Welcome to the Euronext Q3 2018 results call. Throughout the call, all participants will be in listen-only mode, and afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I am pleased to present Mr. Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext. Please go ahead with your meeting.
Good morning, everybody. Thank you for joining us this morning for the Euronext Q3 2018 results conference call and webcast. I am Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext, and I will start with the highlights of Q3 2018. Giorgio Modica, Euronext CFO, will develop the main financials for the third quarter. We will both welcome your questions at the end of the presentation, together with Anthony Attia, Member of the Managing Board of Euronext. Let me start with slide five. As you may have noticed when you received the various materials this morning, we have applied this quarter IFRS 15, like some of our peers. In brief, part of our listing revenues have been deferred according to the principles of IFRS 15, for a period ranging between three and five years.
In this respect, I would like to highlight that all the Q3 2018 figures in this presentation are displayed, including the impact of IFRS 15. In addition, for the sake of clarity, we have highlighted the changes excluding the impact of IFRS 15. We have added in appendix a reconciliation table detailing all changes to the P&L and opening balance sheet. We will be happy to take any questions during the Q&A. Moving back to the performance of the quarter. Clearly, Euronext reported a strong Q3 2018. First, revenue increased by +17.2%, or +EUR 22 million, to EUR 150.9 million in Q3 2018, thanks to the growth across all business lines. In our core equity franchise, market share and cash trading remained strong at 65.7%, and the yield remained robust at 0.52 basis points. Second, core business costs are down -8.2% year-over-year.
This decrease in core business costs does offset part of the cost increase linked to the consolidation of the new acquired businesses and the deployment of ongoing projects. Third, as a result, group EBITDA increased this quarter by +26.4% compared to Q3 2017 to EUR 87.8 million. EBITDA margin was at 58.2%, up 4.2 points compared to last year. Finally, the good revenue performance of the quarter, coupled with continuous cost control, translated into a +31.6% increase in reported net income to EUR 50.5 million. Adjusted for exceptional items and the PPA related to recent acquisitions, Q3 2018 adjusted EPS increased by +31% compared to last year, to EUR 0.85. If we look at the performance since the beginning of the year, EBITDA margin is above 58% at 58.4%. Adjusted EPS is at EUR 2.63 per share, up +25%. Moving to slide six.
I would like to share with you four key takeaways in relation to the status of the various 2019 targets announced in May 2016 as part of our Agility for Growth strategic plan. You will remember that in May 2016, we set four main objectives for 2019. First, deliver value to shareholders to a targeted 61%-63% EBITDA margin for the core business, excluding clearing and selected growth initiatives. Second, strengthen the resilience of the core business with a targeted average market share of 60% on cash trading. Third, enhance agility, which was translating into a targeted gross cost savings of EUR 22 million by the end of 2019. Grow in selected segments with seven growth initiatives, with targeted objectives to generate EUR 55 million of revenues at 50% EBITDA margin. Out of these four targets, we wanted to let you know where we stand today.
First, we are delivering value to shareholders. We are very proud to announce that over the last 12 months, EBITDA margin on the core business, excluding clearing and selected growth initiatives, reached for the first time, and one year in advance, the 61% level, which is within our 2019 target. Second, we have strengthened our resilience in the core business with a strengthened position in our core cash trading business. Since 2017, our market share in cash trading improved to above 65% on average, and our yield growth to above 0.50 basis points. These metrics are both higher than the initial target set in May 2016. Third, we have enhanced our agility with more than EUR 24 million of cumulative savings since May 2016, above the initial EUR 22 million target for the end of 2019.
This objective was reached one year in advance, while spending significantly less restructuring costs than originally anticipated. Fourth, with regards to our selected growth initiatives, two growth initiatives, first, the Synapse MTF and the European family of indices with Morningstar, are live, but they have not generated nor are making progress in line with our expectations. For that reason, we do not expect them to contribute the EUR 20 million incremental revenue in 2019 as originally planned. Let me emphasize three important caveats in this respect. First, some growth initiatives are performing in line with our expectations. In particular, Corporate Services is performing according to plan. The European Tech Hub for SMEs has been deployed and has a strong pipeline. The MTF for ETF, ETF Access, is planned to be live in 2019. Second, Euronext will maintain a strong focus on the development of these initiatives.
Other initiatives in the fixed world and market data and indices spaces are also being explored. In particular, we have launched new indices that are working very well. Third, I would like to emphasize that the company has significantly increased its size, thanks to the acquisitions performed compared to what we were when we planned the Agility for Growth initial strategy in May 2016. As usual, we will provide you with a full annual update on our strategic plan during the full year 2018 announcement next February. I now leave the floor to Giorgio Modica for the detailed presentation of our Q3 financial results.
Thank you, Stéphane, good morning, everyone. Slide eight. As mentioned by Stéphane, I would like to highlight that in the third quarter of 2018, Euronext implemented an accounting change retrospectively as from January 1, 2018, leading to the reassessment of the time recognition of part of our listing revenues, namely IPOs and follow-ons. As a result of the application of IFRS 15, the recognition of such revenues will be deferred for a period ranging between five and three years. Going forward, this change will smoothen the P&L cyclicality of our listing business today, characterized by stronger Q2s and Q4s and softer Q1s and Q3s. In the third quarter of 2018, the impact of this accounting change is EUR 4.3 million positive on the P&L and minus nearly EUR 57 million on the opening equity. You will find a full reconciliation table in the appendix of this presentation.
Including the impact of IFRS 15, Euronext consolidated revenues increased EUR 22 million or 17.2%, EUR 260.9 million, mainly thanks to the growing contribution of our revenue diversification initiative, with Euronext Dublin contributing EUR 8.1 million, FastMatch EUR 5.4 million, and the new selected grow initiative, EUR 4.4 million. Excluding the impact of IFRS 15, revenues would have grown 13.9% to EUR 146.7 million this quarter. Looking now at the different businesses. Listing revenues increased significantly to EUR 27.8 million, up 37.6% versus last year as a result of the consolidation of Euronext Dublin and the performance of corporate services. Trading performance was good across all of our asset classes, with more than EUR 7.7 million increased revenues year-on-year. Post-trade revenues were up EUR 1.9 million, thanks to the good performance of clearing, custody, and settlement.
Market data and indices performance was strong, with revenue up 16.7% to EUR 29.4 million as a result of the new market data agreement in Euronext Dublin. Finally, volume-related revenue accounted for 54% of total group revenues, while the operating cost coverage ratio reached 110%. Move to slide nine and listing. Listing profited for the contribution of Euronext Dublin for EUR 5.4 million and of corporate service for EUR 4 million. This translated into a 37.6% revenue increase to EUR 27.2 million. Excluding the impact of IFRS 15, listing revenues would have grown by nearly 17% to EUR 23.5 million. Let's focus now on equities. Primary market activity and follow-ons were soft this quarter as the market environment remains mixed, the investor adopted a more cautious and selective approach towards IPOs. Euronext had seven new SME listing this quarter.
On the debt front, our franchise benefited from the consolidation of Euronext Dublin that, as I highlighted, contributed significantly to the growth of revenues. Moving now to the cash trading in slide 10. As usual, Q3 suffered from the drop of trading activity linked to the summer break. Cash trading revenues increased 9.2% to EUR 48.5 million, thanks to higher volumes, yield, and market share. More specifically, in the third quarter of 2018, ADV increased 4.7% to EUR 7.2 billion. Market share was strong as well. At 65.7%, up 0.5%, yield was up 4.2% to 0.52 basis points. Conversely, ETF trading suffered from the poor volatility of the market, while the number of ETF listed on our market increased to 1,125 at the end of September. Slide 11, double-digit growth for derivatives, with revenues increasing 11.6% to EUR 11 million, thanks to the improvement registered in both volumes and revenue capture.
The yield is up this quarter to EUR 0.31 compared to EUR 0.30 in the third quarter of 2017, ADV are up 8.5%, mainly driven by the growth in individual equity option and the strong performance of commodity, with ADV up 27.1% compared to last year. In this respect, the new market participant program designed to develop the non-physical commodity market was instrumental to that performance. Finally, FastMatch generated EUR 5.4 million this quarter in revenues, with spot FX ADV up nearly 6% in the third quarter of 2018 to $19.4 billion, supported by the summer volatility in emerging markets. Moving to slide 12, market data and indices performed well this quarter, up nearly 17% to EUR 29.4 million, supported by the new market data agreement and the consolidation of Euronext Dublin. Revenue from market solution and other increased 10.4% to EUR 9.1 million.
The business benefited from the first commercial releases of Optiq for international clients and from increased activity in safety and colo services. Clearing revenue increased 11.6% to EUR 14.2 million, reflecting the good performance of commodities during the quarter and higher treasury income. Revenue from custody and settlement increased 7.4% to EUR 5.4 million, driven by an increase of public debt and equity under custody at INTERBOLSA. Let's move now to slide 13 and start with the EBITDA bridge. EBITDA grew by 26.4% to EUR 87.8 million, with a margin of 58.2%, up 4% versus the third quarter of 2017. The key drivers of this performance are revenue up EUR 22 million and cost saving on the core business, which partially compensated the additional cost of the new perimeter.
Operational expenses, excluding D&A, grew 6.5%, mainly due to the impact of new acquisition, namely Euronext Dublin and FastMatch, while the core business cost decreased above 8%. In this respect, it is important to highlight that the target EUR 8 million saving expected for Euronext Dublin are not yet reflected in the reported figures. Cumulated core gross cost savings amounted to EUR 24.2 million this quarter, with an increase of more than 5 EUR 5 million versus the second quarter of 2018. As Stéphane reminded, with this performance, our cost-saving target for the core business is achieved one year ahead of schedule. If we look at the margin of the core business and of the selected growth initiative perimeter, excluding clearing and new perimeter, of course, the EBITDA margin reached 62% this quarter, up 7 percentage points.
Furthermore, for the last 12 months, the EBITDA margin for this perimeter reached for the first time 61% within our 61%-63% 2019 target. Moving now to the net income bridge. D&A are negatively impacted by EUR 2.1 million of PPA for FastMatch, iBabs and Euronext Dublin, as well by the D&A of the acquired businesses. Exceptional items show a small reduction despite they remain elevated at EUR 8.8 million this quarter versus EUR 9.7 million in the third quarter of 2017. This quarter, exceptional items derived mainly from the agreement for the early termination of the trading service contract provided by Deutsche Börse to the Irish Stock Exchange, advisory costs, and some impairments linked to Synapse.
Results from equity investments reduced EUR 0.9 million as the income of our 11.1% stake in LCH SA, accounted as an associate since 2018, only partially offset the deferred capital gain on LCH Group recorded last year for EUR 1.7 million. The increase of taxes is due to the increase of the taxable income, despite the decrease of the marginal tax rate down to 30.7%, mainly due to the consolidation of Euronext Dublin. For the third quarter of 2018, this translates into a reported net income increase of 31.6% to EUR 50.5 million. Adjusted for these exceptional items in PPA, adjusted EPS is up 31% at EUR 0.85 compared to EUR 0.65 in the third quarter of 2017. Moving to slide 14, in the third quarter of 2018, the net operating cash flow increased from EUR 69.5 million to EUR 87.8 million, while the EBITDA conversion ratio decreased to 80.6%.
The slight reduction of the EBITDA cash conversion is mainly linked to the increase of the tax paid as a result of the increase of taxable income between 2017 and 2016. As far as leverage is concerned, our net debt remains limited, providing for significant strategic and financial flexibility. Looking at the bottom of the slide, as of the end of the third quarter of 2018, our liquidity position remains strong with more than EUR 650 million of cash, including our undrawn RCF for EUR 250 million. I now leave the floor to Stéphane Boujnah for his final remarks.
Thank you, Giorgio. Before moving to the Q&A, I'd like to share with you a few points of confusion. First, Q4 has started very well. October volumes are up 20.2% to EUR 8.9 billion cash ADV, with clearly the return for the moment of volatility on our markets. Second, as I said earlier, we will provide you, as usual, with a full annual update on our Agility for Growth strategic plan during the full year 2018 announcement on the 15th of February 2019. Finally, the perimeter of the company has significantly changed since May 2016 with new asset classes and new businesses. It is important for us to grow Euronext on the basis of this new perimeter. Accordingly, we will present a new strategic plan for the years to come next spring. We will soon communicate the exact date.
Now Anthony Attia, Giorgio Modica, and I are available for your questions. Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero and one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a brief pause while questions are being registered. We have a first question from Ron Heydenrijk from ABN AMRO. Please go ahead, sir.
Good morning. It's Ron Heydenrijk, ABN AMRO. Two quick questions. One is the IFRS 15 impact of EUR 4.3 million, which exact P&L line and listing does that fall into? Secondly, could you maybe give us a breakdown of the EUR 8.8 billion in exceptionals between the impact of the Deutsche Börse unwind with that ISE impairments and, what was it again, the additional advisory cost?
Absolutely. Let me start with IFRS 15. This impacts only one line, which is listing and more specifically, equity IPOs and follow-on and bond listing. For the second question, out of the EUR 8.8, in line with the press release that we issued earlier this year in September, the portion related to DB is slightly less than 50% of that, is slightly more than EUR 4 million. You have three impacts, which with nearly the same size, and those are the impairments, the advisory cost, and some small restructuring for the ongoing activity of Euronext.
Very clear. Thank you.
We have another question from Anil Akbar from Kempen. Please go ahead.
Hi, guys. I have two questions. One is regarding your yield, that the yield, if you look at it in the past few years, has ticked upwards. How exactly is that happening? Is that an impact of MiFID II? What exactly is going on over there? How is the yield so strong for you guys, especially in an environment where most of the trading exchanges are facing pressures on their yield maintenance? The other question is on your market data revenue. Over there, you guys have pointed out that, or as we discussed earlier in earlier calls, that basically this revenue has increased right now because of the new pricing plan. In the future, you expect sort of a normalization. What do you see over here as where do you see this going?
Should we consider the current 16% as sort of maintainable, or what do we expect going forward? Thank you.
Yeah. Thank you for your question. Let me get the two questions. When it comes to the yield, the improvement is mainly linked to a better segmentation of the volumes and to the programs that we launched now more than one year ago, and more specifically, the Pack Omega and the Best of Book that pretty much are priced on average a premium with respect to the cheapest liquidity scheme that we have in our fee grid, which is the SLP program. We have to a certain extent improved the segmentation, adding more quality into our key schemes. When it comes to the market data, you are exactly right. We expect, going forward, an optimization of data consumption. Clearly, we as a management action, always try to minimize that and to further improve revenues.
When it comes to the 16%, this comes mainly from a base impact year-on-year, as the change starts January 2018. You should not expect a further 15%-20% increase next year. However, clearly one of our objective is to maximize those revenues, and therefore, we hope to have an increase also next year. You should not look at 16% as a run rate for growth of our market data revenues.
Okay. Thank you very much.
We have another question from Anil Sharma from Morgan Stanley. Please go ahead.
Okay, morning, guys. Two questions, actually. I hear what you're saying about a strategy update in spring or summer next year, but just could you help me understand? You're saying the Synapse and European family of indices, you don't expect EUR 20 million of contribution. What do you expect? Is the number zero, or is there some positive number at all? Secondly, obviously on the EBITDA margin, you're at the low end of the range. Is it reasonable for us to expect that you should still be getting towards the upper end of the range by 2019? Because I noticed also, Giorgio, you said some of the Irish exchange synergies weren't in the numbers yet.
Okay. I'll reply to the strategic question and the selected growth initiative performance for 2019, Giorgio will give you a precise answer to your question about the target for the EBITDA margin for the core business, excluding clearing between 61% and 63%. As far as your first question is concerned, what we said is that by May or June 2019, we will release a new strategic plan for the years to come, that will take into account the new parameter of the company at that time.
As in any company which release a new plan before the end of 2021, including during the transition year, we will provide you an update of Agility for Growth strategic plan during the annual rendezvous for the review of this plan in February 2019, clearly we will observe the performance of the full plan in February 2020 on the basis of full year results of 2019. One strategic plan for the years to come beyond 2019 to be released in May, June. Annual point of assessment of the performance of the plan in February 2018, sorry, February 2019, and February 2020. As far as your particular questions about the selected growth initiatives.
We said that as part of our Agility for Growth ambition, which had the three other pillars I've described, one of them was to do some organic growth through six or seven selected growth initiatives. What we are saying is that two out of those initiatives will not contribute as expected, will not contribute roughly EUR 10 million each in 2019, therefore the expected top line for those two initiatives will not be there in 2019. We don't say more than that. We are deploying a lot of efforts to minimize the gap between the target, which we released in February 2018, which was EUR 55 million of selected growth initiatives or organic growth revenues and the reality, we will provide you with a full update in February 2019.
Yeah.
On the EBITDA.
Yeah. Let me get that, Stéphane. Clearly the 61% being LTM, last 12 month, includes the fourth quarter of 2017. There is a profitability of 56%, which is on average lower than the profitability we have at the moment, and the profitability we registered in the first three quarters. The 61% with the new quarter, should go up, and clearly our cost discipline will remain there. This is all what I can say. We will not release a new target at the moment.
Okay. That's helpful. Thank you both.
We have another question from Arnaud Giblat from Exane. Please go ahead.
Yeah. Good morning. Three questions, please. First, on the Agility for Growth. You're saying, because you didn't give the split previously, that six or seven initiatives made up EUR 55 million. You're not going to get the contribution from two of them, which will lack EUR 20 million of contribution. In your EUR 55 million assumption, were you assuming 100% contribution from each initiative, or was there some leeway for some mixed successes? My question is basically should we be chopping EUR 20 million off the EUR 55 million target? The second question is on M&A. MarkitSERV , you were in the final rounds of bidding for MarkitSERV. The price rumored seemed pretty high and, well, there was no deal. I suppose it looks like buyers' and sellers' expectations were not met. How far away were you from closing on that deal?
What sort of ROIC were the prices the seller looking for on your side? What did the ROIC look like for you to stop that deal? Is there anything else out there that you are working proactively on other deals? Thank you.
Okay. I'll take the M&A question, then Giorgio will give you a precise answer to your questions about the selected growth initiatives that were part of our GDF group plan. We don't comment on market rumors. What I can tell you is that Euronext is a company which is very disciplined on operating performance and very disciplined on acquisition. We're not going to pay for an asset value that will not reflect our ambitions for growing any company. The decision taken by IHS Markit to not to proceed with the sale is the decision that they have taken on their own. I'm not in a position to make any further comment. That's for the M&A.
Yeah. On the M&A, the general principle, which is not specific to any transaction, remain the same. Our return on invested capital, in terms of targets, is always between 8% and 9%. You should not expect pricing of any assets that significantly moves away from that interval. When it comes to Agility for G rowth, I understand where you're coming from, the reason why we released the statement that we no longer expect the EUR 20 million is exactly because in the regular assessment of those two initiatives, it seemed to us that we were not able to reach the target. We felt the need to communicate that to the market. That doesn't mean that at the moment we have done a complete reassessment of all the initiatives and all the opportunities we have to mitigate the gap with respect to the EUR 55 million.
For this quarter, the update is EUR 20 million, which it does not mathematically translate in the new target. As far as the new target is concerned, we will proceed as always did, i.e., with an annual update as of February 2019.
Okay. Could you also I forgot a question. With regards to the synergies on the Irish Stock Exchange, you mentioned that these isn't fully realized yet. How much is left to be realized next year? Thanks.
At the moment, the vast majority.
Okay.
The integration is proceeding according to plan. The new target operating model is defined and is being executed, starting the third, fourth quarter this year, then getting to the first quarter next year. The migration to Optiq is planned for the first quarter next year, those elements will generate or will deliver the bulk of the synergies that you're referring to. At the moment, pretty much nothing is factored into our numbers.
Thank you.
We have another question from Mr. Folkert Ploeg from ING. Please, go ahead.
Yes. Good morning. It's Folkert Ploeg from ING. Three questions from my end. First of all, I've heard what you mentioned on the M&A and on the strict criteria. If I'm not mistaken, you have also said in the past, if nothing materializes, you could contemplate on some kind of special capital return. Also heard what you said on an update in May, June, more strategic update. Should we therefore more think of anything, let's say, on the special capital return after that event? Or could it still be an event planned for February 2019, where you come with the full year results? The second question, I also heard what you said on the cost savings. You're not giving a new target currently, but simply you're now at EUR 24 million realized. You say still the majority of the EUR 8 million for Dublin should be still being realized.
Mathematically, you could have already said something like EUR 30 million, EUR 32 million could be a new target. Why did you refrain from this? Because I'm struggling how you plan to communicate further on the cost efficiency. The third question is on the restructuring expenses. Think it was something for EUR 40 million also for Dublin, and you still have on your budget where you're still quite a big gap of EUR 19 million to reach EUR 33 million. Can you help us a little bit on what to expect for Q4 and how that will phase in into 2019 in terms of the restructuring costs? Thank you.
Okay, I'll take the first question, capital return, and Giorgio will comment on cost and cost target expectations and on the restructuring expenses in the context of Dublin. On capital return, we have always been very clear. The ambition of Euronext is to deploy capital to grow the company significantly, albeit in a disciplined manner, and to do it within this plan. This plan ends at the end of 2019. We still have a full year to deploy, to make significant acquisitions, to deploy our capital. We will decide with the supervisory board where we are after the current plan is completed at the end of 2019, whether it is appropriate, considering the situation of our capital situation at that time, at the end of the 2019 plan, to proceed with the special distribution.
As I said on many occasions, if by the end of 2019, we still are in a situation where we have not found financially attractive opportunities to deploy our capital, we will proceed after the end of the plan, after the end of 2019, towards a distribution of a special dividend. In terms of the cost targets and the restructuring of expenses in Dublin.
Yeah, absolutely. Let me clarify that. We have two different pockets. Apology for the complexity, but as Stéphane reminded, today we are very different from where we were, we now have a different set of objectives. The objective released in May 2016 was related to the core business, the target was to achieve EUR 22 million of saving, spending restructuring cost for EUR 33 million. With respect to that very specific objective, today we are EUR 24 million saving achieved and having spent around EUR 13 million, EUR 14 million out of the initial pocket of EUR 33 million, with a significant saving of around EUR 20 million. On that part of the business, we don't provide an update at the moment.
When it comes to the Irish Stock Exchange, this comes with a different set of objective in terms of cost saving, as you rightly pointed out, the EUR 8 million. The EUR 8 million are to be achieved with a spend of EUR 14 million in terms of restructuring cost. Where are we on those targets? As I said, out of the EUR 8 million, a very small fraction of that has been achieved so far. You should expect the bulk of it coming in the next two, three quarters. Conversely, when it comes to restructuring costs, around 2/3 of the restructuring costs have been already provisioned in the P&L through exceptional items in the last quarters. Restructuring costs, pretty much 2/3 were already booked, but the saving are not yet reflected in our P&L.
Okay. Thank you so much.
We have another question from Michael Werner from UBS. Please go ahead, sir.
Thank you. Two questions from me, please. First, we saw quite a drop in the non-comp expense base in Q3 for Euronext versus Q2 by about, my number's about 18%. I was just wondering what drove that decline and whether that's going to be sustainable, if there's any one-offs in there. Second, given the changing perimeter of Euronext, can you update us on your 2018 tax rate guidance for the full year? Thank you.
Sorry, can you repeat your second question?
I was just wondering if you can update us on your guided tax rate for full year 2018.
Let me take your question. The decrease in cost is mainly coming from the conclusion of part of the Optiq works and through the release of a good portion of the consultants that have helped Euronext in deploying the IT platform that is running the core market since mid-2018. Yes, it is sustainable when it comes to the non-comp part of our costs. When it comes to your second question, the tax rate for the end of the year should be around 30.5%, 30.7%, around that. This is what we're targeting for the full 2018.
Thank you very much.
We have another question from Mr. Martin Price from Credit Suisse. Please go ahead.
Good morning. I just wanted to come back quickly to the revenue growth initiatives within the scope of Agility for Growth. Can you just confirm that the other initiatives, other than the two you've highlighted, are still on track? Thank you.
Yeah. No, as I said, those two initiatives will not contribute in 2019 to what was expected. We have a much more positive outlook on other initiatives. Clearly, we are extremely confident with the deployment of the ETF Access, which is the MTF for ETF, which will be live in 2019. We are extremely happy and enthusiastic about the growth of two initiatives which are in the listing world. The first one is the Corporate Services, which are producing the revenues that were anticipated. The other one is the European Tech Hub. I'll give the floor to Anthony Attia, who is our Global Head of Listing and who oversees both initiatives.
Good morning, everyone. A few words on the Corporate Services initiative. As Stéphane said, we delivered according to plan, and the commercial intensity is there. As you remember, it's the combination of three acquisitions: Company Webcast, iBabs, InsiderLog, with some organic growth in order to service our issuers with post-listing, post-IPO services. The growth is coming from standard growth from the acquisitions, cross-selling, and also the commercial reach of the Euronext brand on these newer services. On the other initiative that Stéphane has mentioned, it's called the European Tech Hub. We are also deploying Euronext brand in four selected countries, Spain, Italy, Switzerland, and Germany. We have a very strong pipeline, and we already delivered on six new operations this year. We are expecting more in the coming months to come.
That's very helpful. Thanks, guys.
We have another question from Johannes Thormann from HSBC. Please go ahead, sir.
Good morning, everybody. Johannes Thormann, HSBC. Just a little question. First of all, on Euronext Dublin, Irish Times reported that you're thinking about moving the settlement. Could you elaborate on this a bit, or what your thoughts are behind this? Secondly, looking at your FastMatch margin as a simple calculation of revenues divided by volumes, it seems we have seen a nice uptick in the third quarter versus the previous quarter without FX explaining it fully. Have you changed pricing, or what has driven this? The last thing is on your net financing income, which was positive this quarter. Will it be positive also in the next quarters, or do you expect it to come back to be negative again due to the regular interest expenses? Thank you.
I'll take the first question on Ireland, and Giorgio will take the following two questions. On Ireland, we have a comprehensive dialogue with all the market participants in Ireland and with the various players in the clearing industry in Europe and with the European Commission and with the Irish authorities, the Central Bank of Ireland and the Department of Finance of the Republic of Ireland to build together the most appropriate solution going forward post-Brexit for the settlement and custody of Irish securities. This dialogue is very productive, is developing in a constructive spirit, and the objective of this dialogue is to maximize continuity and to minimize operational difficulties for the various users of settlement and custody services. We are confident that within a very short timeframe, we will be able to go public with a solution that makes everyone comfortable.
Yeah. Coming to your question on net interest income. What you should be aware is that we swapped our bond into a variable, which means that we have a derivative instrument that converts the fixed rate into a variable interest rate. Clearly, this is a hedging derivative, but there is a very tiny portion that every quarter is ineffective, and that portion goes through the P&L. This explains the slightly positive or negative result that you've seen in the last quarter. You should expect a very small number, either positive or negative, next quarter. When it comes to the condition of the swap, what we're actually paying on the EUR 500 million bond is Euribor six months plus 38 basis points.
Okay. The FastMatch margin, please?
Yeah. Let me answer to that question. What I can tell you is that we did not change the pricing. If I look at the average fee per million in U.S. dollar, has not changed significantly in the last three quarters. In the third quarter of 2018, we are pretty much where we were in the first quarter of 2018, slightly up with respect to the second quarter. But this comes more from a slightly different mix of clients quarter by quarter than by a change in fee by itself. No, we did not implement any fee change in FastMatch.
Okay. Thank you. Helps.
We have no more question for the moment. As a reminder, ladies and gentlemen, if you wish to ask a question, please press zero and one on your telephone keypad. We have another question. Please introduce yourself and ask your question.
Hi, Stéphane. Philip Stratford from the Financial Times here.
Good morning.
Hi. Just a question just again about Agility for Growth here. We started off a few years ago with additional revenues of EUR 70 million, then it came down to EUR 55 million. Now it's down again somewhere. It kind of almost looks like it's produced almost as much cost as it has revenues. How can we be sure that the next set of forecasts will be any more credible than the last lot?
Thank you for your question. I'm not sure the word credible is the most appropriate, because we know we wanted to be very transparent and be clear with you and with the market, and to indicate clearly that EUR 20 million out of the selected growth initiatives, which were part of the Agility for Growth ambitions, were at risk, and that it was safe to guide the market towards the fact that those EUR 20 million will not be generated by the end of 2019. These selected growth initiatives were part of the Agility for Growth plan and ambition, which was much bigger and which had various ambitions in terms of strengthening the core business, hence the effort done on the market share in terms of delivering values to shareholder, hence the EBITDA margin that we have reached one year ahead of schedule.
Which was all about all sorts of objectives in terms of cost reduction to enhance agility, where we have delivered a performance which was stronger than expected one year ahead of schedule. The company as a whole, not to mention the additional acquisitions that were made 2016, is stronger and bigger and deliver more values than what it was in 2016. One part of this ambition was to develop organic growth, where you are absolutely right, is that we do not deliver organic growth with the level anticipated in May 2016. Some initiatives were more innovation than growth, and we have explored them in an innovation format, and they have not delivered.
Others are live in terms of platform, but the migration of liquidity is getting much lower than expected, and others are very successful, as indicated in the numbers that you have already in the books today for mainly corporate services, and are promising, as indicated by Anthony Attia earlier. As much as we update real time about the development of the top line of those initiatives, we want to pause only once a year at the annual review of the overall Agility for Growth strategy in February 2018 to give the full perspective above and beyond those organic growth initiatives. You're right, we are not going to make 70. We said that in February. We are not going to make 55.
I don't know for the moment, because there are several projects ongoing, what will be the gap between 55 and the guidance that we will deliver in February 2019, considering on the one hand, those two initiatives that don't yield EUR 20 million and the developments that are ongoing for the moment.
Thank you.
We have another question from Ellie Donnelly, Irish Independent. Please go ahead.
Hi there. Under the cost-saving plans for Dublin, will there be any further redundancies?
Giorgio?
Yeah. Let me take this question, Stéphane. No, the target operating model for Euronext Dublin has been defined earlier this year and is going to be implemented as planned. There is no change with respect to what was originally planned.
There will be no further redundancies other than what was confirmed earlier this year?
Absolutely.
Perfect. All right, thank you.
We have no further question.
Thank you very much. Have a good day.
This now concludes our conference call. Thank you all for your participation. You may now disconnect your lines.