Euronext Nv Unsp/Adr

Hello and welcome to the Euronext second quarter 2026 results conference call. On today's call, we have Stéphane Boujnah, CEO and Chairman of the Managing Board, and Giorgio Modica, CFO. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing pound key five on your telephone keypad to enter the queue. I will now hand you over to your host, Stéphane Boujnah, to begin today's conference. Please go ahead, sir.

Good morning, everybody, and thank you for joining us for Euronext's second quarter 2026 results call. I am Stéphane Boujnah, CEO and chairman of the managing board of Euronext. And I will start with the highlights of this record quarter. Then Giorgio Modica, the Euronext Group CFO, will cover the main business and financial highlights of the second quarter of the year. I'm now on slide four and I will start with the overview of the second quarter 2026 highlights. As we have done for over two years now, Euronext extended the double digit growth trajectory. We delivered double-digit growth across revenue, double-digit growth in EBITDA, double-digit growth in net income, and double-digit growth in EPS. This is our ninth quarter of double-digit growth. The excellent performance translated into record underlying revenue and income of $544.4 million, up almost 17%, up 16.9% year-on-year. This compares to what was already a very strong quarter last year. This growth was driven by all segments and was evidenced by clear operating leverage. Or adjusted EBITDA increased faster than revenue and reached a record level of €360 million, up 21% plus 1% compared to last year, which was already a strong quarter. As a result, Euronext adjusted the bid-to-margin reach 66.1% and this represents a plus 2.3 percentage point improvement compared to the second quarter of 2025 despite continued investments in growth and in making the company fit for the future. Adjusted net income increased by 19.9% to 245 million euro. Adjusted earnings per share rose by plus 19.8% to 2.42 euros, highlighting our consistent value creation for shareholders. This remarkable performance demonstrates once again the resilience of our diversified business and the growing revenue contribution of our strategic initiatives. Euronext has never been so strong. Non-volume-related revenues accounted for 58% of total revenue and income and increased by plus 15.2% year-on-year. So non-volume-related revenue did contribute a lot to this double-digit growth because they did grow by double-digit by plus 15.2%. This robust performance was driven by the contributions of Admin Control and Euronext Athens, alongside commercial expansion and sustainable growth in custody and settlement. But it was also driven by the strong results of a renewed momentum in primary markets and also in advanced data solutions. Volume-related revenue increased by plus 19.2%, driven by record volumes across asset classes. Resilient revenue capture and market share improvement and the full results, the full first quarter of the contribution of our strategic initiatives in Power Futures. We consistently diversify our volume-related revenue by adding new products and expanding into new geographies. Our underlying expenses, excluding DNA, amounted to $184.4 million. representing an increase of 9.5% compared to last year. This increase reflects our investments in innovation and talents to support long-term growth and to build the company fit for the future, as well as the impact of the acquisitions of Euronext Athens and Alien Control. But please, I want to highlight that excluding the impact from acquisitions, from the change of perimeter, or underlying cost base grew only by plus 3.5%. So operating leverage, cost management discipline has remained a fundamental feature of the organization, even in the context of this double digit growth of Topline. Net debt to last 12 months adjusted EBITDA stood at 1.3 times at the end of June 2026. Normalized for cash in transit at Norpool, our leverage was right in the middle of our target range of 1 to 2 times. This performance was achieved despite significant cash outflows of over 700 million related to the dividend payment and the redemption of our 2026 bonds. So the cash flow generation and the balance sheet management has remained, again, in Q2, a significant continuous feature of the company. Turning to slide five, I want to take a few minutes to demonstrate that Euronext is today stronger than ever. In Q2 2026, we further reinforced our leadership in European capital markets. We recorded the best second quarter for listing and follow-ons in three years, powered by a simpler and faster listing process. Nearly half of Euronext's new listings were international listings from companies not headquartered in Euronext countries, notably from Canada, Australia, Spain, and the Czech Republic. We were pleased to welcome Seb Balker, the first listing of a global shipping company on Euronext Athens and the largest capital raise also in Greece in over a decade. These developments illustrate the continued momentum in the Greek market, As we progress with the integration, the continuous rally towards Greek assets, the continuous success of the Greek economy, and therefore the continuous opportunity for making Athens a listing venue for the shipping sector. But beyond Athens, overall in listing, it's quite clear that Gioronext has become the IPO market and the IPO magnet for international companies. The execution of our strategic plans also delivered tangible results. Q2 2026 marks the first full quarter contribution of Power Futures. Thanks to our integrated value chain, we are able to capture the benefits of this new asset class across trading, clearing, data and technology. And this success in the Nordic and Baltic region is going to continue to be deployed above and beyond this region. Euronext has recorded growing retail investor participation since the start of the year. The number of non-professional users for OData products has more than doubled year on year, reaching close to 9 million users. The retail participation in ETFs increased by 87% over the same period. We are confident that supportive national initiatives will further reinforce this upward trend for more consistent retail participation in tour markets. The European Commission's market integration and supervision package marks a real step forward to reduce fragmentation and to improve scalability for EU market infrastructures. Over the past few weeks, the six finance ministers of Europe's largest economies in Germany, France, Italy, Spain, Poland, and the Netherlands, and also the European Parliament rapporteur, Mr. Markus Weber, have explicitly called for central supervisions and wide-ranging changes to market structure. A growing number of EU countries are implementing initiatives to increase retail participation to the elite market, in particular through pension reform reforms. These developments are encouraging and are closely aligned with the Euronext long-standing vision. As you can understand, Hacking significantly ahead of the Innovate for Growth 2027 financial targets, we are progressing. We are also nearing the completion of all the industrial projects of Innovate for Growth 2027. We have successfully started the client onboarding to our renewed fixed income clearing franchise in May 2026. In June 2026, we announced a partnership with BNY to further enhance the collateral management capabilities of Euronext Clearing. Over the second half of the year, we will accelerate client onboarding, building an updated risk framework and our new sponsored access model for buy-side clients. As the September 2026 go-live of our CSD expansion approaches, The first clients have confirmed that they will use the model from day one. These early adopters laid the foundation for broad-based market adoption. Preparations for the first issuer migration are also progressing well, and market participants clearly recognize the value of a competitive post-trade model. At the end of June 2026, Our cash position exceeded €1 billion and our leverage stood at 1.3 times that debt to EBITDA. These financial trends provide us with significant strategy flexibility for the coming quarters. So we deliver once again, device diversified growth, once again, discipline cost management, once again, solid execution of our organic growth initiatives, and once again, ambitious plan to make the company fit for the future. I will now hand over to Giorgio for the business and financial review of Q2 2026.

Thank you Stéphane and good morning everyone. Let's now focus on the driver of performance for this quarter. I am now on slide 7. This quarter we deliver record results with double digit growth across all five of our revenue and income lines. This performance reflects the strength of our diversified business model Discipline execution and the contribution of Euronext Athens. Total revenue and income in the second quarter of 2026 reached 544.4 million euros, up 16.9% compared to last year. 58% of revenue and income was non-volume related. This part of our revenue covered 170% of underlying operating expenses, excluding DNA. Let's take a closer look at the key drivers behind this contribution and continued growth trajectory beginning with non-volume related revenue and income on slide 8. Non-volume related businesses grew 15.2% compared to last year. Security services revenue reached 96.9 million euros this quarter, a solid 12.5% increase The increase was also supported by the steady Settlement Activity, growing demand for added value services and Euronext Athens. Other post-trade revenue increased by 1.7% compared to Q2 2025 to €8.8 million, explained by higher guaranteed deposit and the contribution from Power Futures. Net treasury income was up 12.5% compared to the second quarter 2025 at 22.5 million euros. The increase is driven by a combination of higher cash deposit linked to the power, future clearing, higher volatility and average spread. Turning to capital markets and data solution, I am now on slide eight. Nine. Revenue reached 193.8 million euros, marking a 17.2% increase compared to the second quarter of 2025. Primary market generated 54.2 million of revenue, up 16.4% compared to the second quarter of 2025. This renewed momentum was driven by the strongest admission activity and follow-on transactions since 2023, Despite a volatile market environment, the performance was also supported by the contribution of Euronext Athens with the first listing of a global shipping company and the largest full-on capital raise in more than a decade. Advanced data solution revenue grew to €72.3 billion, up 11% compared to the second quarter of 2025. This performance reflects record Retail Demand, the strong growth of the index franchise and the continued commercialization of new data products. Corporate and investor solution and technology services reported 67.3 million euros of underlying revenue in the second quarter of 2026, up 25.4%. This performance is driven by the growth in SaaS activity, record revenue in investor solution, and a steady upward trend in colocation services. Finally, in the second quarter of 2026, it was the last period impacted by the recognition of admin control contract liability under IFRS 3. This resulted in a 0.9 million reduction in reported revenue for the quarter with no impact, I want to remind you, no impact on cash flows. For reference, this adjustment amounted to 0.6 million per month and was applied until mid-May 2026, which marked 12 months since the closing of the admin control acquisition. Moving to slide 10, our volume-related revenue saw an increase of 19.2% compared to last year. Revenue from fixed markets reached 98.4 million euros, delivering a 12.3% increase compared to the second quarter of 2025. Fixed income trading and clearing revenue grew by 8.2% to 55.9 million euros. This reflects strong growth in MTS cash volume, reaching a record quarter at 64.9 billion euros in average daily volume. The performance was also supported by the continued internalization of MTS model and to the performance in the dealer to client space. Commodity trading and clearing revenue increased by 27.2% to 34 million euros in the second quarter of 2026. This performance was supported by the first full quarter contribution from Euronext Norpool Power Future and continuous structural growth in the intraday power trading. FX trading revenue reached 8.5 million euros down 7.9% compared to the same quarter last year. This performance reflects normalization in volatility and the impact from the US dollar depreciation on reported figures. Like for like and at current currencies, revenue decreased by 5.6%. Continuing with the review of our volume-related revenue, I'm now on slide 11. Equity market revenue increased by 24.9%. Giorgio Modica, Yianos Kontopoulos, Øivind Amundsen, Fabrizio Testa, Manuel Bento, Rene van Vlerken, Stéphane Boujnah, Benoit Van den Hove, Daryl Byrne reflecting a 22.7% increase year on year on a pro forma basis including Athens. This quarter Euronext reached an average revenue capture on cash trading of 0.50 basis point. Euronext market share on cash equity averaged 66.2%. The performance this quarter was also supported by the growth in ETF and the contribution from Euronext Athens. Lastly, financial derivative trading and clearing revenue was at 14.1 million euros, a 10.2% increase compared to the second quarter of 2025. These reflect resilient revenue capture and the contribution of Euronext Athens. I'm now moving to slide 13 for the EBIT average. Euronext reported EBITDA for the quarter grew by 20.6% to 354.5 million euros. This was driven by 45.9 million of organic revenue growth at constant currencies and 33.3% million of additional revenue from Euronext Athens and admin control. When we look at costs, Euronext reported 5.4 million of additional cost at cost and perimeter, and 12.1 million euros cost from change of scope. In the second quarter, 2026 non-underlying expenses were 4.6 million, mostly related to the integration of Euronext Athens and admin control. Adding the 0.9 million of non-underlying revenue Link to the IFRS 3 adjustment we just discussed earlier, total non-underlying items, including DNA, accounted for 5.5 million this quarter. To conclude with this slide, Euronext adjusted EBITDA for the quarter grew 21.1% to 360 million euros, with an adjusted EBITDA margin of 66.1%, up 2.3 points compared to Q2 2025. Moving on net income on slide 14, adjusted net income this quarter reached 245 million euros. Depreciation and amortization increased by 5.1 million euros in the second quarter of 2026 plus 10.6% higher than in the second quarter of 2025. This increase is mostly explained by the inclusion of the PPA purchase price allocation related to Euronext Athens and admin control. Net financing expense increased by 1.8 million. 0.9 million of this increase is linked to the non-cash interest expense recorded in our P&L related to the convertible bond issue in May 2025. The rest of the increase is mainly explained by higher interest expense linked to the anticipated bond refinancing executed in May 2025. Income tax increased by 16.6 million euros as a result of the higher profit before tax this quarter. Effective tax rate amounted to 26.4% for the quarter. Share of non-controlling interest increased by 4.6 million euros mostly due to the strong performance of MTS and Norpool as well as the contribution of Euronext Athens. As a result, the reported net income share of parent company shareholders reached 218.8 million euros in the second quarter of 2026, up 19.1% compared to the second quarter 2025. Reported EPS basic was at 2.16 euro per share, up 19.3% compared to the same quarter last year. Adjusted net income share of parent company shareholders was up 19.9% to 245 million. Moreover, adjusted EPS basic was at 2.42 euro per share this quarter, up 19.8% compared to the same quarter last year. I conclude now with the cash flow generation and leverage on slide 15. In the second quarter of 2026, Euronext reported net cash flow from operating activities at 185.5 million euros compared to 135 million in the second quarter of 2025. Excluding the impact of working capital, net cash flow operating activities accounted for 57.3% of EBITDA in the second quarter of 2026 versus 52.3% in the same quarter last year. As a reminder, in May 2026, we paid 322 million of dividends to Euronext shareholders and redeemed 386 million euros of bond outstanding. We also paid 89 million dollars to Nasdaq for the migration of the power futures. Net debt to EBITDA, as reminded by Stéphane, was at 1.3 times at the end of the quarter. These include 228 million euros of cash in transit at Norpool at the end of the quarter. Excluding these elements, leverage at the end of the quarter was at 1.5 times. And with this, I conclude and I give back the floor to Stéphane.