TMX Group Limited

Thank you for standing by. This is the conference operator. Welcome to the TMX Group Q2 2026 Analyst Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. 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 Amanda Tang, Director of Investor Relations. Please go ahead, Ms. Tang.

Thank you, Rocco, and good morning, everyone. Thank you for joining us today to discuss the 2026 second quarter results for TMX Group and last night's joint press release with Memex, a US-based equities and options exchange announcing the strategic combination of Memex and Box into Memex Group. Last night, we also announced our results for another outstanding quarter, highlighting double digit revenue growth across all of our segments. Copies of our press releases MD&A and the investor presentation for the announcement of Memex Group are available on investors.tmex.com. This morning we have with us John McKenzie, our Chief Executive Officer, and David Arnold, our Chief Financial Officer. Following remarks from John and David, we will have a question and answer session. Before we begin, I would like to remind you that 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, investor presentation, and periodic reports that we have filed with the regulatory authority. Finally, figures referenced in today's call are in Canadian dollars unless otherwise specified. I will now turn the call over to John.

Well, thanks, Amanda, and good morning, everyone. Thank you, as always, for joining our call today, especially on a beautiful Friday morning. And as Amanda mentioned, we announced our financial results for the second quarter last night, and as she also mentioned, they were another outstanding quarter and what has been a tremendous first half of the year. And this company has continued to build on the impressive momentum of the last few quarters, with year-over-year double-digit growth in overall revenue, highlighted by key contributions from our core markets and recent areas of expansion. Our results reflect a balanced strength that we set out to achieve when we embarked on our long-term TM2X growth strategy. And today's TMX is a deep and diverse enterprise made up of complementary assets integrated into a national champion and global powerhouse, and very much now built to compete around the world. And while our performance in the first half of the year showcases its strength, more than any growth metric, 2026 will be remembered for the work we have done to push the evolution of TMX. to serve the needs of clients and stakeholders across the crucial capital markets ecosystem, to compete globally, and ultimately, to lead Canada's markets to the sustainable future of success. Now suffice to say, it's been an intense spring and summer, and so before I go any further, I want to express my deepest gratitude to the phenomenal team we've got behind the scenes here at TMX. Our people around the world have done a tremendous job providing excellent service to our diverse and global client base, while pursuing innovation and expansion opportunities and executing against our global growth strategy. And for anyone who's followed our story closely, we've kept you very busy lately as well. We've been taking some exciting steps forward in the execution of our growth strategy and in pursuit of our transformative TM2X objectives. So this morning, I want to briefly cover off our first half performance highlights and then turn my focus to the major progress we have made in our global expansion in 2026. including yesterday's announcement of our strategic investment in Memex Group, the acquisition of Raffi Indices, and the CBOE Australia and CBOE Canada acquisitions. Together, these investments in both traditional and non-traditional business, domestic and international jurisdictions, are designed to build on a track record of leadership and innovation, responsiveness and resilience. Now, turning to our results for the first six months of the year. Overall revenue grew 16%. driven by strong performance in all segments across transaction-based businesses as well as recurring revenue streams. Our organic revenue, excluding last year's Global Insights acquisitions of bond indices, ETF Stream, Verity, and the nuclear sector indices, increased 14% when compared to the first six months of 2025, and adjusted diluting earnings per share increased 27%. Revenue from capital formation increased 20%, compared to the first half of 2025 due to higher revenue from both listing fees and TSX Trust. In the listings business, performance was driven by a continued upward momentum in financing activity on both TSX and TSX Venture. Overall capital raised increased 51% compared to the first six months of 2026, led by a surge in corporate financings in the mining sector on both exchanges. And equity capital raised on the TSX Venture totaled $6.9 billion, in the first six months of 2026, and this is a 108% increase from last year, including some major mining investments highlighted by Blue Moon Metals' $156 million public offering and private placement in May. And in addition to the sustained growth in financing activity, we continue to add new listings to the ecosystem. We welcomed a total of 251 new listings to our exchanges in the first half of the year, which is a 44% increase from the same period last year. First half new listings included some major IPOs, including Cora Mourning, AGT Food, Xanadu Quantum Technologies, Meditech Group, and Apotex, a Canadian-based global health company which joined TSX with a $1.5 billion IPO in June, which is the largest life science IPO in Canadian history, and Lumina Metals, which debuted in April with a $406 million IPO, Canada's largest mining IPO since 2021. So on the heels of a record year in 2025, Canada's ETF market also continues to reach new heights in 2026. Total net inflows in Canadian ETFs totaled more than $104 billion in the first half of the year, nearly double last year's first half inflows. And year to date, assets under management have grown more than 23% from the end of 2025. And the first six months also featured very strong growth in trading activity on our equities and derivatives markets. Revenue from equities and fixed income trading increased 25% year-over-year, largely due to a 32% year-over-year increase in combined volumes, led by a 60% increase in volume traded on TSX Venture Exchange. Derivatives trading and clearing revenue at MX and CDCC increased 26% compared to the six months of last year, driven by increased activity in short-term interest rates and bond futures and an increase in rate-per-contracts. MX sustained the upward momentum in trading activity in key products throughout the first half of the year, with average daily volume of 1.1 million contracts and set a new all-time record in overall open interest of 35.6 million contracts on June 18th. Some of the other MX highlights included record volumes and open interest across our Canadian bond futures portfolio in Q2, and a 34% year-over-year increase in volumes in the CRA, further solidifying its status as the flagship short-term interest rate product as participants continue to navigate uncertainty regarding interest rate policy expectations. And now, turning to our Global Insights franchise, revenue increased 16 percent compared to the first six months of 2025, reflecting higher revenue from all of TMX ZFI, TMX Datalinks, and TMX TradePort. Revenue from TMX ZFI increased 23 percent year-over-year, or 25 percent in U.S. dollars, driven by organic growth in assets under indexing, as well as revenue from three 2025 acquisitions. Again, bond indices, ETF stream, and the nuclear sector indices. TMX DataLinks revenue increased 21% from the first six months of 2025, reflecting the inclusion of Verity, which we acquired in October of 2025, and higher organic revenue from subscriber and uses-based sources, co-location, and data feeds. First half revenue from TMX TradePort grew 7% compared to last year, or 6% in pounds sterling. largely due to an increase in the number of licensees, which has been somewhat muted by a lower non-recurring revenue when you compare it to 2025. And David's going to unpack this a little bit later as he gets into the discussion. So TMX performance overall reflects the consistency, resiliency, and again, the balanced strength of our business model. And it's also powerful evidence of an effective long-term growth strategy and a proven execution mindset. But we can't do it alone. and we're fortunate to serve as the center of a powerful and adverse ecosystem. And I want to pause here for a moment to give credit where credit is due. And we've talked for years about the importance of activating TMX's voice at the center of the market to advocate for the interest in our stakeholders across the capital markets ecosystem. Specifically, we've called on policymakers to evolve tax and regulatory policy in order to take other support measures to help spur domestic and international investments. So today, I'd like to take the moment to thank the Ontario Finance Ministry, the Federal Finance Ministry, and our partners at the OSC and the broader CSA for advancing the Passport Program, with Ontario's commitment to join, which was announced earlier this month. This simply is another way to remove trade barriers in Canada, reduce the cost and complexity for companies raising public money, and helping them to expand, grow, and build prosperity in this nation. Now, in this year marked by milestone operational successes, as we've already talked about, I want to turn our attention now to some of the game-changing initiatives we have undertaken driven by our purpose to make markets better and empower bold ideas to the benefit of both our domestic and global client base. A few years ago, we embarked on a strategy to expand our capabilities and broaden the presence of the ETF industry and to better serve a key segment of the marketplace of an area that we know very well. Beginning with our minority investment in Vetify in January of 2023 and the acquisition of the company a year later, we've made a series of targeted moves to build the business, expanding the geographic presence and portfolio, leading to the acquisition of the Raffi Indices. Not only will this acquisition, which we expect to close by the end of the third quarter, expand Betify's presence in the key fundamental space, it will more than triple the total assets under indexing. And we continue to invest in our core market ecosystem as well, domestically and internationally, and we are excited about what the future holds in the expansion of our markets business. We anticipate the first leg of the CBOE transaction, the expansion into Australia, which we announced in April, will close imminently. Australia is a market that we know very well, and we see a phenomenal potential. And we're committed to pursuing new intermarket linkages and bringing what TMX does really well in terms of operational expertise and innovation to Australia's market ecosystem. And we look forward to welcoming Emma Quinn, the current president of CBO Australia, and her team to what will soon be known as TMX Australia. Now, turning to the news of last night. As Amanda mentioned, we issued a joint press release with Memex, a US-based equities and options exchange, announcing the combination of Memex and Box to create Memex Group. As Amanda mentioned, we've posted an investor presentation on our website as well. Now, David is going to cover the financial components of this deal in a moment, but this is a strategic investment, and it is an exciting step forward, increasing our stake in the US options and equity market, which is the most competitive marketplace in the world. and one we know very well. The TMX has operated alongside the U.S. market for almost 175 years. We see the landscape from a unique vantage point. We compete every day for listings, for capital, for liquidity flows, and specifically on the options side, we are a longtime investor and founder in Box and originally built their exchange technology. Our biggest clients today operate across borders, and this investment will help us to serve them better over the long term. So it's a transformative deal for Memex and Box and positions the combined entity to build on a track record of innovation and pursue further growth. The total transaction is valued at 2.3 billion U.S. dollars or approximately 3.2 billion in Canadian dollars. And we are contributing approximately U.S. 800 million in cash and our current ownership stake in Box. The transaction is expected to close in the second half of 2027, subject to regulatory approval. and upon which TMX will be the majority owner with approximately 59% of the combined entity, supported by leading Memex and Box participants, rolling their equity into minority stakes in the two companies into the new combined group. Going forward, Memex Group will be powered by a management team ready to build and grow with strategic partners around the table ready to guide. And as we outlined in the press release, we have a number of like-minded industry partners in this transaction, including existing Memex and Box investors, and I want to thank them all for their shared commitment to building the new MemEx Group. Now, I want to ensure we leave enough time for your questions, but before I turn over the call to David, I want to emphasize a point around our 2076 initiatives. While the acquisitions of CBOE Canada and CBOE Australia, RAPI Indices, and the plans to create MemEx Group each have compelling dynamics and distinct value propositions on their own, Together, they stand as a clear representation of an enterprise focus on pushing the evolution of TMX, leveraging our strong balance sheet to seize on opportunities to strengthen crucial capital markets ecosystems here in Canada, accelerate our global expansion, create competitive advantages for our diverse and growing client base, and generate increased shareholder value. So with that, I look forward to updating you on our progress in the fall, and I'll turn the call over to David. Thank you very much.