Euronext reported third quarter results

The FINANCIAL — Euronext, the leading pan-European market infrastructure announced its results for the third quarter of 2020.

• Q3 2020 revenue at €204.8 million (+12.7%):
  • Post-trade revenue increased to €44.6 million (+44.9%), driven by the consolidation from 4 August 2020 of VP Securities, the Danish CSD, contributing €10.0 million revenue, and higher clearing revenue. Like-for-like[1] at constant currencies, post-trade revenue increased +16.0%
  • Trading revenue increased to €75.9 million (+7.3%), with €6.3 million contributed by Nord Pool power trading offsetting lower cash and derivatives trading volumes. Like-for-like at constant currencies, trading revenue decreased -1.0%
  • Listing revenue increased to €35.8 million (+2.9%), driven by the strong performance of Corporate Services at €7.8 million (+20.0% like-for-like). Like-for-like at constant currencies, listing revenue increased +2.6%
  • Advanced data services revenue increased to €34.5 million (+3.0%), reflecting a solid performance of the market data and indices businesses. Like-for-like at constant currencies, advanced data services revenue increased +2.6%
  • Nord Pool contributed €8.6 million revenue in Q3 2020
  • Group non-volume related revenue accounted for 54% of Q3 2020 total revenue (vs. 52% in Q3 2019), and covered 128% of operating expenses excluding depreciation & amortisation (vs. 129% in Q3 2019)
• Q3 2020 EBITDA at €117.8 million (+9.1%), with EBITDA margin at 57.5% (-1.9pts); like-for-like, EBITDA margin at 59.7% (+0.1pts):
  • Group operating costs excluding D&A were up +€13.3 million to €87.1 million, primarily as a result of the consolidation of costs from acquired businesses currently undergoing integration
  • Euronext confirms its 2020 guidance for costs, excluding D&A, of mid-single digit growth in 2020, compared to the H2 2019 annualised cost base, to reflect expected costs in Q4 2020 related to the integration of Oslo Børs VPS and implementation of the strategic plan projects
• Q3 2020 reported net income, share of the Group, at €70.2 million (+10.6%) and Adjusted EPS at €1.12 (+13.8%)
  • Increased financing costs related to foreign exchange impacts and the bond tap issue in June 2020
  • Income tax rate at 26.4%, reflecting reduced domestic tax rates and the enlarged Nordic footprint

• Contemplated acquisition of the Borsa Italiana Group
  • Binding agreement signed on 9 October 2020 with London Stock Exchange Group plc (“LSEG”) and London Stock Exchange Group Holdings (Italy) Limited to acquire 100% of the issued share capital of London Stock Exchange Group Holdings Italia SPA, the holding company of the Borsa Italiana Group for a cash consideration of €4,325 million
  • The combinedrevenue for the Combined Group amounted to €1.3 billion and EBITDA reached €711 million for 2019. In 2019, the Borsa Italiana Group generated €464 million of revenue and €264 million of EBITDA
  • Transaction is expected to be accretive to the adjusted EPS (before synergies) immediately, to generate a total of €60 million pre-tax run-rate synergies by year 3, and to be double digit accretive⁵ in year 3 after synergies
  • Potential transaction is conditional upon, amongst other things, the divestment of the Borsa Italiana Group or a material part thereof being a condition of the European Commission’s clearance decision for LSEG’s proposed acquisition of Refinitiv
  • An Extraordinary General Meeting (“EGM”) of shareholders is convened on 20 November 2020 to approve the transaction, the private placement and rights offer
  • Closing is expected in H1 2021

Stéphane Boujnah, Chief Executive Officer and Chairman of the Managing Board of Euronext, said:

“In the third quarter of 2020, Euronext’s business diversification initiatives continued to bolster growth, with the first impact of the consolidation of VP Securities, while the core business showed its resilience and translated into a double-digit growth of revenue at €204.8 million. Combined with continued cost control, this translated into a higher EBITDA of €117.8 million and a double-digit increase in adjusted EPS to €1.12.

Euronext confirms the cost guidance of mid-single digit growth in 2020 compared to the annualised second half 2019 cost base, as costs related to the Oslo Børs VPS integration and strategic plan projects are expected to ramp up in the last quarter of 2020.

We closed the acquisition of VP Securities in August, pursuing our Nordic expansion and enhancing our post-trade activities. As we celebrate the 20^th anniversary of Euronext, we also reached a turning point in the Group’s history with the contemplated acquisition of the Borsa Italiana Group[. The combination of Euronext and the Borsa Italiana Group delivers on the strategic objectives set in October 2019 in our ‘Let’s Grow Together 2022’ strategic plan to build the leading pan-European market infrastructure, through expansion of our federal model and accelerated diversification of Euronext’s revenue mix.”

Unless stated otherwise, variations refer to Q3 2020 figures compared to Q3 2019 figures