TMX Group Limited

Thank you for standing by. This is the conference operator. Welcome to the TMX Group Limited second 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 one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Amin Musavian, Vice President of Investor Relations and Treasury and Interim Chief Risk Officer. Please go ahead, Mr. Musavian.

Thank you, Jason, and good morning, everyone. Thanks for joining us today to discuss the 2025 second quarter results for TMX Group. We announced our results for an outstanding quarter highlighted by another record revenue performance. 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, good morning and thanks, Amin. Good morning, everyone, and thanks for joining us on our call today, particularly for joining us on what is a long weekend Friday here in Ontario and what is shaping up to be a very beautiful day and a beautiful weekend. So we hope for the best of the long weekend to you and yours. Now, as Amin mentioned, last night we announced results for the second quarter and the first half of the year, and again, these were truly outstanding results. With strong year-over-year growth in revenue and adjusted earnings per share, and David's going to take you through those record Q2 details in a moment, just after I talk to you some of the finer points on execution. While we are immensely proud of the team's performance and accomplishment, our focus has always really continued to be on the future, to be better equipped than ever before and to build on our successes. So my comments this morning will touch on some of the key highlights from across the first half of 2025 and the important strategic steps that we continue to take across the enterprise to address the now and the next needs of our clients and accelerate our growth going forward. Now, unsteadyness in our macroeconomic environment remains a near-term reality due to the ongoing global trade conflicts. And navigating uncertainty continues to be a constant and scrolling headline as it surely will be today. But navigation is a critical function. of a vibrant capital market ecosystem. Capital markets are a vital and fundamental component of the global financial ecosystem. They are platforms for companies and venues for investors to pursue capital deployment and growth strategies, capitalize on emerging opportunities, and mitigate risk. And thus far into 2025, our markets stand tall. And as we live our corporate purpose to make markets better and empower bold ideals, And over time, we've evolved beyond the traditional role of a market operator into an active agent and enabler of success. And we're committed to continuing to raise the level of our game to better serve the needs of our growing client base, to be the TMX that they need us to be, innovative and adaptive, responsive and resilient. And you do see that in our results. So looking at the first half of this year, overall revenue increased 18% when compared to the first six months of 2024. This revenue growth reflected increases from across the enterprise, highlighted by derivatives and equity trading and clearing, driven by higher activity as investors reacted to trade war headlines, as well as a double-digit growth in the Global Insights revenue. Now, a consistent theme through the first half of the year is strength in diversity, with strong performances from established business areas as well as areas of expansion and new geographies across both transaction and subscription-based revenue streams and a wide spectrum of client offerings. Organic revenue, excluding TMX Vetify acquisitions such as index research, bond indices, and ETF stream, and news file increased 16%, and adjusted diluted earnings per share increased 23% from the first half of 2024. And overall, offering expenses for the first six months increased year over year as well. And this is largely due to the inclusion of expenses related to those recent acquisitions and strategic realignment costs. And David will take you through that expense piece in more detail in a few minutes. So I'd like to move on to some of the business area highlights. Trading activity on core domestic markets remained strong throughout the first six months. Revenue from derivatives trading and clearing when excluding blocks increased 35% year over year, driven by a 28% increase in MX volumes. Strong volumes feature growth across equity and interest rate derivatives, ETF options, and government of Canada bond futures. And last month, we announced a new Canada bank credit index future product. This is the very first of its kind in Canada, and it's set for launch early next year. Paced by rapid technology and a lot of electronification, credit markets continue to rapidly evolve, creating demand for these types of credit features products. It's based on that FTSE Canada Bank Credit Spread Index. The BCS contract will augment our current suite of yield curve futures, enabling firms to better manage their credit exposure through a listed product. Now, revenue from equities and fixed income trading and clearing increased 12% from the first six months of 2024 to remind higher yields on premium products and higher volumes due to volatility and tariff uncertainty. And on a combined basis, TSX DSX Venture and Alpha Volumes increased 16% year-over-year. Our newest venue, Alpha X US, continues to generate excitement as well. Since its launch in January, the industry response to our U.S. equity trading venue has been tremendous, with month-over-month increases in activity and market share and new participant sign-ons all continuing to exceed our expectations. From Q1 to Q2, average daily volume grew more than 300% and market share has tripled. Now, I'd like to turn to Global Insights, the fastest-growing segment of our enterprise and a key component of TMX's long-term strategy. First half revenue increased 15% when compared to 2024, led by double-digit increases from TMX Trayport and TMX Vetify. TMX Trayport revenue grew 23% year-over-year, or 15% in pounds sterling, primarily due to an increase in licensees. Trayport's performance in the first six months of the year, and really since our acquisition in 2017, demonstrates the immense power of the core JUUL network and the value of executing a consistent strategy to aggregate and innovate for clients. JUUL's dynamic capabilities are tailored to serve the customized needs of a broad scope of client profiles across global energy markets, an ecosystem that includes over 370 trading firms and 10,000 licensees with more than 28,000 total connections. And as we move forward, the team is focused on opportunities to expand that network into new assets and geographies and investing in core technology to support accelerated growth. Revenue from TMX Vetify increased 19% compared to the first six months of last year or 15% in US dollars. Higher overall revenue was driven by increased index revenue as a result of organic growth in assets under management and higher analytics revenue as well as from recent acquisitions. TMX Vetify reached a new record high of US $65 billion in assets under management. And in June, TMX Zettify took another important strategic step forward with the acquisition of ETF Stream, designed to build on our digital analytics capabilities in the UK and Europe. So along with regional expansion plans, TMX Zettify continues to pursue opportunities to expand into new asset classes to meet the needs of modern investment portfolios, looking beyond equities and fixed income into potential opportunities in derivatives, crypto, private equity, and credit. And now capital formation. First half revenue increased 4% when compared to 2024 due to the inclusion of revenue from news files and from higher revenue from additional listing fees. Our public market ecosystem remains strong throughout the first half of the year, despite the weight of the trade war and the tariff-driven uncertainty on capital raising conditions. And while the global IPO slowdown has had a negative impact, IPOs do not tell the entire story in terms of representing activity levels or reading the temperature gauge of our public market ecosystem. In 2025, as they have from time and again throughout Canada's history, the markets are proving resilient. In fact, overall corporate market capitalization on TSX and TSX Venture reached new all-time highs. And on a combined basis, TSX and TSX Venture added 35 new corporate listings in the first six months, including 24 mining companies. Public companies continue to grow beyond initial transactions, through financing and M&A, competing for capital and valuations in an increasing global market. A great example of this is TSX Linus Sid Kiera, who announced a $5.15 billion acquisition in June, which included a $2 billion equity offering. And we measure up very well against our global exchange peers. Through June 30th, our market is ranked second in the world in the number of new listings, according to the WFE. up from fifth last year, and seventh in equity capital raised, up from ninth in the first half of 2024. And then just last week, Go Residential Real Estate Investment Trust began trading on the TSX, the first large corporate IPO since Group Dynamite last year. And on June 4th, Axel Copper completed an IPO on TSX Venture, the first listing from our TSX Venture Passport Program, designed to create a more efficient pathway for entrepreneurs to go public. by fast-tracking the listing of applicants who meet specific criteria. In addition, Canada's ETF industry continues to flourish, reaching a new record high in assets under management in the quarter, and we are at an unprecedented pace in terms of new ETFs choosing to list on our market. In Q2, a record 71 ETFs listed on TSX, bringing the first half total to 123, which is just shy of the all-time record, not for six months, but for the entire year of 2024. So in closing, I'd like to thank our employees around the world for their always-on commitment to our client successes and for bringing our purpose to the job every single day. Making markets better and empowering bold ideas is not a corporate slogan. It's our unifying objective that pulls the teams from across the enterprise and around the world together. Serving our markets with excellence is our shared responsibility, and it is a great, great source of our pride. And with that, I'll pass the call over to David. Thanks, David.