Hello, and welcome to the Euronext Q3 2023 results. My name is Caroline, and I'll be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only mode. However, you'll have an opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand over the call to your host, Stéphane Boujnah, Euronext CEO and Chairman, Managing Board, Giorgio Modica, Euronext CFO, to begin today's conference. Thank you.
Good morning, everyone, and thank you for joining us this morning for the Euronext Q3 2023 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 the Q3 . Giorgio Modica, Euronext CFO, will then further develop the main business and financial highlights of the quarter. Starting with the slide number four. Euronext reported a strong quarter driven by organic growth in non-volume related businesses and continued cost discipline. Underlying revenue and income reached EUR 360.2 million, up +2.8% compared to Q3 2022, and up +4.1% at current currency rate.
On a reported basis, revenue was up +19.5%, reflecting the positive comparison base linked to the non-underlying loss reported in net treasury income last year in Q3. This, robust performance this quarter was notably enabled by continuing organic growth from all non-volume related businesses, and these non-volume related businesses represent now 60% of our total revenue. Obviously, the other contributor has been the double-digit growth in fixed income and in power trading. This more than offset the negative currency impacts from the depreciation of the Norwegian kroner against the euro, as well as lower equity and derivative-related activities. Our revenue was also negatively impacted by the recognition of a small credit note that was not predictable, and that explains most of the small delta with market expectations this quarter.
For underlying operating expenses, excluding D&A this quarter, were at EUR 146.5 million, down -2.6% compared to Q3 2022. This strong cost performance, despite inflation, results from continued cost discipline and positive foreign exchange rate impact. Considering the current foreign exchange rate of the Norwegian kroner, we expect a full-year positive impact in 2023 of NOK 12 billion from the Norwegian kroner depreciation on our cost base. We therefore expect underlying costs, excluding D&A for the full year, to be lower than the original guidance of EUR 630 million given in February 2023, should the Norwegian kroner remain depreciated compared to last year. In this context, Adjusted EBITDA in Q3 2023 reached EUR 213.7 million, up +6.9% compared to the Adjusted EBITDA of Q3 2022.
Our Adjusted EBITDA margin reached 59.3%, up +2.3 points compared to Q3 2022. I would like to highlight that the high interest rates environment enabled us, for the first time, to generate positive finance income, meaning we earn more from all cash deposits than we pay as interest for our debts. Reported net income was at EUR 166.5 million, more than doubling year-on-year. This achievement reflects our good operating performance, together with the EUR 41.6 million capital gain we received this quarter following the disposal of Euronext's 11.1% stake in LCH SA, as well as the positive comparison base linked to the one-off loss reported on the net treasury income last year in Q3.
Adjusted to these two one-off impacts, negative one last year, positive one this year, Euronext's profit grew by +13.2% to EUR 146.5 million. This translated into an adjusted earning per share at EUR 1.38, up +13.7%. On a reported basis, the EPS more than doubled year-on-year to EUR 1.57. Lastly, net debt to Adjusted EBITDA reached 2x at the end of Q3 2023, and our cash flow conversion reached 100.7%. As you can see, our financial health, our balance sheet position, our liquidity position, our cash generation is, are very good. From a business perspective, this quarter, we strengthened our position as the leading cash trading and listing venue in Europe.
Cash trading market share grew to 66.5% on average, and revenue capture reached 0.4 basis points, well above the two floors we committed to deliver at the beginning of the year on those two metrics. On the listing sites, we attracted on our market 72% of new European listings this quarter, with 23 new listings in Q3, bringing the total number of listings year to date to 51 listings, well ahead of our peers in Europe. Notably, the US beauty company, Gucci, dual listed on Euronext Paris to expand its exposure to European investors. On the ESG front, we also continue to innovate with the launch of My ESG Profile.
We are the first exchange that makes individual ESG data of our issuers available on our Euronext website in a standardized format, uniting more than 60,000 ESG data points from 1,900 listed companies. We also confirm our global leadership in bond listing and in ESG bond listings in Europe. Moving now to slide five. Over the past weeks, we successfully delivered several key milestones of our Growth for Impact 2024 strategic plan. We are now well on track to deliver at the end of 2023 our intermediate target of EUR 70 million of cumulative run rate synergies in relation to the acquisition of Borsa Italiana. This is already more than the initial targeted amount of EUR 60 million of synergies that we contemplated in April 2021 for the end of 2024.
We were initially contemplated EUR 60 million by the end of 2024, and we are going to deliver EUR 70 million by the end of 2023. At the end of Q3 2023, we have delivered EUR 47.6 million of cumulative run rate annual EBITDA synergies, and we have incurred EUR 95.1 million of cumulative implementation costs since the acquisition of the Borsa Italiana group, in line with our plan. Since September, all Euronext cash markets are operated on our single technology trading platform, Optiq. The completion of these migrations allowed for the decommissioning of the third-party provider that was supplying the technology for Borsa Italiana and will generate related cost synergies as from Q4 2023. The third and final phase of the trading platform migration is for derivative instruments and is planned for the Q1 of 2024.
We have also marked the first step in the expansion of Euronext Clearing to all Euronext markets. Since Monday, this week, Euronext Clearing is positioned as the default CCP for Euronext Brussels cash markets, and the other Euronext markets will follow later this month, as planned, delivering additional revenue synergies this year. We paved the way for the expansion of Euronext Clearing, for the clearing of derivatives on all Euronext markets, which will be completed in Q3 2024. And this migration will contribute meaningfully to the targeted EUR 115 million of cumulative run rate EBITDA synergies that we committed to deliver by the end of 2024. All in all, we are very well on track for the delivery of the EUR 115 million of cumulative run rate annual synergies by the end of 2024.
The large part of the remaining synergies will be delivered through the expansion of Euronext Clearing for derivative markets in Q3 2024. I'm glad to announce that the European Union has appointed MTS as a recognized interdealer platform for the implementation of electronic market making on EU-issued debt instruments. You may know that the European Union Next Gen program is issuing approximately EUR 750 billion of new sovereign debt instruments. So the fact that MTS is now a recognized interdealer platform for the implementation of electronic market making for these instruments is a successful result of our cross-selling efforts since the integration of MTS within Euronext two years ago. This is another very tangible evidence of the revenue generation created by the integration of MTS within the European project of Euronext.
Early November, we have launched very successfully this new market, where trading volumes and dealer participation have been very dynamic, and already these EU programs represent the third largest volumes on MTS after Italy and Spain. I now hand over to Giorgio Modica for the review of our Q3 2023 performance.
Thank you, Stéphane, and good morning, everyone. Let's now have a look at the performance of this Q3 of 2023. I'm now on slide seven. As already mentioned, total revenue this quarter reached EUR 360.2 million. This is up 19.5% compared to last year reported revenue, + 2.8% compared to last year underlying revenue, and + 4.1% like for like. 60% of our revenue is non-volume related, highlighting the success of our diversification strategy. Our diversified business model delivered a solid quarter, driven by organic growth in our non-volume related businesses, and by double digit trading revenue growth in fixed income and power trading. I will come back to that in a minute. In addition, transitional revenue was negatively impacted by a non-recurring credit note.
Moving to the next slide, slide eight. I will now start with the financial review of our non-volume related activities, which continued to drive growth also this quarter. Technology Solutions reported EUR 27.4 million of revenues, up 5.5%, thanks to the continued benefit from the internalization of our colocation services. Advanced Data Services reached EUR 55.5 million of revenue, up 4.7%, driven by the growth in our market data, as well as the continued strong performance of the data solution business. As a reminder, Q3 always sees a seasonal softer summer period for non-professional users. Investor Services reported EUR 3 million in revenue in the third quarter of 2023, representing a 20.4% increase compared to the same quarter last year.
This results from the continued commercial expansion of the franchise across the largest global investment manager. Slide nine: Listing revenue was 54.6 billion euros, up 3.4%, like for like, reflecting a resilient quarter for listing and follow-on activity, and the continued strong growth of our corporate service SaaS offering. Reported revenue was up 1.1%, reflecting the impact of the weak NOK in our Norwegian activities. Euronext demonstrated once again its leadership position in listing in Europe, recording 72% of the new European equity listing this quarter, with 23 listing in the Q3 , and this brings the total year-to-date listing at 54.
On the debt side, we reached for the first time over 54,000 bond listed on our market, while we also strengthen our leadership position in ESG bond listing, as well as our global position for that listing. Euronext Corporate Services continues to deliver a solid performance, with revenue growing to EUR 10.6 million this quarter, up 12.5% compared to the Q3 of 2022, resulting from a strong performance of the SaaS offering. Lastly, we continue to innovate with the launch of my ESG profile, as Stéphane highlighted earlier, and we are the first exchange to provide such data. Moving now to trading on slide 10. As I mentioned earlier, Euronext, the trading revenue was EUR 118.3 million, benefiting from Euronext diversified trading activity.
Cash trading revenue was EUR 64.4 million , down 4.4% year-on-year, reflecting a low volatility environment for equity trading. In this challenging environment, we confirm our strong value proposition and competitive position in cash trading. Cash revenue capture averaged 0.54 basis point, despite the average order size is still at a very high level. This is above the targeted floor of 0.52 basis points and demonstrates the benefits from the integration of Borsa Italiana cash equity markets to Optiq. Cash equity market share averaged 66.5% this quarter, yet again, above the floor of 63%.
Derivative trading revenue decreased 3.9% to EUR 13.4 million this quarter, due to lower financial derivatives volumes, with ADV down 2%, partially offset by the stronger performance of commodity derivatives, with volumes up 14.7% versus last year. Average revenue capture on derivative trading was EUR 0.34 per lot. Lastly, FX trading reported EUR 6.4 million of revenue this quarter, down 11.4%, despite higher traded volumes, and this is the result as well of the US depreciation and an unfavorable mix of volumes. Continuing with our trading activity on slide 11. Fixed income trading revenue grew 18.7% to EUR 25.4 million this quarter, reflecting the strong performance of MTS Cash, MTS Repo, and the increased traction of Euronext fixed income retail franchise.
Our fixed income franchise continued to be supported by the favorable interest rate environment and good market volatility. For the Q3 of 2023, MTS Cash recorded EUR 21.3 billion of average daily volume. This is +38.1%, and MTS Repo recorded EUR 410.2 billion euro over time-adjusted ADV. As Stéphane has highlighted, MTS has been nominated by the EU as a recognized interdealer platform for the implementation of electronic market making on EU-issued debt instruments, and we launched that market on the first of November this year. Our trading revenue through EUR 8.6 million -EUR 8.6 million this quarter.
This is up 10% compared to the same quarter last year, driven by the very strong intraday volumes and improved revenue capture, partially offset by lower day-ahead volumes, and also impacted by the NOK depreciation, as we discussed. I would like to conclude the business review on slide 12 with our post-trade activities. Clearing revenue was up 1.6% to EUR 29.5 million this quarter, benefiting from the stronger bond and commodity clearing activity, compensating the software, a softer equity clearing environment. Non-volume related clearing revenue accounted for EUR 8 million of the total clearing revenue this quarter. The net treasury income reached EUR 13.7 million this quarter, compared to a EUR -38.1 million last year.
I remind you that last year, in the third quarter of 2022, we proceeded with a partial disposal of Euronext Clearing investment portfolio, which led to a non-underlying loss of EUR 49 million recorded in NTI. As Stefan announced, at the end of October, Euronext Clearing was introduced the new VAR-based margin methodology for equity, ETF, and financial derivative markets, which create efficiency for our clearing members. This mechanically decreases the default fund contribution. Consequently, during the next three quarter, until the expansion of our CCP to Euronext listed derivative, we expect NTI to be, for a short period of time, slightly lower than the current level, at circa EUR 12 million per quarter, should the market condition remain the same.
For the completion of the existing expansion of Euronext Clearing in the Q3 of 2024 onwards, the NTI is expected to increase back again, thanks to the addition of the listed derivative flows. Just to be clear, we expect that in the fiscal year 2024, the NTI will be higher than the NTI in the fiscal year 2023, again, should everything remain the same. So the drop is expected to be temporary. Lastly, revenue from custody settlement and other posted activity was EUR 58.9 million. This is a 6.5% increase, like for like, reflecting the increased revenue capture new services and higher asset under custody, partially offset by slightly lower settlement activity.
As a reminder, Q3 is usually impacted by seasonality in a negative fashion. On a reported basis, revenue increased 3.1%, again, impacted by the NOK. Moving on, I'm now on slide 14 with the financial review for the quarter, starting with the EBITDA bridge. Euronext adjusted EBITDA for the quarter was up 6.9% to EUR 113.7 million, resulting from higher revenue in our non-volume related activities, combined with the continued cost discipline and the positive foreign exchange rate impact on expenses. This translated into an adjusted EBITDA margin of 59.3%. Considering the current foreign exchange rate of the NOK, we also expect a full-year positive impact of EUR 12 million on our cost base from the NOK depreciation.
Consequently, Euronext expects its underlying cost, excluding DNA, to be lower than its current 2023 cost guidance, at EUR 630 million. Non-underlying costs for the quarter were EUR 7.1 million, primarily in relation to the ongoing work related to the clearing expansion, the Optiq migration, and in general, the Borsa Italiana integration. Moving now to net income on slide 15. Adjusted net income this quarter is strongly up at EUR 146.5 million, resulting notably from the higher net financing income, resulting from the higher interest rate income from cash and cash equivalents. As Stéphane highlighted, this is the first time we are earning more from our cash deposits than we pay as interest for our debt.
Then we have a materially higher result from equity investment, and this reflects the EUR 41.6 million capital gain arising from the disposal of our stake in LCH SA and the dividend received from Euroclear. Lastly, income tax for the Q3 2023 was EUR 48.4 million. This translated into an effective tax rate of 22% for the quarter. As a result, reported net income more than doubled, as Stéphane again highlighted earlier, to EUR 166.5 million, and adjusted EPS basic was up 13.7% at EUR 1.38 per share. To conclude with cash flow generation and leverage, as you can see, our balance sheet position is very solid, as well as our cash flow generation.
In the Q3 this year, Euronext reported a net cash flow from operation activity of EUR 174.5 million, compared to EUR 318.1 million euros the same quarter last year, reflecting lower change in working capital. Excluding the impact on working capital from Euronext Clearing and Nord Pool CCP activities, net cash flow from operation accounted for 100.7% of EBITDA in the third quarter this year. Net debt to adjusted EBITDA was just at 2x at the end of the quarter, and 2.2x on reported EBITDA. With this, this concludes my presentation, and I would like to give back the floor to Stéphane.
Thank you, Giorgio. As you understand, overall, this quarter demonstrated the robustness of our diversified model, and we have strong confidence in our growth prospects and our capacity to control costs over the next months. Second, for 2023, costs are expected to be lower than our initial guidance, resulting from the positive impact of the Norwegian krone depreciation. And third, in the next quarters, we will deliver two major milestones of our growth for Impact 2024 project plan, which will contribute very significantly to the EUR 150 million synergies that we will achieve by the end of 2024. Euronext will have, by the end of 2024, meaningful presence on the entire capital market value chain, ideally positioned now to generate further organic growth throughout this integrated value chain. Thank you for your attention, and I'm happy, with Giorgio and two other colleagues, to take your questions now.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from line, Kyle Voigt from KBW. The line is open now. Please go ahead.
Hi, good morning. Maybe two questions for me. First, just in terms of the equities clearing rollout in the Q4 , should we think about run rate revenue from that being roughly equal to the delta between and promised run rate synergies by year-end, and the EUR 48 million already delivered? So roughly speaking, an implied kind of EUR 20 million-EUR 25 million of revenue, run rate revenues from equity clearing, and what factors could possibly drive upside to that figure? And then second question is on expenses.
Just if we annualize the first nine months of the year, we derive in something like just over EUR 600 million of expenses for the full year. I guess, is that the right way to think about full year expenses at this point, or will there be elevated expenses in Q4, specifically around the clearing migration or other investments? Thank you.
Giorgio is going to address the two questions, the first one on synergies and the second one on expenses.
Yeah. So, let me start with the first one on run rate synergies. One element, so just a reminder, out of the EUR 150 million, EUR 45 million of synergies are going to come from the migration of clearing. We did not provide a split. What I can confirm now is that most of the gap between the synergies reached so far, the EUR 48 million, and the EUR 70 million target by the end of the year, is going to be presented by the run rate synergies on the equity clearing.
But this is not going to be the only component, because we're expecting to keep reducing costs as a result of additional steps in the integration of Borsa Italiana. So short version of the answer is, the most part of the gap is going to be the run rate synergies on equity clearing, but not all of that. And in terms of potential upside, the potential upside to that is delivering more synergies, and we will try to do that as we do every quarter. When it comes to your second question, here, we wanted to highlight one very factual element, is that Euronext has around NOK 1 billion expenses in our PNL.
And this translates into we expect to translate into a saving related to currency of around EUR 12 million, which will mechanically reduce our expenses for the year, as we said. So we expect to have a reported cost for the end of the year lower than the EUR 630 million. So this is where we the guidance that we wish to share so far. Clearly, in the Q4 is going to be a project quarter, so not necessarily the expense are going to be in line with the previous quarter.
And I want to highlight as well that, you know, usually, and you can look at previous quarter, there is a seasonal component where the Q3 has lower costs. So on average, we have a Q4 cost above the level of the Q3 . So again, to sum it all up, this is the guidance we gave to the market. As always, we will try to be as efficient as possible on cost for the first, the Q4 as well, but again, it would not be correct to extrapolate from the previous three quarters, the exact cost for the Q4 .
Great. Thank you.
Thank you. We will take the next question from line, Hubert Lam from Bank of America. The line is open now, please go ahead.
Hi, good morning. Thank you for taking my questions. I've got two of them. Firstly, on the revenue capture, it went up to 0.54 basis points. Can you talk about the outlook for this going forward, and also the impact from the higher revenue yield on market share? It seems that both the yield and the share were higher. Secondly, if you can talk a bit more about the MTS for market making of EU debt instruments, which Stéphane mentioned. I know it's still early, but can you just talk about your outlook for growth on it, and also how you plan on capturing liquidity? Thank you.
So I'll take the question on MTS, and Giorgio will address your question on the market share and on liquidity trading and yield. MTS is an amazing platform for secondary trading of govies. It grew from a very strong and powerful solutions for Italian govies towards other OECD countries. It's very active on the Spanish market. And for months, we tried to explain to the European Commission the benefits of creating an electronic secondary trading platform, which all the benefits in terms of transparency. Initially, the commission wanted to use the sort of traditional primary dealer club system.
Over time, they realized that with the size of the issuance, with the necessity to be careful on spreads, that an MTS type of solution was the right solution for them. And they have decided to appoint MTS as the relevant electronic platform for that purpose. And that has started to operate only on November the 1st. I mean, it's a definitely a Q4 event, not a Q3 event, but we wanted to share that with you because what we are seeing for the past few days is a very, very rapid and dynamic development of operations of liquidity. What I said earlier in qualitative term is, I think, striking.
Today, the EU business, so the EU bonds trading on Euronext and on the electronic MTS platform is the third largest pool of assets after Italian debt and Spanish debt. So, we are very enthusiastic because it's a perfect fit for perfectly identified problem within the European Commission, and I think it's a very promising development. Giorgio, on revenue capture and-
Oh, absolutely. Absolutely. So, two elements in this respect, that there are many variables, as you now know, which impacted the revenue capture. And here, there are, to a certain extent, a number of offsetting items. So, just a few of them, the first element is that we want to highlight that the average size of order remains particularly elevated, although we have seen a slight decrease of average size of order. So in absolute term, this is a negative, but this negative impact is reduced slightly, I would say. And the other element that has always been positively geared with respect to the revenue capture is the volume.
Unfortunately, the volumes this quarter are low given the weaker market condition and the seasonal impact of the summer break. So, all in all, these two factors lead to the increase of the revenue capture to 0.54. So again, to summarize, we have slightly better average size, although they remain significantly higher than they were some years ago. This is on the negative side. On the positive side, what we have is the reduction of the volumes, which trigger an increase of the average revenue capture.
Thank you.
Thank you. We will take the next question from line. Bruce Hamilton from Morgan Stanley. The line is open now. Please go ahead.
Hi, morning, and thanks for taking my questions. Firstly, just on slide five, looking at the sort of EUR 45 million delta in synergies between 2024 and 2023, I assume the vast majority of that would relate to the derivatives clearing, and I could you help us think about how much of that is the kind of cost save versus revenues, or is it much more tilted to the latter? That would be helpful. Secondly, on the sort of MTS internationalization point, can you give us a sense of what the market share looks like at the moment on a sort of pan-European basis, and where you think that might go to, and where you see your sort of edge versus, let's say, key competitors?
And then final point on the encouraging sort of improvement in cash volumes and margins. I think there's a tendency when, you know, volume is seasonally soft, that a bit more volume moves to the primary exchange. So have you seen that sort of market share sustained through Q4, or has there been a bit of slippage? Thank you.
So on MTS, it's far too early to give you any credible number on market share, because we have started operating this market less than five working days ago. But what we can tell you in qualitative terms is that we have been positively surprised by the onboarding of clients and their volumes that are amazing. What is in market share requires a total understanding of what's going on in the market, so it's far too early to tell. I'll let Giorgio comment on the synergies. I think the point was covered in the previous question, but maybe it's an opportunity for Giorgio to elaborate and to answer your question on volumes.
Yeah. So, let me be clear. When it comes to the equity clearing migration, we are only talking about revenue synergies, because this is a line of business that we never consolidated in our PNL, that was in the PNL of our former provider, LCH SA. So that element is only a revenue synergies. Then, if your question is with respect to the delta between where we are now at synergy at 48 and 70, whether the bank is going to be increased revenues or reduced costs, the answer to that is the bulk is going to be increased revenues and not reduced costs.
No, sorry.
Uh.
The question was, no, the question was actually on the delta between the 2024 synergy run rate of 115 and the 2023 at EUR 70 million. That, I presume, is almost entirely driven by the derivatives clearing, and I was trying to understand how much of that would be sort of revenues and how much of that would be costs, if I've understood that that is the bulk of that EUR 45 million.
Yes. So in this respect, on a run rate basis, then we get into the next year. So the next year, what is going to happen, the most important element is going to be the derivative clearing migration. Now, conversely, to what I just said, we have already the clearing revenues of our derivative franchise within our PNL, but we have as well, as you see, a line which is the retrocession we give to LCH SA for the derivative clearing arrangement, which is worth around EUR 35 million per year.
Now, that part is going to disappear next year, and this is going to be partially offset by clearly the ramp up of activities that we would have to put in place to serve our client base. So in this for next year, not to be too precise, but I would say it's going to be either 50/50 or slightly more cost than revenues.
Great, thank you. And on the-
I think we would-
the market share, sorry, the market share and cash in-
Yeah, yeah, yeah.
Is that fair? Yeah.
Absolutely, yeah. So, when it comes to Q4, what we see is a volatility of market share with some reduction that it is not to be over-interpreted. This is the usual inter-quarter volatility. We're confident that we will be still able to deliver the objective that we set at the beginning of the year. So, we have seen a slight fluctuation. We are seeing now a recovery, but nothing that should be over-interpreted, and then that concerns us.
Got it. Thank you very much.
Thank you. We will take the next question from line, Greg Simpson from BNP Paribas. The line is open now, please go ahead.
Hi, good morning. Yeah, three questions from my side. First, on advanced data services, growth slowed a bit this quarter to 5%. I think you mentioned some factors like summer and some one-off. So should we be expecting that to reaccelerate in coming quarters, you know, back towards that 7%, 8%, 9% it was in Q1, Q2? That'll be the first question. Second one is on corporate services, growing double digits. Can you help kind of frame the runway for growth here? What proportion of your Euronext listed companies are kind of paying clients in this region?
And then thirdly, on finance income, if I compare the finance income and your kind of cost on your debt, it maybe implies like a 1 or 2, 2.5% interest rate on your average cash. Is that kind of about right? And is the kind of Q4, Q3 finance income a sustainable level? Thank you.
Giorgio will address your three questions on data services and corporate services and on the cost of debt.
So, with respect to your first question, a few things to highlight. So clearly, the non-professional users have slightly reduced during the summer break. We have seen after that a positive trend, but it's too early to conclude on the quarter. So I cannot give you a specific target for Q4. And the reason why I'm focusing on Q4 is that, as you know, we revise our pricing on market data on a yearly basis. So starting from the Q1 next year, we were going to have.
For next year, we will have a new pricing that will include an element of adjustment that will drive market data revenues up, regardless to a certain extent of the number of users. So, to summarize, next quarter, now the trend is positive, but it's too early to conclude on the quarter on the number of terminals. So, I cannot guide you further. For next year, you should take into consideration as well the yearly adjustment on pricing. When it comes to corporate services, this line of business has been growing double-digit for a very long time.
And our ambition is to have that growing further. And I don't know whether you have other question on that, but it's difficult for me to be more precise. What I can share with you is that the part of the business which is growing the most is the SaaS service business. And finally, when it come to the interest we earn on our cash, your 2.5% is not too off, but you should appreciate that this number in the past has progressively went up. Because we progressively adjust condition of our cash investment throughout the group, so we have seen a pickup. At the moment, 2.5% is, on average, about right.
Thank you.
Thank you. We will take the next question from line, Benjamin Goy from Deutsche Bank. The line is open now, please go ahead.
Hi, good morning. Two questions, please. The first on M&A, and the second on pricing. Your leverage continues to fall, so now at 2x, so you certainly have more firepower. Just interested, in your thoughts on the market, has actually the seller's expectation come down? And what are interesting areas for you, and whether any live discussions at the moment? And the second is, you already alluded to the pricing on the data services side. Was just wondering what the pricing outlook, or whether it could change, update your pricing outlook for the other non-volume related businesses, going into 2024. Thank you.
So I'll take the first question on M&A, and Giorgio will take the second one. Euronext continues to be a very strong free cash flow generator. This strong free cash flow generation is driven towards deleveraging the company. And as we have always done it, we monitor very closely whether or not we have opportunities to deploy capital to achieve two strategic objectives. One is to accelerate the top-line growth of the company. And clearly, the bigger we get, the more tangible the assets must be, because with the top line at group level of EUR 1.5 billion, relevant assets have to move the needle. So first strategic objective, accelerate the top line growth of the company.
Second strategic objective, diversify the revenue mix to be less dependent on market volatility. As I keep saying, our cash equity trading business represents 18% of the top line as a group, 18, and it represents 80% of the questions we get usually from analysts. So that's quite important for us to make sure that we have we continue to diversify our top line. And what you can see today with the quarter, where 60% of our revenues were non-volume related business, is that we have been able to offset the low volumes on equities and derivatives with the non-volume related businesses.
So we have those two objectives: accelerate the growth of the top line, diversify the revenues. To the extent we can find opportunities that are relevant to achieve those objectives, and that can meet something which is relatively specific to Euronext, and which probably sets us in a different world vis-a-vis some of our peers. And if, when we can get the confidence that we will generate a return on capital employed of such acquisitions above the WACC of the company after synergies in year, between year three and five, then we will try to analyze that further. So we do monitor opportunities. I agree with you that there is some form of adjustment of valuations, although one should not be overexcited. I mean, high-quality assets still go to the market with high valuations.
But so the impact on valuation is more on average assets than poor assets, but high-quality assets still go with the high valuation. So yes, we do that. It's not new. We do that with a stronger confidence because the company is more deleveraged than it has ever been since the acquisition of Borsa Italiana. Giorgio?
Yeah, on your question on price adjustment for non-volume related businesses, what I can say is that not necessarily the decisions next communication for next year have been all taken. The seasonality of price increases is not the same across all the businesses. What I can tell you is that on market data, this has been already defined, and we're positioning ourselves into a mid-single digit high single digit type of range for increase for 2024.
For the rest of the businesses, again, as we did last year, we might be more precise in February, but we have not concluded on all the businesses and communicated with all the clients. So I cannot be more precise than that.
Fair enough. Thank you much.
Thank you. We will take the next question from line, Enrico Bolzoni from JP Morgan. The line is open now. Please go ahead.
Hi. Good morning. Thanks for taking my question. So one on technology. Actually, some of your competitors are investing a lot in cloud technology. They're mentioning AI quite a bit. I just wanted to hear your thoughts in terms of what kind of opportunities you see there. Clearly, you're taking a slightly different path with the build of your data center, but I'd be curious to know if there are opportunities in that space, also maybe in the context of M&A. And then, just a clarification again on the cost for the Q4 .
If I had to kind of back solve for what sort of cost level I should see in Q4 now to eat the, say, the new guidance, which is gonna be, if I understand correctly, a bit below EUR 620 million. Still, I will need to see quite a bit of an uptick, which is maybe slightly higher than what has been seen historically in Q4 versus Q3. Just wanted to understand whether there is scope to do slightly better there. And then a final one on, in terms of the new products you plan to launch.
Last time when you gave an update, you said that you were thinking about what sort of derivative products you are considering launching next year once you have the clearing of derivatives as well in-house. Is there any update, and have you defined a sort of addressable market in terms of revenue opportunity there? Thank you.
Let me take the question on technology and the questions on the new products launch, and Giorgio will take your question on cost. On technology, you mentioned two concepts that are very different in terms of nature, scope, and impact on business. You mentioned artificial intelligence, you mentioned cloud. So, on artificial intelligence, we are deploying a lot of energy, a lot of resources to analyze very, very carefully what can be the impact of the various artificial intelligence AIs, sometimes solutions, on our cost base and on our revenue generation. It's work in progress. There are a few very basic operational issues that we have already taken. We have a few promising AIs. Again, it's development.
It's an area where the only way to be efficient is to try a lot and to promise a little. So, it's too early to commit to anything, but that's an area where definitely we don't want to waste time because we believe that being wrong is less of a risk than being late. When it comes to what you call cloud, which is basically outsourcing data and applications on data centers of large U.S. based players, we have a sort of different approach from some of our competitors for two reasons. Number one, somehow manage cloud services with our colocation services.
We have our own operations within our data center, and we believe that having critical applications, like our matching engine, hosted in operations that we run, is very important considering what we do. And managing colocation services in a data center that is a cutting-edge data center located in Europe, is also important both for operational, industrial, and business profile reasons.
We do use, for certain operations that we consider as not critical, some providers that are providing outsourced data centers as long as their facilities are located within the European Union, because we don't want to take any risk on data regulation or CLOUD Act or these sort of things, and provided that non-critical applications are hosted in those outsourced data centers. So it's a very different approach from the ones. It's closer to the approach of ICE than to the approach of some other players in the U.S. On the new product, what I said last quarter was very specific.
It's clear that the creation of an integrated value chain is going to be a game changer for Euronext, because having under the same roof our derivatives products and our clearing operations is going to create a new area of opportunities. We are not building Euronext Clearing just for the sake of migrating the cash clearing business that used to be operated by LCH SA and to migrate the derivatives clearing business that used to be cleared operated by LCH SA. This is not a switch of business from one location to the other, from one provider to an internalized provider. This is an initiative, the purpose of which is to build a new integrated derivatives and clearinghouse in Europe.
We are in the process of developing products across new asset classes, across OTC, across all the repos, any area where this integrated value chain can be relevant. But we are at the business development phase. What we commit to deliver are the numbers for 2024 that were announced in our guidance for the beginning of 2023, when we upgraded our targets for synergies in relation to both Italian acquisitions from EUR 100 million - EUR 150 million. So these are the guidance and the expectations we want to create. But what I'm telling you is that we are not going to start working on the growth of the business in 2025, 2026 and 2027, in January 1, 2025.
What we are doing for a few months already, and that which is going to be the most intense efforts in the course of 2024, is to transform various IDs plans into projects so that they can be up and running at the latest in 2025, and for few of them, as soon as H2 2024. Sorry for this long answer, but I wanted to provide you a background to bridge the gap between the reality of what we do within the company on the one hand, and the fact that you need to plug a number in your model on the other hand.
Yeah. So, I mean, I understand very well your question, and I guess that your colleague in the call have the same question. So it's simplify what are going to be the costs in Q4. Before I trying to answer that question, I want to add one element. You should appreciate that our cost base is not fixed, and there are some elements which are outside. So, just to name a few, we have, you know, clearing expenses that are related to the level of activity. There is the evolution of the exchange rate.
And there is, just to mention one, even the share price of Euronext that has an impact on a part of our cost. So, having said that, what we have shared with you is the fact that you should shave off EUR 12 million from the EUR 630 million, and this is not only. Then what we have shared with you is that usually, and as you know, as you can check, the Q4 expenses are usually higher in the range of 6%-7% with respect to the previous quarter. So this gives you, I would say, a fairly narrow range which is 610-618, roughly speaking.
Within that range, you would need to make your assumption. It's difficult for me to be more precise than that, and I hope you appreciate that. Thank you.
Thanks, take care.
Thank you. We will take the next question from line, Ian White from Autonomous Research. The line is open now, please go ahead.
Hi, thanks for doing the presentation. Just two short follow-ups from me, please. First up, just on the dark pool, just wondered if you could provide us with an update on that, and any prospect therefore, when we might start to see that have an impact on trading volumes? And just secondly, I think it was around this time last year, you started to talk about the prospect of inflation-linked price increases related to the developments we'd seen in 2022. Obviously, that feeds into pricing for 2024. But I guess, you know, 2023 has been another year where we've had above normal inflation.
Should we be thinking about further price increases that might be above usual in 2025, given what we've seen so far this year? If you could help me with that, please, that would be great. Thank you.
Okay. On the dark initiatives, it's technically live, and it will be live to markets and up and running in the course of Q1 next year. The support for clients is very strong, but we don't want to create any expectations on at this stage on our news before the project is really up and running in the course of Q1 2024.
I mean, I hope I got your question right. So, your question is, what about price increases for 2025?
Yes.
If that is your question, the only way... it's really too early. What I can highlight to you is that there are certain parts of the business where we have a usually seasonal review of prices, and this includes market data and other areas of our activity, such as from time to time listing and post trade, but it's really, really too early. I mean, we have not finalized and we cannot share with you the number for next year. We will do that later on in February. But as far as 2025 is concerned, the only way I can answer is that usually one of the business line we review systematically around mid-year is market data.
Got it. Thank you.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the next question from line, Mike Werner from UBS. The line is open now. Please go ahead.
Thank you very much. Just two follow-ups for me, please. First, when you talked about M&A and, you know, the requirements for the ROIC to beat your WACC in years three to five, just wanted to know what your current WACC that you're using internally is. And then second, you indicated that, you know, the bridge between the EUR 48 million of synergies, EBITDA synergy run rate at the end of Q3 and the EUR 70 million at the end of Q4, more than, you know, half of that, I think, or at least most of that gap is coming from cash clearing. Can you tell me what the other portions are?
My understanding is that you get to switch off some technology services that were provided to Borsa Italiana, now that you know all of the products have been moved onto Optiq. I was just wondering if that's the case, when that switch was you know enacted, or if it hasn't been yet, when it might be? Just trying to figure out the cadence of expenses in Q4. Thanks.
So Giorgio will answer your two questions on the, on the financial criteria for, the return on capital employed for capital deployment. And the second questions on the, on the synergies, level, in Q4. Giorgio?
Yeah. So, let me start with that. So when it comes to the, WACC we are using is a, is a high single digit, number. This is something that we, we never show for one simple reason, is that it changes from target to target. It depends what the target is and what the activity is. So what I would say is a, is a, is a high, single digit, type of, percentage. When it comes to, to your, second question, and, and maybe let me clarify for everyone, because there were a, a, a few questions. The first part is, the bridge between the 48 and the 70. Now, in that bridge, there are two elements.
One element, which is the main one, so is going to be more than 50%, significantly more than 50%, and this is related to the equity cash equity clearing migration, and this is going to be revenue synergies. The remainder, which is your second part of the question, is going to be mainly the beginning of the reduction of the setup we did put in place to deliver the projects. So we will have a ramp down of the setup we did put in place to deliver the major project. Because, as you now very well understand, the integration of Borsa Italiana is coming to an end.
So this is going to be the cost component for next quarter. Then clearly, as you correctly pointed out, there are certain contracts that are going to be reduced, et cetera, but this will represent the reduction, is more the ramp down of the project setup. Let me put it this way. Then, for next year, we still have to deliver the migration of derivative clearing. And here, I would like to clarify that the further gap between the 70 and 115, this is going to be a combination of revenues and cost savings.
And when it comes to the mix, what I said is that, for next year, we should expect, broadly speaking, and maybe we'll be more precise in February, the bulk of these 45, around 50% or slightly more to come from cost savings, mainly related to the termination of the derivatives clearing contract with the LCH SA.
Thank you for the very detailed answer. Appreciate that. Cheers.
We will take the next question from line, Oliver Carruthers from Goldman Sachs. The line is open now, please go ahead.
Hi, good morning. It's Oliver Carruthers from Goldman Sachs. Thank you very much for the presentation. So we had another confirmation from a large cap issuer this morning, that they will be delisting their shares at a European venue and migrating to the US. You know, I appreciate this is, you know, actually, listing and cash trading is a relatively small part of your business model now, but as the largest European listing venue, Stéphane, can you share some thoughts as, and some perspective here as to, you know, what you think is driving this trend, if you can call it a trend, and really, where do we go from here? Thank you very much.
Okay. I'm going to try to be here. 2023 has been a dry year in listing by any standards. We have two trends. One trend and a few visible events. The few visible events are the one you mentioned, the fact that a few companies, mid-size or large companies, from Ireland, in particular, have decided to relocate their listings in the U.S. That's in each case driven by fundamental dynamics of their business and the fact that in all those cases, the priority for those companies is to be more visible in the U.S. and to be more inc-- and to be included in the relevant U.S. indices.
We see that in situations where the business of those relevant companies is moving or the buyer center is moving to this. These things happen. These events are unfortunate. They are not great news. They are not, in particular, great news for the Irish market, but they have their own logics, and we have to respect and to understand that this is a normal part of business. There is another trend, which is that many companies are ready in Europe to go public and have tried to go public, but are a bit nervous, in particular, since the recent geopolitical developments, which has created uncertainty about what would the after market would look like after IPO.
So that's why, the interesting thing is that we had several large transactions that have been postponed or canceled for the moment, and that's bad news for 2023. But the flip side is that we have an impressive pipeline for the beginning of 2024, which consists of all these deals that have been postponed. The reality is that, whatever the overall market is, one of the most fascinating developments of the past months is that Euronext is now by far the largest listing venue in Europe. We had 72% in Q3 of the European listings took place on Euronext. We had also U.S. companies seeking a dual listing in Europe, like Protein, which is a $10 billion+ type of market cap, deciding to have a dual listing in Paris.
We had non-Euronext countries, companies listing on Euronext, like Ferrovial in Spain, which is a larger Spanish company deciding to list on Euronext in Amsterdam. So we see a momentum both ways. Yes, we are concerned about the sort of dry market we had in 2023. Yes, I feel that 2024 could be better because the depth of the current pipeline.
And yes, probably the form of prospect of stabilization of the interest rates rise, which seems to be perceived as getting to some form of plateau, is going to recreate attractiveness of equity market for companies that, in any event, need to raise equity or for companies where, in any event, investors want to have a proper liquidity event. So, I'm reasonably confident.
Thank you.
Thank you. There's no further question at this time. I'll hand it back over to the host for closing remarks.
Well, thank you very much for your time. All the investor relations teams is available to provide you with more granular analysis and details if you want to reach out to Aurélie, Clement, and Judith, and I wish you a very good day.
Joining today's call, you may now disconnect.