Euronext, the leading pan-European market infrastructure, today publishes its results for the third quarter of 2023.
Strong quarter driven by organic growth in non-volume-related business and continued cost discipline. Q3 2023 costs positively impacted by FX rate. Full-year 2023 costs expected to be lower than guidance.
Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris – 8 November 2023 – Euronext, the leading pan-European market infrastructure, today publishes its results for the third quarter of 2023.
- Q3 2023 revenue and income was €360.2 million, up +2.8% compared to Q3 2022 underlying revenue and income (+19.5% compared to Q3 2022 total revenue and income):
- Strong performance of non-volume-related business:
- Technology Solutions reported €27.4 million of revenue (+5.5%[1]), thanks to the continued benefits from the internalisation of colocation services following the migration of the Core Data Centre to Bergamo and the good performance of Nord Pool technology activities.
- Advanced Data Services reported €55.5 million of revenue (+4.7%), reflecting growth in market data and continued strong performance of the advanced data solutions business.
- Custody and Settlement reported €58.9 million of revenue (+3.1%) as new services and growing assets under custody offset lower settlement activity and the negative impact of the NOK[2] depreciation. Like-for-like at constant currencies, revenue was up +6.5%.
- Listing reported €54.6 million of revenue (+1.1%), resulting from Corporate Services activities and sustained leadership position for listing in Europe, partially offset by the NOK depreciation. Euronext welcomed 23 new listings, representing 72% of the new listings in Europe in Q3 2023. Like-for-like at constant currencies, revenue was up +3.4%.
- Non-volume-related revenue accounted for 60% of Q3 2023 revenue (vs. 53% in Q3 2022) and covered 148% of underlying operating expenses, excluding D&A (vs. 106% in Q3 2022).
- Clearing revenue was €29.5 million (+1.6%), reflecting dynamic bond clearing activities and solid derivatives clearing activities offsetting softer equities clearing volumes, and NTI were at €13.7 million.
- Trading revenue was solid, at €118.3 million (+0.4%), resulting from Euronext’s diversified trading activities and strengthened leadership in cash trading in a low volatility environment for equities trading. Strong organic growth was recorded in fixed income trading (€25.4 million, up +18.7%) and power trading (€8.6 million, up +10.0%), more than offsetting lower cash trading revenue (€64.4 million, -4.4%). Cash equity market share averaged 66.5% in Q3 2023 and revenue capture averaged 0.54 bps, above indicated floors.
- Adjusted EBITDA[3] was €213.7 million (+6.9%) and adjusted EBITDA margin reached 59.3% (+2.3pts):
- Underlying operating expenses, excluding D&A, were at €146.5 million (-2.6%), primarily resulting from continued cost discipline and the positive impact of foreign exchanges rates.
- Considering the current foreign exchange rate of the NOK, Euronext expects a full-year positive impact of €12 million from the NOK depreciation on the cost base. Consequently, Euronext expects its underlying costs excluding D&A to be lower than its 2023 underlying costs excluding D&A guidance of €630 million.
- Adjusted net income was €146.5 million (+13.2%) and adjusted EPS was €1.38 (+13.7%).
- Reported net income was €166.5 million (+119.6%), reflecting the €41.6 million capital gain following the disposal of Euronext 11.1% stake in LCH SA, the positive comparison base from the non-underlying one-off loss in net treasury income in Q3 2022 related to the partial disposal of the Euronext Clearing investment portfolio[4] and positive net financing income.
- Key figures for Q3 2023:
| In €m, unless stated otherwise | Q3 2023 | Q3 2022 | % var | % var l-f-l[5] | |
| Revenue and income | 360.2 | 301.4 | +19.5% | +21.3% | |
| Underlying revenue and income | 360.2 | 350.3 | +2.8% | +4.1% | |
| Underlying operational expenses excluding D&A2 | (146.5) | (150.4) | -2.6% | +0.1% | |
| Adjusted EBITDA | 213.7 | 199.9 | +6.9% | +7.0% | |
| Adjusted EBITDA margin | 59.3% | 57.1% | +2.3pts | +1.6pts | |
| Net income, share of the parent company shareholders | 166.5 | 75.8 | +119.6% | ||
| Adjusted Net income, share of the parent company shareholders | 146.5 | 129.5 | +13.2% | ||
| Adjusted EPS (basic, in €) | 1.38 | 1.21 | +13.7% | ||
| Reported EPS (basic, in €) | 1.57 | 0.71 | +120.5% | ||
| Adjusted EPS (diluted, in €) | 1.38 | 1.21 | +13.6% | ||
| Reported EPS (diluted, in €) | 1.56 | 0.71 | +120.4% |
- Net debt to reported EBITDA was at 2.2x at the end of Q3 2023 (vs. 2.6x at end of Q2 2023), and net debt to adjusted EBITDA was at 2.0x.
- Major achievements in Q3 2023 for the Borsa Italiana Group integration, delivering synergies in line with announced schedule:
- €47.6 million of cumulated run-rate annual EBITDA synergies were achieved since the acquisition of Borsa Italiana Group in April 2021, of which €3.4 million were delivered in Q3 2023.
- €4.9 million of implementation costs were incurred during Q3 2023. This brings to €95.1 million the cumulated implementation costs incurred since the beginning of the acquisition of the Borsa Italiana Group.
- The migration of Italian cash markets to Euronext’s Optiq® trading platform was completed by the migration of Borsa Italiana Fixed Income, Warrants and Certificates markets on 11 September 2023. This trading platform migration was the second milestone in the three phases of the major Borsa Italiana markets migration to the Optiq trading platform. Cash markets in all seven Euronext countries are now integrated on the same trading platform, allowing for the decommissioning of Borsa Italiana’s third-party-provided cash trading platform in Q4 2023. The third phase will see the migration of derivatives instruments to the Optiq trading platform, targeted for the first quarter of 2024.
- A new VaR-based margin methodology for Euronext Clearing was introduced on the Euronext Milan equities, ETF and financial derivatives markets on 16 October 2023[6]. In addition, the first phase of the European expansion of Euronext Clearing was successfully delivered with Euronext Clearing positioned as the default CCP for the Euronext Brussels cash markets since 6 November 2023. Together with the second phase of the European expansion of Euronext Clearing with the cash equity clearing operation extended to other Euronext cash equity markets[7] clearing flows in Q4 2023 as expected, this new activity will significantly contribute to the 2023 run-rate cumulative synergies target of €70 million.
- Continued delivery of new innovative trading solutions for clients:
- Euronext will expand its Global Equity Market (GEM) retail offering for pan-European and US stocks on 13 November 2023. Retail brokers and investors trading from Euronext’s markets in Europe and beyond will then have access to trade 350+ pan-European and US securities, in addition to the 1,900 listed stocks already available on Euronext. Euronext GEM benefits from a smooth and efficient post-trade set-up through Euronext Clearing and Euronext Securities.
- Euronext announces that the European Union has nominated MTS as a recognized interdealer platform for the implementation of electronic market making on European Union issued debt instruments. This new market was launched very successfully early November, and traded volumes and dealer participation have been very dynamic.
- Stéphane Boujnah, Chief Executive Officer and Chairman of the Managing Board of Euronext, said:
“Euronext’s Q3 2023 results demonstrate the success of our diversification strategy. Q3 2023 underlying revenues grew by +2.8% to €360.2 million. Robust organic growth across our non-volume related businesses and double-digit growth in our power and fixed income activities more than offset negative FX impacts and softer cash trading activities. Euronext’s adjusted EBITDA grew by +6.9% in Q3 2023 to €213.7 million, resulting from this solid operating performance, combined with our best-in-class cost discipline as well as positive FX impacts on our costs. Considering the current foreign exchange rate dynamics, we also expect our underlying costs for the full year to be lower than guided at the beginning of the year. As a result of this strong performance and thanks to the €41.6 million capital gain realised through the disposal of Euronext’s 11.1% stake in LCH SA, our reported EPS more than doubled in Q3 20231, to €1.57.
Euronext strengthened its position as the leading venue for equity listing and trading in Europe. We welcomed 72% of the new equity listings in Europe this quarter. Notably, the US-based beauty company Coty dual-listed on Euronext Paris to expand its exposure to European investors. In a softer environment in equity trading, we remained the go-to trading venue in Europe, providing best-in-class liquidity, with a market share averaging 66.5% over the quarter and an increased revenue capture. Our leadership in cash trading has been achieved thanks to the excellent work of our cash team led by Simon Gallagher. I am thrilled to announce that Simon Gallagher will continue to drive client centricity in the City and across Europe as newly appointed Head of Global Sales for Euronext and CEO of Euronext London.
We delivered several milestones in our ‘Growth for Impact 2024’ strategic plan in Q3 2023. We completed the second phase of the trading migration of Italian markets to our proprietary trading platform Optiq. Cash markets from all of our seven exchanges in Europe are now integrated on the same trading platform. I am also proud today to announce the completion of the first step in the expansion of Euronext Clearing to all our markets. Since 6 November, Euronext Clearing is the default clearing house for equity trading in Brussels, and the remaining markets will follow later this month. This strategic milestone will significantly contribute to the targeted delivery of €70 million of cumulated run-rate pre-tax synergies by year end. In addition, our European cross-selling efforts continue to yield with the launch of MTS EU on 1 November 2023, which has shown very dynamic initial activity both in terms of traded volumes and participants.”
■ Euronext Q3 2023 financial performance
| In €m, unless stated otherwiseThe figures in this document have not been audited or reviewed by our external auditor. | Q3 2023 | Q3 2022 | % var | % var(like-for-like, constant currencies) |
| Revenue and income | 360.2 | 301.4 | +19.5% | +21.3% |
| Underlying revenue and income | 360.2 | 350.3 | +2.8% | +4.1% |
| Listing | 54.6 | 54.0 | +1.1% | +3.4% |
| Trading revenue, of which | 118.3 | 117.8 | +0.4% | +1.7% |
| Cash trading | 64.4 | 67.3 | -4.4% | -4.4% |
| Derivatives trading | 13.4 | 14.0 | -3.9% | -3.6% |
| Fixed income trading | 25.4 | 21.4 | +18.7% | +18.7% |
| FX trading | 6.4 | 7.3 | -11.4% | -4.4% |
| Power trading | 8.6 | 7.8 | +10.0% | +24.8% |
| Investor Services | 3.0 | 2.5 | +20.4% | +22.6% |
| Advanced Data Services | 55.5 | 53.0 | +4.7% | +4.9% |
| Post-Trade, of which | 88.4 | 86.2 | +2.6% | +4.7% |
| Clearing | 29.5 | 29.1 | +1.6% | +1.6% |
| Custody and Settlement | 58.9 | 57.1 | +3.1% | +6.5% |
| Euronext Technology Solutions & Other | 27.4 | 26.0 | +5.5% | +4.7% |
| NTI through CCP business | 13.7 | (38.3) | +135.8% | +135.8% |
| Other income | (0.0) | (0.5) | +97.2% | +97.2% |
| Transitional revenues | (0.8) | 0.6 | -220.0% | -220.0% |
| Underlying operational expenses exc. D&A | (146.5) | (150.4) | -2.6% | +0.1% |
| Adjusted EBITDA | 213.7 | 199.9 | +6.9% | +7.0% |
| Adjusted EBITDA margin | 59.3% | 57.1% | +2.3pts | +1.6pts |
| Operating expenses exc. D&A | (153.6) | (153.0) | +0.4% | +3.2% |
| EBITDA | 206.6 | 148.3 | +39.3% | +38.8% |
| Depreciation & Amortisation | (41.9) | (38.8) | +7.8% | +9.8% |
| Total Expenses (inc. D&A) | (195.5) | (191.9) | +1.9% | +4.6% |
| Adjusted operating profit | 195.4 | 183.8 | +6.3% | +6.3% |
| Operating Profit | 164.7 | 109.5 | +50.4% | |
| Net financing (expense) / income | 1.5 | (4.6) | +131.7% | |
| Results from equity investments | 54.4 | 1.7 | +3088.5% | |
| Profit before income tax | 220.6 | 106.6 | +106.9% | |
| Income tax expense | (48.4) | (27.9) | +73.7% | |
| Share of non-controlling interests | (5.6) | (2.9) | +95.1% | |
| Net income, share of the parent company shareholders | 166.5 | 75.8 | +119.6% | |
| Adjusted Net income, share of the parent company shareholders[8] | 146.5 | 129.5 | +13.2% | |
| Adjusted EPS (basic, in €) | 1.38 | 1.21 | +13.7% | |
| Reported EPS (basic, in €) | 1.57 | 0.71 | +120.5% | |
| Adjusted EPS (diluted, in €) | 1.38 | 1.21 | +13.6% | |
| Reported EPS (diluted, in €) | 1.56 | 0.71 | +120.4% |
Q3 2023 revenue and income
In Q3 2023, Euronext underlying consolidated revenue and income amounted to €360.2 million, up +2.8% compared to Q3 2022, driven by the robust performance of non-volume-related activities and solid trading revenue driven by strong performances of fixed income and power trading, more than offsetting a low volatility environment for cash and derivatives trading, and negative FX rate variation impacts. In addition, transitional revenue was negatively impacted by a non-recurring credit note.
On a reported basis, total revenue and income was up +19.5%, reflecting notably the positive comparison base of the non-underlying one-off loss of €49.0 million in net treasury income in Q3 2022 related to the partial disposal of the Euronext Clearing investment portfolio[9].
Non-volume related revenue accounted for 60% of Group revenue in Q3 2023, compared to 53% in Q3 2022, reflecting the successful diversification towards non-volume related activities and low volatility environment for cash trading. The underlying operating expenses excluding D&A coverage ratio by non-volume related revenue was at 148% in Q3 2023, compared to 106% in Q3 2022.
On a like-for-like basis at constant currencies, Euronext consolidated revenue and income was up +21.3%.
Q3 2023 adjusted EBITDA
Underlying operational expenses excluding depreciation and amortisation decreased to €146.5 million, down -2.6%, reflecting strong cost discipline in an inflationary environment and positive FX impact from the depreciation of the NOK over the year.
Consequently, adjusted EBITDA for the quarter totalled €213.7 million, up +6.9% compared to Q3 2022, resulting from the solid quarter for non-volume related activities, fixed income and power trading, and post-trade revenue combined with Euronext’s continued cost discipline. As a result, adjusted EBITDA margin reached 59.3%, up +2.3 points compared to Q3 2022.
The reported EBITDA was at €206.6 million, up +39.3% compared to Q3 2022, reflecting the strong performance in Q3 2023 and the non-underlying one-off loss of €49.0 million in net treasury income in Q3 2022. The reported EBITDA margin grew to 57.3%, up +8.1 points year on year.
Q3 2023 net income, share of the parent company shareholders
Depreciation and amortisation amounted to €41.9 million in Q3 2023, an increase of +7.8% compared to Q3 2022, resulting from ongoing migration projects. PPA related to acquired businesses accounted for €20.5 million.
Adjusted operating profit was €195.4 million, a +6.3% increase compared to Q3 2022.
€30.7 million of non-underlying expenses, including depreciation and amortisation, were reported in Q3 2023, related to the ongoing migration projects and PPA.
Net financing income for Q3 2023 was €1.5 million, compared to a net financing expense of €4.6 million in Q3 2022. This decrease reflects higher interest income from cash held offsetting the cost of issued debt.
Results from equity investments amounted to €54.4 million in Q3 2023, resulting from a dividend received from Euroclear and from a €41.6 million tax-exempted non-underlying capital gain in relation to the disposal of Euronext’s 11.1% stake in LCH SA. As a reminder, following this disposal the Group will not record any contribution from LCH SA from Q3 2023 in results from equity investments.
Income tax for Q3 2023 was €48.4 million. This translated into an effective tax rate of 22.0% for the quarter, primarily reflecting the positive impact of the tax-exempted one-off capital gain from the disposal of the LCH SA stake (Q3 2022: €27.9 million and 26.2% respectively).
Share of non-controlling interests mainly relating to the Borsa Italiana Group and Nord Pool amounted to -€5.6 million in Q3 2023.
Consequently, the reported net income, share of the parent company shareholders, increased by +119.6% for Q3 2023 compared to Q3 2022, to €166.5 million. This represents a reported EPS of €1.57 basic and €1.56 fully diluted in Q3 2023, compared to €0.71 basic and €0.71 fully diluted in Q3 2022.
Adjusted net income, share of the parent company shareholders was up +13.2% to €146.5 million. Consequently, adjusted EPS (basic) was up +13.7% in Q3 2023, at €1.38 per share, compared to an adjusted EPS (basic) of €1.21 per share in Q3 2022.
The weighted number of shares over the first nine months of 2023 used for EPS computation was 106,563,821 for the basic calculation and 106,844,622 for the fully diluted calculation, slightly decreasing from the first nine months of 2022 as a result of the ongoing share repurchase programme.
In Q3 2023, Euronext reported a net cash flow from operating activities of €174.5 million, compared to €318.1 million in Q3 2022, reflecting lower change in working capital. Excluding the impact on working capital from Euronext Clearing and Nord Pool CCP activities, net cash flow from operating activities accounted for 100.7% of EBITDA in Q3 2023.