Euronext Nv Unsp/Adr

Hello and welcome to the Euronext Q1 2025 results call. Please note this conference is being recorded and for the durations of the call, your lines will be on listened only. However, you will have the opportunity to ask questions at the end of the call. 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 zero and you will be connected to an operator. I will now hand you over to your host, Stéphane Bouchna, CEO and Chairman of the Managing Board, to begin today's conference. Please go ahead, sir.

Good morning, everybody, and thank you for joining us this morning for the Euronext First Quarter 2025 Results Conference Call and Webcast. I am Stéphane Bouchna, CEO and Chairman of the Managing Board of Euronext. And I will start with the highlights of this first quarter of the year. And Giorgio Modica, the Euronext CFO, will then develop the main business and financial highlights of the first quarter of 2025. As an introduction, I would like to highlight two key points. First, we continue to deliver double-digit top line growth in Q1 2025. And this is the fourth quarter in a row of double-digit growth of the top line. or Q1 2025 revenue grew by plus 14.1% compared to Q1 2024 to 458.5 million. This remarkable performance reflects strong growth in non-volume related activities. And it also reflects exceptional volatility across trading and clearing activities, especially in cash equity, in fixed income, in Forex, in power electricity and in commodities. Second, we have accomplished very significant steps with the delivery of our 2027 strategic priorities. In the first quarter of 2025, we have announced a series of measures to support the integration and the competitiveness of European capital markets. First, we have announced the consolidation of settlement in Euronext securities for equities trading in Amsterdam, Paris, and Brussels from September 2026. These moves represent a significant optimization of the European post-trade landscape with Euronext securities as the CSD of choice for Europe now. Also, we have announced last month that Euronext is committed to facilitate access to European capital markets with the launch of a simplified English-language European common prospectus. We are creating a sort of European S1 to facilitate the integration of capital markets when it comes to literacy. Last week, we have announced a full suite of initiatives to support investments in companies that contribute to European strategic autonomy. This includes a series of new indices to capture exposure to critical investment teams in energy, in security, and in zero strategy, and also a set of tailored private market equity type of instruments and initiatives and debt financing solutions for aerospace and defense projects. Earlier this week, we have successfully completed the acquisition of admin control. This acquisition that completed yesterday, in fact, This acquisition doubles the size of our governance solutions and further expands our footprint in the Nordics with the high growth business. We are looking forward to boost the development of admin control across our unique corporate solutions network in Europe. Since the beginning of the year, we demonstrated our capacity to innovate ahead of the curve, to lead the way to a more innovative and a more competitive European capital market. Let me now give you a quick overview in slightly more level of details of Q1 2025 highlights on slide four. As a reminder, this is the first quarter in which we are using our new and simplified reporting framework. It will help you to clearly distinguish our non-volume-related revenues and to track the progress of our strategic priorities. Our non-volume-related revenues and income streams comprises three distinct segments. First, securities services, which includes custody and settlement, as well as non-volume-related clearing revenue. Second, capital markets and data solutions, which encompasses primary markets, data services, and the solutions business. And net treasury income, which reflects the treasury income generated through our CCP initiatives at your own experience. Then all volume-related revenue streams is divided into two segments. Fixed incomes, currency, and commodities markets, which includes the trading and clearing revenue from fixed income, commodities, and foreign exchange. Equity markets, which includes revenue from trading and clearing of cash equity and financial derivatives. Giorgio will provide you with the details of each of the new lines of this new reporting framework in a few moments. But first, I would like to take a few minutes to look at the big picture. And the big picture is that Turonect delivered a double-digit revenue growth in Q1 2025, as I said earlier, for the fourth quarter in a row. In Q1 2025, revenue grew by plus 14.1% year-on-year, up to $458.5 million. Let's start with non-volume-related revenue because, as mentioned in previous conversations, we are implementing a double diversification strategy, and in the context of this double diversification strategy, we are growing on non-volume-related revenue. Non-volume-related revenue amounted to 57% of total revenue and income and posted a strong performance overall. Security services reported solid growth. Custody and settlement revenue grew plus 11.6% year-on-year to 75.8 million euro, driven by higher assets under custody, driven by dynamic settlement activity, and also strong growth of value-added services. Capital markets and data solutions were also a strong contributor to a record performance in 2025. Advanced data solutions revenue grew by plus 8.1% to 65.1 million, driven by growing demand for diversified data sets and also dynamic retail usage. Data solutions were also supported by the diversification of our offering with the acquisition of GRSS, a leading service provider to benchmark administrators. Corporate and investor solutions and technology services grew by plus 9.8% to 45.9 million. The strong growth in this segment is driven by the commercial expansion of our SaaS business, a growing client base in our co-location services, and also a double-digit growth in investor solutions supported by the acquisition of substantive research. Let's move now to our volume-related business. When I referred earlier to double diversification, I want to underline also the very wide and powerful diversification of the various segments created within the Euronext volume-related business. And clearly, this volume-related business was fueled by exceptional volatility, especially in cash equity, in fixed income, in forex, and in power and agricultural commodities trading and clearing. Thick markets revenue was up plus 25.1% compared to Q1 2024 at 19.7 million euros. Equity markets was up plus 18% compared to Q1 2024 at When it comes to cost or underlying expenses excluding DNA, we're at 164.5 million euros, up just 9.1% compared to Q1 2024. This increase on the cost base compared to Q1 2024 reflects first growth on investment and the impact of three acquisitions performed in 2024. This growth of our cost base is totally in line with the ramp-up of growth investments we have announced as part of the underlying cost guidance of $670 million for the full 2025 year. In parallel, we continue to deploy a very strong cost discipline across all our operations. Consequently, OQ1 2025 adjusted EBITDA grew by plus 17%, compared to Q1 2024 to 294.1 million euros. Euronext adjusted the beta margin increase by plus 1.6 points to 64.1 percent, reflecting the strong top-line growth of the group. So, we reported net financing expenses of 1.5 million in Q1 2045, impacted mainly by short-term forex movements. This compares to a net financing income of $4.7 million in Q124. Minority interests were also increased compared to last year, driven by the strong performance of MTS and Norpol, where we have minority partners. Consequently, adjusted net income was at $183.5 million, up plus 11.8%. We reached recorded adjusted earnings per share at 1.8 euro per share. Q1 2025 reported net income was 164.8 million up plus 17.9%. Reported EPS grew by plus 20% compared to Q1 2024 to 1.62 euro per share. This also reflects a lower share count due to the share repurchase program performed in 23 and 24. As you know, on 10 March 2025, we completed the 300 million share repurchase program announced on the investor day at the launch of our strategic plan in November 2024. Net debt to last 12 months EBITDA was at 1.4 times at the end of March 2025, which is totally in line with our target leverage ratio between one times and two times announced as part of Innovate for Growth 2027. So now, let me give the floor to Giorgio for the business and financial review of Q1 2025.

Thank you, Stefan, and good morning, everyone. Let's now have a look at the strong performance of this first quarter of 2025. I'm now on slide six. As you can see, the slide showed a new reporting format We are convinced that this will sharpen and simplify our communication and better represent our business. Non-volume-related revenue and income comprise security service, capital markets and data solution, and net treasury income. The volume-related revenue consists of the FIC markets and equity markets. I will deep dive into the different segments on the following slides. On our investor relation website, you can find a reconciliation table detailing line by line all changes between the old and the new reporting format. This quarter, we reported a remarkable growth, driven by exceptional market conditions and the progression of our strategic plan initiatives in our non-volume related businesses. Total revenue and income is up 14.1% compared to last year, reaching 58.5 million euros, of which 57% is non-volume-related, covering 158% of our underlying operating expenses, including VMA. Let me dive into the drivers of this strong performance, starting with non-volume-related revenue and income on July 7. let's begin with the asset driven revenue business security service revenue was at 83.4 million euros making a 6.8 percent increase this segment comprises custody and settlement as well as other post trade revenue accounting for all non-volume related clearing revenue custody and settlement revenue reached 75.8 million euros, 11.6% increase compared to the first quarter of 2024. This growth was driven by record assets under custody above 7.1 trillion euros alongside dynamic settlement destruction driven by market volatility. Value-added services continue to grow organically double-digit and are further supported by the acquisition of Accupay. Other post-trade revenues declined 25.3% to 7.6 million euros, primarily due to the reclassification of treasury income related to Euronext derivative flows from revenues to net treasury income in September 2024, following the expansion of Euronext clearing activities to derivatives. Net treasury income was up 55.8% compared to the first quarter of 2024, and this represents the flip side of the reduction we just discussed in other post-trend revenues. As discussed, NTI benefits from the expansion of Euronext Clearing and the internalization of treasury income from LCHSA following the derivative clearing migration in September 2024. It also reflects higher cash collateral posted to the CCP due to the elevated market volatility. Turning to capital market and data solution on slide eight, revenue reached 157.3 million euros with a 6.6% increase compared to the first quarter of 2024. Primary market generated 46.3 million euros of revenues up 1.8% compared to the same quarter last year. This is an illustration of the resilience of our listing business despite extreme market volatility. Advanced data solution revenue grew to 65.1 million euros, up 8.1%, driven by the acquisition of GRSS, the strong demand from retail, and growing monetization of our diversified data sets. Corporate and investor solution and technology services reported 45.9 million euros in revenues for the first quarter of 2025. This reflects continued commercial expansion of the governance SAS offering and the acquisition of substantive research, which support investor solution revenue. It's also supported by the growing client base of our co-location and microwave connectivity services. Following the completion of the acquisition of admin control on 13 May 2025, admin control revenue will be reported within the Euronext corporate and investor solution and technology services revenue starting from the second quarter of 2025. Moving to our volume related activity now, I am now on slide nine. Revenue from our FIC market reached 90.6 million euros, making a 25.1% increase compared to the first quarter of 2024. Fixed income trading and clearing revenue grew by an impressive 32.4% to 51.8 million euros, driven by the continued favorable market conditions. MTS cash average daily volume was up 64% year-on-year at 56.8 billion euros. MTS repo term adjusted average daily trading volume reached 508.9 billion, up 3%. Commodity trading and clearing revenue increased 12.8% to 29.6 million euros in the first quarter of 2025, supported by record intraday volumes at Norpool and dynamic agricultural trading and clearing volumes. FX trading revenue reached a new record of 9.2 million euros this quarter, up 30.4% compared to the first quarter of 2024. This reflects favorable market volatility and a positive volume mix effect with more anonymous trading. Continuing with our volume-related revenue on slide 10, equity markets revenue saw an 18% increase compared to the first quarter of 2024 and reached 108.4 million euros. Cash equity trading and clearing revenue grew by 22.5%, reaching 94 million euros. This growth reflects a 31.8% increase in average daily volumes, driven by market volatility, and an average revenue capture of 0.5 basis points due to the increase in volume, stronger intraday volatility, and larger average order size. This reflects the usual inverse correlation between the level of volumes and the average fee. Financial derivative trading and clearing revenue was 14.4 million euros in the first quarter of 2025, a 4.8% decline compared to the same quarter last year. This decrease is mostly linked to the decrease of the average clearing fee, as following the clearing migration, certain clearing fees are now reported in the line other post-trade revenues, and as such, are not fully comparable with the first quarter of 2024. Moving on with the EBITDA bridge, I'm now on slide 12. Euronext reported EBITDA for the quarter was up 21.3% to 294.2 million, mainly thanks to 51.9 million euros of additional revenues at constant perimeter. The reduction of our non-underlying cost of 8.8 million linked to the termination of the derivative clearing arrangement with LTHSA was offset by 10.8 million euros of additional costs at constant perimeter and 3.2 million of additional costs from change of scope. Euronext adjusted EBITDA for the quarter was up 17% to 294.1 million euros with an adjusted margin of 64.1% this quarter, up 1.6 points compared to the first quarter of 2024. The underlying operating expenses excluding depreciation and amortization increased 9.1% compared to the first quarter of 2024, reflecting The investment in our strategic growth project and the impact of the acquisition performed in 2024 for 3.2 million euros as already discussed. On the lack for lack basis, underlying operating expenses excluding DNA increased 7.2%. Moving to net income on slide 13, adjusted net income in the first quarter of 2025 reached 3.5 million, which represent an increase of 11.8% compared to the first quarter of 2024. These reflect mainly the strong EBITDA growth in the first quarter of 2025. Depreciation and amortization accounted for 48.3 million euros, plus 9.8% compared to the first quarter of 2024. PPA related to the acquired business accounted this quarter 20.4 million euros. Euronext reported a net financing expense of 1.5 million euros this quarter compared to an income of 4.7 million in the first quarter of 2024. These variations mainly reflect short-term effects movements and the decreasing interest rates. In the next few quarters, we expect net financing expenses to be around 6 million euros, excluding any impact from effects and capital gain or losses on financial instruments. As of today, our cash position was impacted by 500 million bond redemption and the acquisition for 400 million of admin control. And we'll be impacted in the next weeks and months by a $290 million dividend payment and the acquisition of the power derivative business from NASDAQ. In addition, going forward, raising debt for Euronext will have a cost which is higher than the cost of the debt today. Depending on the maturity and on the instrument, the cost is going to be between 3% and 4%. And the return on our cash that, as you know, is invested in in a very short term, max three months maturity, will be impacted by the fluctuation of the interest rate, and today is yielding around 2%. Income tax for the first quarter of 2024 was 67.8 million euros. This translated into an effective tax rate of 27.7% for the quarter compared to 26.9 in the first quarter of 2024. I want to highlight that the higher tax rate this quarter is mostly related to prior year adjustments. In the full year 2025, we expect the tax rate to remain at around 27%. The share of non-controlling interest increased to 11.9 million, and as Stefan said, this reflects the strong performance of MTS and Norpool. As a result, the reported net income share of parent company shareholder increased by 17.9% compared to the first quarter of 2024 and reached 164.8 million euros. Adjusted EPS was up 13.9% this quarter at 1.8 euro per share compared to 1.58 euro per share in the first quarter of 2024. This increase reflects higher profit and lower number of outstanding shares over the first quarter of 2025 compared to the same quarter last year. Reported EPS increased by an impressive 20% year-on-year to 1.62 euro per share. To conclude, I'm now on slide 14 for the cash flow generation and leverage. In the first quarter, 2025 Euronext reported net cash flow from operating activities of 190.6 million compared to 184.6 million in the first quarter of 2024. This reflects higher cash flow from operating activity upset by negative changes in working capital from shorter movement in outstanding power sale customer and supplier invoices related to nor put CCP activity in higher income tax. Excluding the impact on working capital from Euronext clearing and nor put CCP activities, net cash flow from operating activities accounted for 88.1% of EBITDA in the first quarter 2025. Net debt-to-EBITDA ratio was at 1.4 times at the end of the quarter. On 22 April 2025, Euronext successfully redeemed the 500 million bond issue in connection with the acquisition of Euronext Dublin in April 2018. As a reminder, subject to the approval today of the dividend, we will pay a total dividend of 292.8 million euros or 2.9 euros per share. This represents an increase of 16.9% compared to the dividend per share of 2.48 paid in 2024. And this concludes my presentation. Now I'll give back the floor to Stefan.