Hello, and welcome to the Euronext First Quarter 2022 Results Call. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen-only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero and you'll be connected to an operator. I will now hand over to your host, Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext to begin today's call. Thank you.
Good morning, everybody, and thank you for joining us this morning for Euronext's first quarter 2022 results conference call and webcast. I am Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext. I will start with the highlights of the first quarter before handing over to Giorgio Modica, Euronext CFO, who will then further develop the main business and financial highlights of the quarter. Moving to slide four, before discussing our first quarter performance, I would like to say a few words on the current situation in Europe. This quarter was marked by the Russian invasion of Ukraine. While our exposure to Ukraine, Russia, Belarus is negligible, our European roots are the core DNA of the Euronext project. As the leading Pan-European market infrastructure, we remain extremely concerned by this situation.
Clearly, this crisis has generated strong volatility across European markets, yet we have continued to provide fair and transparent markets at all times. We have demonstrated the resilience of our business model in those circumstances. We continue to monitor closely the situation, notably with regard to the implementation of the sanctions on Russia and Belarus. However, as I just said, our exposure to the situation is negligible. Moving now to the presentation of our first quarter results. Euronext reported a very strong performance in the first quarter of 2022, with revenue reaching EUR 395.7 million. This is the highest quarterly revenue we have ever disclosed at Euronext.
During the first quarter of 2022, revenue increased by more than 50%, adjusted EBITDA increased by more than 50%, and adjusted net income increased by more than 50%. This is not only due to the consolidation of the Borsa Italiana Group. Our results were also up year-on-year on a pro forma basis. In other words, including Borsa Italiana Group as if we were owners of this asset in Q1 2021. On that pro forma basis, Euronext reported +6% growth in first quarter revenue this year and +11.4% growth in Adjusted EBITDA. This strong performance results from several drivers. On the one hand, both non-volume related revenue and trading activities reported a very strong performance.
On the other hand, we benefited from our continued cost discipline, combined with the successful ongoing integration of the Borsa Italiana Group and the delivery of the related expected synergies. On the revenue side, our trading activities were driven by the volatile environment at the end of the first quarter of this year. In the meantime, our non-volume related activities proved also to be resilient. Altogether, non-volume related revenue accounted for 55% of total revenue and covered 151% of underlying operating expenses, including D&A. On the cost side, the reported increase for sure in underlying expenses, excluding D&A, reflects the consolidating cost from the Borsa Italiana Group. I would like to emphasize that both on a like-for-like basis and on a pro forma basis, the underlying expenses excluding D&A were down compared to last year.
This is a result of our continued tight cost control, combined with the successful ongoing integration of the Borsa Italiana Group that is enabling us to deliver on the targeted EBITDA synergies. Overall, these numbers translated into a +11.4% increase in pro forma Adjusted EBITDA to EUR 252.2 million, resulting in an Adjusted EBITDA margin of +3.1 points to 63.7%. Bottom line, we delivered in the first quarter of 2022 a +7.3% increase in adjusted EPS at EUR 1.54 per share. On a reported basis, net income was up +46.5% to EUR 143.8 million. Giorgio will further detail this financial performance, but our strong performance in Q1 improved our leverage positions.
It provides us with additional strategic flexibility, as recently recognized by S&P, which confirmed our rating at BBB and improved the outlook from stable to positive. During this first quarter, we pursued the strong momentum around the delivery of the integration plan and the delivery of synergies in relation to the acquisition of the Borsa Italiana Group, and we pursued the development of the first key migration, the migration of our core data center, which will occur in just a few weeks. With regards to the targeted synergies, we have reached EUR 15.2 million of cumulative run rate EBITDA synergies at the end of this quarter, just 11 months after the closing of the acquisition. Another key achievement is the confirmed go live of our new green core data center near Bergamo.
Euronext will become the operator of its own core data center next month. From 6th June 2022, our new core data center will be live, unlocking the first batch of identified business development synergies. This migration will be the first major milestones within our Growth for Impact 2024 strategic plan that will pave the way for the migration of the Italian cash equities and derivatives markets onto the Optiq trading platform in 2023. I would like to thank our teams and to thank the teams of our clients for this successful migration project that will benefit more broadly the world financial ecosystem and that will help all our clients reduce their carbon footprint.
As a result of our progress in the integration of the Borsa Italiana Group, and as a result of continued cost control in the first quarter, we are today very pleased to upgrade our 2022 cost guidance, expecting EUR 10 million less of underlying costs and EUR 10 million less of implementation costs. This translates into expected underlying costs for 2022 of EUR 612 million, down from the EUR 622 million previously announced in February this year. In addition, we now expect EUR 150 million of non-recurring implementation costs by 2024, down from EUR 160 million initially announced in November 2021. Moving to the next slide, allow me to highlight some recent developments in our ESG strategy.
As you know, we believe that Euronext must play a critical role to promote the transition of companies to more sustainable business models. We also continue to advance on the different pillars of our Fit for 1.5° commitment during this first quarter of 2022. We pursued the development of our ESG offering as we continue to strengthen the ESG franchise of our national flagship indices. We have welcomed additional issuers of sustainability-linked bonds on our market. Alongside the enhancement of our ESG offering, we continue to act as partner of choice for our clients, publishing our guide for ESG reporting, Target 1.5°, and co-founding the Sustainable Trading Initiative to support our clients in their ESG journey. From internal Euronext corporate perspective, we also started to deliver on our own, ambitious ESG commitment.
As I mentioned before, the migration of our new core data center near Bergamo will represent a massive milestone towards our Fit for 1.5° commitment. Furthermore, we continue to empower our people, for example, by launching for the third year in a row our 10 shares for all employees program, as well as training our employees on climate issues. For the past two years already, 100% of the Euronext employees are shareholders in Euronext. Lastly, as you may seen in our universal registration document, we have disclosed our first set of targets in line with Science Based Targets initiative.
These targets notably include an expected reduction by at least 42% of our Scope 1 and Scope 2 carbon emissions by 2030 compared to 2020, as well as a reduction of at least 42.6% of our scope three travel carbon emissions by 2030 compared to 2019. The assessment to further reduce our emissions is being finalized, and we will be able to publish our final targets by June 2022. I now hand over to Giorgio Modica for the review of our first quarter performance.
Thank you, Stéphane, and good morning, everyone. I am now on slide nine. In the first quarter of 2022, Euronext consolidated revenues and income grew 6% pro forma for the acquisition of the Borsa Italiana group. On a reported basis, revenue and income grew 58.8% to EUR 395.7 million, representing an increase of EUR 146.6 million. These strong results were driven by the growth of both non-volume related activities and trading and the integration of the Borsa Italiana group. On a like for like basis and at constant currencies, i.e. mainly excluding Borsa Italiana consolidation that started in the first quarter of 2021, Euronext consolidated revenue was up 6.9% compared to the first quarter of 2021. We recorded good performance across different business lines.
Trading revenues increased to EUR 150.8 million, up 9.9% pro forma and 57.2% on a reported basis, resulting from strong trading activity across all asset classes and products. Post-trade revenue increased 3.1% pro forma and 51.7% on a reported basis to EUR 95.8 million, driven by the continued strong activity. Clearing revenue profited from the highly volatile environment while custody and settlement revenue was stable. Advanced data service revenue increased 3.4% pro forma and 43.9% on a reported basis to EUR 52.6 million due to a solid core data business performance. Listing revenue grew 12.4% pro forma and 42.9% on a reported basis to EUR 55.4 million.
The listing activity was resilient, and Euronext confirmed its leading position as the leading venue for equity and ETF listings in Europe and for bond listings worldwide. In terms of revenue mix, in the first quarter of 2022, non-volume related revenue accounted for 55% of total group revenue versus 58% pro forma in the first quarter 2021. As a result of the increasing relevance of our non-volume related revenue in our business mix, even during periods of high trading activity. I would like to highlight that to better reflect the segmentation of our revenue mix between volume related and non-volume related revenues, from this quarter, we include within our non-volume related revenue, part of the revenue of clearing, such as the net treasury income and membership fees.
Lastly, non-volume related revenues covered 151% of our underlying operating costs, excluding D&A, compared to 147% pro forma last year. Moving to the next slide for listings. I'm on slide 10. Listing revenue was EUR 55.4 million, an increase of 12.4% on a pro forma basis and 42.9% on a reported basis compared to the first quarter of 2021. To better understand this trend, I would like to highlight that according to the principles of IFRS 15, admission revenues are recognized over a period of time, which for Euronext, mostly ranges between three and five years. As a result, in the first quarter of 2022, we benefited from the exceptional listing activity of 2021, offsetting a softer IPO environment this quarter.
In detail, during the first quarter of 2022, Euronext was able to confirm its leading position in Europe for primary equity listing, counting 22 new listings despite the recent headwinds to the listing activity. Euronext also recorded the three largest IPOs in Europe in terms of money raised and continued to demonstrate its activity as a SPAC hub. In the first quarter of 2022, EUR 2.2 billion was raised on Euronext primary market, which represents 73% of the total money raised on primary markets all over Europe. As far as secondary issues are concerned, EUR 2.6 billion were raised in the first quarter of 2022. The deal pipeline remains strong, but market conditions have worsened, with several issues postponing the execution of deals. If current market conditions persist, next quarter might not be as strong as the first quarter.
Moving to ETF, once again, we confirm in the first quarter of 2022 our position as the number one listing venue for ETF, with 3,679 ETF listed at the end of March 2022. Euronext also reinforced its position as the leading venue for bond listing worldwide, with over 52,000 bonds listed across all Euronext markets and continued to grow its ESG bond listing franchise. In the first quarter of 2022, EUR 320.5 billion in debt was raised on Euronext markets. Overall, this brings us to a total of EUR 325.2 billion raised in equity and debt on Euronext markets in the first quarter of 2022. Lastly, Euronext Corporate Services reported a record quarter in terms of revenues at EUR 10.5 million.
The +15.7% increase year-over-year results from a strong performance across services and increasing commercial traction in Italy. Like-for-like, listing and corporate service revenues increased 12.5% compared to the first quarter of last year. In summary, this quarter demonstrate the strength of our equity and debt listing businesses in highly volatile market conditions. Let's move to our trading business next on slide 11 and start with cash trading.
On a pro forma basis, including Borsa Italiana, ADV increased 19.8% to EUR 15.5 billion, representing the second strongest quarter ever recorded on Euronext equity markets after the first quarter of 2020 at the beginning of the COVID-19 pandemic. Average revenue capture over the quarter was at 0.47 basis points, and the market share averaged 68.1%, including Borsa Italiana.
This level of average fee is impacted by the dilution coming from the consolidation of Borsa Italiana and the normalization of market behaviors and the average size of orders. Excluding Borsa Italiana, the average fee remains above 0.50 basis points. Cash trading revenues increased 11.1% pro forma and 35.7% on a reported basis to EUR 94 million. Moving on to derivative trading. Derivative trading revenue was up 9.3% pro forma and 37.5% on a reported basis to EUR 16.1 million in this quarter. Pro forma average daily volumes on financial derivative was up 6.1% from the first quarter of 2021, reflecting the high volatility environment for equity derivatives.
Commodities reported another record quarter, while average daily volumes were up 6.1% compared to an already strong quarter in the first quarter of 2021. The average revenue capture over the quarter for derivative trading was EUR 0.30 per lot. Fixed income trading reported revenue at EUR 24.4 million, primarily resulting from the consolidation of MTS. On a pro forma basis, fixed income revenue increased 4.7%. In the first quarter 2022, MTS Cash generated EUR 16.9 million of revenues, and MTS Repo generated EUR 5.2 million in revenues. Repo trading saw a strong traction this quarter with term-adjusted ADV up 25% to EUR 347.9 billion.
MTS Cash maintained a robust performance in a market dominated by rising interest rates, with ADV volumes down only 1.6% versus the exceptional Q1 2021 to EUR 22.7 billion. Let's continue with trading on slide 12, and let's start with the FX business. The first quarter of 2022 was the second-best quarter ever for Euronext FX after the first quarter of 2020, both in terms of revenue and average daily volumes, thanks to the positive impact of volatility. Euronext reported average spot FX trading volumes of $24.5 billion in the first quarter of 2022, up 14.4% compared to the first quarter of 2021. Spot FX trading revenues increased 18% compared to the first quarter of 2021 at EUR 7.2 million.
Power trading reported EUR 9.1 million in revenue this quarter, a solid growth of 8.4% compared to the first quarter of 2021 as a result of a larger footprint in Central Europe and a solid performance in the U.K. and in the Nordics. In the first quarter of 2022, average daily day-ahead power traded was 3.13 terawatt-hours with a 6.3% increase compared to the same quarter last year, and average daily intra-day power traded was at 0.08 terawatt-hours, up 25.9% compared to the first quarter of 2021. Moving to slide 13. Revenue from our post-trade activity, including net treasury income, increased EUR 72.9 million to EUR 109.2 million.
Clearing revenue was up 87.2% and 11.2% on a pro forma basis to EUR 51.9 million as a result of higher clearing revenue both at Euronext Clearing and LCH SA, reflecting higher trading activity. On a like-for-like basis at current currencies, clearing revenue was up 14% compared to the first quarter of 2021. Net treasury income through CCP business of Euronext Clearing was EUR 13.4 million. Custody and settlement and post-trade revenue encompassing the activity of the four CSD we operate under the Euronext Securities brand was up 38.6% to EUR 63.9 million on a reported basis. The performance was organically driven by increased number of accounts in Euronext Securities, also in Euronext Securities Copenhagen. On a pro forma basis, revenue was stable year-on-year.
On a like for like basis and at current currencies, custody and settlement and other post-trade revenues slightly decreased 2.5% compared to the first quarter of 2021, mainly related to lower segment activity versus the first quarter of 2021. I'm now on slide 14. Advanced data services revenue was up 43.9% to EUR 52.6 million. This represent a 3.4% increase on a pro forma basis compared to the first quarter of 2021, driven by strong performance of our market data business, resulting from higher number of users and sustained growth of the data solution offering. Investor services revenue was at EUR 2.2 million this quarter, down on a pro forma basis, driven by a change in scope, up 7.4% on a like for like basis.
Lastly, technology solution revenue was up 94.5% compared to Q1 2021 to EUR 23.1 million as a result of the consolidation of Borsa Italiana Group technology business, including Gatelab and X2M. On a pro forma basis, technology solution revenue decreased slightly by 2.9%, mainly due to a seasonal decline in client activity. Moving to slide 16, for the financial highlights of the quarter, let's start with the EBITDA bridge. As announced with the last publication, from the first quarter of 2022, we do not have any more a separate line below EBITDA to capture exceptional items. From this quarter, all costs are included by nature in the different lines of our P&L. This means that our EBITDA includes exceptional costs as well.
However, we now publish an Adjusted EBITDA, which correspond to revenues minus non-underlying costs, underlying costs, excluding D&A, which highlights the underlying performance of Euronext. The definition of non-underlying items includes integration costs, double run of significant projects, operating exceptional items, amortization of intangible assets from acquisitions, non-operating exceptional items, and tax on the non-underlying items that I just described. Euronext Adjusted EBITDA for the quarter was up 66.8% to EUR 252.2 million. On a pro forma basis, Adjusted EBITDA grew 11.4%, demonstrating Euronext ability to capture value in a volatile environment and its trademark cost discipline. This result is also impacted by the release of approximately EUR 45 million of bonus accruals in the first quarter of 2022.
The Adjusted EBITDA margin increased to 63.7% this quarter from 60.7% in the first quarter of 2021. On a like for like basis, EBITDA margin was at 64% this quarter, up 2.9 points, and Adjusted EBITDA increased 12%. Non-underlying costs, excluding D&A, were EUR 5.5 million and were mostly related to the Borsa Italiana integration, bringing the EBITDA of the group to EUR 246.7 million. Moving to slide 9 for the bridge of net income. The net income increased this quarter 46.5% to EUR 143.8 million. On a pro forma basis, net income increased 10.9%, resulting from the following elements.
D&A slightly increased EUR 2.5 million, reflecting the impact of the new data center and higher tangible and intangible fixed asset D&A. The result from equity investment decreased EUR 8.6 million, as this year, this line only reflects the contribution of our 11% stake in LCH SA, whereas last year, Euronext received a one-off interim dividend from Euroclear. I would like to highlight that the EUR 20.6 million of non-underlying costs in the bridge are mainly represented by D&A, namely the PPA amortization of our acquisitions. Lastly, income tax for the first quarter of 2022 was EUR 52 million. This translates into an effective tax rate for the quarter of 26.1%. For 2022, we expect a stable tax rate at around 27%.
Adjusted for non-underlying costs, adjusted net income was EUR 164.4 million, translating into an adjusted EPS increase of 7.3% to 1.54 EUR per share this quarter. I'm now moving to slide 18 for the cash flow generation and leverage. Net operating cash flow amounted to EUR 368.6 million. Excluding the CCP activities impact of Nord Pool and Euronext Clearing on the change in working capital, 84% of our Adjusted EBITDA was converted into post-tax operating cash flow. Our strong cash flow generation capability enable us to significantly delever to 2.3 x net debt to EBITDA at the end of this quarter. This compares to 2.6 times at the end of the fourth quarter 2021 and 3.2 x following the closing of the Borsa Italiana acquisition.
This improved leverage provide us with additional strategic flexibility as recently recognized by S&P, which confirm our rating at BBB, but improved the outlook from stable to positive. Moving to slide 19 for the evolution of our liquidity position over the quarter. As illustrated, our liquidity position remains strong, above EUR 1.5 billion, including the undrawn RCF revolving credit facility of EUR 600 million, while excluding the cash currently in transit at Nord Pool. With this, I would like to give back the floor to Stéphane Boujnah.
Thank you, Giorgio, and happy to take your questions.
If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. The first question comes from the line of Mike Werner from UBS. Please go ahead.
Thank you very much. Thanks for the presentation. Two questions, please. First, on the EUR 4.5 million release of the bonus accrual in Q1, can you just provide a little bit of color as to what drove that? Also, whether that's something that is probably considered one-off and non-recurring. Then second, on the Technology Solutions business, you indicated kinda just lower client activity in Q1, but you know, the Q1 revenue run rate was about you know, 9% lower than the run rate that we saw in the second half of last year.
I was just wondering, you know, is this something that's maybe seasonal, one-off, you know, is kind of really client related and activity related, or is this kind of a you know a more appropriate run rate going forward given the change in the markets? Thank you.
Thank you very much for your question. Starting from the EUR 4.5 million. This is an adjustment that we had when we had to finalize the decision on variable payments. This can be considered in one sense one-off because clearly this is something that is going to happen only in the first quarter of 2022. However, embedded in the number, you see already a lower accrual that will last throughout 2022. There is a part which is recurring and a part which is one-off. The EUR 4.5 million specifically, this is the one-off component.
When it comes to the technology solution, a part of our activity is client-related, and what we have seen is a seasonal slowdown in the first quarter that we think is going to be recovered in the next quarter, Q2 2022.
Thank you.
Thank you.
Just a quick follow-up, please. In terms of the release on the bonus accrual, you know, the EUR 4.5 million, should we assume that, you know, it accounts for about half of the lower cost guidance, the EUR 10 million cut in costs, that you guide for 2022?
I mean, as the cost target is going to be benchmarked against the actual number for 2022, clearly any decrease in cost in the first quarter is included in that number.
Okay. Thank you very much.
The next question comes from the line of Bruce Hamilton from Morgan Stanley. Please go ahead.
Thanks. Good morning, and thank you for taking my questions. I've got three. Firstly, obviously, you've given us an update on the timeline for the initial return revenue synergies linked to the migration of the data center. Could you give us any color on sort of timeframe and potential quantum around the opportunity linked to internationalization of MTS? Is that just a sort of gradual process, or, you know, how should we sort of think about that? Secondly, in terms of the importance of retail activity, could you give any sense of how much of your cash trading relates to retail and where we are, you know, where that is versus history, just to give a sense of any sort of further risk of normalization, and similarly in the kind of post-trade business?
Finally, in terms of balance sheet flexibility, obviously, you know, great that your net debt EBITDA is coming down quite quickly. Can you remind us what sort of levels the, you know, the credit rating agencies are now comfortable with? I assume that may have gone up a little bit in terms of where you could sort of run without putting at risk your rating. Maybe just give us an update on that. Thank you.
I will take the question on the revenue synergies, and Giorgio will answer the questions on the retail activities and on the balance sheet in relation to the perception by rating agencies. Let's be clear. We had announced in November that, in relation to the acquisition of the Borsa Italiana, we would extract EUR 45 million of cost synergies, EUR 15 million of revenue synergies. We announced in February that, in addition to those EUR 60 million, we will get to EUR 100 million through EBITDA expansion with a mixture of cost synergies and revenue synergies in relation to various projects, one of them being the migration of the core data center.
As of today, we have extracted in relation to the acquisition across the Borsa Italiana Group in Italy, but across the Borsa Italiana Group, 15 million of run rate cost synergies. It's about one-third of the EUR 45 million cost synergies that we had announced or targeted for the end of 2024 in November 2021. Fifteen million, part of EUR 45 million all costs. For the first time, with the migration of the core data center to Bergamo, where we will start invoicing directly colocation services, we will start generating revenue synergies. Going forward, starting next quarter, we will have a contribution of revenue synergies to the mix of synergy extracted in relation to this, the acquisition of the Borsa Italiana Group.
As far as the MTS revenue synergies are concerned, they are part of the bigger bucket of revenue synergies, and they take longer than a few quarters to be extracted. We have various projects that are ongoing, but the internationals and MTS revenues are not going to materialize in a material, in a significant manner immediately. They are part of all the revenue synergies. Some of them are more or less one-off related, like milestone related, the development of the revenues to be extracted from the data center in Bergamo. You will see them in a recurrent manner after the implementation of the migration on the sixth of June.
Others are ramping up with the penetration of clients, with the International and the MTS business in the Euronext countries. That's more a project that will develop across 2023 and 2024. Giorgio?
Yeah, absolutely. When it comes to the retail activity, what we have seen is that the participation in this volatile environment is slightly different from what it was one year ago. We see less participation for this new crisis linked to the war in Ukraine with respect to what we have seen at the time of the pandemic. The retail participation remains mid-single digit. We're talking of 3%-4%, where it used to peak to 6%-7% at the peak of the pandemic. When it comes to your second question with respect to leverage and rating, in the note from S&P, S&P clearly highlights some targets for the end of 2023.
seems to hint that if we will go and if we remain in that trajectory, we might have a further improvement clearly before the end of 2023. The objective for the trajectory points at the FFO to net debt of 30%, and the net debt will be down 2.5 x. As long as we will remain in that trajectory, I believe without waiting the end of 2023, we might be open to good surprises.
On the lower side, however, I wanted to remind you in terms of flexibility, that the BBB rating band ranges between 4.5 and 3.5 x net debt to EBITDA in terms of leverage, and between 18% and 23% in terms of FFO to net debt.
Brilliant. Thank you.
The next question comes from the line of Haley Tam from Credit Suisse. Please go ahead.
Morning. Thank you very much for taking my questions. If I can have a few follow-ups please. Just with the data center migration, could you confirm that all your clients who currently co-locate with you in London are moving with you to the Ponte San Pietro data center? I apologize if I've missed it, but have you actually quantified how much of the additional EUR 40 million synergies will be coming from this move, versus perhaps Euronext Clearing in the longer term? If I can, I'd like to ask a question just about Euroclear, and the 9.8% ICE stake that is now being sold to the French and Belgian government investment firms, who are also reference shareholders of Euronext.
Could you give us any color on what this means, if anything, from a strategic perspective for you? Thank you.
Okay. On the core data center, you have questions on operations and a question on revenues. I can confirm that all our clients are ready or about to be ready, and there will be further testing and rehearsals between now and the 6th June with our clients. If we confirm today the timetable for the migration of the core data center, this is because, as seasoned operational professionals, we have reached a conclusion that, together with all clients, the teams in the Aruba facilities near Bergamo, across our various clients and within Euronext are ready for that migration.
We do not disclose the granular breakdown of EBITDA contributions to the additional revenues to be generated by this quarter. Next quarter, we will be in a position to be more specific, because by then, you will see the contribution to the run rate revenue synergies of the revenue generated by the colocation services charged directly through the core data center in Bergamo. On the Euroclear situation, we have noticed the fact that SFPI and Euroclear have acquired the stake that was sold by ICE. We are familiar with SFPI and with Caisse des Dépôts et Consignations, who are both reference shareholders of Euronext.
By the way, Euroclear is also a reference shareholder of Euronext, so we know each other extremely well. The fact that there is a common interest by SFPI and by Caisse des Dépôts et Consignations for both Euronext, which is the leading pan-European market infrastructure, in particular in terms of trading and post-trade. For Euroclear, which is the leading ICSD in Europe. It shows the consistency of the strategy of Caisse des Dépôts et Consignations and SFPI, but it doesn't mean anything else. That we have two strong shareholders of Euronext who have a strong interest for market infrastructures in Europe across the value chain.
Thank you.
The next question comes from the line of Philip Middleton from Bank of America. Please go ahead.
Yeah, good morning, and thanks for taking my questions. First, well, first of all, on costs, could you talk a little bit about what the revised guidance for this year potentially means for years further out? Are we looking at some of the cost savings which are one-off, so you don't read that through? Or do you feel that the lower level of bonuses is in some sense sustainable and that therefore the EUR 10 million may endure through further years? Secondly, I wonder if you could tell us a little bit more about the economics of the clearing and settlement business. How much of this, roughly, half the revenues come from asset-based revenues compared to the settlement revenues? Thank you.
Okay. Giorgio will answer your first questions on the inertia in the revised guidance. Anthony, who is the head of post-trade, will answer your questions on delivery models about the clearing business of Euronext Clearing, formerly known as CC&G. Over to you, Giorgio.
When it comes to cost, let's first focus ourselves on 2022. What is going to happen this year is the following. You should expect, in the next quarter, clearly, the one-off elements not to be there anymore. We will have, to a certain extent, the seasonal inflation coming from the increase of salary kicking in from the second quarter this year.
It's difficult for me to be more granular when it comes to the phasing of cost rather than reiterating that the new target is EUR 622 million, because we will have many projects completing and many projects starting, which gives to a certain extent a complex phasing of the cost throughout 2022. When we move to 2023, again it is very early, I believe, given the situation we're having at the moment, to anticipate what is going to be the target and revenues for next year. Clearly we are analyzing the situation with the objective of maximizing revenues and minimizing cost.
I appreciate this might seem high level, but this is exactly what we are trying to achieve. To make a long story short, 612 is what we see for 2022. You will see a slight increase in the second quarter coming from one-off element that are not going to be there anymore, plus some inflation on salary costs. Then we see a rather steady state for the remainder of the year.
Good morning. This is Anthony. Thank you for your question. Across our core CSD, the split of revenue is quite similar. We have roughly 50% linked to custody activity, and so exposed to the valuation of assets. The remaining 50% are linked to settlement and issuance businesses. What I wanna note is that we also are developing services on top of this of this type of revenue. It's a new business, and it's growing. I wanna take the example of tax reporting services in Norway or data services. This is the part of the CSD business that is new and growing.
Thank you.
Thank you. That's helpful.
The next question comes from the line of Kyle Voigt from KBW. Please go ahead.
Hi. Good morning. Thanks for taking my questions. Cboe has been rolling out its competing equity index derivatives products across Europe. I know it's very early days there, but are you seeing any evidence of end customer activity migrating away? Could you comment on whether you expect to make any potential changes to pricing there, or if you feel comfortable with the competitive positioning of those products? My second question is on the M&A environment. As you've stated previously, you've de-levered significantly at 2.3 x net leverage now. I guess given the volatility we're seeing, at least in public market valuations, and given the uncertain macro environment, can you just talk a bit about the M&A environment and whether you're still seeing potentially attractive opportunities in this type of environment?
I will answer the M&A question, and Giorgio will answer the question about the competitive environment, particularly in relation to Cboe initiatives. The way Euronext has approached or has been approaching M&A since the IPO is extremely consistent and disciplined. We do believe that external growth is a fundamental component of the growth ambitions of Euronext for two reasons, to expand our European footprint in situations or in infrastructures where there are fundamental compelling synergies to be extracted by the expansion of the single liquidity pool, single order book, single technology platform. To diversify the revenue streams of Euronext to be less dependent on volatility, in particular, in volatility related to equity markets.
In order to pursue those two objectives, in particular the ones of diversification, we have an investment committee of four members that meets every four weeks. No matter the level of leverage, no matter the stock price of Euronext, no matter the competitive environment, no matter whether LSE is trying to merge with Deutsche Börse or is not merging with LSE and whether SIX is buying BME or not, we have systematically a framework where we monitor opportunities. The other framework we have is that we are very disciplined in terms of a return on capital employed. We believe that our purpose is to extract synergy through consolidation of assets and therefore we don't overpay for assets.
That's why, for example, after very long debates, we decided not to bid for the acquisition of BME and to let SIX pay the price they have paid for that acquisition at that time, because we felt that we could not justify value creation for that particular asset. We are extremely disciplined in terms of how much we are willing to pay. Sometimes we take bold decisions like paying EUR 4.4 billion for the acquisition of Bolsas y Mercados because we feel, on the basis of our experience, that the business is going to perform better than the market felt, and that we could extract more synergies than the market belief. For the moment, that has proved to be the right call.
Going forward, one of the new development, exactly as you articulated it, is the fact that to a certain extent, valuation, in particular of technology-driven assets, SaaS assets, data assets are starting in certain subsegments of those two domains to go down or to cool down. Some private equity owners who are considering selling those assets are becoming more reasonable in their expectations. This is happening. Anyone who has done M&A in his life knows that this phase of cooling down of sellers' expectations can take a few months. It's just the beginning of the process.
In that environment, it's true that some assets that were not within our reach in terms of multiples, because we could not justify this type of value, the valuations of a few quarters ago, are slowly reaching a territory where we could justify those valuations. That's just one component of an overall environment. We are not going to buy things because they are cheap, just as we were not buying them because they were expensive. We'll buy them because we believe that they create synergies. We can extract value, and they make sense in terms of the strategic fit with the rest of the product portfolio.
Sorry for this long answer, but you gave me the opportunity to frame the overall approach of M&A and the way we will use the new balance sheet flexibility that we have regained by strong operating performance and strong cash flow generations. Over to you, Giorgio, on the Cboe initiatives.
Thank you very much, Stéphane. Clearly, Cboe is a very strong and reputable competitor, and we are looking carefully at their moves. However, at the moment, we are convinced that the quality of execution of our market does not justify any price decrease in order to compete on that market. Again, Euronext is about overall quality of trading, and we still are the venue that sets and define the best execution, and this is our competitive leverage against competition. This is the first point. The second point is about client traction.
Again, what Stéphane said on the data center is a i.e., that clients are with us and ready to migrate to the new data center the sixth of June, is a testament to the fact that what we are trying to achieve in Europe is fully supported. We are asking a lot from our clients because we want to give a lot to our clients, and the payoff is positive. Again, what we are seeing is a strong support from our client base in a moment of a high transformation. We believe that even before having delivered all the benefits that we're trying to achieve with this transformation, the quality of our execution is sufficient to maintain and strengthen our position as a leading venue in Europe.
I appreciate all the detail. Thank you very much.
The next question comes from the line of Arnaud Giblat from BNP Paribas. Please go ahead.
Yeah, good morning. I've got two questions left, please. Firstly, can I ask, with regards to the normalization of retail activity, you mentioned that on the trading side. I'm wondering on the settlements and custody side, how things are going. I mean, some of the retail brokers in the Nordics have reported a slowdown in activity. I think your revenues are more geared into number of accounts than more than anything else.
What's the outlook there? Should we expect a continuation of the strength we're seeing in the Nordics? Do you expect the accounts to remain open, or should we expect some degree of normalization with activity coming down? My second question is on annual fees and initial listings. That's up 13% quarter-on-quarter. Could you run maybe through some of the drivers behind that and whether or not it's sustainable? Thanks.
I'll let Anthony to answer your question as a head of primary markets and listing expert on listing fees and also on the nature of the development of our post trade business or CSD business in the Nordic.
Thank you, Stéphane. Concerning the retail activity on our CSD, it's about the, as Stéphane said, the Nordic activity, the CSD in Copenhagen and Oslo. What we have observed in the last quarter is normalization or stabilization of the number of retail accounts, which is still high from a historical perspective. Nevertheless, the number of settlement instruction has normalized and we observe a drop compared to the peak that we had last year. Concerning the annual fees on equity listings, we have different adjustments in front of inflation compared to our listing venues or countries.
We decided for this year to increase the yearly fees on our large-cap issuers, which is an increase that was long overdue. This is a one-off increase, but we are obviously monitoring the effects of inflation across the board on our different fees. Thank you.
Thanks.
The next question comes from the line of Martin Price from Jefferies. Please go ahead.
Good morning, and thanks for taking my question. Most of my questions have actually been asked, but maybe just on the revenue growth target of 3%-4% per annum through to 2024, which you detailed at the Capital Markets Day last year. Within this, I wonder if you could just provide an update on your assumptions around volume growth and revenue capture for the core cash trading business and whether market development since the Capital Markets Day may have prompted any form of reevaluation. Thank you.
Thank you very much for your question, which is a fairly legitimate one. Clearly we are assessing and reassessing the market environment on a daily basis. We feel that at the moment, the market environment is more volatile than what we had expected at the Investor Day. This might trigger at some point the decision, but we really feel it is too early, five, six months after the Investor Day to change the target for 2024. We're doing a step at a time, delivering the key milestone of the project. Clearly we will ask ourselves in the next quarter the question on whether it's appropriate and timely, a potential change of the target for 2024.
Again, to make a long story short, we don't feel it's appropriate moment to change the target for 2024. We are assessing the situation and, in this quarter, in the next quarter, we will clearly look at that.
Understood. That's very helpful. Thanks, Giorgio.
The next question comes from the line of Johannes Thormann from HSBC. Please go ahead.
Good morning, everybody. Johannes from HSBC. Three questions, please. First of all, you previously said, when the revenue per trade was at 50, but said this is not sustainable. Now we have 47. Is this more of a good run rate or, what's your view on that? Secondly, just on the Nordic CSD business, a follow-up question. Sorry if I miss it. The number of accounts, why does it increase if the retail and trading activity has normalized? What has been the driver for the increased number of accounts? Last but not least, on the Euroclear stake sale recently, you argue that you look for targets with strategic fit. You own a stake in Euroclear, and you have already leverage below the 2.5 level.
Why haven't you bought a stake yourself to position yourself at a better yeah moment? Thank you.
Thank you for your questions. I will answer the Euroclear question. Anthony will answer the question on the Nordic CSD's retail accounts, and Giorgio will answer your first question. On the Euroclear situation, it's very simple. When the process of the disposal of the ICE stake started before the summer, we were approached, and we looked at it very carefully. We decided not to deploy the capital of our shareholders in this transaction for two reasons. We believe that the best use of Euronext capital is to try whenever it's possible to control, to buy controlling stakes in order to extract synergies, because we are an industrial player and to consolidate assets.
We believe that we are not big enough to deploy several hundred millions just to deploy capital to a minority stake in a non-liquid company. As a principle, we are not huge enough to do multi-hundred-million stakes for minority stakes in a non-liquid company. The second reason, which is more important, is that we already have what we need to protect the optionality of being around a table if one day the situation around Euroclear is becoming actionable. We own directly and indirectly approximately 5% of the equity in Euroclear, and we are a board member of Euroclear. Increasing our stake in Euroclear would not have materially changed our position.
We would not have had a second board member, and we wouldn't and we would have just moved our stake from, let's say, 5% to close to 10%. For assuming that we would have bought 50% of the ICE stake. We believe that this type of progress in the optionality of one day doing something with Euroclear, if and when the Euroclear situation is actionable, was not justifying the deployment of, in this particular case, approximately, for the sake of the argument, of 5% or 4%, let's say EUR 250 million. We believe, in other words, that the capital of our shareholders is better deployed in due course to a situation where we can extract the synergies.
That was the rationale of not bidding for the stake, and that's an illustration of the sort of very strong M&A discipline that I described earlier on when in the previous question of one of your colleagues.
Perfect. Thank you.
Let me give the floor to Anthony for your questions on the CSD accounts.
Thank you, Stéphane. On our four CSDs, as you might know, we have two different account management models. One is the one in Italy and in Portugal, where we have omnibus accounts, and it's the custodians or our client who are managing the relationship with the retail. In Denmark and in Norway, the CSDs have the direct management of the retail accounts. That's a different revenue stream. Last year, we observed a significant return of the retail investors on the equity market, on the stock exchange, which had a consequence to increase the number of accounts opened in the CSD.
We had new accounts that have been opened. The increase of the settlement instruction process by the CSD as a consequence of the trading on exchange. In Q1 this year, as I said, we observed a stabilization of the number of accounts. Very few accounts were closed and we see a normalization of the number of accounts. As Giorgio explained, a drop in retail activity, which has the consequence to have a drop in settlement activities as well.
Or in other words, people kept their accounts and traded less. This is to a certain extent the number of accounts is a stock, and the settlement instruction is a flow that comes from that stock. Coming to your question about the revenue capture. The first element, and I believe that your question deserves a complete answer. The first element that I wanted to highlight is when two years ago we were highlighting that the 0.50 was a run rate, and we were anticipating a reduction of the revenue capture, that was not including Borsa Italiana.
Whereas the 0.47 does include Borsa Italiana, and when we take into consideration Euronext alone, we are still above the 0.50 that we got the market to be a sustainable long-term target. What is happening and why the average fee have trended down? There are a couple of key drivers. The first one is that the revenue capture of Borsa Italiana is more sensitive to the average size of trade, which means that it benefits from a lower average size and gets diluted when the average size increases. This is one of the reasons why you have seen the average revenue capture trending down. The second element is the behavior of our client within the order book.
Now, we have more and more liquidity providers which are able to comply with the highest standard in terms of execution, and therefore they are having access as they had in the past to fee segments which are lower than the average one. The combination of these two trends explain the 0.47%, which we believe is sustainable overall into the new market condition. Again, the 0.47% shall not be compared to the target we gave to the market of 0.50% because that one was excluding Borsa Italiana, which today on average has lower average fees with respect to the rest of the Euronext markets.
Perfect. Thank you.
The next question comes from the line of Reg Watson from ING. Please go ahead.
Morning, all. Apologies if this has already been asked and answered, but as well as improving your guidance for the underlying cost for this year, you also improved your guidance for the one-off costs out to 2024. Have you changed the EUR 50 million guidance for one-off costs for 2022? And if not, why not? Perhaps a little bit of color on the phasing there. Second question for Stéphane. The strategic flexibility that you mentioned, there are other bourses in Europe which are often acquiring or consolidating platform businesses. Do you find that attractive as a strategic option for Euronext as well? Thank you.
Okay. First of all, let me apologize because that will have to be the last set of questions because we have to run to the annual general meeting in a few minutes. Apologies for the ones who could not ask questions. On your strategy question, yes, there are still single country or several countries exchange or market infrastructures in Europe. As I said on many occasions, the Euronext federal model is an open model.
We are happy to welcome within our single liquidity pool, single order book, enabled by single technology platform, exchanges that want to address the issues of scalability, attractiveness of the local market, exchanges that want to combine the continuity of their relative autonomy and identity while being part of something that is scalable. We have from time to time dialogues with exchanges who need to decide what they want to do. In Europe, there are all sorts of situations. There are large market infrastructures that are very local in terms of culture and very diversified in where the exchange part has become a minimal part of their business.
You have other exchanges that are very focused on the historical core exchange business and want to remain independent because they don't mind the weaknesses or the drawbacks of being relatively small. There are others who are really thinking about consolidation. It's a game of consenting adults, and things happen when everyone is ready to accept or to find the mutual benefits and the compromise that go with mergers and with consolidation. We monitor very precisely in detail every situation in Europe, whether they are actionable or not, because this is our core mission to build the leading pan-European market infrastructure in Europe and to make sure that we build the backbone of the Capital Markets Union.
this is at the core of our attention. Giorgio, on the-
Yeah.
On the guidance.
The very fair question. The point is that we made a reassessment of the overall integration cost, as well taking into account that the big part to a certain extent is going to be delivered the sixth of June. We came up with the conclusion that under EUR 50 million is good enough for us to deliver. However, the reason why we didn't change the EUR 50 million is that we don't want to put ourselves in the position to miss a target potentially if we accelerate delivery. As you know, many times acceleration means acceleration of cost as well. When it comes to the phasing, we kept the previous phasing.
Not because we are shy, but because we know that sometimes acceleration and the strategic flexibility we need to capture the opportunity we will have in the next quarter might trigger anticipating some cost or moving costs from one quarter to the other. This is the reason why we decided to be less specific on non-underlying costs than we've been on underlying costs.
Okay. Thank you. That's very clear.
There are no further questions in the queue, so I will hand the call back to your host for some closing remarks.
Thank you very much. I wish you a very good day.
Thank you for joining today's call. You may now disconnect your lines.