TMX Group Limited

Conference Operator, welcome to the TMX Group Limited first quarter 2025 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. Following prepared remarks, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. I would now like to turn the conference over to Amin Mousavian, Vice President of Investor Relations and Treasury and Interim Chief Risk Officer. Please go ahead, Mr. Mousavian.

Thank you, Michael, and good morning, everyone. Thanks for joining us today to discuss the 2025 first quarter results for TMX Group. We announced our results for an outstanding quarter highlighted by another record revenue performance last night. Copies of our press release and MD&A are available on tmx.com under Investor Relations. This morning we have with us John McKenzie, our Chief Executive Officer, and David Arnold, our Chief Financial Officer. Following the opening remarks, we'll have a question and answer session. Before we begin, let's cover our forward-looking legal disclosure. Certain statements made during this call may relate to future events and expectations and constitute forward-looking information within the meaning of the Canadian securities law. Actual results may differ materially from these expectations and additional information is contained in our press release and periodic reports that we have filed with the regulatory authorities. Now I will turn the call over to John.

Well thanks Amin and good morning everyone. Thank you all for joining us on our call today on what is very much a busy week here at TMX. So as many of you know already and you've read through the documents by now, we announced our outstanding Q1 results last night. This afternoon, we are hosting our annual shareholder meeting here in our market center in Toronto. And tomorrow marks the 21st edition of our annual equities trading conference. This morning, I'm going to focus my comments on providing an overview and insights into our performance from an enterprise perspective, highlighting those areas of strength, as well as areas where challenges continue to exist. And I want to update you on important progress we have made in executing our strategy and bringing our purpose to life in some exciting ways this year. Now, it does feel like 2025 just got here, but we really hit the ground running. And TMX has delivered excellent Q1 results, with outstanding year-over-year growth in revenue and adjusted earnings per share. And while we are immensely proud of our recent success and the bold steps forward we have taken this year to position TMX for future success, we recognize the gravity of the challenges faced by a broad set of our stakeholders, both in Canada and around the world, in these uncertain times. Now, as much as ever, our industry needs a strong TMX, an innovative and adaptive, responsive and resilient enterprise committed to serving their needs and enabling their success. Now, turning to our results for the first three months of this year. Overall revenue increased 21% compared to Q1 of 2024 and to a new record quarter. Revenue growth included increases across the enterprise, from traditional businesses and new growth areas, as well as transactional and recurring sources. Organic revenue, excluding news file, index research, and the bond indices that we acquired in February, increased 19%, and adjusted due diligence per share increased by 26% from the first quarter of 2024. Now, total expenses increased compared to last year as well, reflecting the inclusion of operating expenses related to recent acquisitions and strategic realignment. The year-over-year increase in expenses also reflected higher costs related to our employee performance incentive plan driven by the increase in our share price and higher headcount and payroll costs, which David will take a closer look at later on in his remarks to follow. Now, moving on to the highlights of Q1 across our business areas. Trading activity on our traditional derivatives and equity markets increased significantly year-over-year as investors reacted to tariff announcements from the U.S., and prevailing economic and interest rate uncertainty. Record MX volumes, led by strong activity across the equity and interest rate derivative segments, ETF options, and Government of Canada bond futures, drove a 42% year-over-year increase in derivative trading and clearing revenue, excluding box. On the equity side, Q1 revenues from equity and fixed income trading increased 24% over Q1 of 2024, largely due to an 18% year-over-year increase in combined volumes on TSX, TSX Venture, and Alpha. The first quarter also featured impressive performance from our new U.S. equity trading venue, an ATS which we've named AlphaXUS, which launched in January. Now focused on innovation, execution quality, and partnership, AlphaXUS has been well received by participants in the United States, and the average daily volume has grown each month since launch. Now, overall revenue from Global Insights, which we formally called GSIA, was 14% higher in Q1 of 2025, highlighted by double-digit increases from TMX Zettify and TMX Trayport. From an enterprise view, both TMX Trayport and TMX Zettify represent key components of TMX strategy to diversify, globalize, and increase the portion of our revenues that's derived from recurring sources. They also share an innovative and competitive entrepreneurial spirit, all important accelerants to this growth. Q1 revenue from Tradeport grew 20% compared to last year, or 13% in pound sterling, largely due to an increase in licensees. Our cold core jewel network provides an essential connection point with a dynamic suite of insights, tools, and capabilities at the center of the global energy markets ecosystem. TMX Vetify Q1 revenues increased 21% year over year, or 13% in U.S. dollars. Increased revenue was driven by organic growth in asset center management and higher analytics revenue, as well as revenue from recent acquisitions of index research and our bond indices. Now, moving forward, our Global Insights Division continues to seek out strategic opportunities to expand product offerings and create innovative client solutions across new asset classes and geographies. Now, turning to capital formation, revenue increased 10% when compared to Q1 2024, due to the inclusion of revenue from news file and higher revenue from additional listing fees. Now, despite continued challenging capital raising conditions, we are seeing some encouraging signs of recovery, specifically in the mining sector, with renewed financing activity on TSX and TSX Venture, and the continued growth of Canada's ETF industry, which set an all-time record for monthly fund inflows in March. And now beyond listings, revenue from TMX Corporate Solutions, which we formerly called Other Issuer Services, increased 18% year over year, largely due to the inclusion of Newsfile. And Newsfile had a very strong start to the year, adding nearly twice the number of new public company Newswire clients in the first quarter compared to the same period last year. TSX Trust also reached a milestone in their evolution in March, surpassing our largest competitor to become Canada's leading transfer agent by market share. So congratulations to our great people at TSX Trust for this tremendous accomplishment. And I'd like to turn now to another tremendous accomplishment and a landmark achievement that has been years in the making. Last week marked the successful launch of our Post-Trade Modernization Platform, or PTM. This implementation represents a major upgrade and overhaul of CDS's foundational technology, providing the essential functions, including clearing and settlement, as well as depository and entitlement payments. This initiative, one of the larger projects we have ever undertaken, brings a world-class end-to-end solution to Canada's markets and sets a new global benchmark for building agile, leading-edge capital markets infrastructure. The PTM initiative also stands as an impressive feat of collaboration, and I'd like to express my gratitude to all of our client participants and regulators for partnering with us on this journey, and to our technology provider, TCS Banks, Now, collectively, we have implemented the broadest scale system of this kind ever on a single platform. And like any complex, large-scale technology project, we've experienced an interesting range of challenges along the way, including the COVID-19 pandemic and the industry transition to T plus one. And we expect to see continued challenges flare up, areas to adjust, things we need to improve on as we move further along towards the deployment of our full capabilities. And so with that, I'd like to thank our participants, not just for their partnership, but for their patience. Infrastructure headlines might not generate the most clicks these days, but this new platform is mission critical. It's a system for every financial institution in Canada. It pushes us to the head of the pack of our global peers and enables further growth, powering new services like the recently introduced CCMS, or Canadian Collateral Management System, and SGC notes. And my special thanks goes out to our Clearing and Technology teams for pushing this project across the line. We all know that it has been many late nights, weekends, but it's your dedication and perseverance that has been nothing short of inspirational on this journey. Now, as we celebrate the successful implementation of the transformative platform, I also want to acknowledge the partnership of Jay Rajnaratham, who recently made the decision to move on from TMX. Jay joined us in 2016 as our Chief Information Officer and his portfolio has continued to grow to include post-trade businesses, and then TMX Data Links, Corporate Strategy, and TMX Vetify. Jay led our technology team in supporting new products and integration initiatives, including integral work on PTM, and creating a modern and client-centric approach to resiliency. And I'd like to wish him every best success in his future endeavors. Now, during last year's Investor Day, We took a deep dive into our long-term strategy and outlined TM2X, our plans to accelerate the growth of the enterprise. At the end of Q1, we took more steps to ensure we had the pieces in place to further enable a propulsive execution mindset, realigning the organization with expanded leadership mandates across operations and corporate functions. Peter Conroy, who you've come to know as the CEO of Trayport, has been appointed CEO of Global Insights. In his expanded mandate, Peter receives TMX Tradeport, TMX Vetify, and TMX Data Links. In the role of CFO, David Arnold, who you'll hear from in a few moments, has also expanded to include full oversight of strategy and corporate development, in addition to leading the finance function, as well as enterprise risk management, innovation, and integration. And on April 1st, we welcome Judy Din to TMX. Judy is Chief Information Officer and the newest member of our senior management team. She is responsible for the strategic leadership and guidance of all aspects of technology at TMX and helping to drive the ongoing evolution and execution of the TMX corporate strategy. Judy most recently served as the CIO of the US Bank TD. And she brings more than 20 years of experience as a technology executive in financial service industry into her new role, including leadership roles at RBC, CIBC, and BMO. And I'm really excited about what these leadership appointments and expanded mandates mean for TMX and our overall team. You know, Judy's track record of technology leadership and innovation, Peter's proven success in delivering for clients and leading growth, and David's opportunistic and disciplined approach to strategy. These are winning attributes, and I feel very strongly that our leadership is in good hands. And next, I'd like to briefly update you on another important enterprise initiative, our capital markets advocacy efforts. Now, our markets have proven resilient. resilient through all measure and manner of crisis over time, macroeconomic, geopolitical, or otherwise from the credit crisis right through the COVID-19 pandemic. And this year, the weight of prevailing uncertainty hangs over all of our markets due to the unpredictability of global tariffs. And on the heels of our federal election here in Canada, TMX continues to advocate on behalf of our interests in our market and our stakeholders, In March, we published a six-point platform outlining specific steps that the Canadian government can take to ensure our country is seen through the world as a great place to invest in new business. And while election campaign platforms promise some of the right things and some of the same things that we've asked for, campaign promises are just promises, and we need to see follow-through and consistency from the new federal government on measures to create an investment-friendly environment. These include tax reforms to incentivize companies to invest in growth and innovation, and regulatory reforms to bring certainty to the market, to increase confidence that large projects can get done here, and enable Canada to compete for global capital. And we have made real progress, and the push continues. TMX's advocacy is an always-on campaign in keeping with our history at the center of the country's capital markets, and with our responsibility to our stakeholders. In closing, and as always, I want to thank our people across the country here in Canada and also in the UK, Germany, Austria, Australia, Singapore, Israel, Brazil, and the US for your essential contributions to TMX's success. Through all market conditions, our team around the world is unified in this purpose, and this shared commitment to making markets better and empowering bold ideas is TMX's sharpest competitive edge. Our recent performance, including Q1 results, are impressive. But what we are most proud of is the standard of excellence our team has set in every reporting period in serving our markets and our clients. And together, we look forward to the opportunities and the challenges ahead. So with that, David, let me pass the call over to you.