Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deutsche Boerse AG (DBOEF, Financial) reported double-digit growth in financial derivatives, driven by temporary spikes in volatility.
- The company achieved significant market share gains in commodities and EX trading in Europe, with new client acquisitions contributing to growth.
- The fund service segment saw a 14% net revenue growth in custody and a 37% increase in settlement, reaching a record level of EUR3.8 trillion in fund assets under custody.
- The security services segment benefited from increased cash balances and higher equity market levels, leading to record assets under custody of EUR15.2 trillion.
- Deutsche Boerse AG (DBOEF) updated its guidance for 2024, expecting net revenue to reach around EUR5.8 billion, with EBITDA projected between EUR3.3 billion and EUR3.4 billion, aligning with market expectations.
Negative Points
- The equity-related derivatives environment was more muted, impacting revenue growth in this segment.
- There was a decline in margin fees in the power spot product, offsetting some of the revenue gains.
- The market intelligence segment faced competitive pressures, leading to a downward trend in performance.
- The ISS stocks business was behind plan, affecting overall growth expectations for 2024.
- The company is cautious about M&A activities due to ongoing integration challenges, potentially limiting growth opportunities.
Q & A Highlights
Q: Can you provide an update on your M&A strategy, particularly regarding ISS stocks and potential acquisitions?
A: We remain cautious with M&A due to ongoing integrations but have completed two bolt-on acquisitions over the summer. These acquisitions are small, under EUR10 million, and complement our existing offerings. Our financial flexibility remains strong, with surplus cash expected to exceed EUR900 million by year-end.
Q: How do you view the competitive landscape in the trading business, especially with new offerings in single enterprises and rates?
A: We have a strong market position across a broad range of products. Our focus is on fixed income, where we continue to innovate and expand our offerings. We feel confident in maintaining our competitive edge in this area.
Q: With inflationary pressures easing, how should we think about cost growth for 2025 and 2026?
A: We aim for a 3% organic cost growth this year. For 2025, we expect cost growth to be below 5% as inflationary pressures ease and one-off costs from integrations decrease. We will continue investing in technology and products while seeking cost-saving opportunities.
Q: Can you explain the subdued growth in the ESG and index business and any restructuring plans for market intelligence?
A: The index business has been impacted by low volatility in equities, while market intelligence faces competitive pressures. We are focusing on improving product offerings and restructuring for efficiency and productivity to maintain strong bottom-line contributions.
Q: What are the drivers of success in winning new clients for IMS, and how is the ARR growth in North America?
A: Our success is driven by our comprehensive front-to-back service offering, not pricing. In Q3, SimCorp achieved 14% ARR growth, with North America growing by 21%. We focus on software-as-a-service contracts, which offer higher revenue opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
