19th Oct 2023 10:33
(Alliance News) - London Stock Exchange Group PLC's third-quarter update was largely positive, though its organic annual subscription value outcome may have disappointed on Thursday.
LSEG shares rose 1.2% to 8,174.00 pence each in London on Thursday morning, though the stock had been lower in early dealings.
The London Stock Exchange operator backed annual guidance, posting growth more or less across the board in its third quarter.
Total income, excluding recoveries, was 8.0% higher on-year at constant currency in the third quarter of 2023. Recoveries relate to fees for third-party content, including exchange data, that is distributed to its customers.
Total income amounted to GBP1.97 billion, rising 3.2% on-year from GBP1.91 billion.
Growth was broad-based in its three major divisions, LSEG said.
In Data & Analytics, total income was 1.9% higher year-on-year at GBP1.30 billion. At constant currency, it was 7.2% higher. The unit includes LSEG's market surveillance and risk management solutions offering.
In Capital Markets, it rose 1.6% to GBP375 million, or 6.2% at constant currency. That was despite a slowdown in Equities and foreign exchange, where total income was 8.3% and 10% lower, respectively, or 8.6% and 3.3% down at constant currency. The fixed income and derivatives offering led the way, with a total income rise of 7.5%, or 13% at constant currency.
In Post Trade, total income surged 15% year-on-year to GBP286 million. At constant currency, it was 17% higher.
"LSEG delivered another quarter of strong, broad-based growth. By building compelling solutions that meet customers' evolving business needs we have established a consistent track record of growth in our Data & Analytics business. Our Capital Markets revenues accelerated in the third quarter, with ongoing innovation increasing Tradeweb's share of global credit trading. Our Post Trade businesses also continue to grow strongly as customers look to our risk management services in an uncertain macro environment," Chief Executive David Schwimmer said.
Looking ahead, LSEG expects total income growth towards the upper end of the 6% to 8% outlook range.
The company said organic annual subscription value in the third quarter, a closely-tracked recurring revenue metric, grew 7.1%, picking up from 6.9% in the second quarter.
However, Jefferies believes the market was looking for growth more in the range of 7.2% to 7.5%.
"Management commentary around momentum will be important," Jefferies added.
By Eric Cunha, Alliance News news editor
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