H1: Top-line growth in line with guidance but an EBITDA margin miss

LSEG posted H1-23 top-line growth in line with the management’s guidance but disappointed on opex growth, which led to a miss on the EBITDA margin guidance. The management however remains confident that the company can reach its targets with top-line growth being further supported by the underlying revenue trends and investments in Data & Analytics. This confidence was reflected in the group’s capital allocation, as the interim dividend was increased and the second buyback program was launched.

The positive earnings momentum continues

LSEG delivered a good Q1 with growth driven largely by Data & Analytics as a result of higher sales, better retention and higher pricing. Post-Trade benefitted from the strong activity at SwapClear as well as a higher yield on larger collateral balances. Capital Markets was also a contributor, with Tradeweb and FX more than offsetting Equities. All the guided targets were maintained. The positive earnings momentum continues.

Ending FY-22 on a strong note

LSEG ended 2022 on a strong note with growth across the board and strong cost discipline. The management upgraded its 2025 run-rate annual synergies from £225m to £350-400m building on the continued growth of the group’s Data & Analytics business. LSEG also guided for upgraded revenue growth in 2023, expecting 6-8% revenue growth at constant currency. The Microsoft partnership, through increased business-as-usual capex, has led to a downgrade to the adjusted EBITDA margin guidance for 2023 to ar

LSEG and Microsoft enter a strategic partnership in cloud and analytics

LSEG and Microsoft have entered into a 10-year strategic partnership aimed at transforming LSEG’s data infrastructure using the Microsoft Cloud and developing new products and services for data and analytics. Under the agreement, Microsoft will acquire a 4% stake in LSEG from the Blackstone/Thomson Reuters consortium (which held a 35% stake in LSEG as of end 2021). The close of the transaction is expected by the end of the Q1-23.

A roaring H1 with strong progress on revenue and cost synergies

LSEG realised a strong quarter with continued growth in Data & Analytics (recurring revenue) while benefiting from the volatile market environment in Capital Markets and Post-Trade. Thanks to its good progress on its revenue and cost synergies targets, opex landed particularly low vs consensus, leading to a good improvement in adjusted EBITDA margin, now in line with the 2023 target. Management looks set to achieve all its long-term targets and estimates that momentum seen in H1 should continue

Q1 in-line with expectations with Refinitiv’s integration still well on track

LSEG realized a Q1 in-line with expectations, with a gross profit improvement being driven by growth across segments but, more particularly, by Capital markets which benefitted from elevated market volatility as well as Data & Analytics. The Ukraine impact is expected to be modest at around £60m for FY 22. Synergies continued to be released from the Refinitiv integration and the management left its financial targets unchanged for 2022.

Refinitiv's integration process on track

LSEG delivered overall good results, with beatings on costs (below guidance), good progress on the integration of Refinitiv with synergies exceeding 2022 guidance and additional cost synergies identified. LSEG also delivered good progress on the achievement of financial targets for the coming years and maintained its guidance of a 5-7% total income CAGR (6.1% in 2021), an EBITDA margin above 50% (48% in 2021) and a 1-2x net debt leverage over adjusted EBITDA.

Cautious on short-term growth

The London Stock Exchange Group (LSEG) this morning released its trading statement for Q321. Total income was bang in line with expectations, as was the gross profit. However, the stock is down about 3.5%, probably on concerns that, according to management, the strong YoY growth in Q321 will not be sustainable going into Q421. Concern regarding the supply chain pressures impacting the timing of some technology spend this year is another reason for profit-taking.

Reassuring financial targets

The LSEG released this morning its numbers for H1 21. These were overall better than expected, especially the adjusted EBITDA. The key takeaway from the release is the confirmation of the financial targets following the integration of Refinitiv. This had been questioned following the Q4 20 earnings, especially on the costs side. Management still expects mid-single-digit growth in costs but confirmed the 50% EBITDA margin in the mid-long term. This should be supportive of the share price followin

Reassuring numbers

The London Stock Exchange Group released this morning a trading statement for Q1 21. The overall picture is mostly reassuring regarding revenues, even if the mix is of a weaker than expected quality (small miss in the data & analytics division). Cost synergies are well on track and even ahead of the guidance on an annualised basis. The LSEG share price has fallen sharply since the Q4 20 earnings release and a profit warning. These new numbers will give it a floor.

Dear LSEG...

The London Stock Exchange Group’s (LSEG) share price is down another 3% this morning. It follows a sharp fall of 13% last Friday following the FY2020 earnings release. The FY2020 results were not the cause of the sharp fall. The sluggish guidance regarding the costs for 2021 and following years and the recent sharp drawback in growth stocks (rich P/E or EV/EBITDA) have contributed to this (almost) 15% decrease in the company’s share price.

Refinitiv or Italy, part 2

This morning the LSEG released its numbers for H120. The bottom line was above expectations driven by higher income (treasury income especially) offsetting higher-than-expected expenses. Most importantly, the company has « commenced exploratory discussions which may result in a sale of MTS or potentially Borsa Italiana ». We had expected this to happen as covered in Latest of late June (« Refinitiv or Italy »).

All projects on track

The London Stock Exchange Group (LSEG) released this morning its FY2019 numbers. Revenues and expenses were roughly in line with expectations (slightly lower than our own forecasts). The key anticipation was to discover more about the Refinitiv deal. Management did not elaborate other than “regulatory approvals processes ongoing and on track for completion in H2 2020”. It did not comment either during the conference call.

Definitely nothing to see

The London Stock Exchange Group (LSEG) is down about 6% this morning as the Hong Kong Exchange and Clearing (HKEX) eventually simply dropped its offer on the UK market venue. While the odds in the last few days was for a rather higher price (with a higher amount of cash), the dropping the deal is not so surprising as it would have been scrapped either by the majority of LSE’s shareholders (probably) or by the regulators involved in the potential deal.

Tracsis - Interims: FY order book visibility and a doubled pipeline

Interims to January are in line with the February TU, and materially unchanged forecasts for the FY July 2024. After the well flagged expected 1H24 revenue movement of -7% (vs 1H23 which had been strengthened by c£2m perpetual licence sales in the US), prospects for the second half are supported by several new contracts that will generate revenue in 2H24, in addition to material contract delivery milestones from existing large projects such as major TRACS Enterprise, Railhub deployments, and Rem

Eleco - FY23 recurring revenue growth of +22%, EBITDA +2% ahead

Eleco’s FY23 results show robust organic recurring revenue growth of +17% with recurring revenue +22% to £20.7m, adj EBITDA +2% ahead of the January update, and a confident outlook with Q1 ARR already at £24.5m vs £22.6m at FY23. At this point, the excellent start to FY24 leads us to reiterate our FY24-26E revenue, adj EBITDA, EFCF, and DPS, and we include the April 2024 acquisition of Vertical Digital in our FY24-26E net cash, as we explain below. As Eleco builds upon the successful acquisition

An excellent win, momentum rebuilding

Made Tech has won a material expansion (worth up to £19.5m/2yrs) with a long-standing customer, The Department for Levelling Up, Housing and Communities (“DLUHC”). Coming off the back of a soft H1 bookings performance, we expect this win to materially boost investor sentiment and reassure how notwithstanding a tough backdrop (given an impending general election) MTEC continues to outcompete legacy providers and in-so-doing, grow its share of wallet with large/strategic customers. Landing near FY

Morning Note – 24 April 2024

LIBERUM: 1Spatial: Walk the talk and get SaaSy

Alphawave Semi - FY23 results, 1Q24 trading update

Following the updated guidance published last week, Alphawave reported a 74% YoY increase in revenue to US$321.7m for FY23 generating adjusted EBITDA of US$62.6m, up 34% YoY. As previewed, bookings in 1Q24 were strong at US$117.9m, up 20% YoY and ahead of guidance. The results release and conference call confirm that revised guidance mainly reflects a more conservative approach to revenue recognition under new CFO, Rahul Mathur, and an acceleration in the pace at which Alphawave is pivoting away

tinyBuild (TBLD LN) - Focused on H2 recovery

tinyBuild’s FY23 results confirmed a sharp drop in revenue and swing into adjusted EBITDA losses, as well as asset impairments and high cash burn. After already making $10m of annualised cost savings, the company continues to run-down its cash balance and now relies on a H2-weighted release schedule to reduce cash outflows.

LIBERUM: Cerillion: Continued strong trading in 1H

Morning Note – 23 April 2024

To infinity…

Cerillion has announced a very solid update, as H1 sales and EBITDA are both up 10% y/y to £22.5m and £10.9m respectively, notwithstanding the exceptionally strong base period (sales and EBITDA +27% and +38% resp.). Results therefore point to continued strong customer demand, reflecting how Cerillion’s out-of-the-box product continues to resonate and gain adoption, particularly in a ‘budget conscious’ environment, by offering faster time to market, greater configurability and at a lower cost. Me

Synectics + (SNX, House Stock at 188p) - Positive AGM statement

Hybridan Small Cap Feast - 24 April 24

24th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

Pennant International - FY23 update and appointment

We view confirmation of market forecasts / PEN's February update as providing further validation for the company's strategy. Ongoing business streams (including the concluding stage of the Boeing / Apache contract) provide underpinning for forecasts for the current year and software-derived earnings as strategized look set to rise in FY24 with the launch of the company's GenS technology (well-regarded and long-established OmegaPS series update). Tuesday's statement from the Prime Minister ple

In-line H1, strategic initiatives advancing at pace

As reported in March, underlying EBITDA profitability improved to record levels despite FX headwinds. Further platform and proposition developments were completed, key steps on its digital roadmap, and it has already won 7 contracts YTD. Alongside planned growth in private membership, this will at least offset the loss of one contract. Forecasts are left unchanged today and, as member engagement throttles back up, FX headwinds ease, and proof points of digital efficiency emerge, markets should b

itim - Further professional services contract secured with The Entertainer

itim is a disruptive SaaS-based platform that enables store-based retailers to implement a proven Omni-channel solution. This morning, the group has announced an additional professional services contract with its long-standing client, The Entertainer. Following a year-long trial, The Entertainer is opening in over 800 Tesco stores across the UK & Ireland, alongside a supplier agreement for Tesco stores across Central Europe. Under the contract, The Entertainer will extend its use of itim's Unify