. Q4 2024 continues your next trend of success over the first three quarters of last year. Your next revenue grew by plus 11.1% in Q4 2024 compared to Q4 2023 to €415.8 million. Giorgio will deep dive into the details of the strong performance across our businesses in a minute, but I want to highlight that non-volume related revenues accounted for 59% of revenue and covered 151% of underlying advantages excluding DNA. Q4 2024 underlying expenses excluding DNA were at 163.2 million. This 3.4% increase year-on-year reflects investments in strategic growth that we have started to deploy in Q4 and the impact of acquisitions performed over the year. Or adjusted EBITDA grew by plus 16.7% compared to Q4 2023 to 252.6 million euro. Euronext adjusted EBITDA margin increase by 2.9 points to 60.7%. Adjusted EPS was at 1.66 euro per share, up plus 16.9% year-on-year, which also reflects the lower share count due to the share repurchase program performed over 2023. Reported EPS increased by 12% to 1.4 euro per share. Net debt last month adjusted EBITDA reached 1.4 times, at the end of 24, which is in line with the target leverage between one to two times that we shared as part of our updated capital allocation policy at our university on the 8th of November last year. So we are very pleased that our continued deleveraging path has been fully recognized by S&P that upgraded your X from a triple B plus positive outlook rating to A minus stable outlook rating in February 2025. Finally, thanks to our strong Q4 2024 performance, we confirmed that we exceeded our 2024 financial targets. You may remember that we closed in November 2024 the previous plan one quarter in advance. So the final results at the end of 24 are even better than anticipated. On average, our revenue grew every year between 20 and 24 by plus 4.7% per year compared to the initial target, which was 3 to 4% growth in CAGR. Also, we reach an EBITDA average growth per year of plus 6.4% over the same period, which is significantly above the targeted 5 to 6% CAGR in EBITDA growth that we had anticipated when we launched the previous plan in 2021. This is yet another example of our outstanding track record to deliver what we promised and to overdeliver what we promised. I now give the floor to Giorgio for the review of our fourth quarter of 2024.

Thank you, Stéphane, and good morning, everyone. Let's now have a look at the strong performance of this fourth quarter of 2024. I'm now on slide eight. Total revenue are up 11.1% compared to last year and reached €415.8 million, of which 59% is non-volume related. We report solid growth in both our non-volume related business and trading activities across all asset clusters. Six Income continues to be a key contributor to Euronext's top-line growth. Let me deep dive into the drivers of this strong performance, starting with listing on slide 9. Listing revenue was 59.4 million euros, up 5.8% driven by the strong performance of corporate solutions and the resilient listing activity partially upset by the depreciation of NORC. Euronext confirmed its leadership in equity listing in Europe with 16 new listings. On the debt side, in 2024, Euronext listed over 14,700 new bonds, this is an all time record. With this performance, Euronext reinforced its number one position worldwide with over a total of 55,000 bond listed on its platform. Euronext corporate solution continue to deliver a solid growth with revenues of 14 million euros in the fourth quarter of 2024, up 13.6% compared to the fourth quarter of 2023. This is the best quarter ever for our corporate solution franchise, supported by the strong performance of our SaaS products and event-related activities. I am now on slide 10. Data and investor services activity continues to drive growth this quarter. Advanced data services reached 61.1 million euros of revenues, up 8.9% driven by the demand of diversified data, analytic products, and dynamic retail usage. Revenue was supported by the acquisition in June of 2024 of GRSS, a leading provider of services to index benchmark administrators. Technology Solutions reported 28.4 million of revenues, up 3.1%. supported by the activity of Norpool and the launch of Euronext Wireless Network in July 2024, which offset the termination of Borsi Italiana legacy services following the migration of Italian markets to OPTIC. Investor services reported 4.2 million revenues in the fourth quarter of 2024, representing a 39.8% increase compared to the same quarter last year, resulting from the commercial expansion and the full quarter contribution of substantive research acquired in September 2024. Moving on to trading on slide 11. Euronext trading revenue reached 414.4 million euros this quarter, up 13.5%. This strong growth was driven by the double-digit performance of fixed income, FX, and cash trading and the overall good trading performance across all asset classes. Cash trading revenue grew 10.6% to 70.9 million euros, driven by a more positively geared volume environment. Over the fourth quarter of 2024, Euronext cash trading revenue capture was at 0.52 basis point, reflecting more dynamic volumes and higher average order size. Cash equity trading market share averaged 64.4%. Derivative trading reached revenues of 12.9 million in the fourth quarter of 2024, up 0.3%. Strong performance of Euronext's commodity derivatives supported by the new product launches offset the continued low volatility environment for equity derivatives. Euronext revenue capture on derivative trading was 0.35 euro per lot, reflecting a positive impact of the volume mix. Lastly, FX trading revenue was 8.5 million euros in the fourth quarter of 2024, up 27.7% compared to the fourth quarter of 2023, thanks to the favorable market volatility, commercial development, and pricing optimizations. Continuing with the review of our diversified trading activity on slide 12, fixed income trading revenue grew by 23.7% and reached another record at 37.8 million euros. This increase reflects record quarter volumes in MTS cash and repo driven by an economic environment favoring money markets and supporting volatilities. Power trading revenue grew to 13.3 million euros in the fourth quarter of 2024, up 8.8% compared to the same quarter last year. The strong performance was mainly driven by continuous strong growth in intraday volumes, up 27.1%, but lower day ahead volumes due to milder weather conditions. On a like-for-like basis and at constant currency, power trading revenue increased by 10.1%. I conclude this business review with the strong performance of our post-trade activity. I'm now on slide 13. Clearing revenue was up 1.8% to 32.9 million euros this quarter, reflecting the increase in equity clearing volume following the expansion of Euronext clearing in November 2023, as well the dynamic commodity and retail bond clearing volumes offset by the muted volumes on equity derivatives. Euronext has internalized the clearing and net treasury income related to derivative flows in September 2024. Euronext, therefore, no longer receives treasury income from LCHSA. previously recorded under non-volume-related clearing revenue. Non-volume-related clearing revenue mostly are related to membership fee and accounted for 8.4 million euros of the total clearing revenue in the fourth quarter of 2024. Net treasury income amounted to 17.9 million euros The 53.3% increase compared to the fourth quarter of 2023 reflects the increased level of cash collateral posted to the CCP following the migration of all Euronext market derivatives clearing to Euronext clearing and improved margins. Revenue from custody, settlement, and other post-trade activity was 69.9 million euros this quarter, up 12.2% compared to the fourth quarter of 2023. reflecting higher assets under custody, a growing number of settlement instruction, and continued growth of service offering supported by the acquisition of Accupay on the 3rd October 2024. Moving on with the financial review, I will start with the cost outlook for 2025 on slide 15. In 2024, Euronext reported underlying expenses excluding DNA in line with the revised guidance of 620 million euros. This compares to an initial guideline of 625 million euros, which did not consider the impact of any acquisition executed over the course of 2024. The 2024 normalized underlying expenses, including DNA, were approximately 640 million euros, reflecting approximately 8 million of positive one-off items and the full year impact of bolt-on acquisition executed in 2024. In 2025, we expect the total underlying expenses excluding DNA to be around 670 million euros. We expect 2025 underlying expenses excluding DNA to be stable at around 640 million euros compared to 2024 normalized underlying expenses excluding DNA. as savings and synergies are expecting to entirely offset any inflationary impact. In addition, we plan to invest around 5% of our normalized underlying expenses, including DNA, to deliver strategic growth projects, as highlighted during the Investor Day on 8 November 2024. Moving on, with EBITDA bridge, I'm now on slide 16. Euronext EBITDA for the quarter was up 20.2% to 241.4 million euros, mainly thanks to 37.2 million euros of additional revenues at constant perimeter. The reduction of non-underlying costs for 4.4 million euros offset only by 1.8 million of additional costs at constant perimeter. Underlying costs for the quarter were 11.2 million euros, mainly related to the last steps of the Borsi Italiana Group integration and integration of other assets. As a result, Euronext's adjusted EBITDA for the quarter was up 16.7% to €252.6 million, with an adjusted EBITDA margin of 60.7% this quarter, up 2.9 points compared to the fourth quarter of 2023. The underlying operational expenses, excluding depreciation and amortization, increased by 3.4% compared to the fourth quarter of 2023, reflecting the early investment in growth for the new strategic plan and the impact of acquisition. Moving to net income on slide 17. Adjusted net income this quarter is strongly up at $172.3 million. which represent an increase of 16.3% compared to the same quarter last year. This reflects mainly the strong EBITDA growth of the last quarter of 2024. Results from equity investments decreased 6.9 million. As a reminder, in the fourth quarter of 2023, Euronext reported 17 million of results from equity investment due to the capital gain related to the disposal of the staking token and the dividend received from SICOVAM, while in the fourth quarter of 2024, Euronext received only the dividend from SICOVAM at 10.1 million euros. Depreciation and amortization increased 8.7% versus the fourth quarter of 2023 to 49.6 million euros due to the impact of migration project and acquisition. PPA related to the acquired businesses accounted for 20.7 million euros and is included in DNA. Income tax for the quarter was 55.5 million euros with an effective tax rate of 26.6%. As a reminder, in the fourth quarter of 2023, the effective tax rate was as low as 22.6%, reflecting the positive impact of tax-exempted items in that quarter. Reported net income reached 144.6 million euros with an increase of 10.8% compared to the fourth quarter of 2023. Adjusted EPS basic was up 16.9% at 1.66 euro per share compared to 1.42 euro per share in the fourth quarter of 2023. This increase reflects the higher profit and lower number of outstanding shares over the quarter with respect to the number of shares we had in the fourth quarter of 2023. I will conclude with cash flow generation and leverage. In the fourth quarter of 2024, Euronext reported a net cash flow from operation activity of 175 million euros compared to 194.5 million in the fourth quarter of 2023, reflecting negative changes in working capital from short-term movement in outstanding power sales customer and supply invoices related to North Pool and CCP activities and higher income tax. Excluding the impact of working capital from Euronext clearing and North Pool CCP activity, net cash from operating activities accounted for 64.3% of EBITDA in the fourth quarter of 2024. Net debt to EBITDA ratio was at 1.4 times at the end of the quarter, despite our 300 million ongoing spare buyback programs. On 3rd February 2025, Euronext welcomed the decision of S&P to upgrade Euronext's rating from BBB plus positive outlook to A minus stable outlook. S&P decision reflects the completion of the integration of the Boss Italiana Group, the successful expansion of Euronext Clearing, and they continued the leveraging thanks to the Group's strong cash flow generation. Before giving the floor back to Stefan, I take this moment to remind you that our new Simplified reporting will come into effect as soon as the first quarter of 2025. In the next weeks, we will make available a reconciliation table between the old and the new reporting. This table will be available on our investor relations website and will help you to prepare for the upcoming quarter. of course, will remain available for any question you might have. And with this, now I would like to give the floor back to Stefan.