Welcome, ladies and gentlemen, and thank you for joining us today for our Investor Day in 2023. It is great to see you all here in the room, and of course, we would also like to welcome the participants that are joining today via the webcast. We have a full agenda today. The presentations will take around two hours, and afterwards, there is sufficient time for your questions. At around 2:30 P.M., we are planning a short break. With this, let me now directly introduce our first speaker, Theodor Weimer, Chief Executive Officer of Deutsche Börse, who will present our strategy, Horizon 2026. Theodor, the floor is yours.
Thank you, Jan. Welcome, ladies and gentlemen, and thank you for joining our Investor Day here in Eschborn, either in person or virtual. Today, we are presenting our new strategy, Horizon 2026. Before I go into details, let me give you a few introductory remarks. Horizon 2026 is the natural evolution of the previous strategies, Roadmap 2020 and Compass 2023, what we have implemented since 2018. Like every strategy before, we developed Horizon 2026 jointly with Executive Board members and with our dear business leaders. All numbers presented here today are fully aligned with our business leaders. They're all present here, willing to take your questions later on. We also intensively discussed our new strategy with the Supervisory Board in several rounds and received its full approval.
Let me take the opportunity here to thank all of you for the many great and intensive discussions, but always constructive discussions we had in developing our new strategy. My special thanks goes to Gregor, who caught the flu, but is nevertheless attending today. He's a fighter, as you all know. Even if he can only be via video today, but he will be here with us later on for his part. What's special about our new strategy is that we have already taken a big step forward with the implementation, even before the official announcement today. We have closed the acquisition of SimCorp, and we are now 100% shareholder of SimCorp, following the successful squeeze-out, what we have done last week. We started to work on the combination of SimCorp and Axioma already.
The plan is to finalize this in the first quarter of the next year, and we are already—we have already closed the merger of ISS , and STOXX. Slide 4 summarizes upfront three strategic imperatives for the Horizon 2026 cycle. First, the foundation of our strategy continues to be strong organic growth. Organic growth is, as you all know, our proven strength. Second, we need to make our new Investment Management Solutions segment a success. We consider this a true must-do for the new strategy cycle, and we are confident that we will succeed. To do that, we need to ensure that we are growing strongly. B, we need to realize synergies fast. And C, we need to expand the IMS margins as planned. Third, we need to take a leading role in setting up new digital asset ecosystems.
We will build platforms to serve these new digital asset classes that are truly emerging. They will ultimately come through, but the exact timing remains unclear. This will ensure that we are laying the foundation for growth beyond our Horizon 2026 strategy cycle. Two messages are key for me: One, our strategic path is very, very clear. Now it is all about execution. Two, and on execution side, we have, in my humble view, already delivered quite well over the last and past years, and trust me, we will do so again. This management team here in the first couple of rows is extremely strong, and it stands for strong and reliable execution. Over the past two strategy cycles, ladies and gentlemen, we sustainably over-delivered on our objectives, as you can see on slide 5.
Since 2018, both net revenue and EBITDA on average grew by the famous 13% per annum. As promised, we have delivered 5% secular growth. This growth stems from our own efforts. It has become a consistent and a reliable driver of our success. Another 4% of our growth came from acquisitions, and yes, we had an, on average, a 4% cyclical tailwind over the last 6 years. This was mainly driven by the normalization of the interest rate environment. But even without these 4%, we would have achieved a revenue growth CAGR of 9% over the last years. It is noteworthy to mention that we have kept our high EBITDA margin over the last 6 years, even despite the fact that a slight margin dilution from acquisition came along with these acquisitions.
But this acquisition improved, A, our business mix, and B, our structural long-term growth prospects. Let me reiterate that we will continue to focus on operating leveraging. We know how important it is to prove that we are running scalable platforms, and we are good in doing so. Since 2017, we evolved our business model significantly into areas of higher growth and recurring revenues. On the right-hand side of slide 6, you can see that Investment Management Solutionss segment is expected to contribute by the year 2026, 25% of our overall net revenues. In 2017, it has been only 5%, primarily stemming from our index business. This means we have significantly reduced our dependency from transaction-related businesses that are usually, as you know, much more volatile. Slide 7 gives you an overview of the point of departure of Horizon 2026.
Let me clearly state upfront, strategically, we start from a position of true strength. Financially, we start our Horizon 2026 cycle with a record year of 2022. That makes it naturally, financially more challenging. Let me summarize our key beliefs. A, all major secular trends are fully intact, and they are playing, they are playing in our favor. B, the normalized interest rate environment since 2022 has sustainable positive implications for many of our businesses. In addition, we expect that the ongoing geopolitical uncertainty will drive further volatility, at least from time to time. C, we have a strong, diversified, and very resilient portfolio and business model. This makes us very well hedged against different macro scenarios. Contrary to the last two strategy cycles, we have now, with the acquisition of SimCorp, already locked in our M&A growth upfront.
In other words, all we need to deliver, guys, is strong execution, and this has been the strength in the past of our organization. Last but not least, we need to continue our strong track record for execution excellence. Let me elaborate a bit more on the three first trends. On slide 8, we state the obvious. With our business model, we are very well positioned to capture the most important industry trends. The increasing importance of the buy side and its needs to increase efficiency. The trend to OTC to on exchange world with central clearing, electronification, futurization, digitization, and increasing automation in our industry is clearly a trend what we can observe, and the strong growing demand for high-quality Data and Analytics to support well-informed decision making. Let me emphasize the increasing importance on the buy side on slide 9.
This is one of the cornerstones of our strategy. Why is this the case? The growth of the buy side is significantly stronger than the growth on the sell side. We all know that. In fact, three times as high. We, as Deutsche Börse, are structurally attractive for the buy side. Why? Because we are a neutral operator, and we are a trusted partner. We are a partner with a long-term investment perspective. We are good operators of technologies and well experienced to run scalable, scalable platforms. We have a long-standing track record to run our platforms with the highest reliability, and it's a fact, we are one of the truly credible and highly profitable platform players in Europe. Everybody's talking about platforms, but we are truly, and a great player of platforms in Europe.
We are focused a lot on expanding our buy-side exposure, and we are proud to share with you that we have now access to more than 3,000 asset managers. Three thousand asset managers and owners globally, at ISS, at Axioma, at SimCorp, of course, but also at Eurex. Our joint assessment as management team is, we have by far not yet tapped into the full potential from this client base, which underpins the growth opportunities ahead of us. Slide 10 is very important for us and probably also for you. We believe that the normalization of the net interest rate environment will remain beneficial. Even with the presumably peaking net interest income this year, we predict Clearstream to still contribute EUR 500 million-euro net revenue by 2026. As that, assuming an expected, more modest interest rate environment in front of us.
You are aware that our net interest income from Clearstream has basically two drivers. On the one hand side, the development of the net interest, of the interest rate, namely the Fed funds rate and the ECB deposit rate. By the way, the latter is significantly less important for us. For both rates, we simply used the more recent forward rates and modeled the impact until 2026. On the other hand, the development of volumes. We assume that the level of cash balances will continue to grow in line with the settlement activities over time and amount to roughly EUR 16 billion in 2026. What are the key takeaways? First, don't forget, between 2008 and 2021, we operated at an abnormally low net interest rate environment.
A positive interest rate environment is the normal one, and it is by far and, by the way, the much more sustainable one. Second, despite the recent observed declines of the inflation in Europe and elsewhere, we should not fool ourselves. Higher interest rates will be there for longer, for longer, most probably. Third, even if, even if interest rates were to decline stronger or faster than expected, let me remind all of you that this would then likely fuel volatility, triggering hedging needs, and our trading volumes would certainly increase. Another proof, my dear friends, we are well-hedged for different macro scenarios. As mentioned before, we are operating a diversified, robust, resilient, and very strong overall business portfolio, as you can see on slide 11. Quite frankly, I have seen only very few companies with such a strong portfolio during my whole career.
The facts speak for themselves. We operate a very attractive EBITDA margin in every segment. The segments are expected to grow at CAGRs between mid-single digit or low-double digit until 2026. We are operating in many markets that are structurally growing TAMs, total addressable markets, with a high share of recurring revenues. That means we don't even need to increase market shares to grow, but would of course, expect to naturally improve our relative position in many areas. We can rely on, last but not least, on very established and strong brand names. This brings me to the overview of our strategy on slide 12. The good news up front, we continue to target a CAGR of 10% revenue growth despite, despite starting from our record year 2022, and the composition, the composition of the growth has fundamentally improved.
First, we expect to deliver strong organic growth of 7% on average per year. Second, with the acquisition of SimCorp, we will grow by an additional 3% annually, and this growth is already locked in. Third, our digital efforts give us long-term optionality. On top of that, the base investments are already included in the plan. Four, we have refined our capital allocation priorities to reflect the progress we've made on our strategy and reflecting the positive outlook. Let me lead you through those four points in more detail. We see continued strong organic revenue ahead of us, as you can see on Investment Management Solutionss is expected to grow at 9% on an organic basis.
Stephan Leithner, Christian Kromann, the CEO of SimCorp, who is here with us today and who deserves a special welcome from my side, and Gary Retelny, the CEO of our joint ISS STOXX operations, will share with you the building blocks for growth for the coming years. Trading and Clearing is expected to grow at 6% CAGR. Contrary to the misperception of this being very and exclusively volatile dependent, we have several strong secular growth cases that Thomas Book will present later. Fund Services is expected to grow at a rate of around 11%, and our assumptions have not changed since our last investor day. Securities Services is expected to grow at 9%, and both segments will be presented by Stephan Leithner in more detail later on.
Let me briefly touch the topic of cyclicality and its impact from 2022 to 2026. There are two elements here. NII, net interest income, will result in an increase of net revenue of around EUR 240 million over the plan from 2022 to 2026. Volatility, on the other side, will result in a decrease of net revenues over the plan from 2022 to 2026. As last year, we had very high volatility levels. Net-net... We believe those two elements together will result in cyclicality, having a modest, positive impact on net revenues over the full cycle till the end of 2026. All in all, and as said, we expected and expect, on a blended basis, organic net revenue growth of 7% on average per annum.
Slide 14 provides an overview of how we are evolving the scope of our business in a very natural way, and how all the pieces of the puzzle are fitting increasingly together. We started with an index business, added analytics in 2019 with the acquisition of Axioma. In 2021, we added ESG solutions with the acquisition of ISS. Now, in 2023, we entered the software and the SaaS business field with the acquisition of SimCorp. With these elements together, we now have all necessary ingredients to offer a leading end-to-end, buy-side-orientated proposition. This results in additional growth opportunities, which will make our business more resilient because of a structurally growing TAM and a higher share of recurring, of recurring revenues. Until 2026, we expect the share of recurring revenues to increase to a level of 65%-70% across DBG Group.
Let me share with you our high-level strategic thinking on the Investment Management Solutions segment on slide 15. IMS consists of, as you know, two highly attractive businesses with strong growth potential. Why is IMS so important for us? With the closing of SimCorp and the successful squeeze-out, we can now, even quicker than originally anticipated, combine Axioma and SimCorp. We can offer a true... We call it a true European Aladdin alternative. We offer end-to-end technology solutions to the buy side, covering front office portfolio management and risk management solutions. Strongly relying on the superior investment book of record, accounting book of record, and reporting solutions, which was at the heart of SimCorp for many, many years. With a combination of ISS and STOXX, we have created a more credible, we call it, MSCI challenger.
It is a best-of-breed data offering, targeting the investment process again, with supporting ESG data, research, rating, indices, indexing, and Market Intelligence. The TAM, the total addressable market for those businesses, is expected to grow strongly from EUR 15 billion in 2022 to EUR 21 billion in 2026. This means the overall TAM is big, and it's growing fast. It's an increase of 40%. In addition, we can rely on very high client retention rates, and I'm not getting tired to mention it over and over again, on a very high share of recurring revenues. Last but not least, we can generate significant synergies from a combination with IMS and the rest of the group. We are working hard to further improve our digital leadership in our industry.
As shown on slide 16, we are already a lighthouse player and, quite frankly, a protagonist with regards to cloud adoption. We apply a hybrid and a multi-cloud strategy, and we have set new standards within the financial service industry. We have already 40%, 40, 40% of our IT estate in the cloud, and by 2026, we will be around 70% with Google Cloud as a preferred partner. We benefit from Google Cloud's skills and their superior knowledge in the industry. Areas where we can expect tangible results from our Google Cloud partnerships are: faster time to market, increasing efficiency, superior cybersecurity, not to forget super cybersecurity, building out an acceleration of new and existing digital infrastructure and platforms, and also state-of-the-art applications on the AI side.
With our efforts in setting up platforms for new digital asset classes and the deployment of a data mesh in partnership with Google Cloud, we are laying, we are laying the foundation for further and future success. It is important to mention that we have all included all necessary base investments in our Horizon 2026 plan, which I have covered, which we will be covering over the course of this afternoon. Why is this important? We do believe these efforts, these digital leadership efforts, are important for our future. We cannot risk not investing, not investing here. We firmly believe there will be a tokenization of new digital asset classes at scale, and we, as platform providers, want to be prepared. We strongly believe there is a Tesla moment on the horizon....
But given the uncertainty of the timing of market adoption at scale, we wanted to be conservative on the revenue side, and therefore, we did not reflect the long-term revenue optionality in Horizon 2026. And quite frankly, we can afford in doing so. You can therefore think of digital assets and our efforts there as a free, as a free call option on the revenue side. In the context of the progress, we have made in implementing our strategy and a positive outlook, we have refined our capital allocation priorities, as you can see on slide 17. First, top priority remains, is, and remains organic growth. We are supporting this with modestly growing operating cost and capital expenditures of around EUR 350 million-EUR 400 million per year. Second, on the M&A side, we reflect the current situation in our capital allocation.
Key focus for the next 12 to 18 months will be to realize synergies and to deleverage our company towards our target AA- credit rating. Gregor will show you later how quickly we reduce our leverage. So, M&A will not be in focus until end of 2024, mid-2025. Generally, generally, and for the full cycle, we confirm to do M&A, of course, is strategically and financially attractive. Strategically and financially attractive. The latter means ROIC above WACC in the years 3-5, cash EPS accretion in the years 1-3. Third, we want our cash dividend to provide reliable, regular returns to our shareholders. Our current policy dates back more than a decade. Over the years, continuous earnings growth has made our payout ratio decline to the lower end of the payout range of 40%-60%.
That was what we have communicated. In order to be able to sustainably provide regular returns to our shareholders, we decided to adjust our dividend payout ratio range to 30%-40%. We combine this with a novel commitment to our shareholders to increase DPS, dividend per share, every year. For the full year 2023, you should therefore expect higher dividend per share than last year, and a payout ratio of around 40%. Four, we also decided to make share buybacks a more active component of our toolbox in case of excess liquidity. And if excess liquidity builds up, for instance, in the absence of M&A, we intend to complement the cash dividend with share buybacks.
Now, given the fact that we are generating excess cash from our ordinary business quite fundamentally, that we are deleveraging quickly, and we do not plan to do sizable M&A over the next 12-18 months, we decided to launch, for the first time under the refined capital management framework, a share buyback program of EUR 300 million to be executed starting Q1 2024. Slide 18 summarizes our financial guidance over the full strategic cycle. By 2026, we expect to have around EUR 6.4 billion of net revenue. By 2026, we should generate an EBITDA of around EUR 3.8 billion and a cash EPS of around EUR 12.90 per share.
Ladies and gentlemen, these numbers imply that our EBITDA margin will be, or at, or slightly above our current high level of 58% over the plan period for Horizon 2026. And rest assured that we are willing and able to implement cost efficiency programs in case revenues are unexpectedly lower than planned. Therefore, our formula, that we will grow 10% year by year on the top line and on the bottom line, will stay also intact over the next and the coming strategic cycle, even based off record results in 2022. Ladies and gentlemen, this completes my presentation. Thank you for your attention, and over to you, Jan. Thank you.
Thank you, Theodor. Our next speaker today is Stephan Leithner. Stephan Executive Board member of Deutsche Börse, responsible for pre- and post-trading, and Stephan will now present our new Investment Management Solutions segment. Stephan, over to you.
Jan, thank you very much. Theodor, thank you very much, and good afternoon from me to all of you. I'm very excited to be not alone in talking about Investment Management Solutions, but to have Christian with me here today in the room, and Gary joining us also by video from New York. Theodor has shown how we have changed, step by step, the group profile to higher growth and more recurring revenues. He has also shown how we have positioned clearly against the secular trends on the buy side, as well as on data and technology transformation that is going on.... He has also emphasized how implementation will be now the focus going forward. And Investment Management Solutionss squarely at the center of what we need to present to you today.
And what I'm so excited is that we're not describing to you a concept as we move from Data and Analytics to Investment Management Solutions, but that we really start from having completed the prerequisites. As we stand here today, and Theodor alluded to it, we have not just concluded the majority acquisition of SimCorp, but we have acquired 100% through the squeeze out in the last few days. We have not only described the path, how our existing companies between Qontigo and ISS are going to realign, but we have closed the realignment between ISS and Qontigo. So, now we have ISS STOXX, and we have concluded that at the end of October.
Last but not least, and I think it's a very important step, we today in parallel will announce to our clients the combination of Axioma and SimCorp, and that really brings the pieces together to realize the full potential. So, let me from there, nevertheless, take a quick look back at the context of the industry. As Theodor has laid out, the trends on the buy side, growing faster than the sell side, is one of the elements that we as a group have continued to adjust towards. But in order to truly take advantage of these outsized growth dynamics, it's also about addressing the right pain points. And the industry on the buy side is really struggling in a number of dimensions. And you can see at the bottom that the outlook is not per se for a more efficient and more profitable industry.
It's an industry that has many very genuine challenges in terms of the middle class of, players struggling performance and differentiation that they need to find. There is a top-down margin pressure from the indexation, from the ETF markets growth. There is a cost pressure bottom up. Now, all of those are familiar to you. Many of you, that's what you live day in, day out. What we experience is that the industry is changing, that it's truly looking for partners in that journey. And the important message we want to leave today is really that Deutsche Börse is the natural partner. You've seen it raised by Theodor briefly, but let me dig, a bit deeper on that. We have experienced that we are a very genuine partner for the industry because we are neutral and trusted. We are not an opportunistic player in and out.
We are industrial. We have the capability to invest, and this needs many investments for our partners. We have also seen that this is really about technology capability, which we are very credible, also before SimCorp, and, even more so now in that SaaS transformation. And lastly, it also needs the capability as a partner to operate in a regulatory environment. Many of the industry capabilities are now changing, becoming more tightly regulated. So, we have had this pull from the buy side for a number of years already, that they're looking for Deutsche Börse as a partner, and we had selective strengths and capabilities. As you see here, we've definitely had the capabilities in what we have acquired in ISS, in STOXX, in Axioma. That's straight at the center of what the buy side needs.
But we have also seen the pull, the reach out to more traditional infrastructure assets. It's been around the clearing, around collateral management on the Clearstream side, the funds platform. All of those have been infrastructure services that have extended their reach out to the buy side. But we have lacked, really, the glue that has allowed us to operate in a true service, client-centric way on the buy side. And that's what is the differentiation that SimCorp, as a platform that is deeply embedded, that is a strategic choice that many, many clients over many, many years have made, and therefore something that allows us to have a dialogue that is truly front to back. And as you can see on the chart here, for us, the back doesn't stop at the back office.
It continues with the distribution and the capabilities we already have in our fund business. I think it's very important to understand that full picture being at the heart as we now move from what we used to call Data and Analytics, Investment Management Solutionss. this is more than just a change of name. This is truly a very different approach. The approach that we see in how we want to Investment Management Solutionss is to really combine three components. The first one is, we believe it's critical that in that enormous space, we focus on the highest value-added areas. We have identified high-value-added data with ESG and index on the one inside, and we have identified the high-value-added proposition from the platform that SimCorp represents, together with Axioma, and therefore the analytics capability.
Those are the two sort of high-value components that we want to focus on. The new segment is, at the same time, really geared to maximizing synergies within the segment. That's what we talked about in terms of numbers, and I want to show you more details. Lastly, I always come back. It's something that is front to back, and in that sense, truly client-centric, rather than just being a singular product sale in different areas. Let me deep dive on each of those for a minute. The first point is really around what are our target areas? You've seen me show before that expect the aggregate buy side to grow by 6% from a wallet perspective. Now, the areas that we have selected with ESG data, research, and the index side, together with the investment management software side, is in aggregate growing with 8%....
According to the market analysis. I think it's truly important that these are sweet spots, not only from a growth, but also, and I'll come back to that later, from a margin perspective in comparison to many of the other activities. So, in that sweet spot environment, we now Investment Management Solutionss, two groups of activities. One is the high-value data activity, and that's really centered around ISS, STOXX, and then on the other side, SimCorp and Axioma. As I mentioned before, we have today basically announced also the full integration of Axioma into SimCorp. The messages will go out to clients. We have already had enormous pull, and keep in mind, this partnership between Axioma and SimCorp is not a strategic decision.
It's grown over many years, and Christian will later on talk in greater detail on how the partnership that we forged 2 or 3 years ago, we have already had a lot of tractions with clients on. So again, we're not talking about a future concept. We're in the middle of the implementation with a very strong basis for what we talked about. The same is true on the ISS and STOXX side. STOXX has a unique brand, and that's the value added of the index environment, is the branding component, together with the intellectual power that it brings. On the second leg, clearly, the ESG trend, and Gary will talk to that, is very much intact. It's changing, it's getting globally more differentiated, but most important, it's getting more demanding. It needs highly professional, very experienced operators, and that's what ISS brings as a background.
That's why we are so proud that we will certainly have the conviction to be one of the two or three leading players in the long term in how ESG data is provided. Now, I've said it's not only about the grouping in the segment, but it's very about the tangible synergies between the different businesses. We have spent extensive time over the last months, and the synergy implementation has started. Even on the side of ISS STOXX, we started in the middle of the summer before we closed. We started the implementation of the synergies under Gary, Allen Heery, and the other colleagues from the ISS, as well as from the Qontigo side, and we have gone through extensive work together with Christian and his team. When it comes to Axioma, again, thanks to the partnership that already existed, we could start early.
We have already gone through much of that, and we have a very actionable plan that Christian will talk in greater detail. We have announced EUR 90 million of synergies that we expect by 2026. We stick to that number. It's a very well-underpinned number. It is underway, as I said. Let me give you some of illustrations here. I think when we talk about SimCorp and Axioma, obviously, the integration of the roadmaps between the front office, the middle office, but also between the existing front office and data offering that SimCorp has and Axioma, is a very powerful source for alignment in terms of cost savings, but also on the other side, on the revenues.
We do see scaling benefits from the combination of SimCorp with the group when it comes to cloud cost, to the software as a service transition, and more broadly, the IT spending that needs to happen. We do believe that there is obviously a singular operating model from sales, as well as central functions from which we'll benefit. So therefore, we have a high degree of comfort on the cost synergies, and in parallel, as I mentioned earlier, the history on the cross-selling is one that has a lot of experience and specific client examples that Christian will also allude to later. On the other side, with ISS STOXX, you know, it's very strongly a story of integration that has made a lot of progress already in the last few months.
I think there is a global location strategy and a client outreach and a client approach that are very complementary. So, in aggregate, you know, we therefore confirm in an operational sense, the EUR 90 million synergies, but what I really want to emphasize is that we look beyond those EUR 90 million. I mentioned earlier how we view ourselves as a partner of choice to the buy side industry. We truly believe that that partner of choice characteristic puts us at the center of two ecosystem environments. The first one is the internal one and let me focus on that.
We have not included in the synergies any benefits from the SimCorp combination when it comes in working more closely together with Clearstream. I alluded earlier to the stories around collateral management, securities lending, all those areas that we are rapidly growing on the side of Clearstream that have immediate synergies.
There is the entire ecosystem that comes together around the trading venues when we talk about the approach of a more direct reach-out and involvement of the buy side. Again, we have not included any of those benefits in what we have quantified so far, but in this room, only two weeks ago, the 150 most senior leaders of Deutsche Börse were assembled. It was tough for me to keep back the colleagues from the Trading and Clearing and from the Clearstream side, to nail down Christian and the colleagues and say: "Can't we start working together?" Our message was: We will deliver, first and foremost, short term, the performance that we committed to. That's both for Axioma and SimCorp.
But there's no question that those ecosystem at the bottom of the chart that you see here will be a very powerful engine as we look going forward. Now, beyond the internal benefits, we are very focused to make clear and keep the commitment that SimCorp, Axioma together, but also ISS, STOXX, are an open platform Investment Management Solutionss is very much powered by the partnerships that it has externally. The most impressive for me was the momentum and support that we have found since the day of announcement from the global custodian community, which SimCorp has worked with for many years. Many of those global custodians have been my personal relationships and clients when we worked out of Clearstream. The first call that came in was saying, "Fantastic. It's a fantastic company, fantastic product. We work on SimCorp systems for our clients."...
That's what they really wanted to emphasize. So, I think that external environment has a lot of ecosystem momentum that we can leverage on. Now, all of this comes together in the numbers. The numbers outlook is, as Theodor alluded, we expect that, the combination of ISS STOXX and SimCorp Axioma, which represents EUR 1.2 billion revenues, will be growing at 9%. As you can also see, the growth momentum is quite balanced between the different, segments and areas. Clearly, the two key stories that stand out for us is on the one hand side, the software transformation, software as a service transformation, a journey that is ahead of SimCorp, and on the other side, the ESG journey that is ahead of ISS STOXX.
So, we are very comfortable that all of this will not only realize in terms of growth, but also of scale, and Theodor alluded to it. You know, we have an outlook of 45% margin for the combined business. I think this is something that really puts it as a premium in the context where many other are struggling to realize the scaling benefits that, in our context, are very tangible. So, let me conclude on that and, really, you know, hand over with, warm regards to Christian. If I may do that, but leave it to Jan, obviously, to make the more formal part. But I think you will be as excited as myself.
I hope many of you outside have also. Since Christian is such a humble person, he wouldn't dare to make the sales job, but outside is system demos for SimCorp, and I think nobody should leave the room that hasn't signed up for a SimCorp system for your mothership. Thank you. Jan?
Thank you, Stephan. Nothing much to add. I'm now introducing Christian Kromann, CEO of SimCorp. He will give you in-depth insight into the SimCorp and Axioma businesses and its growth opportunities. Christian, over to you.
Thank you. I've got to remove some of the devices here, so, I can see what's going on. Well, great to, to meet you all, and, thanks for the warm welcome to both Theodor and Stephan and, and you, Jan. So, as you can imagine, quite a interesting period that we have now closed off, and we are extremely excited about now being fully in the Deutsche Börse family and start to execute on all the good ideas that we have been discussing over the years.
As I think it was said already, M&A is always strongest when it makes strategic sense as well as financial sense, and in my past, I've been a part of many M&A transactions where it only made financial sense, and then at some point, you run out of steam, and you can't really justify why you did it. And in this particular case, and that actually preceded to the closing of the transaction, we had so many business conversations on the back of the announcement of doing this, that almost felt natural to just go straight into that. So, before I start, my name is Christian Kromann.
I joined SimCorp in 2019 and have obviously been a relatively volatile situation and have changed our business model quite fundamental as we've gone through COVID, and many other troublesome things that we've seen since 2019. Before that, I spent more or less my entire life in the financial services, financial software industry on a global scale. But let's talk a little bit about what is SimCorp, what do we do, how does it fit into the Deutsche Börse family, and also a little bit about the growth numbers in the end. So, first and foremost, so, I think it was said a few times, SimCorp has been around for quite a while. We actually turned 50 a couple of years ago, and for people that are above 50, they know that's a perfect, balanced age.
You have knowledge, and you still have the youth to continue to innovate. This is also what we do. If we look quickly about how you break down the revenue on the SimCorp side, we have SimCorp Dimension, which is the platform, if you will, that has been mentioned quite a few times. It still generates the majority of the revenues, but as over time, and SimCorp has actually, as standalone, also been acquisitive, both in terms of extending our capabilities into client reporting, data management, and many other good things. So, we actually know what we're doing, and that's also why we have a framework that we can already start to execute on as we now welcome Axioma to the family. The market leadership, if you will, is defined with an already very existing strong client base.
It's a global client base, but it's also clear that we've had our starting point in Europe, where we now have 23% market share, but we have already, many years ago, started our journey into North America as well as APAC. But given the size of the market, in particular in North America, where we have 8% market share, there's still a lot more to come for, and that's obviously something also that fits the Axioma combination with SimCorp extremely well. We are a tech company. We are a software company. We normally refer to ourselves as the tech backbone of the investment management industry. That means that we lead with tech, but as we go through the SaaS transformation, it's obviously also come a service-led transformation.
We sometimes calculate some of these things a little bit for fun, but we can, with quite a lot of conviction, say that we have more than EUR 30 trillion of assets running on the platform every day. We are normally a very, very integrated and mission-critical part of any customer that we're working with. Strong organic growth, that means that we have already good existing customer base, where we can both take a higher share of wallet, but we, of course, also net new names to the list every year, and with most platform businesses, SimCorp is also extremely happy that it's a very sticky value proposition. Once you're in, and you create that underlying very critical part of the infrastructure, and you take so good care of our customers as we do, of course, they stay with us for many, many years.
We have what we call best-in-class capabilities. They obviously develop over the years. The starting point for SimCorp many, many years ago, was an overall ambition to be front to back. We started in the back and moved slowly over the years towards the front, and over for the last 10-15 years, it has been a full front-to-back value proposition. What has really changed the scheme for us the last years has been in the low interest environment. The innovation around investment assets has really turned a lot from the classical fixed income and equity, to also include alternatives as a very, very big part of the investable assets that our customers are spending time on. Alternative assets, it's a lot more manual asset class.
There's a lot more things that you need to do, and therefore, a fundamental processing platform becomes a very, very important part of it. We developed it natively. That means that we do everything inside the SimCorp Dimension value proposition, as compared to some of our competition that went down an M&A route to continue to support the entire value chain. And I can reassure you, we're very happy about the steps we took. So, it is a full front to back. It's a full multi-asset class value proposition. We have our investment book of record, and we have our accounting book of record. What was really the new part, the last 4 or 5 years, as I alluded to, was the way we deliver the software. Historically, and I joined in 2019, just before COVID, I traveled around, in particular in Germany.
People would say they would never accept a critical platform like SimCorp delivered as a service from SimCorp. It had to be in the basement where you can go down and look where it is. That has changed. Everybody around the world is now demanding software to be delivered as a service, and of course, that is a huge opportunity for SimCorp to take that additional responsibility for our customers. Finally, and that actually started some years ago. I think I met you, Stephan, four years ago, where you just acquired Axioma, and we were starting to elaborate on whether we could work together as partners, and we kicked off the Axioma integration. That was both a physical integration, but also a joint value proposition.
It's great to see that we have already happy customers that are using the combined value proposition in production. That's a very great place to start from as we start to elaborate further on our joint value proposition. If we quickly look a little bit about, who do we serve? Typically, in the SimCorp context, we would say we serve anybody that has more than EUR 10 billion or $10 billion, under management. That typically means that you either have some level of complexity in your investable strategy or that you have volume already. It doesn't mean that we can't find, and we've, I met, an Australian customer last week that had EUR 2 billion when they started. Now they have EUR 150 billion.
So, it's also a good example that once you kind of get a platform that is highly scalable, then you really can take off on your business. Of course, asset managers is a very big part of what we do, but we also play extremely well in what you would normally define as asset owners. So, anybody that has an ownership of an asset, insurance, pension, sovereign wealth funds, central banks, et cetera, these have been a very key contributor of SimCorp's growth over the last many, many years. And then finally, we also see a lot of the custody and as a servicing players, starting to take a usage of SimCorp, ultimately inside their value proposition, which is also something that I think from a group perspective, is gonna be a very interesting conversation once we get into the weeds.
If you look at what we have below, that is the value chain that SimCorp has been working on for many years. That's how we define our value proposition, all the way from the data management to the left, through the asset allocation, portfolio management, risk management, through the operations, the portfolio accounting, and then the analysis and reporting in the end of that. That's what we do. That value chain overlaps very clearly with the value chain that Deutsche Börse Group as a whole is trying to capture, and for that, it's also extremely strongly and great fit that we are looking at when we look at it. A little bit about differentiation. You know, when do we win? What's the key value proposition? Because of course, there's other companies in the world that would claim they do something similar to what we do.
Whether we are European Aladdin or Aladdin is a U.S. version of SimCorp, it remains to be seen, but let's say we're gonna give it a run for the money. But there's really four things that makes a huge difference in the way we pitch and the way we speak to our customers. The full front to back, but also the multi-asset class coverage has, especially the last years, become a real differentiator. And when we say that, and especially if you meet a sophisticated investor, what they call it a total portfolio view, i.e., the total from the liquid assets through the alternatives, the ESG instruments, the OTC derivatives. How do you optimize across that? How do you look at the risk pictures across that?
You can only really do that if you have a trusted real-time view of what that platform does, and that's how SimCorp has been engineered from the day we started. So, no reconciliations, one version of the truth. The cross-asset portfolio management, I think I already alluded to that, so that remains to be something we invest in quite a lot with our customers, but also something we believe very deeply in. The two ones to the right are really the new ones. Because we were independent, and out of the big ones, we were the only one that was independent. That has become a really integrated part of our value proposition. Because we do believe that once, if you want to be a platform, you need to enable your customers with flexibility and optionality that allow them to make the technology choices you want to make.
And what I mean by that, a lot of our customers are now in a situation where they need to manage costs, but they need, still need to innovate. You can't do both at the same time unless you have something that helps you innovate. And what we do here is we go out and validate all the technology platforms that are relevant for our industry. We integrate them with that. That's how we started with Axioma, actually. The fact that Axioma then ended up somehow buying us was, an interesting concept of the ecosystem, but let's see. It's exactly what we wanted. It gives more. And that optionality is so deeply run inside Deutsche Börse Group as well. And that's, I can't underestimate how important it is that we share that common view, of the world, because that's how the world will see us as well.
They will see it as a real neutral, independent part that can help our customers strive on their strategy. Then finally, the delivery methodology. So, I think software as a service is obvious. It goes on everywhere. SimCorp is, for technical reasons that we can debate in more detail at a later stage, very well equipped for making that transformation our product, since we have all our customers on the same version, regardless of how they use the software. A new innovation under that heading is what we call business process as a service. So, what does that mean, and why is it called business process as a service and not BPO? For that exact reason. BPO is something where you use cheaper labor to perform the same functions.
What we try to do is taking our technology footprint, highly automate our customers' processes in the areas where they don't differentiate. The example that is so easy to understand is data management. All of our customers have the same feeds from Bloomberg, Reuters, whatever it is, corporate action, market data. They all need to do the same cleansing process. We have the software that performs that and automate it. It's a very straightforward conversation when our customers say, "Well, SimCorp, that doesn't really make my day. It doesn't make me different, that I'm particularly good in cleaning Bloomberg data. Can you do that for me?" The reason why that is great for a technology company is the same process across all customers, and you can relatively easy create scale.
We've now extended these things into also be used in an accounting concept and also some of the back-office functions that is being performed. Once again, if you look at it from the customer's point of view, they need to drive their business. They don't want to concentrate on running technology, and sometimes they don't want to concentrate on running more basic functions as well. So, in the end, if you sum it all up, operational efficiency, the optionality of how you do things, the scalability, and obviously time to market and better investment outcomes is how we measure ourselves through the eyes of the customer when we work on it. Let me just dwell a little bit on a new concept that has really become front and center of our conversations with our customers, is the term operating model.
It's obviously been there forever, and it's not necessarily something that SimCorp would really engage in a dialogue about if you go 5, 10 years back, because customers would buy a piece of technology from SimCorp's users, and then they would control their operating model. The way the world comes about these days, especially given what has happened the last couple of years, where the AUMs have gone either flat or dropped, is obviously cost is suddenly right in the center of what you want to do. So, you need to choose what you do. How do you run your business? That obviously is also depending on whether you're an asset manager or you're an asset owner, but it's all under the same heading. You need to choose how you want to run your business.
The one on the left is the good old one, if you will. That's where you take everything in-house, you use SimCorp front to back, you automate as much as you can, and we have customers that are best in class, cost-income ratio. By doing that, they're outperforming the rest of the market because they have a very clean way of looking at it. It's relatively easy to combine that value proposition with a SaaS delivery model that gives you additional scale. But then where the things really become interesting is when you take that full ownership of that front-to-back value proposition and combine it with some of these business processes as a service, as an alternative to do full outsourcing to an asset servicer or a custodian.
The interesting thing here is, of course, we also work with the custodians and the asset servicers in that dynamic, and it becomes really a strong driver for SimCorp's growth. In the end, what we normally say, we don't care how we get there as long as people are using SimCorp. Let's take a quick look at where we are in our SaaS transformation. As I alluded to, it's something we started years back. To be perfectly honest, in the middle, around 2015, 2016, it became clear in North America that you couldn't sell software in a traditional on-prem way anymore. We made the jump, but it was very much opportunistic, driven by new customers joining SimCorp as customers.
Whereas now, if we go towards 2021, 2022, suddenly our entire 300 client base wanted to get onto SaaS as fast as possible. So, we took a step back and say, "All right, let's seize the moment. Let's go for that opportunity and build something that is highly scalable and global, in the context." Needless to say, going from being a traditional software company to a SaaS company requires quite a lot of thinking. How do you set it up? How do you utilize locations around the world to get access to talent and the right cost and volume? How do you change the mentality of the company and all of these things? So, we've actually done a lot of that extremely fast. So, we're now at a point where we can say we have 80 customers or just...
Well, above 79, that must be 80. So, 80 clients on SaaS. That's a huge step forward, but the volume of customers we're pushing through at any given moment has also gone up quite considerable. And what is extremely important to note here is that we talk about the biggest financial institutions in the world, in all parts of the world. So, we've now proven that we can do it. Out of those 54 is, or more than 54 is SimCorp Dimension. The reason why we highlight that is that's the big mission-critical infrastructure, more than 7,000 users. It's a complete 24/7 setup, high availability. Obviously, as you would imagine, a lot of these institutions are extremely focused on how they can access the market, how they trade, and all of these things.
We also start to have real data supporting that going with SimCorp's SaaS capabilities, you achieve some really nice performance and cost improvements as well. Let's go quickly back a little bit to the value chain that we saw before and start to talk a little bit about the combination of SimCorp and Axioma, because it is very exciting. We knew that already by working together with customers, and we have already beaten competition by combining these two great assets. As you can see here, it really complements each other. I don't think I've ever done an acquisition in my life that has such a great complement, both in terms of geographical footprint, but also in terms of how the two solutions work together.
So, it's really great that we can now go out and push this full steam, utilizing the already existing integration, but we have a bit of more excessive plans that I'm gonna come back to in a slide or two. Why don't I spend just two minutes explaining a little bit what we do for a couple of specific customers? Because sometimes it can be a little bit abstract to understand all of the value chains and everything we do. So, here are four examples. What is unique about these four examples is they are already using SimCorp and Axioma in combination. Not necessarily sold together, but over time, they started to work with the two platforms together.
Start in the upper left corner, global sovereign wealth fund in the Middle East, highly diverse, and extreme use of alternatives, as well in SimCorp, and they have everything in SimCorp, front to back, and have done that over many years, and have also grown the fund size quite considerably. So literally, this is the critical infrastructure, doing everything from the front office through the middle office to accounting, data management services, all run in a highly scalable software-as-a-service value proposition. If we then go to the right, we have a global, active asset manager, actually close to $1.5 trillion, headquartered in Europe, that is, recently merging with another big entity and has, part of that, decided that they're rolling out SimCorp across the board, and removing, some of the key competition in that space. We're truly excited.
We've been with the one of them for quite a long time, and it's very exciting to see that they are now creating their scalability, their synergies, out of utilizing the investment they've already done on the platform. In the lower left corner, that was actually announced a couple of years ago. No, yeah, certainly not a couple of years, a couple of weeks ago, that we won this selection in Sweden. Two of the so-called AP funds have chosen SimCorp front to back. Very exciting. That was basically head-to-head with everybody in the world, actually, and in the end, also replacing quite a lot of our competition. And then finally, that was actually the first combined SimCorp Axioma customer.
They're now in production, a global multi-asset platform, running out of, something close to Switzerland. But it's a good example that they all, some of them started in one slice, many years ago and have expanded their capabilities. Some of them have landed as new customers over the last couple of years by us winning through this, enhanced value proposition of SimCorp and Axioma. So, let me just dwell a little bit more on SimCorp and Axioma, because, yes, we built an integration, yes, we know the value proposition works, but we're actually setting the ambition layer substantially above that. We want to rethink, and we want to redefine what we mean by portfolio management. It's fully integrated in our horizon plan.
As you would imagine, some of the investments comes a little bit before the return, but also here, we are investing into the future beyond 2026. What do we really mean? Fully cross-asset. That is the Holy Grail, and we also well pos-- we're already well-positioned through the capabilities of the platform, as I said before. We will simplify and automate what it requires to run risk, optimization, and all the other good things that we do by combining SimCorp and Axioma's capabilities. We are overlaying that with the cloud and some of the cloud-native investments that SimCorp has already started some years ago as part of our SaaS transformation for our next-generation digital experience. And then final-- and finally, we are continuing allowing our customers to customize, and in SimCorp, you customize through configuration, not through code, where it is required.
So, you can combine our standard capabilities, but still, a lot of our customers still needs to be different in some places to make sure they continue to beat competition. With all of these good things, let me bring it back to talk a little bit about the numbers. So, first and foremost, we have now agreed across the group, which I'm particularly excited about, that we will continue to performance manage SimCorp on an annual recurring revenue concept. I know because I've had hundreds of investor meetings spending time on explaining what is that? and why is it a good measure for SimCorp? And, of course, we will spend the required time. But let me just clarify first and foremost, the ARRR definition of SimCorp is a so-called forward-looking ARR. It's the annual recurring revenue measured at one point against another point.
Recurring revenue in SimCorp means subscriptions, software assets, recurring services, software, sorry, SaaS services, and all the things. We still have a fraction, which is the one-off implementation capabilities that are non-recurring. Everything else is growing at a healthy rate. I'm also particularly excited about telling you today, we went out earlier this year with a 12-17 growth guidance on ARR, and we can now say that based on what we can see from here, we will end the year between 14% and 17%. So, the market is really reacting positively to what we do. Let me also put a few numbers in the context of horizon. So, what we're looking at here is the 2023-2026, expecting annual recurring revenue growth.
We're looking at a 13%-18% revenue growth on a CAGR basis, even in the combined businesses between SimCorp and Axioma. So, I think it's really starting to work. A lot of the great initiatives that SimCorp started some years ago is really now working out. And then finally, we can start to utilize a lot of these things on the Axioma side as well. So, thank you very much.
Thank you, Christian. We are now turning to Gary Retelny, President and CEO of ISS. Gary is joining us via video from New York, and he will be presenting the combined ISS and STOXX business. Gary, the floor is yours.
Thank you very much, Jan, and welcome to all. Just some introductory points. First, the combination of ISS and STOXX that Theodor and Stephan referred to is very powerful. It will form a very high-quality data research index and analytics provider with very strong, globally recognized brands that are expected to serve a very broad client base of more than 5,000 of the world's largest global investment managers, banks, and corporates. It's actually quite exciting. Beyond the strong positioning and the standalone momentum of each one of our businesses, ISS STOXX will be fueled by the opportunity to bundle services and distribute them into our mutually existing strong client bases, as well as focus on product innovation.
I'll talk a little bit more in detail as we go through the slides, but I wanted to at least highlight some of the things that we already have been working on together as members of the Deutsche Börse family of companies. We've launched joint products together, most recently an ESG Biodiversity Index, particularly in Europe. We've collaborated on several client pitches, resulting in joint client wins, and we're operating together in a very highly attractive market, fueled by increasing client demand for high-quality ESG capabilities. It is really important to focus on the high-quality elements of ESG, and I'll talk about those in a second. I was gonna say, turn the page, but you're already there, Jan, so thank you. This page, essentially, I wanted to make a very important point here.
Instead of reading everything off the page, these are the components of what is now ISS STOXX. So, you see at the top what we call governance and ESG. That is comprised of three distinct business units: our governance research business unit, our ISS ESG business unit, and our Corporate Solutions business unit. If you look underneath those three, you will see a very large number of offerings, and that actually are very compelling and allow us to compete globally with the largest of companies. There are very, very few companies that have the reach and the reputation of an ISS in terms of its governance research, and or have the high-quality ESG data that we have labored to achieve over the last few years.
ESG has changed dramatically in the last couple of years, and we'll talk about that in a second. If you go to the right of the top, you'll see, of course, our new index business, STOXX and DAX, which we'll talk about in a second, a little bit more. And last but not least, our Market Intelligence business that focuses on workflow solutions for global asset managers. At the heart of these businesses, essentially, is what you see at the bottom of the page. So, not only do these businesses make sense in terms of the bundling and the offering of products together to clients, but they're all dependent and supported by three very distinct groups of functional areas. The first one is the broad and innovative product sets that we intend to produce and that we currently have.
There is a significant amount of potential revenue synergies between the groups because of this. Second, the unique data assets and intellectual property that sit at the heart of all our businesses, that is a very significant asset that is truly underappreciated when it comes to ISS and now ISS STOXX. We have a tremendous data factory, as well as a very strong application development team, one based in Manila and other parts of the world, the other one based in Mumbai and other parts of the world, that actually support all the businesses. So, it gives us essentially what you see in the third category, and that's the scalable technology infrastructure.
It is very important for us to be able to scale and grow our businesses by leveraging the technology as well as the data that we have, that actually feeds all those businesses that you see at the top. So, that is the reason why we have presented them this way. But the scalability and leverage of what we do is fundamental for the growth and profitability of all our businesses. We have proven the model. ISS has delivered essentially good growth since becoming part of the Deutsche Börse group of companies, and we have outperformed our initial investment case. If you can turn the page, please. So, one of the areas that we believe are extremely exciting for the combined entity is our ESG business and business lines.
So, I mentioned briefly at the beginning, our ESG high quality business, and I just wanna spend a minute on that because it's extremely important to highlight. When ESG started as a trend a number of years ago, what people were concerned about mostly is to say that they were in ESG or they took into account ESG, and they wanted to make sure that they were recognized as being proactive in terms of adopting ESG in their investment process. What ended up happening was that it became much more marketing and less investment. That has dramatically changed in the last couple of years. ISS, from the beginning, had decided that what we wanted to be was not only high quality ESG data provider, but the highest quality ESG data provider in the market, with extremely robust methodology.
In the early days, most of the sales conversations were about just ESG holistically or generically. What has happened now with the vast majority of clients is that they are digging deep into their own subscriptions and trying to understand what the value of the data is and what do we mean by high-quality data. And I'm very proud to say and happy to say that ISS ranks extremely well with our clients when those analyses are done. So, if you go to the top here, what I've tried to do, essentially, is just to give you a little bit of sense of what our governance and ESG business lines are and how they have evolved over the years. Just to take a couple of minutes or a minute, with regards to, some of them.
If you look at our ISS governance business, which provides a governance research and proxy, what is affectionately known as proxy advisory services, we believe that ISS is the leading governance company in the world. And we're very proud to say that. It's not something that we take for granted, and it's not something that we say without actually believing that most clients turn to ISS when it comes to governance research. We do about 50,000 meetings a year. That's up from 32,000 just a few years ago, to give you a sense of the growth. We're now over 1,100 professionals globally. ISS has approximately 3,400 people globally now. Our governance research covers 110 markets, and we do close to 4 trillion shares in terms of research.
The middle category, of course, is ISS ESG, and we're now over 600 people on a global basis. We have over 1,100 clients, and we have over 12,500 corporate ratings. We still are seeing very strong momentum in this market. We'll talk a little bit more in detail about it in a second. And we're focusing on continued product innovation, of course, in our, with, as well, with our IP and regulatory solutions. The third business line inside of governance and ESG business is our Corporate Solutions business. There is a wall that separates, a firewall that separates our corporate business from our governance and ESG businesses, as we try to significantly mitigate potential conflicts of interest. It's been in place since the beginning and has served us quite well.
But this business focuses essentially on corporates. It traditionally had been a very strong U.S.-centric business, but we are now exploring and looking at significant growth opportunities in EMEA as well as in Asia Pacific. So, you're gonna continue to see the growth of Corporate Solutions over the next 3-5 years. If you can turn the page, please. And then, of course, the other businesses that form ISS, STOXX now are index business which is STOXX and DAX, and there's a lot of information here that I'm just not gonna read it other than to say that STOXX is a very strong global brand.
It's extremely well known in Europe, and we believe that the partnership with ISS, now that we are both one and the same, is a key differentiator for us versus the largest index providers in the world in the space. So, we believe that the quality of our ESG data, as well as the quality and brand of our research in governance, as well as in ESG, gives us the ability to compete effectively for business with the largest index providers in the space. That we could not have said prior to the combination with STOXX. So, we are extremely excited about the possibilities that that combination entails.
And of course, you all know DAX, so, I'm not going to say much about it other than it's obviously the number one German index, and we expect it to continue to develop products around it. And then finally, MI, our Market Intelligence business, that focuses on providing workflow solutions to global asset managers, also extremely highly regarded in the space, with good opportunities for growth in EMEA and in Asia Pacific. One very important point to say about STOXX, actually two: one is that it traditionally, as Theodor noted and Stephan noted, many of the businesses have been sell side focused. The STOXX team already, prior to the combination with ISS, had been working very hard in moving the sell side focus to buy side.
We intend to accelerate that, given that ISS principally has been a buy side-focused firm with very strong relationships globally. So, we expect that leveraging those relationships and bundling our governance products and our index products will give us the ability to sell even more to the buy side. And then, secondly, already STOXX has been working in improving their production and operating plan. I mentioned scalability as fundamental to the growth of the business. I'll throw out another word that is fundamental for the index business, and that's custom. It is very important to be able to have a scalable, customized index offering that allows clients to actually work with you in deciding, designing the index that they want to provide.
In order to do that, you have to have a very, very strong operating plan as well as strong methodology. We're working on STOXX to be able to deliver on both of those. If you can turn the page, please. I know I'm running out of time, so, I'll try to be very succinct. We've tried to put together here a slide on the ESG growth story. It's something that we get asked about fairly frequently. I am very pleased to say that the growth of ESG continues unabated. We don't see really anything in the horizon. Of course, there will be bumps along the way that actually is threatening that. To the right, you see what we perceive as the prevailing industry dynamics, so, we see the market demand continuing to grow. That's reflective in our growth rate and ESG. We can...
We see the rise of passive products focused on ESG. Traditionally, they had been focused on just basic benchmark indices, but the focus now has been turning to incorporating ESG. Technology and high-quality data will be fundamental to this. That is not changing. We have seen ESG starting to get traction with corporates on a global basis. Europe has been faster than other parts, including the U.S., but nevertheless, it's happening there, happening there too. And we expect to be able to provide a comprehensive offering of products and services together with our ESG research, as well as our governance research and our index capabilities to deliver the scale that the largest institutions in the world demand.
On the left, you just see a graph of the growth of ESG and its trajectory, and we expect it to grow at those rates through 2026. I guess it would be remiss not to mention that there are tensions that exist in ESG, particularly in the United States. Some of them are political, some of them are not. I just wanted to make the point that it is very important to listen to all voices and make sure that we are able to explain the quality of our data. Even though we support our clients, of course, very active, actively in their pursuits of portfolio management, we are not an activist firm, and we are a Data and Analytics vendor.
We've spent a fair amount of time explaining what it is we do and how we do it, with actually very good results and very good traction. So, in spite of the political headwinds, if you will, that come and go in various parts of the world, currently in the U.S., we still see unabated the growth of ESG. We don't see anyone, any investment manager, deciding that it is not important. Actually, they might do it more quietly. It forces them to focus on high-quality data, which plays to our strengths, and we believe those trends, those trends are intact and will continue for the foreseeable future.
So, if you turn the page, and this is my last slide, we believe that we have now put together a very compelling offering with a combination of ISS and STOXX. Quality and scale are absolutely fundamental. The chart on the left gives you a little bit of sense of where our revenues will come from. So, you see that Index will now be 30... This is as of 2022. On a pro forma basis, Index will be approximately 38%, our governance and ESG, 41%, our Market Intelligence business, 21%. Extremely well-diversified business. The focus has always been on recurring revenues for ISS. That is not gonna change. We expect that to continue to be the case. We're very excited about the possibilities. One thing that I would like to highlight is that we will focus on bolt-on acquisitions.
Theodor has made very clear in his presentation and in conversations as well internally, what we should be looking at, and that's what we intend to do. These are small bolt-ons that actually are very accretive to our growth rate, and we've been fairly disciplined about them over time. We've done 17 since 2014, and I would say, with success, so, we're very excited about those possibilities should they come to pass. We also have a very experienced management team in place that has been together, in some cases, for 20 years, including over a decade, specifically at ISS. It's been a very stable team, and it's a very knowledgeable team with regards to the industries that we cover.
So, in closing, I simply wanted to say that we're very excited about 2024 in terms of our growth rates and possibilities, while at the same time, we view it as a year of integration in combination with our new colleagues at STOXX, as well as building a foundation for future growth for years to come. So, thank you very much for your attention, and I hope we get a chance to delve into questions later on. Back to you, Jan.
Thank you, Gary. We are now taking a short break, and we are resuming at 2:45 P.M., 2:45, so please be back in the room on time. Thank you.
Thanks for being back on time. We are now resuming with the presentations. Our next speaker today is Thomas Book. Thomas Executive Board member of Deutsche Börse, responsible for our Trading and Clearing division, which he will now present. Thomas, the floor is yours.
Thank you, Jan. Great to be with all of you here today. Let me now dive into the Trading and Clearing division. With our market units, Eurex, EEX, Cash Market, and 360T, we operate a growing and highly profitable multi-asset class business across financial derivatives, commodities, cash equities, and foreign exchange, covering OTC and on-exchange markets. We have delivered on Compass. Trading and Clearing started at EUR 1.7 billion in 2019. In 2022, we generated EUR 2.2 billion revenues. With this, we grew at an average rate of 8% annually. Today, Trading and Clearing contributes close to 50% of the top line of Deutsche Börse at a margin of around 60%. Our value proposition to customers is driven by global distribution, product innovation, and effective risk management, based on an industry-leading technology stack.
We are the benchmark and go-to place for hedging and investing and trading European markets, being at fixed income derivatives, power, equity, or equity index products. With that, we host the largest and most efficient liquidity and margin pools. Also, we are a leader in product and service innovation. For example, Eurex alone introduced more than 800 products since 2019, among those true groundbreaking innovations like total return futures. Overall, we have delivered in the past. We have a strong and diversified portfolio positioned in a sweet spot of the industry, and we will continue to contribute significantly to the organic growth in Horizon 2026. To deliver steady and secular growth, we build on a strong execution record. This slide here gives you examples of our core growth engines, Eurex and EEX.
It shows examples of successful execution of major market infrastructure projects, product innovation, and new market entries contributing to our top line. Our systemic approach already demonstrated high-value generation in recent years. It will also fuel our organic growth within Horizon. Take, for example, just the EEX market entry into the U.S. power market. In 2017, we acquired Nodal, and since then, we achieved an average growth rate of 43% per year in power derivatives. Today, Nodal is the number one in U.S. power, measured by open interest ahead of ICE. Our execution discipline is based on a strong team, and I'm very proud. We have a very outstanding and experienced management team. They are all here with us today to my right, so, please use them for questions later. Theodor already spoke about our secular growth drivers being fully intact and the positive industry dynamics.
With the new interest rate environment and the energy transition, some are even more pronounced than previously. Trading and Clearing is positioned in a sweet spot to benefit from these structural growth drivers. Midterm trends, like the shift from OTC markets towards cleared and on-exchange markets, from active to passive to automated investment strategies, as well as towards ESG and carbon neutrality, will create further load on our business platforms, and energy markets will take center stage. In the energy transition, the shift from fossils to power will drive the need for hedging and for trading activity. But we are also ready for transformational industry trends. The buy side is growing in importance, seeking direct access to platforms and services. Earlier, we heard Stephan and Christian already talk about the role of the buy side.
I have to say, we are really excited about the potential in working together with Investment Management Solutionss segment. in addition, algorithmic, quant-driven, and AI-based trading models are spreading out across markets and asset classes, and digitalization will drive the industry towards instant technology infrastructures and create a huge new asset class of tokens. And all of this happens against the backdrop of positive growth dynamics for capital market infrastructure providers as a sector. Let me go into our strategy. Our business strategy has a clear focus to leverage this attractive market environment for our value creation. With our organic business roadmaps, we address both the opportunities in the macroeconomic outlook but also focus on the industry's structural growth dynamics.
The main development elements of our organic business development are the Eurex fixed income roadmap and equity and index roadmap, both targeting at the market's increasing demand for hedging and investors for efficient risk transfer, and EEX's commodity roadmap to build out our lead in the highly attractive energy, renewables, and carbon markets. In addition, we position for growth of digital assets, as Theodor has pointed out, with a full value chain offering for institutional clients, creating new business upside midterm. The execution of our organic roadmap is supported by two investment themes that strengthen the value proposition across all our market units. F7 will be our next generation risk management platform, and it will upgrade our capabilities in effective risk management. A new state-of-the-art data mesh platform will upgrade our data architecture and market data distribution.
It also delivers the foundation for new opportunities to translate our rich data sets into data products. Now, let's look at financial derivatives first. Eurex is well-positioned to further grow, especially in the fixed income business. We will focus our ambition to be the home of the Euro yield curve, and we are really excited about the potential on the fixed income side, and I will go into this a little later. For equity and index derivatives, our ambition is to build a global product suite and drive futurization. We will focus on product innovation and product expansion. We've just launched daily options in Europe and saw a really strong start, and we are really looking forward to work with Gary and his team on ESG and other new index product opportunities going forward.
Overall, Eurex will contribute EUR 300 million from the fixed income roadmap and EUR 50 million for equity index of secular growth to our plan. While we expect the market environment to be more volatile, given the geopolitical uncertainties, we have not accounted for any cyclical tailwind as a major source of revenue within Horizon. Any cyclical opportunities will therefore be an add-on to our structural plan. On this page now, let me briefly go into fixed income a bit deeper. The potential is really exciting, and I would just like to make three points here on this page. Firstly, Eurex is in a unique position to be the home of the Euro yield curve. Eurex is the only market that offers all product segments in one clearing house: futures, options, swaps, and repo.
With that, we can offer cross-product netting, margining, efficient collateral management, together with Clearstream and advanced protection across derivatives and repo. This delivers superior capital and margin efficiencies. It helps our clients to reduce their cost. Market participants use different euro-denominated fixed income products, not in isolation, but as a bundle. Like, for example, buying a bond, financing it via repo, managing the rates risk via a future or a swap, or trading the basis between bonds, futures, and swaps. In a time of normalized rates, these benefits are even more relevant. Secondly, we have strong partnerships with major market participants, and they have been instrumental to our success. We started the OTC Partnership Program in 2018, and it was a key pillar for building our segment.
We have, meanwhile, expanded it to repo, and it also supports the recent launch of Euro Bond. Thirdly, Eurex Repo has become a fantastic success story. In 2023, Eurex Repo grew by more than 70%, compared to only 10% at LCH. We could significantly increase our market share. The repo market is in fundamental transformation, from uncleared to cleared and to direct buy side access. And we have created one of the leading offerings in buy side repo in Europe. All of this makes us very confident to capture 50% of the total euro market opportunity, which is EUR 1.5 billion, by 2026. Let's turn to commodities. The European Energy Exchange is a real star in our portfolio. It has grown its revenue base by a factor of 11 over the past decade and developed into the leading power exchange globally.
Again, this year, EEX is on a strong growth path with a 25% volume increase in power derivatives. We continue our success story in the commodity markets with a clear focus on developing our core benchmark business and building out the global ESG product offering with renewables, energy tracking, and carbon markets, and already positioning for new markets such as hydrogen. A special focus is on expanding our distribution towards trading firms and institutional buy side. During the energy crisis, EEX's cleared market share has reached record highs in its core products. Now, we see strong membership growth. The liquidity has increased to a level where algorithmic and quant traders are entering the market as a new customer group, increasing market activity significantly.
We've experienced this development already at Eurex years ago, which led to an exceptional activity and volume growth, and this is what we expect for EEX now comparably. To further strengthen our proposition, our commodity clearing house, ECC, will upgrade to our next generation risk platform, F7. It's a perfect lead over from our organic to our technology roadmap on the next slide. Effective risk management is at the core of our proposition to deliver customer benefits and efficiencies, as I just mentioned earlier, and it is a key differentiator to our competitors. We are very proud, and we build it out continuously.
With F7, we will deliver a risk management platform that is capable to foster our technology lead with a scalable cloud-based infrastructure that will improve our value proposition for margin and operational efficiencies, but it will also strengthen our innovation cycles with a reduced time to market for new products, with new pricing engines. As key milestones you see here on the slides, in 2024, we will deliver portfolio margining to support our fixed income roadmap. In 2025, we expect our commodity business to run on F7, pushing growth to its derivatives markets. Let me now turn to digitalization that was already introduced. Deutsche Börse firmly believes in the positive impact that digitalization will have on financial markets in the future, and we will be part of this transition.
We will invest in the technological transformation with a target picture of providing a full value chain for instant trading and settlement of tokens. The ecosystem is already evolving. Cryptocurrencies are the first liquid use case today. Market cap and trading volume are already significant, and Bitcoin, by the way, is one of the best-performing assets in the year 2023. But besides crypto coins, we expect that tokenized assets will develop into a huge market capitalization until 2030, and we believe our proposition is strong. As a neutral and trusted market operator, we have constantly delivered on building new markets in regulated environments. We have a natural right to be an important player in this market.
So, our focus is to enable the digital business across the entire value chain, with a focus on the key product and use cases, cryptocurrency, tokenized securities, and alternative assets, as well as stable coins. By connecting already, the existing dots across the group with that we have with Crypto Finance, D7, 360X, and the Deutsche Börse offerings, we are gradually completing an entire value chain. Crypto Finance already offers digital native capabilities in trading, settlement, and custody of cryptocurrencies. In the world of tokenized securities, we are well-positioned with D7, and Stephan will go into that a little bit later. For alternative assets, 360X, together with partners, is covering innovative asset classes like art, music, and real estate. And next is the launch of our multilateral trading facilities, a regulated venue for cryptocurrencies, planned to go live in Q1 2024.
With that, we will offer a complete value chain for crypto coins in a regulated environment. But the digital transformation is not only about innovation, it is about technology leadership. We execute our digital asset business platform is in partnership with Google Cloud, which is a perfect combination. We really like them as partners between a trusted market operator and a cutting-edge technology provider to drive market operation in this field. Here on one page, you see we are operating a well-diversified mix of businesses, and we have a very strong portfolio of secular growth initiatives. In addition to financial derivatives, commodities that I spoke about, foreign exchange is outperforming the market, a top performer, and gradually relevant for our overall top line. Cash market will be a cash cow with high profit margins. Theodor already mentioned, our plan for Horizon does not consider cyclical tailwinds.
It is purely built on secular growth. But still, we believe there is cyclical upside optionality. Just take, for example, the U.S.-EU fixed income market activity. The Eurex volumes are still below its record levels in the 2000s. The same is true for the repo market. So, there's good reason to assume further cyclical catch-up, given the continued high-yield environment that we are seeing in the next years. With that, let me conclude my presentation here today. Trading and Clearing has delivered strong growth in the past, and we are starting from record levels and from a position of strength, with a strong portfolio of businesses and organic growth initiatives.... We will deliver EUR 500 million organic growth to Horizon 2026, and our delivery plan is backed by a strong track record in execution. Eurex and EEX will be our core growth engines.
As a baseline, we have planned a 6% average CAGR until 2026, purely with organic initiatives. We are focused on delivering secular growth. Cyclical tailwinds, inorganic opportunities, and digitalization are additional upside opportunities to our base plan. I thank you very much for your attention, and with that, hand back to Jan.
Thank you, Thomas. Our next speaker is Stephan Leithner again. Stephan will now present our Securities Services and Fund Services business. Stephan, over to you.
Thank you, Jan. Thank you, Thomas, in particular. I must say it's very, very exciting how your two major initiatives on the fixed income and on the digital side strengthen the links between the post-trade and the Trading and Clearing businesses. This is something that we feel very passionate about, to see how the synergies are growing. We have given you a detailed update on the Securities Services business by Sam last year, and it is important to me to say that the basic trends and the basic strategy is very much intact when we speak about our securities service's businesses. Clearstream Securities Services has delivered another year of continuity and growth, as we have described it, and as you see it again here, reminded in terms of fee-based growth development.
To me, this is very important to highlight, because so much of our discussion currently is centered around the NII. The question of structural, volatile, underlyingly is a very strong business for a number of structural reasons, has shown that the 7% growth that we have seen in the past years will continue going forward. And if I look at those, numbers, then, it's important to not only emphasize that there is the fee-based business that is, that is structural, but we also believe that our NII contribution is much more of a sustainable and long-term character, as Theodor has laid out at the beginning. All of that always needs to be seen and understood in the context of enormous scaling that Clearstream is delivering year in, year out. We have seen this year the growth to a 72% margin business.
We don't talk too much about it, but I think it's very important to not lose sight of that. Even on a fee-based revenue only basis, this is an above 50% margin business. So, it's outstanding, and behind it lies really the growth momentum, which we have now seen materialize on a number of very strong at scale CSD and ICSD capabilities that we have. And we continue to refine them, but the underlying themes are very much intact. We have seen our underlying assets under custody grow from our last investor day, EUR 13.3 trillion to now EUR 14.5 trillion. Another 7% growth in those 15 months on an annualized basis, and behind it is very much the tailwinds that we see with the move of the assets to the fixed income side in terms of the global theme of investment.
Clearstream has always been a very strong fixed income house. 80% of Clearstream's underlying assets under custody are fixed income, so, we are a big beneficiary of a continued inflation development of debt, and at the same time, a more active trading activity when we talk about fixed income. We are still the strongest player in terms of the European cross-border. We are the leader. We are 50% of all the volumes that go into T2S. I think that's a unique position that allows us many add-on services that we have developed. We have seen the growth very much linked to what, Thomas talked about on the collateral management side. Last time I talked to you, it was EUR 590 billion.
EUR 700 billion is what we now exceed in terms of the collateral management volumes that we have, and the volume, together with Eurex Clearing and repo, has a strong momentum. Not only that, you know, behind it is also that we're now able to export those capabilities, and Sam and the team have forged a partnership for the Canadian market that is a very powerful momentum to just not see us grow client by client, but market by market. At the end of the day, you know, I know the focus is very much on what is the NII picture. Let me emphasize that in our conviction, it is much more structural and sustained than it is often understood. It is very much driven, you know, by the balances that are held by our clients overnight.
They have proven very stable and resilient, but more important, they structurally grow with the settlement volumes. That's what you see on the left-hand side. We think there is a 2%-3% quite sustainable growth that is happening, and that link has continued even as interest rates have dramatically moved up. So, therefore, in the medium-term outlook, as Theodor has outlined, we see the EUR 500 million €STR contribution from NII as something very defendable in our plan of Horizon 2026. We will continue to also manage that basis, and we see the framework developing from a regulatory side that also, as the yield curve will be changing from a very inverted to a more normal pattern, that we can also lock in more of that return and give it more stability going forward.
So, I think we truly see that our NII is not, especially from a balance perspective, is not cyclical, but is very much a structural driver of our returns. At the end of the day, we need to look beyond the tactical and the short-term strategic. That's the digital story that we are very much working together on with Thomas. And let me here just really again emphasize, very much that we started D7 not last year. This is not a fad. This is not some innovation tests that we are doing. We started D7 in 2021. We are the only operationally productive digital security system that is available, that has gone through full regulatory audits, that has been, in that sense, really testified to handle large volume.
We have now more than 4,000 issues, and the main point here is really, as we speak these days, the second generation, together with Google now, is going live. We have full API interfaces, and we have in one of the highest volume issuance markets, which is the German retail structured product market, we have a number of the leading players that are fully signed up and that are issuing on a permanent basis daily, hundreds of securities into our digital systems. We are moving beyond that. The journey forward is really two components. On the one hand side, the Google partnership that is helping us on the next level, but at the same time, we also need to go international. We have this summer opened the German fixed income market to D7.
We are, in the course of the next two quarters, going to Luxembourg and therefore to the international bond market. That's why we are so comfortable that from a long-term perspective, our partnership, together with the Trading and Clearing colleagues, will put Deutsche Börse very much at the center, because we have the backbone capability on the settlement side with D7 already in place and live. If I look forward from a number's perspective, we stick to our very stable outlook in terms of a 7% growth capability from a fee-based revenues. And as we have shown earlier, relative to the 2022, the EUR 500 million-EUR 600 million, if I'm a bit more optimistic on the NII outlook, also shows that there is upside in the NIIs.
While it has been very much talking about the linkage also between Clearstream and Trading and Clearing for the security services side, the other aspect is our Fund Services business, and they're clearly the link. You've seen it on my graphs at the beginning when we Investment Management Solutionss. it's the back end in a true way. It's the distribution side. That's why the linkage between investment Fund Services as a client universe, addressing distributors and asset managers, is linked so much to the vision that we are Investment Management Solutionss. at the heart of it, however, is the progress that we have continued to make in moving basically from what was a few years ago, an execution only, a custody and settlement engine, Vestima, for fund shares, that has emerged in a number of series of steps.
Next, we talked about an ecosystem where we had partners, we had Vestima, and we had distribution services partners. We then invested, as you know, through Swisscanto and UBS. We then, you know, in the next step, took on the data side, and we are deeply convinced that having the right supporting data infrastructure is critical for a platform like what we have with Clearstream Fund Services, because it allows us a differentiated proposition vis-à-vis the asset managers. With the acquisition of Kneip last year, we have taken that step, and this year, like in the other areas, our focus has been very much on complementing our story when we talk about the technology component.
That's on the one-hand side, D7 also for fund shares, but that's very importantly, with FundsDLT, we've acquired a proper, full blockchain-based fund distribution mechanism that has major impact on the transfer agent side for our clients on the asset manager. So, I think what has changed really, if you look at this chart, is on the one-hand side, that the business underlyingly has continued to grow and accelerate. From EUR 138 million, this is a 20% growth story since 2017. We will reach EUR 450 million in revenues. This is an outlook of 11%, as I will show to you in a minute, at the back of a 20% growth story, on largely organically, but with transformational steps over the last eight or nine years.
So, I truly believe, you know, that we have shown that we have moved from what was a small nucleus to a now very much standalone business. Because keep in mind, this was one of the elements we told you a year ago, that we were separating and building out the fund business as a standalone business. It is now operating out of a Luxembourg standalone, MiFID-centric bank, as well as the Zürich-based fund distribution businesses and the data business that sits in Luxembourg. So that story is one that we are not alone with, but I think we are better in terms of consistency of development and growth. And the consistency has been tested in the last two years, as the original high-growth fund markets have shown some weakness because of the equity market developments.
But what you can see here is that Clearstream Fund Services has continued to show resilience and outperformance also in the underlying volumes. What you can see on the left-hand side is really the outperformance in the growth years, but equally how we structurally, and not only against the market, but also against key competitors that have been shrinking in the last 1.5 years. Our volumes have continued to grow, and I think this is very, very important because it's driven by the structural parameters. The type of partners that we work with, they are winners in their segments. These winners pull us with them as we go forward. You see some of the names here. We have a more broadly based platform in terms of-...
The product capabilities, in particular, the alternative investment and the hedge fund investments that were done a number of years back, a few years back by the team, are now really helping to stabilize our flows and the overall assets under custody. So therefore, as we look forward, you know, let me just emphasize three sorts of fine tunings in a way that, again, Philippe and the team are very much focusing on. The first one is that we have progressed from our large institutional distributor clients to increasingly partner with aggregators and global custodians. We have talked about the HSBC partnership. EUR 500 billion of additional volume are going to be contributed over time in one of the biggest partnerships in the fund space that exists. It's very powerful.
It empowers HSBC, but it equally obviously creates scale in unparalleled way for Clearstream Fund Services. We not only partner with big global custodians, but also on a regional level, the Belgian bigger banks that act as aggregators in small private banks in Belgium. ZKB, you have seen ever been a partner of ours around sort of Swisscanto at the time. They are an aggregator in the Swiss market, and similarly, you know, we truly elevate it. The second big continuation for us is to grow our value proposition vis-a-vis the asset management space. That's what we are very focused on, be it on regulatory support to them, be it on data and digital services. It's a key priority for us over the next one or two years.
Lastly, we have spent quite a lot of money on the carve-out and separation out, EUR 50 million-EUR 60 million, but we will be very disciplined when it comes to the cost developments going forward. So, that's why in aggregate, you know, we think our outlook of 11% growth is very much intact. It's supported by our pipeline, and Philippe and the team will make that happen. I'm very confident. Jan?
Thank you, Stephan.
Back to you. Yep. So, our final speaker today is Gregor Pottmeyer, Chief Financial Officer of Deutsche Börse. Gregor is also joining us via video, and he will present the financials part of today's presentation. Gregor, the floor is yours.
Yeah. Thank you, Jan, and obviously, I'm excited to be here, even if it's only via video call. So, I would like to start with the first page, on 69. So, here you see strong development since 2017. We have achieved a 13% net revenue growth, a 13% EBITDA growth, and a 13% cash EPS growth. On the next page, you see that we have made good progress in all growth areas. So, the 13% CAGR net revenue, we achieved 5% secular growth, 4% cyclical growth, and 4% comes from M&A. If you look into the four business segments, so Investment Management Solutions contributes a 38% growth, including the M&A activities. Trading and Clearing, 7%. Fund Services, 22%, including the M&A activities, and security services, 12%.
On the next page, you see that we have continuous long-term growth that demonstrates the strength of our well-diversified business model. So, from over this 10-year horizon, from 2017 to 2026, we achieve an 11% CAGR. If you take 2022 as a starting point, so the EUR 4.3 billion, it's a 10% CAGR. Though this guidance for 2026 is effectively an upgrade to the 7%-9% organic growth issued at our last year's Investor Day. So, it's basically now a 10% organic CAGR expected for 2021-2026. If you take 2023, so another record year, as a starting point, then the CAGR would be even 9%. On the next page, you see the components of our 10% growth for the next 3-4 years.
So, it's a 7% organic growth, 3% from M&A. So, this 7%, organic growth is mainly driven by secular growth, so it's roughly 6%. And from a cyclicality perspective, it's only modestly positive. So, it's higher contribution from net interest income, but that is partly offset by slightly more muted market volatility in our Trading and Clearing, business. So we assumed slight headwind compared to 2022. So overall, it's roughly, on a net basis, 1% growth from cyclicality. The M&A baseline effect of the SimCorp acquisition is included here with the 3%. On top, we expect to continue to do M&A if strategically and financially attractive. Additional potential net revenues we see from our digital asset platform, what Thomas spoke already presented.
On the next page, you see that all segments are expected to contribute to the organic net revenue growth until Investment Management Solutionss, as stephan Leithner showed you, a 9% CAGR, so EUR 470 million.... roughly, 60%, the far majority comes from the, from the SimCorp, from ISS STOXX, roughly one-third, and synergies, the EUR 35 million are also included. Trading and Clearing business is also roughly growing by EUR 0.5 billion. The far majority, 60% from financial derivatives, and it's really impressive to see the fixed income roadmap with some EUR 300 million. So, we have a high confidence level to achieve that additional EUR 300 million. Also, commodities growing by EUR 150 million, and FX roughly growing by EUR 50 million. Fund Services business, EUR 200 million, 11% CAGR.
Some smaller contribution from NII, but the far bigger parts equally spread around fund processing and funds distribution and data. Securities Services, another EUR 0.4 billion additional net revenues, so 55% comes from custody and settlement, and 45% from M&A, from NII, sorry. On the next page, here you see our cost management, and here you can really see that we expect disproportional organic cost growth. So, on organic cost basis, we'll grow by 5%, as promised in the past. So, for 5% organic cost growth, we are able to deliver 7% organic growth. So, this shows the operating leverage. That shows the scalability of our business, even on a Deutsche Börse portfolio level. It shows our attempt to have a consequent cost management, and we will achieve the cost synergies, Stephan Leithner already alluded to.
Even in SimCorp, we expect that the operating costs are expected to increase under proportional to the net revenue costs. As always, we have cost contingency plan in place in case net revenue cost is meaningfully below our plan. On the next page, here you see our growth rate in Horizon 2026. Theodor already mentioned that. 10% net revenue growth, 11% EBITDA growth, and 11% cash EPS growth. On the next page, we show here the development of the cash EPS and a 10-year horizon from 2017 to 2026. So, it's a 12% CAGR. Taking starting point to 2022, it's 11% CAGR. And we all know that cash EPS is our leading earnings KPI, that is best measures our profitability and cash flow generation.
Main driver for this strong development is organic growth, consequent cost management, and the scalability of the existing business. All our M&A has also resulted in immediate Cash EPS accretion. The most recent SimCorp acquisition, for instance, is also immediately Cash EPS accretive, with a mid-single digit based on run rate synergies. On the next page, we want to give you also an update with regard to our climate strategy. We set ourselves new long-term climate targets to be validated by the science-based target initiatives. So, our near-term target, 2030, is that we want to achieve a reduction of our emission by 2030 by 42%, having 2022 as a base year. And we want to achieve that for Scope 1 and 2, and for Scope 3, what we can influence.
For the supplier engagement in Scope 3, Deutsche Börse aims that 97% of its suppliers by emission will have science-based targets by 2028. Our long-term target is 2045, where we are committed to achieve for all Scope 1, 2, and 3, to reduce the absolute emission by 90% at the latest by 2045, again, with a base year, 2022. The SBTI validation process is in place, and we expect validation in Q1 2024. We continue to have a strong credit rating despite SimCorp acquisition. So, we have a double A minus S&P credit rating with a stable outlook. With regard to that, so usually we had a double A rating, so it's now one notch down. We have also adjusted now the rating metrics targets.
So, net debt to EBITDA, the target is here now, no more than 2.25. So far, it was 1.75, and FFO net debt, at least 40%, so far it was 50%. And you see in 2021, we were above these thresholds after the ISS acquisition. Now in 2023, we are again above that, but we expect to come back in 2024, and that's due to the fact that we have a strong cash flow generative business. So, in 2024, we expect to have a cash flow of roughly EUR 2 billion after CapEx. So, here we have basically EUR 1 billion for distribution and EUR 1 billion for deleveraging and building up cash. On the next page, you see that we are committed to generate really attractive returns for our shareholders.
You see the dividend increased continuously from 2018, from EUR 2.70, to this year, more than EUR 3.60, so, continued increase. The payout ratio went down as planned, from 60% to 40%. That's why we guide now this 30%-40% range in the future. For 2023, we expect to have roughly 40%. And as already announced, in case of excess liquidity, we intend to complement the dividend distribution with a share buyback, and we start with EUR 300 million in Q1 2024. With this, I will give back to you, Theodor, to give the key takeaways of Horizon 2026.
Thank you, Gregor. Again, good recovery for you and fast recovery, and we need you for the next 1 hour for the Q&A. Thank you for what you have done. As always, dry and very impressive, if I may say so. What do we think? What should be the key takeaways for you, right, of this session of 80 slides, right, of out of the Horizon 2026 strategy? Let me briefly try to summarize the situation. Point of departure. Point of departure, we clearly worked out we are active in highly attractive markets, with a very strong set of portfolios of businesses we are working in, right?
Imagine we are sitting on a portfolio, right, which is growing between mid-single digit high or mid-single digit and low double digits, with EBITDA margins in a range of 40% plus, in some of the big businesses, even bigger. That's a great portfolio to work with. Second, we have developed, I think, a very clear strategic path, and we all know that the pieces of the puzzle, what we have created over the last couple of years, is fitting together extremely well meanwhile, right? We have a clear focus on organic growth. This has been our strength in the past, and this will continue to be our strength in the future. So, focus on organic growth, and this combined with a focus of our recurring revenues.
You know, we have done a big step forward on the buy side universe, more than 3,000 clients, right? And everybody sees, right, what opportunities are going forward with the asset managers and the asset owners, and so forth. And of course, last but not least, leadership in digital asset classes. We strongly believe this is the future. This may go beyond the Horizon 2026, but we are in the business of ensuring the success long term of this great company. Third, yeah, is the execution of the strategy. That's what we call internally, the strategic imperatives. Focus organic growth, as M&A is already locked in. Second, make the Investment Management Solutions segment a success in terms of growth, in terms of margins, in terms of synergy realization.
We should, and we will, utilize the Google Cloud partnership, which is, by the way, I think you mentioned it, Thomas, great fun for the team, and sometimes really exciting in terms of how these guys are approaching our business. Number four, and we mentioned this at length, the refined capital allocation priorities we've worked out. The change reflects predominantly the strategic progress and the positive outlook, and we have at the end of the day, we modernized our capital management allocation framework. We made it more flexible with regards to capital allocation to the framework, and quite frankly, we also listened to you quite intensively. And the first share buyback program of EUR 300 million from Q1 2021 onwards, we have launched basically last night. Number five, everything is good on the strategic side.
How does it translate into the financials? And therefore, our famous formula, 10% top line growth, 10% bottom line growth is valid. Also, starting off with a record year, 2022. This is important to reiterate. And also, the operating leverage, which is of our, in our business, of utmost importance. Operating leverage will stay intact, and we will produce continued high EBITDA margins. We are in the range of 58% plus, right? That's a number which you should take away as well. And last but not least, right, Gregor mentioned it, for us, cash EPS is the key final and ultimate KPI. Cash EPS will grow by 11%, right, until the year 2026. With this, I would like to conclude our presentation of the 80 of the 80 pages. Have fun to digest them in detail, right?
Before you digest them, I'll ask my dear colleagues to come up for the Q&A. I hope I haven't stolen away obviously what you wanted to say, Jan?
... Nope, not at all. Thank you, Theodor. This brings us to the Q&A session. We are taking questions from the audience here in the room, but also from-
Feel lonely!
the telephone lines. Those on the telephone, please make sure that you mute the webcast, so to avoid an echo. On the telephone, if you would like to ask a question, then please press 9 * s o, that's 9 * on your telephone keypad. But first, we'll start with questions here from the room. We have microphones on both sides, and it would be great if you could state your name and company if you ask a question. Ian already has microphone, so please go ahead.
Thanks very much. It's Ian White from Autonomous Research. Thanks for the presentation. Three questions from my side, please, if that's okay. Just first up on the outlook for SimCorp and Axioma. The 13%-18% ARR growth, how much of that is expected to be delivered by SaaS migration, upselling of existing SimCorp clients? And how does that compare? Basically, how much of SimCorp's recent growth over the last three years, say, was driven by that SaaS migration or upsell channel, please? That's question one. Number two, similarly, on IMS, how much of the growth there, I'm thinking again, mostly about SimCorp and Axioma, depends upon doing more in North America? Maybe you can just offer some thoughts around that market specifically, please.
Just finally, on the fixed income roadmap, the extra EUR 300 million of revenue there, can you just spell out for us what growth might you be able to achieve here in the Euro OTC clearing and the short-term euro rates? Either a market share or an absolute number. What sort of policy proposals, I guess, have you embedded into your thinking, please? Those are my three questions. Thank you.
Thank you, Ian. I suggest the following, that Christian, you take the first two and maybe supplemented by comments from Stephan. And then we've got Erik Müller here in the room. If you take on the first shot on the fixed income one, would be great. Christian?
Sure. Yeah. So, let's start with the first one, which speaks to the ARR outlook for SimCorp, including Axioma. So SimCorp is somewhere between 5 or 6 times the size of Axioma. So, to get to a 13%-18%, of course, SimCorp needs SimCorp in the kind of pre-integration to Axioma world, needs to drive the majority of that growth. And that's ultimately the same growth story as we had before we'd entered into Deutsche Börse Group, as being outlined in the SimCorp Capital Markets Day, roughly a year ago. Plus, obviously, the top line synergies that we are driving through as part of the integration with Axioma. And that actually leads me to the second point of your question. So, a big part of the top line synergies is actually North America.
So, it's always been on the roadmap for SimCorp. And as I started by saying, today, we have now 8%, and that's SimCorp standalone, market penetration in North America. That's where the biggest bulk of our addressable market resides, and that's also something that is critical to our growth story. And that's why the Axioma model, if you will, integrating that in with SimCorp, so much sense. So, actually, North America is close to being the biggest location for the combined company, and we are now coming in with an additional 400 customers in the Axioma world. And we suddenly have a real footprint in North America that we can both cross-sell, but also that we can utilize to take market share in that specific market.
I would just add one comment, if you allow, which is what we have already seen in the last few months, is that in terms of that AR outlook and the growth momentum, it's not only the complementarity between Axioma and SimCorp clients today, but it's very much the clout of the wider group. The sense of confidence behind the investment commitment that the group is making, has been among the very big-ticket clients that were in progress stages. Now, those are always a small number at certain times, but again, has been a big driver, and that gives us also, for the U.S. market, a much better sense of confidence.
... Yeah, maybe on the last one. Can you hear me?
Yeah, probably you stand up, Eric, so that everybody can hear you.
On the last one, my name is Erik Müller. I'm responsible for the CCP, Eurex Clearing and running the fixed income business. So, the EUR 300 million upside, including up, including 2026, that Thomas has outlined, includes essentially, all these four components that were on the slide. So, there is the, long-dated ETD, exchange-traded derivatives. There's the short-dated, Thomas mentioned our entry into Euribor. We already have an €STR contract, depending on what will happen on the short end. Then there's repo, which by the way, is at the moment, our fastest-growing business in fixed income. And then there is the OTC part. And within the OTC part, we're currently at EUR 32.5 trillion in notional outstanding. That gives us roughly a 20% market share versus, the incumbent in the UK.
In notional terms, if you look at trading activity, the number would be lower. It's roughly 10% if you include the long-dated IRS and what's called the FRAs, the forward rate agreements. If you were to strip out FRAs, you would conclude it's only 5% share. So, with these kind of metrics, we were careful not to give out a sort of market share goal, 'cause there is not a direct relationship between the market share and the revenue, as many of our large sell side clients are on packages where they can consume, you know, unlimited amounts of activity for a package price.
So, I think that's why we are confident that this business will continue to grow, and obviously, there is also regulatory tailwind in all the discussion that I'm sure you follow around the sustainability of the current split of the business between the U.K. and the E.U. You might be familiar with EMIR 3.0, and the proposal is still under discussion, but there is a high likelihood that something called the active account requirement will become a reality sometime next year. There's still a lot of debate about the technical specifications around that. So we are, in a nutshell, confident that we can further grow our share in this market. It is a contributor, a significant contributor to the 300, but it's less than a third of the total. Yeah.
On the strong base we have today, even if market shares continue to grow gradually, what we've seen over the last couple of years, we are confident that this part will contribute the necessary amounts to reach the EUR 300 million. That's baked in. We haven't baked in erratic scenarios of, you know, hard thresholds by a certain amount of time, et cetera. These are all reasonable assumptions that we have picked to feed into the overall EUR 300 million target.
Can I just ask one follow-up on the four points you mentioned?
Just a second. Yeah. Could you wait for the mic, please?
Sorry, just one quick follow-up, please. Just on the EUR 300 million-
Mm-hmm.
Am I right to think, is the OTC clearing the largest portion of those four pieces, or is, is repo, for example, a much bigger opportunity there that you see?
Repo is, indeed, even slightly more pronounced within those three hundred than OTC, and there are both cyclical reasons, if you want to call it that way. You follow the ECB's policy; there's still a lot of excess liquidity in the European banking system. There are estimates of around EUR 600 billion. It used to be over EUR 1 trillion, and those will fade out until the end of 2024. That's the explicit goal of the ECB here. With that, the ECB tells the European sell side that they should go and refinance themselves again in the repo markets as they used to before the crisis. So, that's one thing that's going on.
Structurally, there is a concern in especially the regulatory camp globally, that the risks from banks are well understood, but less so, from the buy side, and especially the liquidity risks in the buy side. You have followed U.K. LDI crisis, et cetera. There are a lot of follow-ups that are done on the back of that, and the conclusion is that all those buy side firms have been dragged through regulation into exchanging variation margin every day and putting up initial margin against future exposures. That requires cash. When they sit on high-quality securities, and Stephan Leithner mentioned this as a driver for the Clearstream business as well, it's very important that there are market infrastructures that can help transform high-quality collateral into cash. That's the structural driver.
Buy side needs access to the tripartite and slash cleared repo markets to mitigate that liquidity risk, and that explains why, repo is a very significant part of, the whole EUR 300 million target.
... Got it. Thank you.
I think Mike, one row back was pretty quick in raising his hand.
Thanks, Ian. Thanks, Ian. I got three questions, hopefully, relatively quick, please. Just regarding the combination of SimCorp with Axioma. If I recall, when you first announced the Axioma deal, you talked about Qontigo and ISS being combined together. So, I was just wondering if you could help clarify, especially how General Atlantic, which was a partner with Axioma and Qontigo, sits in there. And then second, in terms of the buyback policy that you announced yesterday afternoon, I think Theodor said that we shouldn't expect anything large in terms of M&A, either into 2024, into early 2025, which allows, you know, the flexibility to do a buyback next year. How should we think about that buyback policy going forward?
Is this a one-time, or is this something that could be recurring, depending upon your M&A, appetite? And then finally, just going on to SimCorp. I, I think, you know, you noted that North America was a, a key area of growth because of the market share potential. But, you know, of that 8% TAM growth that I think you highlighted in the presentation today, how does that look by region in terms of the Americas, Europe, and then Asia Pac? Thank you.
Thank you, Mike. I think the first question goes to Stephan, clearly, right on the SimCorp, and the GA situation, Axioma situation. The second one with the M&A, and what do we expect for the next year, goes to Gregor in the first cut, right? And the third one, SimCorp United States, goes again to you, Christian.
Thank you very much. Let me quickly take up the point between Qontigo and ISS at the initial announcement. For us, the game plan was from the outset, very much to build on the partnership we had with SimCorp from the past already. Now, given the public market transaction context, you know, it, a lot depended on the outcome. With the 100% ownership of SimCorp, we clearly have a different degree of freedom, and we truly believe that over the last few years, many of the content synergies between Axioma and the index business have been built. They won't go away. We are offering optimized indices for ETFs. That will continue. That's a fantastic capability, but it doesn't require being housed together.
That's why now the real benefits from an IT background development story, roadmap, as we have talked about, it's very much between Axioma and SimCorp, and the staff support and the wave behind that, making that combination really tangible, has been very strong. With respect to your point around GA, GA continues to be at 20%, and now the sole external shareholder in the context of ISS STOXX. They are not a shareholder anywhere around SimCorp, so also not in the combined Axioma SimCorp.
Gregor?
Okay, I can take the second question with regard to the buyback. So, in principle, we extend now the toolbox, and our understanding is that it's not just a one-time exercise here with the EUR 300 million. And we say for 2024, we won't do M&A, but we say we have a strong cash flow generative business, and even with that, you see that we come very soon, latest in 2025, in a very comfortable situation again. But then we have to make the decision whether we want to follow the path of doing M&A or whether we do a share buyback. So, it's open, but it's not just a one-time exercise, so we extend our toolbox and are much more flexible and have more options.
Very good. And on the addressable market question for SimCorp. So, as part of the Capital Markets Day a year ago, we did a little bit of a scientific exercise in terms of calculating the addressable markets for SimCorp. As I just said before, we normally set the bar at EUR 10 billion assets under management, and if you do that, you end up with around 1,800 companies across the world that plays in that space. And around 750 is in North America, another 750 is in EMEA, and then the last portion is in APAC, including Australia and New Zealand.
So, those are the benchmark numbers we talk about when we talk about market share, and the 8% is not a growth, it's an absolute market share in the North American market, as we speak. That's basically where we are coming from, as we speak. So obviously, normally, the next question is: How much is there to win? What are the other ones using, and what is actually going on? We are so fortunate to play in a world where there's still a very, very large volume of legacy systems that needs to be replaced at some point. That's one statement, and of course, we can go into detail as we go along.
The other one is that if you then put our biggest competitors in the mix, despite what we all say, very few of us has one customer front to back, all asset classes, once we end. So, that means that our competitors can potentially also count some of the ones we count. So, that also means that the share of wallet is in a very, very important growth driver out of the already 300 existing customers that we have already onboarded onto SimCorp, and to a certain extent, sometimes less risky, because you already have the relationships, and you can build from there. So, those are the two important dynamics when we talk about market share.
We stay still on this side of the room. Hubert, first row on the right-hand side.
Hi, good afternoon. It's Hubert Lam from Bank of America. Just two questions for me. Firstly, sorry, going back to the buyback. I guess you said that for buybacks, you would only do it if you have excess liquidity. Can you just talk about what you mean by excess liquidity? How much cash you need? So, just so we can think about what potential, when we do our forecast, what potential there is for buybacks and/or M&A. Second question is for Investment Management Solutionss, you talk a lot about the synergies you have between SimCorp and Axioma, as well as the synergies between ISS and STOXX. But can you also talk about the synergies between those two segments, i.e., SimCorp, Axioma and ISS STOXX? So, what are the synergies between the two broader segments?
Thank you.
Gregor, again for you. You are in most demand.
I think share buyback is important, obviously, right? No, excess liquidity, we will have in 2025, we will have more than EUR 1 billion excess liquidity available due to our strong cash flow generative business, and therefore, we have to make a decision in 2025 whether we want to continue to do M&A or whether we do a share buyback. So, with that extension of our toolbox, we make it very clear that's a clear option to do that again in 2025. But we are open, and it's not decided.
Structurally, if I may add, right, since we have higher interest rate environments, it's pretty clear that the cost of capital are higher and therefore M&A is structurally more demanding.
First, with respect to your second question around the synergies between ISS, STOXX, and the synergies on the other side, SimCorp and Axioma, they're in two dimensions, really. One is the client dimension, and they are very much, you know, this is taking a different type of conversations. That both ESG data and index are very strategic data discussions, different from regular sourcing. At the same time, as we said before, SimCorp is a key system platform front-to-back type conversation. So, that's where we see with the bigger asset managers, both of them are allowing us to elevate beyond just the normal purchasing points into something that is more a C-level type conversation. Now, the other side is, what I alluded to earlier, is we have a number of true product synergies, in particular from the analytic capabilities that already existed within Axioma.
So, the optimization, the risk, the factor approaches, is something that, on the index side, has allowed us to progress and win big mandates and switches, as you may have seen in the press also in the U.S. I think that will all obviously continue.
Thank you. Again, on this side of the room, Benjamin, in the first row.
Thank you very much. Benjamin Goy, Deutsche Bank. Another Investment Management Solutionss, and then a second one more on Trading and Clearing. The last two major transactions you did actually surprised positively versus the initial statements. Was just wondering, where do you see more upside risks? Is it the Investment Management Solutionss? are it, sort of, say, the underlying execution of SimCorp or maybe also synergies with security services and Fund Services and other businesses of the, of the group? And the second question is on, you mentioned F7, but, you know, I think you can take T7, C7, F7. How much of a benefit is that to, as one group, operate across various asset classes and as maybe players across these markets actually converge, also when you think about digital assets going forward or commodities?
So, what's the benefit in terms of product development, revenue opportunities, and maybe also bottom line as you scale these platforms? Thank you.
This time, we kick off with the T&C with you, Thomas.
Great. Thanks a lot, Benjamin, for the question on F7. It's actually a quite important further development that we believe will really strengthen our value proposition. And I think the benefit that we expect from it, first of all, that we have a joint technology stack lowers the entry hurdles to our marketplaces, so connectivity and other things. That will be a clear benefit for F7. Just to highlight that again, it will significantly contribute to our proposition, Eric has alluded to it earlier, of margin offsets. So, one of the first milestones will be bond portfolio margining for the repo side. The second milestone will be offsetting the repo market with futures, and by that, we can sort of bring this whole flywheel to life.
The same is true for our commodities business, where we are able, when we move to the next generation of risk system, to much better sort of use the portfolio efficiencies that we have in that stack. So, we really believe it is a great benefit that we have this platform across the businesses rolled out, that we have it known to all the large clearing members with its benefit. And lastly, it will also really contribute and help us in getting products to market. I'm looking here in particular at Equity Index and the work with Gary. We will have new pricing engines included in the F7 system that will just allow us to push the sort of OTC to on-exchange business with new product approaches.
So, I should decide who's gonna do the overall performance?
No, you should do it.
No, I think we,
... We obviously have the SimCorp plan as standalone. That's basically what we went into to the situation with, and that's been pretty well articulated and, and well documented. So, what we're looking at, of course, now is how fast can we do the integration? How fast can we spend some of the integration money that we're adding into, into the universe and, and SimCorp and Axioma, and get that additional top line growth out of that, and therefore also bottom line. SimCorp was already on the path of creating better profitability. That is also well documented as we go through the SaaS part.
I think the part that has really is yet to explore, and here we're also a little bit conscious of how we spend our own time, also in the middle of a Q4, is the wider Deutsche Börse universe, if you will. How do we work with Clearstream? How do we work with Trading and Clearing, and how do we really get that full group-wide value proposition on the road? But we have a lot of good ideas that we already set sail on, and we really need to execute on them before we kind of explore the bigger world.
In addition, yeah, just for the minutes, guys, right? When we approached SimCorp, we said we are happy with the 50% plus one share, right, majority. And I think it's a huge advantage now that we could squeeze out the company so, quickly, right? This gives us much more impact in creating synergies now, and it should be mentioned as well. Andrew, in the second row on the right, please.
Afternoon. It's Andrew Coombs from Citi. Thank you for the presentations. If I could ask a couple on your leading KPI cash earnings per share, and then also another one, SimCorp. So, on the cash earnings per share, just firstly, a simple question. You're guiding to EBITDA 11% CAGR, cash EPS 11%. What are you baking into the per share part of that in terms of buybacks? Is it just what you've announced today, or is it anything incremental? And then, more broadly, on your M&A policy, you talk about one of your defining features being cash earnings per share accretive over year one to three. In a hypothetical situation where you had a transaction that's cash earnings accretive, but statutory earnings dilutive because there's a big PPA charge, how do you think about that conceptually?
The final one on SimCorp. Thank you for the ARR metric. I just wanted to ask if you could elaborate on revenue and cash timing recognition of a software-as-a-service client versus an existing on-premises client. Thank you.
Easy one for you, Gregor.
Yes, sure. With regard to the cash EPS 11%, what kind of share buyback is included in that number? So far, in the 2026 number is only the EUR 300 million included. With regard to the second question, so more conceptually, so, we focus on cash EPS as we want to exclude the effects out of the PPA. Yes, the PPA hurts, obviously, the PNL, but otherwise, we would punish M&A, and that's why we focus on cash EPS. So, excluding here the PPA, and we think that is the right measure, the right thing to measure our success on an earning basis.
Christian, again, for you. You can't shy away.
Clearly not. So, why don't... That's a very good question, right? So, and I kind of expected it to come at some point, right? So, let's go through it. So, SimCorp is historically operating a traditional upfront license and maintenance model, and then since 2016, we've sold every new customer on a subscription. As we go through the SaaS transformations with the customers on-prem, they also shift from a traditional upfront license model to a subscription-based model. We're currently half the way through. That means we have half on an on-prem... Sorry, we have half on a traditional upfront license model, the other half on subscription. Eventually, the one will die, and we will all be on subscription.
The technicality around subscription is as follows: so, if you sign a 5-year deal where you pay EUR 1 million a year, the day you sign it, you book EUR 2.5 million upfront, and that's IFRS treatment, that's the way it works, and then you basically book the rest over the period of 5 years. So, great spikes as you go, and next time you do it again, the whole world start all over again. That also means when you do a change from an old model to the new model, you're also making that spike as you go. So, we've had as many conversations as I've had investor meetings through my career about whether it's a good thing to lock the customer into a long-term subscription model, and thereby increasing the upfront spike, or whether it's a bad idea.
And I can tell you, it's a good idea, and one of the reasons why we changed our guidance principles this year to a more cash-oriented revenue, called ratable revenue, instead of reported revenue, is to make sure everybody understands that the cash impact is super positive from these deals.... But it is, of course, you know, as we all look at reported revenue in some shape or form, and it also impacts margin, then of course we need to navigate through that. But we're really trying to educate the market on what are the right financial metrics to measure our success on, and that is the cash-based revenue.
Thank you. Jochen Schmidt, in the last row in the middle.
Thank you. Thank you, Jochen Schmidt, Metzler. Just one question on D7. This business is still in a very early phase, obviously, but could you already give a net revenue figure for 2023 or any medium-term outlook? Thank you.
Stephan?
Yes, happy to take it. I think at this point, from a revenue perspective, oh, it's not a relevant dimension. We clearly see it as part of our broader digital story. You know, we have now made enough inroads into the core German retail structured product market, which is a high issue volume market. But at the same time, you know, that transition will certainly only become relevant once we move from a narrow financial perspective, once we move into the bigger international bond markets.
Again, my right-hand side, Enrico, in the middle. We also have a microphone on my left-hand side, by the way.
Don't feel pressed, guys.
Hi, thank you. It's Enrico Bolzoni, J.P. Morgan. Another couple of questions on SimCorp, if I may. So one, with respect to the difference between clients that have been migrating to SaaS, or they join as SaaS and legacy systems, can you give an, as an idea in terms of the difference, profitability from your point of view, in terms of EBITDA margin? And the second question, clearly, you have some clients that already migrated, which is still a relatively small proportion of the total. Shall we expect a linear and gradual transition, or actually, because of, I don't know, technological investment, at some point, it could be much faster to transition existing clients to a SaaS model?
If not, is it because of their premises or is it because of your technology stacks, or really, what does make the difference? Thanks.
Okay, let's take the first one first, and there's actually a quite elaborate description of that in the CMD material that was released from SimCorp roughly a year ago, where we go through those deals in great detail. So, nothing has changed in that context. But of course, if you are going from selling pure licenses and selling licenses embedded in a delivery model where SimCorp has third-party costs to hosting providers, of course, the margin from any measure is lower on that. We are not disclosing at what levels they are, but however, what we do talk a lot about is all the investments we are doing in automating the platform, moving people that are involved in managing these platforms to so-called talent locations.
And make sure we ultimately drive our cost base to a more effective level, to basically raise the margin as we move more and more revenue through that funnel. But exactly how the dynamics are, I really recommend that you go back and look at that material. Then the other question, which is a very essential question that we still, to this day, is continuing to ask ourselves about: How fast will it go? And if you go two years back, literally everybody was knocking at the door at the same time, and we got a little bit anxious, because how on earth should we cope with that? Since then, it has proven that in fact, that the senior executives at our customers are pushing for this.
You still have to go through the legal departments, the regulatory departments, the procurement departments, and they have their own rhythm. And that means that especially when we deal with some of the tier one banks of the world, despite the fact that we can have a handshake on the financials within 3 months, the deal can still take up to a year to get finalized. So, there is some slowdown in the whole process. But last year, we said we would move between 5 and 10 customers across. This year, we said we would move between 10 and 20, and that's proven to be right, even though this year it seems like the bigger ones are moving faster than the smaller ones, which is great.
Then next year, we're probably gonna raise the bar considerably, to a point where, we're gonna start to see the engine, really working. For technology reasons, we don't need to force people to do it, because we are literally moving them with the platform, as compared to some of our competitors that need, basically need to terminate the old relationship, move the customer onto a re-implementation on the other side. We have that luxury, if you will, because we built the technology the way we did. I would say right now, it's a good balance between push and pull, and we will continue to kind of monitor very closely.
Okay, we're starting on the left-hand side now, last row.
Thank you. Three questions. So, Matthew from Columbia Threadneedle. Firstly, would it make sense at some point to Investment Management Solutionss and the investment fund solutions services business at some point, considering you're obviously, you know, it's moving to more of a services outsourcing type business, and we've obviously seen in the IFS side, you know, you've got Kneip in there as well? So, just a thought. I don't know. 'Cause clearly, if you did that, then that would become one of your largest in terms of an infrastructure business. I know that's the kind of way you're trying to move, that becomes then your largest division. Related thereto, presumably you've thought or you'd like that recurring revenue business or those types of businesses become a majority in the mix at some point.
Don't know whether it ever becomes an LSE type of mix, which is close to 70%. So, if you ever were to want to get to that point, have you thought about how you might want to get there? What else you would want to add or else you would want to focus? And then finally, wealth management and distribution are very interesting areas. You've obviously done that transition from sell side to buy side, and increasingly so on the distribution side. Great opportunities. What is your exposure there, and what are those opportunities for you to move there? Oof! Sorry.
Strategy 2030.
Exactly. The easy answer is it's not within the Horizon 2026 timeframe, right? And thank you for the input. It is... At the end of the day, quite frankly, I think, if you look ahead, how fast the industry is changing, right? And how agile you need to be, I think currently we will definitely focus on building out our IMS segment as it is, right? And sometimes you have to be aware that you should not create too complex structure too fast, right? And that's what we have done pretty well, and therefore, for the foreseeable future, I think this is too far-fetched, the IMS and the IFS combination. So, I'm seeing there is a strategic logic somewhere, right?
But you should not, you should not think of that we have this, as a plan B in our mind. Correct, Stephan?
Yes. But I think on the other side, picking up the back end of your question, though, on the wealth management and the other dimensions, that's clearly something where we do have strong positions, and not only in the fund business. But let's recall that Axioma is very strong on the side of portfolio construction, and they are indeed sort of the wealth business. And again, Gary alluded to earlier of the custom index space, and that, again, is something where the index capabilities are clearly taken beyond just the more narrow, where again, the wealth client base that we have on a number of fronts is a very powerful space. So, we are very cognizant of that space. I think it is a segment that is fast growing, but it is one where we have attractive footholds.
I think there was still a question on the recurring revenue, and you saw from Theodor's presentation, we are targeting 65%-70% already by 2026, and the range somewhat depends also, obviously, on the development of the transaction-related business. Second row, Roland Pfänder.
Hey, good afternoon. Roland Pfänder, ODDO BHF. I would have two questions, beginning with SimCorp and Axioma. You laid out your target of 13%-18% ARR growth. So, how much of this would be related to existing customers or maybe price increases? And, and what would be from, yeah, signing up new customers, actually, from this growth rate? Second question, regarding cash equities. What I saw from a presentation, it's, somehow guided flat. How important is this business actually to the group? Maybe in terms of, launching derivatives or something like this. So, what's the status of cash equities and how do you develop it forward? Thank you.
Let us start with Eric. Yeah, Eric Leupold is our head of Cash Equities. Eric, please.
Yeah. Hi, guys. You want to take the first part, how important it is for the group or?
No, go ahead. Go ahead, you can take it.
Well-
You're old enough.
Well, you saw right, I think, in the presentation. So, Eric Leupold, heading Cash Equities for Deutsche Börse Group since 2.5 years. I think for the overall group, I think it has become less important than maybe like 5, 6 years ago. I think from a structural side, it's not growing structurally, right? I think we are fighting for market share, especially on the DAX side, and I think the European market overall, in terms of capital markets development, is pretty weak, we have to say. I think the overall development of Capital Markets Union and all these things have not come into a, a, a place where we, where we can, like, profit from, from those developments on the regulated market sides. I think listing businesses within the European Union are pretty weak, right?
I think we saw a weak year also on Deutsche Börse side, on Frankfurt Stock Exchange in terms of listings. But still, I think we are trying to manage this business very efficiently. I think we did so over the past years. I think we were benefiting a lot in 2020 and 2021 from the tailwinds we had from the Corona time, and also from retail investors who were trading, like, heavily. This came down significantly in this year. I think we had a pretty poor year in 2023, but still, we are operating on a high margin and we're trying to keep up this business and enhance, I think, our value chain on the cash equity side over the coming years. Yeah, that's it. Thank you.
Yeah, let me add. It is an integral part of our proposition for Trading and Clearing, which goes through the value chain, starting with index. We've heard that from Gary, continuing through then to derivatives into our options markets. We have it all on the same technology stack with T7, and I think we can be really also very confident that we have a strong robust market share in the DAX shares. But it is, of course, a business that is right now focused on Germany, but both for the institution and for the retail side, relevant.
... I remember exactly some six years when I, when I took over the leadership at Deutsche Börse, I was asked, because many people were fearing that I would make the decision to go downstream and consolidate cash equity businesses, right? Every year, another cash equity business. Others have done this, and I clearly stated in my first three months, this is not the way what we are doing. So, cash equities business, given the structural, components of the growth, the higher volatility, what they, what there is, that we are focused on the domestic market. We, we want to keep a 60% market share on the, on Xetra side, on the lit market side, but we have to do with dark pools, with systemic internalizers. We are not active in Europe, right? This is simply not our business per se.
But in terms of the perception in market, it is important that we don't give up this business, right? Despite the fact that it's just a EUR 300 million business, which is a 6%-7% or whatever of our overall revenues, right? We have to work hard in order to demonstrate to the markets that we don't give up this business. But is it an area where we want to invest heavily? Well, no. Left-hand side, first row. Kyle, please.
Well, there's another question, I think, right? So, we have an-
The pricing, your pricing question, I think, yeah, we didn't address.
We didn't respond to the existing versus new customer question that was in SimCorp. So, I want all the questions, so we keep on going. No, no, it's a very good question, right?
You need to work for your money, my friend.
Right, exactly. Clearly. I would say the, for the strategy we developed, it's been a key decision criteria and design criteria as well, that we wanted to generate more and more growth through existing customers. Above all, it's more predictable, and there was a huge amount of opportunity and value we could provide to those existing customers. That goes both for extending the functional footprint of what we do, but also for adding the SaaS component, even the business process as a service component on top. Typically, when we move a customer from on-prem to SaaS, you at least double the revenues, and then, of course, if you put BPaaS on top, you make an even more interesting commercial journey. But it also means that sometimes the...
It's a little bit more complex to understand the growth drivers in SimCorp, where if you go ten years back, you could more or less measure the growth on the number of new customers that comes through. Which is still important, and it will always be very important for any company to win in a competitive market, because that's where you see the true colors. But in the end, we now have both handles, and it's by far because of the SaaS transformation, it's the existing customers that is driving their growth.
Now it's your turn, Kyle.
Thanks, Kyle White, KBW. Stephan, I believe you mentioned that as the yield curve normalized, you could possibly lock in more of the rate upside in security services and II, which would give that revenue stream some more stability. I guess, can you provide a bit more color on the regulatory changes that you noted? Does that imply that you'd be able to term out some of those balances? And if so, how far out the curve can you invest? Is there a certain percentage of the balances that could be extended? And then, second question is just a follow-up on SimCorp, clarification on what was previously stated. Given that you're increasing the ARR guidance for 2023, would that also imply higher revenues than the EUR 600 million that you previously guided to for 2024?
Do you want to kick off?
Yeah. Sam, do you want-
All right, Sam, yeah.
So, Sam Riley, Securities Services. So, Stephan mentioned earlier on with regards to NII, and to your question specifically, I think what we've seen... Sorry, there's a bit of feedback. What we've seen over the last few months, certainly as interest rates have become, you know, flattened in terms of the curve, but also in terms of our balances, they normalize what we would call operating balance, right? Under those conditions of the operating balances, we've got certain operating balances that obviously from a zero to five-year perspective, we could obviously use in that curve. It's a small amount of the total operating balances. So, whilst it does give us some leverage over the five years, it is a small amount of that EUR 500 million that Stephan talked about.
In addition, Kyle, we have really looked at some 18 months ago, we've looked into this, right? Exactly as I said, on the background of the regulatory requirements, and we finally decided not to utilize this tool. It is simply, it doesn't pay off, right? Because then you have to start to create completely new reporting systems and so forth, and therefore, it's a very limited number. On the ARR?
Yeah, but maybe what I should say about that, so, as you probably know, we were guiding on three numbers, and one of them was so-called ratable revenue, and the last one is margin. When we left the market last Monday, we were still well within the guidance of all three numbers. But you can't necessarily say because we are upgrading the guidance on ARR, that we're also upgrading the guidance on IFRS revenue. It doesn't necessarily function that way.
Thank you. Any further questions? First row over here.
... Hey, thank you. Oliver Carruthers from Goldman Sachs. Just one final question left on SimCorp. I think you mentioned back when the transaction was announced, that you were gonna take a different approach to SimCorp, in terms of capitalizing software R&D spend. You know, can you just remind us of the logic here? And can you quantify the effect this is gonna have on the SimCorp and the IMS EBITDA margin next year and the year after? And then potentially, could you also talk to the trajectory of your software spend within SimCorp for the next few years? Thank you.
Well, the capitalization is probably better, you guys take that.
Then, Gregor, if you wanna take it-
Yeah, I can take it. So, we have currently different accounting standards at SimCorp, where basically you do not capitalize, you see the investments, and we on Deutsche Börse do capitalize. So, in close alignment with our auditor, there're the need that we harmonize these efforts from a group accounting perspective. And if we would adopt the accounting standards we use today in Deutsche Börse, then there's a need to capitalize the R&D spend. So far, the R&D spend is in the range of EUR 100 million plus, and our assumption is that we roughly capitalize 40% out of that.
The other question was SimCorp spend on software? Was that-
Yeah, exactly.
Well, well, give me an example of what that could be.
So just-
We normally sell our software, we don't buy it.
Sorry, the second part of the question was on the impact on this changing capitalization will have on the EBITDA margin of SimCorp within DB1, so just a quantification of that would be perfect.
I think taking the amount that Gregor just alluded to, or also if you relate that back to the sort of cross revenues of EUR 590 million, roughly EUR 600 million, then you get an order of magnitude, what it means from an EBITDA margin change.
Yep.
Does it address your question? Good. Good.
We don't have any questions on the telephone line, so it's really up to you. Tom, second row on my right-hand side.
Oh, thanks very much. It's Tom Mills at Jefferies. This might have been partly covered off in one of Eric's answers earlier, but I think in the presentation you talked about potential for better collateral management in conjunction with SimCorp. Can you just expand on how you see that working? And then just on the cash balance side of things, I think at the Investor Day last year, you said, you know, we would expect a slight reduction from our customer cash balances in a higher rate environment. I guess the reductions we've seen so far are kind of attributed to cyclical effects, and obviously you're expecting some underlying growth over the next few years, you know, with, with rates tapering down a bit. But just wanna get your view on why that hasn't perhaps happened as you might have expected it to.
Whether it's some structural impact that's different than you'd anticipated. Just intrigued on that. Thank you.
The second one goes to you, Gregor: cash balances and the development.
Yes, I can start with that. So, we see currently a structural component. So, in the first quarter, we had some EUR 18 billion customer cash balances, then it went down in Q3 down to EUR 15 billion customer cash balances. Yes, there was also some seasonality. In October, we are now back to EUR 16 billion, but still the EUR 16 billion are lower compared to the Q1 level we have seen. And that's why we guided, and it was mentioned by Theodor, that for 2026, we basically expect some stable customer cash balances in the range of EUR 16 billion.
So, in next year, we should also consider that we most probably will see a down level of the EUR 1.7 billion what is currently blocked, and so it will slightly go down next year, and then it will go up with a close prediction we have to EUR 16 billion back again in 2026.
With respect to the collateral management or taking that up, I mean, keep in mind, it's in what we described as the ecosystem, internal ecosystem dimension. But the main driver is quite simple, that, on the buy side, one of the first direct reach outs to Clearstream and one of the key onboarding themes has been around the cleared, sort of derivatives handling for the buy side and the requirements that regulatory have developed there. So, those have led to a more active role around collateral management by Clearstream. So, that shows without disintermediating any existing relationships, buy side directly working with Clearstream. Now, then it comes really down to what is, in terms of collateral management capabilities, built into Dimension to SimCorp systems.
Also, there, just to emphasize that what sets us apart from a technology perspective on the Clearstream side, is that we have one of the really superior collateral optimization engines. So, if you link that analytic capability with the SimCorp side, this is one of the early wins. And when I referred back to two weeks ago, the leadership team sitting here and banging the door, "Let me get in," I can tell you that Sam was feeling he gets pushed back, and the Trading and Clearing colleagues get a first entry. No, it's not the case, but it's one of the themes that is very tangible.
... Any further questions from the audience here? There's Tobias Lukesch in the back.
Yeah, hello. Tobias Lukesch from Kepler Cheuvreux. Two quick follow-ups, maybe. Gregor, you mentioned the Cash EPS, and I appreciate that you do not want to dilute the impact of M&A. But could you maybe share the reported EPS that you expect in 2026? So, what is the PPA impact that you basically then adjust here on the numbers? Secondly, on the digital platform, basically, I mean, you decided in Q3 to basically impair the whole goodwill of the crypto finance business. And if you do look at the growth component of the Trading and Clearing segment, it's definitely a driver. You mentioned fixed income. I was just wondering, you know, if it really takes until 2030 to get a more visible income or revenue stream out of that asset area, basically.
A very last one may be on costs, if I may. I mean, IT-wise, should we expect any pending spending spree on one of the segments, you know, besides the restructuring, the kind of integration that we see in the IMS segment? Thank you.
Gregor, do you wanna kick off with the EPS question?
So far, we guided that with regard to SimCorp, we expect some EUR 80 million additional PPA for 2024 and the next years. Currently, there is roughly from our depreciation, roughly one third is related to PPA.
Thomas, the second one?
Yeah, probably briefly, picking up on your question on the potential for the digital asset. Obviously, currently, we are in a sort of, crypto winter, if you will, and also have some uncertainty on the regulatory side that, delays some of the institutional pickup. I hope it is clear what we outline here is a ecosystem that is very strong in its proposition for institutional clients. Also, crypto finance is focused on onboarding institutional clients. And, your question, I mean, it's, probably in Germany would say it's in der Luft. We have not factored in any revenues, which does not mean that we don't have the ambition for any revenues until the timeline, timeline. But it is obviously difficult to predict when we will see a pickup in institutional adoption. That is what we target for.
That is also what we believe in. And cryptocurrencies is just one of the use cases out there that is waiting for broader institutional adoption. And MiCA will be, of course, an important milestone on that way that we are targeting. But then there are other use cases that we have both on security tokens or alternative tokens that we hope to pick up. But the timeframe, we are obviously conservative in our estimates, but we clearly are expecting potential there.
And if I may-
To build, just in one sentence, to build on what Thomas was saying, and to my earlier reply also on D7 and the retail structured products. What we do already see is clearly that this creates a natural, you know, flow of volumes to the venues and to the infrastructure that we're building around the digital instruments. For example, on the retail structured products, historically, very much home market-based issuance. We've seen clearly that, as Clearstream Banking Frankfurt is offering more efficient issuance, instant settlement possibilities, and so on. We do see from other European locations, issuance activity by the big players. It's a narrow market in retail structured products, but it's big in France, it's big in Germany, it's big in the Benelux. So, from those markets, moving to the issuance venues that offer the most, the best.
So, I think there is a scaling effect when the right pricing dynamics will come, is certainly the second element.
And we have got Christoph Böhm with us, our CIO and COO, is completely frustrated, disappointed that he couldn't make a statement today because of the technology, and therefore, you deserve to get the last question, right? And mention the cost as well, not just the fun part.
So, thank you very much for that question, and giving me the opportunity to talk to you. So, first of all investment strategy. What do we do, when it comes to new technology? You can layer this into three areas. We invest into, optimizing the existing run business. This is more about how much money we have to put into change and how much we can tune, the run piece. On top of that, we digitize the existing business. This is where we add capabilities to allow us to connect customers who continue to run in the existing environments, new products, and especially provide interfaces, for new digital products. And on top of that, we put, completely new capabilities, which are focused, on digital products and mostly born, in the cloud environment.
To make it more specific, what we are doing is, we implement new technology. For example, when we create an environment where the outdated landscape either requires a big investment or has no meaningful future. For example, when we sit together and we created the future IT landscape for the fund business, we decided that what we have in place is a very good starting point to add capabilities and to further help the customers to digitize. But also, if we make it a standalone business, we need to have a respective IT environment that comprises of a core banking system and all the related surroundings. And of course, this is not rebuilt in the existing IT footprint. It was put and designed... It was designed for cloud, and it is put into a cloud environment.
This is how we address that. When it comes to how much we invest and how we manage cost, we have an ongoing investment envelope, which is split into optimizing the change-to-run ratio, which is giving us constant benefits on the run side and frees up money for further change, as I said, to be split between traditional investments and digitization. And then we have additional investments. We are especially focusing into the partnerships we are having with the cloud hyperscalers to push on one side to make use of cloud platforms, to create the data lake we want to have consistently across the group, and to further develop our offerings around the digital exchange and the digital security space. Thank you.
Back to you, Theodor.
Yeah. So, we are done now. Thank you for coming. Thank you for your attention during the long hours of presentation. Even more, thank you for your questions, for great questions, and for the, the fact that you are covering us and talking to us on a constant basis. We appreciate the dialogue quite a lot, right? Also, on a one-on-one and group-wide basis. We'll continue this, this afternoon and tomorrow, and thank you for coming. Thank you for joining. All the best for you and for Deutsche Börse. Thank you.