Good morning, everyone.
Good morning.
Morning. Great. Thank you for joining us. It's a pleasure to welcome you to LSEG. I had the opportunity to meet quite a few of you last night. For those who I haven't met yet, I joined LSEG in July of this year, and given the pace with which we're operating, it really feels as it's been much longer. Just to give you some background, I have 28 years of experience, leading large global businesses in capital markets, post-trade, and the data business. I joined from Mastercard, where I was on their leadership team for the data and services business. Now, welcome again. As I said, great to be here with everyone. We've got a lot to cover.
I'll spend the next half an hour or so talking about where we want to take the business and share my vision, as well as plans for the business. We're at a really critical stage. As we move from integration to transformation, this is a great time to pause and review where we are in the division, what the landscape is, and what our future strategy is. I will lay out some of the strengths that we see in the business, and also where we see the opportunities for further growth as we look to strengthen, as we look to innovate, and as we look to scale our business. You'll also have the opportunity to listen to my team as they spend time with you during the breakout sessions. Let me start by setting the stage.
David's already highlighted the progress that we made since 2021, so let me reflect on what makes our DNA business unique. As you can see, there are a number of strengths listed on the slide. I'm just gonna pick one of them, and I'm gonna focus on that. So our broadest and deepest data. So we connect to 550 real-time, multi-asset venues. Our market-leading, real-time network carries a staggering 220 billion messages every day. And we, we've achieved all of this through our laser focus on our data quality, and the growth of AI makes this even more important as it opens up significant new opportunities. And at LSEG, we measure data quality in three dimensions: data accuracy, data coverage, and the timeliness of the data.
Delivering on all three requires a really careful balance, and we have a proven track record of getting this right. As you can see on the right of the slide, we already work with 99 out of the top 100 banks. That, in itself, is a very impressive statistic. Clearly, we want to be 100 out of 100, and you know there's a salesperson waiting in the wings, eager to be the one that gets the 100th spot. Now, let me spend a couple of minutes on the changes we've made to our reporting structure. Yesterday, Anna spent some time talking about which businesses will now be part of Workflows, Data & Feeds, and Analytics. Going forward, DNA will report along these three business lines. This new structure really allows us to be more focused, more aligned on our priorities.
It also enables us to maintain synergies that we currently have with FTSE Russell, Risk Intelligence, and of course, the rest of LSEG. And this aligns really well with our partnership with Microsoft, which I will cover in a few minutes. So in essence, what are we trying to do here? We're creating a product-led structure that enables us to be a client-centric, world-class product organization. That's something I'm personally really excited about, and you'll hear this more from me throughout this presentation and any conversation you'll have with me later today. Now, let's look at our market opportunity. You'll see on the left of the slide, a number I'm sure most of you are familiar with, our current TAM, which is estimated at $35 billion, and it will grow at about 5%-7%.
We'll deliver this growth by continuing to strengthen on our core and, you know, things we're doing with expanding our product functionality. What's interesting about this number, it only represents what customers spend on third-party providers. It's under half the spend of their total on Data Analytics. There's an estimated $50 billion of spend that customers currently take in-house to clean data and perform manual activities. This is, for us, the new playing field. That's really exciting, and it provides the clear growth opportunities that we see in the coming years, and we want to address this TAM with our offerings with Microsoft and beyond as well. On the right of the slide, you'll see structural trends that are facilitating these growth opportunities. So let's try to bring this to life.
Today, some of our customers have up to a couple thousand employees in their data operations team, carrying out technical validations, normalizing the data, and storing it in their databases. It's a very time-consuming and costly exercise. These are the sort of challenges we want to help our customers address, breaking out of the historical view of the market and focusing more directly on our customers' needs. I'm absolutely focused on this, on thinking on how we can help our customers meet those changing needs to become more efficient, and also to help create value for them. If we look at this another way, and we slice the vended TAM by customer segment, you'll see that we have a leading position across most of the customer segments in which we operate....
That gives us a great foundation from where we can drive further growth in the business. This is a complex market. It's also very dynamic, and it has very dynamic customer needs. So we're gonna focus on near-term investment in areas where we see breakthrough opportunities to strengthen our position. Our strategy for growth is working. You heard yesterday, both enterprise data and trading and banking have performed really well over the last few years. The question is, why is that the case? It's because of our concerted efforts on the priority areas you see on the right of the slide, which has ultimately led to better value for our customers, and as a result, improved performance. This is also evident through the record customer satisfaction scores, which resulted in improved customer retention and revenue. Again, you can see the investment we're making in the business is paying off.
We've made good progress in ASV, product retention, and customer satisfaction since we outlined them during our capital markets day two years ago. For me, this is a great business to inherit and to build on, and you can see all the hard work of the integration is already paying off. There's an exciting story of growth to tell, both in the near term as well as in the longer term. What I want to show on this slide is that our transformation journey is end to end. It covers product, it covers sales, technology, and operations. You're gonna hear Ron Lefferts, Triona O'Keeffe, and David Shalders covering a lot more of the details in their presentations, immediately after mine. My objective here is very straightforward. It's to accelerate the end-to-end transformation journey.
I know the story is familiar to you, but it's worth stressing that these benefits of agility, efficiency, and growth will continue to play out, and we will continue to invest here. This is a really important slide, something I'm really passionate about, so I'm gonna spend a few minutes on it. We've identified three steps: strengthening, innovating, and scaling, which will incrementally move us from where we are today to where we want to be in the future. These three steps lay out our journey over the next few years and how it will help us prioritize, accelerate, and grow at scale. Let me start with strengthening, right? We've talked about how we've improved our performance to date. For us to continue to grow, we need to strengthen the business.
This is particularly important, given that we're fundamentally a subscription business with 93% of recurring revenue. We'll continue to expand product functionality and improve the user experience with more customer-centric solutions. We'll also complete the transformation of our technology estate, creating a more resilient and agile platform, which allows us to have innovation and growth at the same time. The next two steps, innovation and scaling, are where we'll continue to invest in our core and win market share. The innovating phase is where we'll capitalize on our existing data excellence to create products that no one else can create. We'll concentrate our spend on fewer and more material opportunities, both organically and through our partnership. Again, Microsoft being a great example here.
Then the last phase is where we can truly scale with an engineering mindset and an innovation culture and become, yet again, a customer-centric, world-class product organization. Naturally, there's been a lot of focus on Microsoft, and I'm gonna cover that in a minute or two. A few slides back, I showed you the impressive performance we're already seeing in the businesses today and how those metrics, including revenues, are trending in the right direction. If we focus on this slide for a moment, it shows some of the organic opportunities outside of the partnership that will continue to drive further growth in the business. Clearly, we have a track record of investment and delivery of results, which gives me every confidence in our ability to drive growth further. Let me give you a preview of some of these initiatives.
So for Workflows, LSEG Workspace will continue to be a critical growth driver. We'll continue to provide customers with an enhanced experience as we upgrade them from Eikon, accelerating the deployment of LSEG Workspace using the OpenFin framework. And there's an added benefit of OpenFin, in that it enables interoperability of LSEG Workspace components within our customers' desktops. That means we can truly meet our customers wherever they are. And for Data & Feeds, we'll help our customers reduce their physical data storage and management costs by offering cloud-enabled and managed Data & Feeds. We'll continue to deliver high quality and unique content across all asset classes, offering unique data assets and content across the latency spectrum at lightning speed, where they need it and how they want it.
For analytics, building on our existing strengths in quantitative modeling and leveraging the breadth of our data assets, we can create new models in a more cost-effective way for our customers. ... And we'll also deliver API-centric analytic tools, enabling customers to easily integrate analytics across their organization. So as you can see, it's important to remember there's plenty of opportunity for growth even before the true impact of the partnership begins to kick in and scales. So in the breakout sessions, my team will spend time with you to go through these initiatives in more detail. Now, let's focus on the partnership with Microsoft, and one of the many reasons I'm excited about the future of DNA. It enables us to co-innovate solutions that will transform the experience for financial services professionals.
We want to enable users, like all of you in the audience, to do more, faster and simpler. So let's picture what a financial analyst or a market data manager needs to do to get a comprehensive view of a company's performance. They have to sift and collate across potentially hundreds of sources, including performance metrics and analysis, to arrive at an informed decision. Our partnership will help that a lot of that pain, time spent, and cost will be a thing of the past. And you'll see from the pyramid, we will integrate LSEG Workspace into Microsoft Office, which will simplify Workflows and expand communities. We will change how our customers discover and experience data, and we will introduce AI-enabled apps and a modeling infrastructure that will improve productivity and enhance customers' own data excellence. Let's see what that really means in action.
We have two demos that bring to life the innovation we're creating together with Microsoft. The first demo will show how we'll deliver enhanced data discoverability for financial services professionals using our data and analytics, all of which was powered by GenAI, native, Microsoft Fabric, and Purview. The second demo shows a use case of an equity analyst, which will resonate with many of you in the audience. It demonstrates how accessing LSEG Workspace in Microsoft Teams through simple language prompts will enable intuitive discovery, visualization, and easier sharing of data and insights. So let's spend a couple of minutes watching both of those demo videos.
As a market manager at Contoso Asset Management, Morgan manages hundreds of LSEG data and content sources using a single intuitive workload in Microsoft Fabric, all powered by LSEG's comprehensive Data Analytics and data management expertise. Morgan's colleague asked her to provide all relevant data to help them evaluate top companies in the energy sector. Not knowing which datasets might be the most useful, she enters a prompt into Copilot. Quickly, she gets recommendations from LSEG's extensive data catalog. To learn more about ESG data, with a single selection, she easily gets an overview of all the ESG data, including coverage, available delivery formats, frequency of updates, entitlements, and distribution rates. To test the content sets with flexible query options, she loads a sample of that dataset in her instance of Microsoft Fabric. Here, she can integrate data anywhere she wants, like this Power BI report.
Now, Morgan decides to test the data structure in her Python notebook. She uses Copilot to further understand the structure and relevance of the dataset, which helps her write the code necessary to run data management and controls. Impressed with the dataset, she makes it available across all applications built on Microsoft Fabric, powered by LSEG's comprehensive financial market intelligence. With a simple workflow, it's also available for her to share with colleagues, easily managing entitlements and access through a single interface. Alex is an equity analyst and decides to shift focus of a presentation she's delivering today to Fabrikam, a client who's been getting a lot of press lately. She fires up a business chat using the LSEG Copilot and enters, "Latest news on Fabrikam." Instantly, she gets top themes of interest from the latest news feeds.
Seeing that relative value has significant upward momentum, Alex enters, "Investigate relative value," in the chat, and again, quickly gets a summary article. From here, she digs into the numbers to better understand performance in the market over time, and the LSEG Copilot pulls up the analysis. Next, she asks the LSEG Copilot to add the last three queries to the quarterly review deck as a quadrant page with the standard formatting and summary. Just like that, LSEG Copilot provides a visual of the new page in PowerPoint. Noticing the quadrants are not in the order she wants, she prompts a reorder into the chat, and the page updates. Thanks to LSEG Copilot, Alex feels confident she'll knock it out of the park.
In just 90 seconds, Alex has pivoted her presentation to a completely different company, produced new, insightful visuals, incorporated them into her presentation, designed them to her liking, and is ready to go.
I've seen those at least a dozen times, and every time I see them, there's a bit of a wow that plays in. This is fairly amazing what we're trying to do together with all of you. So yeah, both of these demos show how we'll deliver on our vision of co-innovation with our partnership with Microsoft. Now, let me return to the base of the pyramid, which is what we describe as the foundation. This is the need for us to invest in our technology... We know that to successfully navigate through the other areas of the pyramid, we must continue to transform our estate. We've got a great story to tell here, so let me go into this in a little more detail. When you look at our data estate today, it isn't as efficient or as scalable as we would like it to be.
This is something that needs to change, and we're addressing it. Transforming our technology estate is a critical element for the delivery of our commercial ambitions across the Microsoft partnership, and this is going to be powered with Microsoft Fabric. It's also expected to substantially reduce our database costs and materially improve the data accuracy and timeliness through modernized, more efficient tooling. Together, these improvements will help us accelerate our ambition of delivering a much more scalable platform for growth. It will also help us be more efficient, agile, and resilient. The Microsoft partnership initiatives I just mentioned will open up the opportunity for us to move further along the value chain, allowing us to knock on the door of the unvended $50 billion TAM that I referenced earlier.
The right of the slide shows where we can operate and open up the in-house spend through the partnership with Microsoft by addressing some of the pain points our customers are experiencing. In a minute, I'll share the timelines for the product delivery, but first, let me go through a couple of examples of what will enable us to win tomorrow. Data management as a service. It's a suite of AI-enabled applications that will help reduce customer costs on data storage, access, and management. So while we're delivering true interoperability through LSEG, customer and other third-party datasets, it will allow our customers enhanced data insights. Modeling as a Service, Analytics as a Service, and LSEG Workspace will achieve interoperability across customer applications and facilitate custom models and analytics development. In turn, these will help us become the provider of solutions across the middle and the front office.
The opportunity to work with Microsoft and create value for our customers is what's really exciting to me. Key to all of this is putting the customer at the center of everything we do. It's incredibly important. It's the only way forward, and it's something I've personally prioritized throughout my career. Together with Microsoft, we're collaborating with our top customers through an iterative validation process, and I'm pleased to say we're receiving lots of positive and useful feedback on how we're thinking about the future of our product offerings. As you saw in the opening video yesterday, the excitement around the journey and where we're going is something that's coming through the senior-most customers that you saw yesterday.
In a recent Design Partner Program session, or DPP, as we call it, one of our customers gave us some really pointed feedback, and I quote, "We don't just want you to provide the data. We want you to partner with us to solve our data rights issues." That's exactly what Data Management as a Service will provide for our customers. We're at the beginning stages, and we're making good progress. There's a lot of interest from our customers, and we look forward to engaging with more customers in due course. Of course, alongside DPP, we have lots of people on product delivery working across the partnership, and we're making good progress. Product development will continue to be iterative as we move from pilots to full commercialization. So much has already changed since we announced the partnership. This slide is by no means the full story.
We've evolved along with the environment around us, and what I'm showing here is how things stand today. So together, we're nimble enough to shift where it makes sense as things evolve. That said, you can see from the slide there's plenty of work underway, and teams are progressing well across LSEG Workspace, data intelligence, and analytics with product delivery through 2024. Let me zoom into LSEG Workspace for a moment, as many of the features I'm going to refer to were in the demo videos you just saw. So let's start with meeting preparation, which is a great example of the work we're doing with Microsoft to create value from our data using large language models and generative AI. This solution will automatically generate meeting preparation summaries, combining insights using our financial data and all the relevant content in Microsoft 365, including documents, emails, and chats.
Pilots will start with the investment banking community, eventually moving to general availability for all LSEG Workspace users. Next, let's talk about Open Directory, which will enable fair and open access to chat and other collaboration experiences for financial services user communities through Microsoft Teams and other chat interfaces. And these are integrated within user Workflows, underpinned by a compliance-first approach. Pilots will be targeted at internal and external users.... Finally, the interoperability of LSEG Workspace and Microsoft products will enable users to seamlessly access, discover, and share content. That's maximizing productivity through more integrated Workflows. And again, for this one, internal and external pilots will focus on web users, and general release will start with wealth management users, followed by investment solutions and trading and banking.
There's also lots of focus and progress on Data as a Service and Financial Data Engineering, with phased product delivery planned, as you can see on the slide. Microsoft is just one of the ways we're building on our linkages across the group. What we show on this slide is that DNA already plays a huge collaboration role across LSEG. As we execute across our growth priorities, there will be further opportunities for DNA to become the connective tissue of data excellence and technology solutions across LSEG. As the divisions continue to work and collaborate, we will be well-positioned to drive further customer value and retention. Our unique offerings make us a really important partner to our customers, which is incredibly exciting for our business. And as we enter the new phase of innovation, we're laying the groundwork to scale effectively in the future.
We will become a customer-centric, world-class product organization with Microsoft as a partner. Our strategic direction includes transformational opportunities to drive growth, to strengthen our business, and also strengthen our position in the market. As you've heard, we have a clear path to this future growth. It's a really exciting time to be in DNA, and you can tell how positive I feel about this journey. I have full confidence in our teams to be able to execute on our plans and to help scale this business. On that note, thank you very much, and let me hand it over to Ron to talk about the sales organization.
Hi, everyone. Good morning. Good to see you again. And I represent the sales and account management team, which is focused every day on making that 99 out of 100 banks to have a perfect 100 score. And so I'd like to talk to you about today about how we're doing that. So as you've been hearing from David and Satvinder, LSEG's been on a significant journey over the last three years, and we're investing to transform our offering and to continue to enhance our partnerships with our customers. And these partnerships are fundamental to the achievement of LSEG's long-term growth plans. And as a sales organization, we have a clear vision on how to build, grow, and maximize those... the value from those partnerships.
Over the next 15-20 minutes, I'm going to unpack that vision for you in a bit more detail. Now, our customer base is vast, and it's highly diversified. Of course, a large portion of our customers are in the financial markets, but we also serve a wide range of other customer types, including corporates, central banks, and regulators. We have over 45,000 customers, including 99 of the top 100 banks, 75 of the top 100 asset managers, and we deliver these services across the globe in over 190 countries. We have incredibly strong relationships with our largest customers, but we are not singularly reliant on any one customer or any group of customers. In fact, of our top 250 accounts, they represent just around 55% of our overall revenue.
It's because of this diversity that we have to ensure that we serve our customers in a differentiated way that allow us to adequately prioritize resource, but that also delivers a highly effective outcome for them. This is the heart of our strategic vision. Now, of course, our customers contribute far more than just revenue. They also provide us with valuable and powerful insights that help us drive critical product development decisions. I'll talk a little bit more about that in a moment. You heard David talk yesterday about the journey we've been on as a group since the acquisition of Refinitiv, and I'm going to zoom in on the customer-facing aspect of that journey. Early on in the integration process, we identified the challenges needed to overcome to build a scale organization to support our future needs.
For example, we were interacting with our customers in many different ways across many different markets, and we were way too siloed in our approach. We were selling focused and very discrete products rather than end-to-end solutions. We absolutely were not disciplined in capturing our customer insights that through our... all those interactions, and we weren't closing the loop in our communications back to our product development life cycle. We also didn't have the right incentive schemes to motivate our teams to partner more closely with our customers, which drove a focus solely on individual transactions. We asked ourselves: how can we better transform the way we interact, not only to benefit our customers, but also to inform and develop our products and services?
Now, as I mentioned, our customer base is highly diversified, and it's critical that we employ a differentiated approach with each customer, dependent on the nature and scale of that relationship. This is really important because some of our customers are highly complex global organizations that require a high-touch coverage model, deep understanding, and to ensure that we have a unique perspective in order to solve their needs. Now, at the other end of the spectrum, we have tens of thousands of customers who are also looking to grow with us, but they have a more targeted footprint, and they require a less focused interaction. What we're building is a scaled service model that supports customer-focused interactions, ranging from high touch to no touch, through seamless integration of in-person and digital experiences. We are already embedding smarter techniques.
For example, we've already been using AI to help us better determine the next course of action in the sales process for our sales teams. There's a big opportunity for us to effectively service our customers through our new e-commerce platform in an efficient digital manner. Not every customer needs a dedicated account team with frequent and high-touch interaction, and so we developed a platform that's smart, intuitive, easy to use, so that our customers connect with us, and we connect with them with the right solutions quickly. This distinction in customer segmentation, while using disciplined best practices and next-generation technology like AI and digital capabilities, enables our sales organization to scale significantly more than our previous structure, and to better focus on our customer needs and objectives by harnessing the power of one LSEG.
One of our key areas of focus post the Refinitiv acquisition, has been to foster a truly collaborative sales culture and sales organization, encouraging our colleagues to share insight, best practice, and product expertise. This, in turn, is enabling us to go to market as one LSEG, supporting our customers unilaterally across our offering and throughout their Workflows. For our strategic accounts, we now have full alignment and sponsorship from our executive committee, who share accountability for the success of those relationships. In data and analytics, we are now ensuring that we have true product specialists in place to support our frontline teams. And this is critical as it enables us to go right to the heart of our customers' requirements and determine the most appropriate solutions for them.
A great example of this is how we're helping banks navigate new regulation, like the Fundamental Review of the Trading Book. To comply, banks must accurately understand their capital requirements. We bring together our teams across Tradeweb, Yield Book, SwapClear, to be able to aggregate and package proprietary data to ensure customers accurately understand their capital requirements. To me, this example is how our teams can approach our customers in a joined-up way that delivers real value. We have also built out dedicated solution sales teams to focus on our customers' most complex requirements, like data management services, which leverage a broad range of LSEG's strength across people, product, technology, and operations. Finally, our interconnected approach is facilitating a more holistic set of conversations with our customers that touch upon a much greater portion of their Workflows.
The broad nature of these conversations help to inform our product developments and help us build highly relevant services that we bring to the marketplace. The feedback we receive from our customers is absolutely critical to the enhancement of our offering, and our sales teams play a key role in ensuring we collect this feedback through our interactions. We are in our customers' offices every single day, hearing their views directly, and this drives our product roadmap and helps shape the way we go to market. I truly believe we've taken this to the next level with the Design Partner Program initiated via the LSEG-Microsoft partnership. As Satvinder explained in his presentation, we're bringing together subject matter experts across business operations and technology to hear their pain points directly and establish their key Workflows so that we can develop solutions that will be highly relevant to them.
We then partner with engineers and product designers from both LSEG and Microsoft to share these ideas and to put them into practice. This process is well underway, and we had early meetings that have been really great, and I've personally heard several aha moments, especially as Satvinder was describing our data management as a service, or when you've seen the integrated banking Workflows, we hear, "I want that now." Right. So very exciting. And the Design Partner Program is really a critical part of the work we're doing with Microsoft, and it's made possible by the deep and highly strategic partnerships we've been building with some of our biggest customers. Now, in our first half results earlier this year, David talked about our great partnership with HSBC.
And the video you saw yesterday with John Hinshaw, HSBC's Chief Operating Officer, you heard him directly talk about real excitement in that partnership and how that has been driving value to their firm. And since that last update, we're pleased to say that the annual savings has grown to $43 million and continues to grow. We've also displaced in Real- Time in their Global Markets division and had a major displacement in Real- Time. We've also helped support their continued expansion of their wealth platform in Asia Pacific, and of course, they are active participants in the design program. And another great example is BlackRock, and all the great work we do there.
So being the largest asset manager in the world, they're naturally one of our largest FTSE Russell customers, and there are over $370 billion assets under management tied to 100 FTSE Russell indices that help power the iShares suite. And we're also a key provider of the data—a key data provider in the Aladdin ecosystem, a platform that drives investment Workflows for over 100,000 investment professionals around the world. And LSEG is the preferred data source for fixed income, equity, and public reference data that helps drive the platform. And a couple of weeks ago, myself, David, and Satvinder had our semiannual leadership review between our firms, and as always, we left with a clear understanding of their long-term strategy and game plan.
We also left with how LSEG and is gonna have has the game plan to critically partner with them going forward, and that's so essential in these type of interactions. As you heard from Sudhir himself, head of Aladdin, he said, and I quote, "We are working together to create a shared roadmap of innovation and new product development for the benefit of our mutual clients." And that, to me, represents true partnership, going to market together, driving value. This really embodies the one LSEG approach. It's all about understanding our customers' strategic objectives and aligning our solutions and our extensive ecosystem to partner with them to achieve those objectives. When we do this, we see real benefit. As we're aligning to our customers' needs and driving high-quality interactions, this is delivering significant results.
In just the last 12 months, our customers tell us that they have a significantly better understanding of our products and services, and that is having an immense impact. And when we're engaging in that interaction with our customers as one LSEG, they are six times more likely to recommend us with a nine or a 10 out of 10 Net Promoter Score. And innovation for our customers is central to our strategy, and it's vital that we are actively engaging with our customers to highlight the benefits of new products and services like Workspace and the solutions we're developing with Microsoft, as well as upgrades that we're frequently making to existing products. And when we have customers that tell us we're actively engaged, you can see that they are more likely to have a higher product satisfaction with Workflows better supporting their business needs.
Our focus is, of course, to improve upon that 76 active engagement, which will, in turn, continue to drive better product satisfaction and workflow integration scores. As I outlined earlier, this was a sales organization with great potential, but in serious need of realignment. In the last two years, we've begun to execute on a clear plan to address each of the challenges I laid out. Instead of just trying to maximize sales volumes in isolated products, we're focused on selling solutions integrated into customer Workflows.
For example, instead of selling point-in-time desktop and then a real-time feed and then analytics tools to a hedge fund, we're coming and approaching the customers as one LSEG, developing a nuanced understanding of their requirements and producing holistic end-to-end solutions to address their needs, often calling on many of our leading assets from across the group. We're developing targeted, data-driven account plans for our largest customers with a view to maximizing value and efficiency for them and building steady and growing relationships. We've evolved our understanding of how to interact with our customers, recognizing that some customers need high touch, while others might prefer low touch, no touch, or a digital experience. We are now building out the capabilities to enable us to meet these preferences effectively and at scale.
We're driving collaboration across our sales teams and actively facilitating knowledge sharing and innovation hubs to spread and build upon our experience. We're going to market as one LSEG, allowing us to develop deeper strategic partnerships with our customers. We're making sure we've got the technical specialists in place to actively support our frontline teams. Finally, we've changed the incentive model for our sales colleagues to ensure we're acting in the best interests of the business and driving the highest quality and most professional standards at all times. Through all these principles, we've been able to create a truly transformational sales approach that we're implementing across LSEG. We made a lot of progress over the last two years, as you've seen in the results, but there is a lot more to do.
As LSEG continues to develop innovative and leading solutions across Data Analytics workflow and the financial services ecosystem globally, we have to make sure we are ready to partner with our customers effectively and powerfully demonstrate that the impact our services can have on their businesses. Thank you so much for listening, and I really look forward to having you see all the exciting work that we're doing in our breakouts. With that, I'll turn it over to Peregrine.
Thanks a lot, Ron. So this is the key for the rest of the day, till about 3:00 P.M. You'll have a personalized agenda on the reverse of your lanyard. We split you into 6 groups, so please follow your agenda. The map will show you, kind of lines up with the letters of the breakouts. So if you stick to that, you can't go far wrong, and ask any one of the team or any other of the LSEG representatives who can help you. And then we'll be back in here shortly before 3:15 P.M. for the panel Q&A, which will be webcast. So we've got about 15, 20 minutes before you need to be at your first breakout. Thank you. ...
Okay, welcome back, everyone. I imagine you've all got a lot of notes. Welcome back to everyone on the webcast.
We have an hour set aside now for Q&A with David, Anna, Satvinder, and Ron. Let's kick off. So hands up for questions, please. Yes, thank you, Kyle. Sorry, you have a microphone. So if you wait for the microphone, so the webcast. You can stick your hand up, Kyle.
Let me just start with a question on EBITDA margins. Just the way that you laid out in the slide, the three segments, 52% for Capital Markets and Post-Trade, and for Data Analytics, specifically, 45%. You showed that the peers are at 51%. So the question really is: Given what we heard from Tradeweb, with less expectation for margin expansion into the future, should we expect that really a majority of the margin expansion over the medium term should really come from that Data Analytics segment? And is 51% getting to a peer margin set, is that achievable in the medium term?
Thanks for the question. Anna, I'll turn that to you.
So yeah, I mean, the reason we showed that slide was because the majority of the margin opportunity is in data and analytics, and that's the piece we're working on. And I would say there's no structural difference in terms of our business versus our peers that would mean that we shouldn't, once we've optimized ourselves, be at a similar level of margin. That said, you know, it's gonna take a number of years, which was the journey we've laid out.
Yeah. Andy?
Thank you. It's Andrew Coombs from Citi. I'll ask two questions, and I apologize, one will be for Anna again. On the mid- to high single-digit revenue growth, you talk about this accelerating after 2024, in part due to some of the Microsoft initiatives and other factors. When you specifically think about 2024, just so we can think about base, this year, you're talking about the high upper end of 6-8, but you've flagged that there's 1 percentage point from M&A in there, and then there's a couple of items in post-trade. So what do you think we should be thinking about as the base from which to then accelerate from for the revenue growth? I can ask the second question as well now, or is it best-
Well, why don't we take... We'll take that one and then come back to you. Andrew, you want to touch on it?
Yeah. So I, I think your question is really: Where are we for 2024? And the first thing I'd say...
Yes.
I mean, the first thing I'd say is all the momentum that I talked to you about at Q3, nothing's changed. So we're feeling good about the business as we enter 2024. Now, you know, I'll let you work out the exact numbers. But we've got good underlying organic momentum that you can work your way through, and there are a number of one-off items that will slightly slow our growth in 2024, which we've talked about and are fully reflected in your consensus, well, in analyst consensus, you know, which looks to be sensible. And they are the reduction in cash collateral in post-trade, Euronext, Credit Suisse, all the things that you know and we've spoken about. But as I say, where I sit today, we enter 2024 with good momentum, and nothing's changed.
Thank you. Second question for the rest of the panel will be, when you think about some of the Data Analytics businesses that you've outlined, you said number two in Workflows, number one in real-time data, and number three in PRS. So when you think about the various different businesses, is it a case that, for example, Workflows, there definitely is a market share gain element, whereas, for example, in real-time data, given that you're already the number one player, it's, you're more dependent upon the addressable market growth that David outlined yesterday evening. And within that, just to take a tangible example, you've given this figure for HSBC. Can you give us an idea of the breakdown of that between the Workflows business versus data and feeds?
Sorry, I missed the last part there.
So you've given the number for HSBC, and how much has been achieved through that from displacement. I'm interested to know what the breakdown of that is as a tangible example.
Yeah. So we're not going to give more specific breakdown with respect to that example. I think, and Satvinder, feel free to weigh in in a moment here. I think we have, and hopefully you heard a bunch of this today, we have significant opportunity in each of those three areas using a number of different levers. So I wouldn't say, you know, we have this opportunity set in Workflows, whereas we only have this opportunity set in Data & Feeds. But Satvinder, why don't you, why don't you weigh in on that?
So I think if you look, I think this question is a really good question, but if you look at the three businesses, they're actually really market-leading businesses today. And we're going to do a combination of two things. One, deepen our relationships and therefore grow market share.
... And number two is look at expanding the TAM that's available for these businesses. And how we deepen our market share, there was a slide I presented in terms of pre-Microsoft scaling. Here are the initiatives that we're looking at, right? We talked about the Eikon migration, we talked about PRS feeds, we talked about migration to the cloud, we talked about modeling. So that gets us deeper. And if we spend a second on how we're gonna expand the target market, let me just give you one example, right? Real-Time Optimized. So if you look at our Real-T ime, we're number one. You think we're, we're mature there, there isn't much opportunity to do anything else. So defend and keep growing slowly. We changed the game. So we developed Real-Time Optimized, which was...
It took the need of physical hardware, physical infrastructure, connecting to us completely away. We put it on the cloud. It was almost Real-T ime. Not everybody needs Real-T ime. So the corporate community then opens up. So we have a European corporate that's using our Real-Time Optimized data and actually using it to manage their supply chain. It's a completely different TAM. So a combination of going deeper into our existing customers and opening up new TAMs by ourselves, and obviously with Microsoft, is gonna be what - how we think where the growth is gonna happen.
And if I can just touch on HSBC, as David indicated, we wouldn't give specifics around where their cost savings are, but I can give you, anecdotally, that it is across all of our offerings. So, for example, I mentioned already the real-time displacement. We've had hundreds and hundreds of desktop displacements, across different divisions. And then in support of our open philosophy, for example, they wanted to build own a portal themselves. And it required some fixed income analytics. So we exposed our Adfin fixed income library so they could build their own, and displace another competitor. So it's examples across the board.
Yeah. Hubert.
Hi, Hubert Lam from Bank of America. I've got three questions. Firstly, on the going back to the mid-single-digit, high-single-digit guidance, how much of that is driven by market share gains and pricing? First question. Second question is, again, for Anna. Yesterday, you talked about cumulative free cash flow exceeding, underlying profit after tax to equity holders. So it's obviously a very cash-generative business. How should we think about what do you use with the cash? I know you're doing a buyback for next year, but should we expect a recurring buyback every year going forward, just because of the strong cash generation? And lastly, a question on Microsoft. So your relationship with Microsoft is very, very entrenched now across Data Analytics and enterprise data, banking, and trading and banking, and also capital markets now.
How should we think about the economics that's split in terms of revenues between Microsoft and LSEG? Just given how tight you guys are together now.
Yeah. Great. So actually, why don't we mix things up a little bit here? So, Sat, you know, you can touch on the third question. Anna, if you want to answer the first question, and I'll actually answer the second question in terms of the buyback question.
Okay.
Yeah. Sat, why don't you go ahead?
So very simple. We have guardrails, and the guardrails are based on a very principled approach to how the commercials across both sides are gonna work. We will make money whenever a customer has a need for data and analytic services that we provide. We will obviously make money on any workspace licenses. Microsoft will make money whenever their product licenses are involved and used, and they will obviously make money on cloud consumption. Those are the broad parameters and the principles in which we will price products. Obviously, as we get more mature, as we do pilots, as we do MVPs, we will figure that out and get to the right combination. There will be different combinations depending on the product, but the guiding principles are the ones I just stated.
So you take the first question in terms of the mid to high single digit question.
Yeah, sure. So the mid- to high-single-digit growth is an organic guidance. And I call that out because we see this as a real step up. Your question was, how do we think about share and price within that? I think we start from the customer and products that meet our customer's needs, and we then charge appropriately for them. And so that will sometimes be through pricing, and sometimes, you know, the pricing may be lower, and we may say that we see larger share gain. So in the way we give our guidance, it is in aggregate because we make our choices solution by solution through the lens of what the right balance for the customer is.
And then on your second question, which was really, are we gonna have recurring buybacks, if I've phrased it correctly. So we have done GBP 1.5 billion in buybacks over the last 15 months. We've just announced yesterday we're gonna do another GBP 1 billion over the course of this next year. Nothing is changing in terms of our capital allocation approach. So this is a business that is enormously cash generative, and you have seen us have the cash generation to do the GBP 1.5 billion of buybacks, to do the M&A, to do the organic investment internally, our dividends as well. That will continue in terms of just from a policy perspective, from a capital allocation policy perspective.
We, I think, have been very careful not to commit to doing regular buybacks, but we are very committed to actively managing our capital. We have, because of the nature of our business, highly regulated, a good line of sight both to when we might do M&A, and if we do do any M&A, it typically has a pretty long regulatory approval period. So that gives us a very good handle on our cash generation, when we are going to have cash that's available to use for buybacks. But as I said, we're not going to put ourselves in a position of committing to regular buybacks. But by the same token, as you can see, we are developing a very strong track record of actively managing our capital.
Bruce?
Thanks. Yes, Bruce Hamilton, Morgan Stanley. Couple of questions. Firstly, on the foundation piece, so the migration of the 50 data sets to the cloud. It feels, based on my sort of conversation with Tony, it feels like that's quite important in that the sort of friction in accessing data and linking data is still problematic. So what's the sort of timeline for when that's no longer an issue, which could release more data usage? And how important is that to the process of charging more on a usage basis? That's the first question. The next one's quite a short one. I think, Anna, you said that EBITDA margin improvement won't-- will be nonlinear.
I'm assuming that's simply that it picks up when revenues pick up towards the end, rather than signaling anything else in terms of they shouldn't be going down. It's just the pace of growth will be linked to revenues. Just to make sure, that's true. And then final one on Post-Trade, the segment growth. So I assume that embeds Euronext moving out, so that 4%-6% in your slide. Just to double-check. Thank you.
Thank you, Bruce. Satvinder, do you want to take the first one?
Yeah.
And then Anna-
There's a reason we call the base of the pyramid foundation, right? It's the right word. It is very important to what we're doing. You saw what we're trying to do. We're trying to move key data sets onto the platform. I think most of the key ones will move by the end of next year. That gives us the benefits accruing over time as we continue to move more. I think the more important part also is we're looking at a full reference catalog being available by then as well. So it gives us the ability. So if you look at the slide I presented with all the Microsoft initiatives, they're not sequential, they're in parallel.
And so we've got stuff going on with Workspace, with data, and intelligence and analytics in parallel with what we're doing on the foundation side. So it gives us the ability to create value as we move across our data sets, but also our ability to monetize some of the capabilities that are really important to us, like Data Management as a Service, in parallel as we do this. And one of the things we're also gonna do is we're gonna have a Copilot in place that allows data platforms to add more discovery and data analysis. So all of this will happen in parallel. The timeline is majority of that by the end of next year, but will continue in subsequent years as well.
So if I just do the EBITDA margin growth. So by nonlinear, I'm not flagging that it's going down. I'm just saying that it, you know, we, we shouldn't draw a straight line up. And just to clarify one thing you said, the reason we see EBITDA margin growth is as much about efficiency in our cost base as it is about revenue growth. And that's why, you know, we should be consistently driving it. And the reason that we are flagging that it will not be linear is because we want the freedom to invest when we see the opportunities with customers along the way. And, and, Bruce, can I just clarify your last question?
Sorry, yes. Just on the slide 21, the post-trade segment growth, 4%-6%. Just... I assume that embeds the Euronext departure.
Yeah.
Mm-hmm.
Sorry, can I just clarify one thing on that? So that slide is about our market, the market growth-
Market growth
... not our growth in each segment. So where Euronext sits is neither here nor there.
Right.
So that, that is a market growth slide. Yeah.
Hi, Oliver Bazin from GS. You spoke yesterday about how people had doubts about your growth previously, and you've obviously beaten those, and congratulations for doing so. And you spoke a lot in the presentation we've seen today about the structural growth the business is facing. I guess my question, looking at the slide you also presented yesterday of how uncorrelated you are with typical things you might expect your business to be correlated to, is what, what are the biggest things that could cause you, which hopefully won't, but to miss those guidance? What's the downside that we should be aware of?
So I think the point of that part of the discussion yesterday was what a robust model this is. Very diversified. We went through it yesterday, by product, by region, by customer. I think this is... It's a subscription business. You know, 70%, 70%+ of our revenues are recurring. And again, you heard yesterday in terms of the transactional revenues, how consistently growing those have been as well. And we've looked at this, you know, as part of our due diligence on the Refinitiv transaction. We looked back at how the business performed going back, you know, many years, including looking at what the performance was in these kinds of businesses in 2008.
So, you know, it's hard for me to speculate on what could really drive, you know, a dramatic shift in the performance. You know, when a number of customers go out of business, that wouldn't be a good thing. You know, we've Anna's touched on the Credit Suisse, very modest impact, but impact that we'll see over the course of the next few quarters. So I think if there's some kind of major financial crisis that wipes out a number of our customers. At the same time, I think you all know that when there's volatility that tends to actually be a good thing for our business.
But if there is so much volatility that everyone just puts pens down and again, you could see that in some kind of major crisis scenario, that would not be a good thing. So I think that gives you a little bit of a sense of, you know, the robustness of the business, the real strength of the business, and it would have to be such a widespread crisis that it would take out a, you know, a significant number of our customers, and really shut down a lot of market activity so-
Can I make a little build? 'Cause I've had this question in many different ways over the last few days, asked differently, which is: why is it mid to high? You know, which is... Where does that range come from? And what I've said to many of you is, when we set guidance back in 2019, we didn't foresee a pandemic, couple of wars, huge inflation, supply chain disruption. And as we set guidance going forward, we've given a range that foresees all of those things.
Mm-hmm.
So I think, you know, that's how we thought about it, actually, to set the range in the first place.
One of the things that we're doing is where we can, we're really focused on execution, and we're focused on how we really have built our organization to try and be as proactive as possible. So especially in the 73% subscription side, one third of my sales teams is focused on, as a group, called Customer Success. And we've developed a methodology called the Customer Lifecycle Framework. So we proactively monitor all of the subscriptions, and understand where our customers are in terms of key renewals, and we deploy resources specifically focused on ensuring that they've got the right kind of utilization, the right kind of usage patterns, and are really proactive.
So we've taken a strong proactive stance towards managing our existing book, which is why you've seen 300 basis point improvement in our retention rate. And so we view that as another way to help, mitigate some of these other external events that could really impact us.
Thank you. That's very reassuring.
Yeah, Russell, if you just keep moving on the line.
Yeah. Thank you. Russell Quelch from Redburn Atlantic. Given we're now, I think, at the point where sales has to take over some of the growth in place of retention, which has obviously been a big part of the growth this year, I wanted to maybe ask a couple of questions around sales, maybe for you, for you, Ron. Firstly, in terms of the HSBC example that was given, you talked about that account being one that was a drag on growth. You've turned it into a growth account, yeah? How within your top 20, maybe, maybe 50, if you want to go there, customers, how many more of those customers are left where you've got the same opportunity you had with HSBC? That's question number one. In terms of question number two, when you think about...
You had a slide up there where you had all the sales initiatives, and then you had pie charts down the side, where how far you are through those various initiatives. And clearly, you're not there yet in terms of your sales or go-to-market strategy. I just maybe wondered if you could put some timeframe around when we might expect you to be where you want to be in terms of your go-to-market strategy, such that we can expect those new sales part of the growth to start accelerating.
Great, great questions. So, I'll take the first one, and, HSBC is an example of one of our strategic accounts, and you were asking around our strategic account program. That was an underserved customer segment for a long period of time under Refinitiv. When I first came in, I looked at the growth trajectory of those strategic accounts, and the growth rate between 2018 and 2020 was 0%. And so that includes, you know, price increase as well as, you know, market increase. So really not the right place you want to be with your top accounts. So they were generally speaking, declining. It was a declining group.
And so we, as part of the sales transformation strategy, we changed how we approached those accounts, we changed how we engage with them, and we also evolved some of our commercial models. So, for example, HSBC is one of the accounts that's under something akin to an enterprise type of agreement. And so that provides us with... That provides the customers, like HSBC, with a certain level of cost certainty and a true partnership. And for LSEG, that provides us with certainty of revenue and as well as an incentive for us to partner together to find new revenue opportunities, even outside of those enterprise agreements.
We found HSBC, for example, to be our fastest growing growth sales, new sale account, even though it was under an enterprise agreement, for example. And now that collection of accounts that was growing at 0.0% for 2018 to 2020, is now projected to be growing more towards where our target rate is.
You want to just touch on the second question on the timeframe on-
Sure.
LSEG, your continued progress on go-to-market?
Sure. So, we have done a lot of great things, but there's obviously a lot more to go. And without getting into the entire strategy, I'll just pick out one or two examples. So one thing we wanted to do is to ensure that we trained all of our team on selling the LSEG way and one LSEG. So we made the largest investment in over a decade in our people to train them on a common methodology. So one of our sellers who sits in Seoul is speaking the same exact language and has the same approach as someone who's sitting in, you know, São Paulo. And so we are 100% complete with that rollout in APAC, and in the first quarter, we'll be complete.
And so all, every single salesperson will have gone through that methodology and training, which is a big milestone for us. But there are some others that are going to continue to take some time, but we've had some great progress. So we talked about building out digital capabilities and call center capabilities, and more of like a global demand center type of model. So we made some incredible progress this year, partnering very closely with what you heard in some of the operations breakout with the operations team. So we have soft launched our e-commerce capability. And in first quarter of this year, next year, we'll be launching that more broadly. So we'll be putting World-Check online to be sold through our e-commerce channel, front to back.
And so we view that as something that could give us great access to a very large customer set without requiring humans. And in parallel, we built out call centers co-located with our operations center. So we had sort of a call center in supporting North America. We now build out call centers in Gdynia and Manila, co-located with our operations team. We're able to staff those teams about 60% with resources we already had trained, who were part of the team. We've moved thousands of accounts to be managed out of those, and we're just starting that. So we're gonna start seeing some scale happen going forward over the next couple of years.
Yeah, Arnaud.
Hi, it's Arnaud Giblat from BNP Paribas Exane. A quick question on what you mentioned during your presentation about the ability to price for usage as a vector for growth. I'm wondering, does this really kick in with the full rollout of Workspace and Microsoft product, or can that happen sooner? And with a lot of your key clients now on enterprise pricing, what's sort of the lag of your ability to change pricing? I suppose the contracts are set for maybe a year or two.
So, Ron, if you wanna touch on the second question, and then we'll come back to your first one.
Sure. So, we are cautious where we apply the enterprise commercial model, and we have several commercial models available to us. Everything from this enterprise agreement, which falls into a certain pattern, and where it makes sense for us, we engage in those. And we have some very large customers on them, like the few that I mentioned, and we have some smaller customers on them. So but that's a very specific pattern. And it's, I would say, a relatively modest part percentage of our book. But where we've applied it, it has had the right kind of result that we've been looking for.
We also have different types of models, where many of our contracts are less than 12- or 12 months in duration. And that's an area of improvement that we're looking to get to move more to a longer term, more of a 24-month type of model, to get some more consistency. Especially with some of our smaller accounts, where we have a lot more churn in our book, and so a lower target retention rate. So we look for some improvement there. And then, as the technology becomes more available, where we can do usage, we'll be looking forward to that. 'Cause we approximate usage now. We sell often, for example, in our data subscriptions, within bands in certain ranges, and then we monitor that in kind of a retroactive way.
We still look at usage, but it's more in the rear view mirror as opposed to a proactive way. That's something that we're looking to improve upon.
Sorry, yeah, Haroon. You can go all the way back over there, thanks.
Hi, this is Haroon. Just, it seems like a lot of the opportunities you mentioned over the last couple of days are really opportunities that no one else is going after, either because they don't have the capabilities or history that you have, or because the incumbents or the other players in the market don't want to disrupt themselves. So it really comes down to pace of product development, quality of product development, and pace of execution. Have you maybe worked on the culture incentives, and product development capabilities to deliver against that? And have you learned anything from Microsoft on the product development side that's been helpful?
So, Satvinder, I'll turn that one over to you in a second. Just to pick up, Haroon, on your comment, in terms of the fact that we're going after some spaces, it seems like no one else is going after. I think that's a function of the uniqueness of what we bring to the table strategically. And the fact that we can have such a broad-ranging strategic conversation as a partner with these huge global institutions. No one else can really have those kinds of conversations. I think you're right in terms of the fact that we have a very different approach. We're, just to be blunt about it, willing to disrupt ourselves. And our open model really facilitates that.
It facilitates the kind of partnership with our customers, and a number of our competitors have a very different approach, whether it's the closed silo model, whether it's the closed box model. And so I think because we have such a different attitude towards that, you know, I, I agree with you. I think that, you know, a number of our competitors are in a very different position in terms of that kind of attitude towards self-disruption. But Satvinder, you wanna, you wanna jump in there?
One of the things I'll say is, look, the opportunity is in front of us, and as David said, we have a very different mindset to some of our competitors. We're very proud of that, because that's based not on our thinking that it is better, it's based on what we've heard from our customers. Our customers want us to be open, so we want to be open, number one. Number two, while the opportunity is there, it will not last forever. It's not static. We have to grab it, and we have to work at pace with it. If you look at just the partnership, using that as a great example-
... We've got hundreds of people working on it. Microsoft has hundreds of people working on it. We have access to the best engineers, best product people, best client people at Microsoft. That's a great benefit. We're learning a lot from them as well. So there's parts of my organization that's benefiting tremendously by having that sort of exposure, not only to their minds, but also to their ways of working. So when we say we're on a journey to be a customer-centric, world-class product organization, yes, there are things we're doing organically ourselves. We're bringing in some of the best talent in the industry to help us in that process, but there are quite a few things we're learning through osmosis, by watching how the Microsoft teams operate, because we work with them day in, day out.
So if you wanna learn how to work in an agile way, there's no better example than actually working with teams that have grown up that way. So it's a combination of lots of things, but I think the bottom line for us is, we've gotta grab the opportunity, and speed is really important for us.
And Mike.
Thank you. Michael Werner from UBS. Two questions, please. First, with regards to the acceleration of revenues after 2024, I was just wondering if you could help us better understand what's driving that. Is that revenue synergies that you think are coming through? Is that new products in terms of your new products that you're developing with Microsoft? Or is this one where, you know, particularly with the workspace, with the Microsoft enhancements, you know, as that gets rolled out, do you expect a little bit of a faster jump in terms of the price point of that product? And then second question, you know, we sat and listened to the transformation team, and they talked about how the depth of the software development and engineer teams has improved substantially.
Just going forward, thinking about some of the M&A that you have done over, say, the past 2 and 3 years to add capabilities, is that something that, going forward, we should expect LSEG, excuse me, to do internally? You know, as that software development team improves and, and ultimately, you know, as, as you get a lot of these projects rolling out, it potentially frees them up from a capacity perspective. Thank you.
Thanks. You wanna touch on the first one? I'll take the second.
Sure. And, you know, you've heard a lot of the drivers of growth over the last couple of days, so I'll call out some of them, but actually many are relevant to 2025. So yes, we'll be seeing the revenue synergies flowing through. We already are, but they will continue to benefit us. Absolutely, we'll see the Microsoft partnership revenue start to come through in 2025, and we've also seen the pipeline across a number of other areas broader than Microsoft that will benefit us as well. And we continue to drive sales force effectiveness and pricing yield efficiency. So all of those things should flow through.
On your second question, and I'll interpret it. Tell me if I'm interpreting this wrong, but I'll interpret it as, as we get better at building internally, will we have to buy less? Yeah. Probably the best way to think about that is that we think about build versus buy analysis all the time. And there are a number of things that we are building right now that we had evaluated buying, and a number of the things that we have bought, we evaluated building. I think if you take a step back, you pick up on the comments that Satvinder was making in terms of changing how we build product. If you...
I'm not sure if in our breakout sessions, if anyone touched on what we refer to as Project Gemini, which is insourcing a lot more of our engineering talent that had historically been outsourced. We are building a lot more, as we've talked about, engineering muscle within the organization. So I think that is a cultural change, and that does improve our capability set, and we are getting stronger and stronger at the product build. But I think you will continue to see us evaluate, build versus buy in a number of different situations. And there may be... We'll see. There may be times when we might be building more going forward because we have incremental capability in-house, but there also may be circumstances where it makes, makes more sense to buy.
But I think, I mean, it's an interesting question, but there's no definitive sort of, "We're shifting much more towards building, and less towards buying.
Thank you.
All right. Enrico?
Thank you. It's Enrico Bolzoni from J P Morgan. Couple of questions from me. One on CapEx. You're guiding now for this decline, but within that, it seems that clearly is gonna be less directed towards what has been under investment in the past and more towards other initiatives. Can you just give us some color in terms of, you know, understanding whether the, the CapEx that's gonna come in the future will actually contribute just to, you know, increase the top line, or actually, there's more that can be done to, to improve the cost base, and make it even more scalable?
And then my second question, as a result of the partnership with Microsoft, the migration to the cloud and the other initiatives, would you say that actually it's potentially easier to do inorganic acquisition, so small acquisition, simply because the business, just for the way it's positioned, is more scalable, so it's actually easier to plug in other realities to the existing one? Thanks.
Thanks. Why don't you take the first one? I'll take the second one.
Sure. So you will see declining CapEx as we move through maybe the rump of the integration of the Refinitiv business. And as we sort of move through that, we'll see more and more of our CapEx focused on two things, growth and continuing to drive efficiency, because there are some areas where we can still do that. And that growth chunk will continue to be a significant number as it is today. But today, you also have some of the kind of core infrastructure stuff at work as well, which will fall away. So lots of investment in growth as we go forward.
Then on your second question, whether it'll be easier to make acquisitions or maybe easier to integrate. I think a couple ways to think about that. So first of all, I talked yesterday about the fact that we are really integrating this business, and significant investment going into that in terms of integrating our network infrastructure, consolidating data centers, et cetera. And so you will see us if we're doing M&A going forward, and we're doing this with the more modest size acquisitions that we've done since Refinitiv. We're actually integrating. We're not just stapling things on and then carrying on. And I think that's important, and that requires discipline, and it requires sort of ongoing focus on that. To the specific question of once you have that integrated architecture, is it then easier to acquire?
In some cases, yes, but it will depend. And so, for example, if you think about what we're building, and I was talking with some of you about this earlier in the day, we're basically creating a very efficient and scalable machine where you can input new content here, and then have a very efficient global distribution mechanism. So under that construct, it should be relatively straightforward to add incremental content into that machine. Now, it will depend on what that content looks like and how we can ingest it. But then there are other potential capabilities or potential M&A that might not fit so easily into that machine, and they might relate to other parts of the business as well.
So I think that, long and short of it is, we will have a more integrated business across the whole estate, which will make us more efficient and will make our business more scalable, and we will continue to maintain that discipline going forward. And in some cases, depending on the particular asset, that will make it easier to acquire and integrate. None of that will change the discipline with which we approach any M&A, and it has to make strategic and financial sense, and we've been very, very careful about that. Ian?
Thanks very much, Ian White, Autonomous. So just a couple of follow-ups from my side, please. First up, on pricing, I'm just wondering if you might be prepared to share a bit more color around what you're assuming on pricing as a lever, particularly by the end of the forecast period. Does it become a bigger driver? Are you assuming that, you know, Workspace remains at a significant discount to the major competitor in the desktop space, for example? And that's question one. Question two, I'm just interested in thoughts around how you think some of the advancements in technology, cloud-based distribution, for example, might impact the broader competitive dynamic between vendors. So if it becomes cheaper and easier for customers to receive product or ingest data, does that also mean it's cheaper for them to switch between vendors?
Should we expect to see more displacements and, you know, some threats and opportunities that you see around that, please? Thanks.
Got it. So my typical approach on your first question would be, I would ask Anna if she wants to not answer that question. So we're not gonna get into the specifics of multi-year views on pricing. I think what you've heard from Anna yesterday is that we have increasing capability to use pricing as a lever. We're going to continue to be thoughtful about it in the context of our long-term, very strong, kind of, trusted relationships with our customers. I think we're all aware of certain products where we have a significant discount to the competition. I've said in the past, you know, that we're not going to... So for a 25%-30% discount to a competitor, we're not going to move that up 24.9%.
You know, we will do it in a, an appropriate way, a phased way that makes sense for our customers and for our customer relationships, but not in a position to, to get into sort of a multi-year pricing discussion at this point, other than just recognizing the continued improvement in our product. The continued investment in our product is improving, our pricing power. On your second question on, whether that makes it easier to switch, I don't think so. And, yeah, I'll, I'll turn it over to you. It sounds like you guys are both chomping at the bit to answer that one. Just, I mean, one quick point I'll make, and then you guys can, can both touch on it.
So we've gotten this question about cloud, and if you think about when we have our hardware on your trading floor, that that's really hard to switch out of, but when it's cloud distribution, oh, that must be a lot easier. But what that doesn't include is the fact that you're using our taxonomy, our classification system in the consumption of all that data. And so, you know, we estimate that, you know, a big bank customer has our taxonomy, our classification system, coded into 300-500 applications across the estate... So what you have is a situation where it's much easier to access our data, but it's still deeply embedded and deeply sort of coded into all of your systems. I don't know if you wanna- I don't want to-
You took my answer.
Oh, okay. Stephanie, you wanna touch on anything?
Look, I'm four months into this organization, but one of the taglines I love is, you know, we do a lot of things across the trade life cycle. Nobody does everything we do. And I think customers use us not for individual products or services; they use us for the solutions we provide. They use us for the investments we're making in the future, and they know we're gonna create more value for them as their relationship with us and as they stay with us. And I think that is a very sticky point. In addition to everything that David said, which is absolutely true, you know, just going to the cloud doesn't make it any easier for them to move.
I think there's a stronger emotional bind that we have with our customers, which is based on what we do, how we do it, and our commitment to the future and our investment into the future.
Ben?
Thanks. Ben Bathurst from RBC. Looking out over the medium term, which regions do you expect to be the biggest contributors to the growth that you've outlined? And is there any change in the regional mix or contribution to growth relative to sort of the previous three years, given the fact that the world's arguably a slightly different place now?
Just sort of starting point, Americas are the largest capital market in the world and is our largest market. We're seeing significant growth in Asia, in a number of different product areas. You know, Ron, you wanna touch on, on sort of the perspective on a global basis?
Yeah, no, I'd love to. So, we have seen, surprising resilience and strong performance from EMEA. I'll, I'll state that first, extremely strong and across our product set. And in particular, with our, core offerings around enterprise data, so in both real-time, and, in our reference data businesses. So very strong retention, very strong net new gross sales, high single digit to low double digit. So very, very strong. And, EMEA has been incredibly resilient, given the, all of the geopolitical, things going on in that in, you know, in that market. And then APAC, as David had mentioned, continues to have pockets of, strength for us as well.
There has been some exposure on some of our transaction revenue relative to some of our offerings that support investment banking. For example, our due diligence products, which have... You know, as that activity has slowed down, we've seen some slowness there. We've also seen in some of our emerging markets, where there has been some more volatility, like in China, for example, with small medium business more churn, especially in recent quarters. But as we talked about overall, the strength of the business, the strength of our pipeline, are still very in line and consistent with what we've seen in the past.
Just one last item on that. In post-trade, this is more of a longer term opportunity set, but really interesting what we're seeing in Asia. That's—that can be in a couple of different areas, whether it's in India, whether it's in China, where there's been a change in the futures and derivatives law over the last year and a half that makes it more acceptable from a risk management perspective to engage in clearing. In China, for example, both international banks going into China, but also potentially Chinese entities clearing more internationally. So but that's a little bit more of a longer term view.
Yes, so right at the back. I can't even see that far. Oh, it's Kyle, I think, again. Yep, it's Kyle.
Thanks, Ben. Hi, it's Kyle O'Donnell with Alua Capital. Thanks for taking the question. One of the more exciting messages, I think, from yesterday and today, for me at least, was the acceleration of the product launch with Microsoft to the first half of next year, previously, versus the second half of next year. So you've still, though, kept the revenue contribution to starting in 2025. I'm just curious if you could expand a little bit more on that, and is there an opportunity where, because of the acceleration of the launch, potentially you start to monetize the products in 2024? Or, if not, what is different, I guess? What changes by 2025, that you start to activate that revenue?
The-- so what we've talked-- what we've said in the past, and there's no change in this, is that you'll see material revenue in 2025. And so there may be an immaterial shift in terms of what we see in 2024 based on the earlier launch. But in terms of that kind of materiality threshold, we're not expecting a meaningful shift. I don't know if you'd add anything to that?
Yeah.
Sorry. Yes, sir.
All we've heard is wonderful, good news. So being an analyst, I have to think of the opposite. The financial sectors around the world are changing, many of them reducing the number of players, reducing pricing. What is the worst thing that you could imagine that could happen to you over the next couple years?
Who wants to answer that?
Where do you want to start? First one.
Can I actually-
Yeah, you answer it.
Yeah, I think, like, one of the things that we are super focused on, and we haven't talked a lot about resilience over the past day and a half, but one of the things that we're really focused on, we haven't really talked about explicitly, is our risk management culture. And this is something that we take very seriously. A core part of how we operate. It's something that we... When we acquired the Refinitiv business, one of the things that we had to implement, and again, we haven't really talked about this over the last day and a half, is a risk culture within that business. Thomson Reuters viewed itself largely as a media business. We view ourselves as systemic market infrastructure, and that's just a very different mindset.
So when you ask a question like that, I could give you a million things that could go wrong, and we do lots of scenario planning so that we are prepared for whatever may come. We're very focused on, you know, a big part, we, we don't have meaningful. Like, financial institutions, there's often a lot of concern about balance sheet risk. We have GBP 300 billion or so of collateral in LCH, but because of the way we manage that, you shouldn't think about that as traditional balance sheet risk in the way that you would think about it at a bank. And then we're very focused on operational risk, regulatory risk, and, and very various other things like that. So it's a core part of how we operate.
We run all kinds of, as I said, scenario planning, test runs for various things, exercises. But and we think in terms of backup and resilience. And so I would like to say, and we've got David Shalders, our COO here, who deals with a lot of this as well. Our Head of Risk is not here right now, but you know, we build redundancy into the system, and so that if something goes wrong, we have the backup, and we can recover very quickly. So that's probably the best way I would answer that at this point. I don't know if anyone has anything you'd want to add.
Well, I would add, because we're that critical infrastructure, we are very embedded in our customers' own plans on how they're managing their own risk, and so we partner very closely with them as well on their own plans, and so we inform each other in terms of how we're managing risk. So I think that's also a really critical part of what we do, because we're such a critical part of their operations as well.
Any more questions? Oh, yes, at the back. Thank you.
Thanks, Rahul, from Lone Pine Capital. Thanks for taking the question. When you guys first did the Microsoft partnership, AI wasn't as big of a buzzword as it is today, obviously, but it must be influencing the technology roadmap, you know, on a go-forward basis. When I just think about an average user of your products, they are probably using less than 1% of the data that you actually have, right? On a given day or whatever it is. And so having an AI interface, right, where you could potentially natural language query, right, and just the consumption of the data that could bring about, how, like, how big of an opportunity is that? How big of a priority is that? And what are you, what are you doing to, you know, go after that opportunity?
So it's interesting, and it's interesting that you link it to AI. And I understand why you've linked it to AI. I would not limit it just to AI. And the reason for that is that there's a lot that we are doing that makes it easier to access and utilize our data. And some of that is as simple as moving it to the cloud. So... And we refer to this as liberating the data. And in many ways, that's what we're doing strategically with our datasets that Satvinder was talking about. And by making that available in a cloud environment, in an integrated architecture, we're liberating those 48 or 50 different datasets. And we've seen that when we do that in the past, that leads to a pretty dramatic pickup in usage and consumption.
And World-Check's the best example of this, where, you know, we used to distribute World-Check by file transfer. And I don't know what the timeframe was. It was, you know, it was once a month, and then it was once a week, and then now it's, you know, embedded in a lot of our customers' systems, either through feeds, and it's also available through the cloud. What has that done? It's made... A lot of our customers now use it real-time. Some payments firms check every transaction with our World-Check database. You can imagine what that has done to the usage of that data, the consumption of that data. And because of that facility, when Russia invaded Ukraine, we've talked about this in the past, the usage of World-Check went up 800%.
So that is what we mean by the liberation of data. I think to your question on AI, I think it'll be yet another accelerant. And, you know, hard to calculate what that, that will look like. But this notion of the liberation of the data, we think is, is a very positive tailwind, for our business broadly. So, Sat, I don't know if there's anything you'd, you'd want to add to that.
Just a couple of things. One is internal use cases. You heard Ron today talk about how they're using AI in the sales organization. In the breakouts, you probably heard in the transformation breakout how we're using AI for our own internal efficiencies, how we interact with internal inquiries, customer inquiries. So that's just one part. Then you look at stuff we're doing right now, BAU activities, how we're embracing AI, advanced dealing, how we're using chat rooms to pre-order, put orders in. And that's an amazing ability to take a couple of those Workflows out, take the friction in the system out, and create something that adds a lot of value. In my deck, you saw that one of the test cases we're putting out there with our partnership with Microsoft is the Lipper AI-assisted Q&A chatbot that we want to put out there.
We've also talked about, as we do our data platform, how do we put a Copilot in there that allows for data discovery and analysis? So there's a lot of things we can do with AI. To David's point, it liberates it, but it also creates significant efficiencies for us internally, but also creates significant efficiencies for our customers, and allows them to be a lot more efficient and do a lot more of the value add on top of that. So I think it's a real game changer, and we totally agree with that.
Hmm. And I would add, our customers are really asking for us to accelerate that as part of our roadmap, and we think that that's key, and really strategic that we're partnering up with Microsoft. And so as part of the outreach to our customers, as we're building our capabilities... Just, for example, earlier this week, we met with one of the large interdealer brokers, and we were talking with them about a large segment of their business. I was there with Dean Berry's team, who you met Dean, in terms of the workflow breakouts. And their main use case was, "Hey, listen, we've-- what we, what we want is chat. So, we don't want any more screens.
Just include it, so it's just easier and intuitive for us to get what we need, 'cause we just chat all day long. So if we have that capability embedded into the rest of our information, we're good to. You deliver that, you're pushing an open door, okay? You're knocking on an open door in terms of the capabilities that we want to buy from you.
I think we have one more question. Johannes, just behind the pillar.
Thank you. Johannes from HSBC. Just one final, follow-up question on the EBITDA margin. You don't want to give a precise guidance for the next years, but, what could be the long-term ambition for the group? Is it that, Data Analytics gets to the same level of, the other two units, or does all units get even higher to do a 55% EBITDA margin? Don't want to focus on a year, but, just as a long-term ambition, what is your thinking about this?
David handed me a question not to answer. Look, what we've laid out is the gap to our peer set, and that will create considerable value for ourselves and investors as we close it. There's no shortage of ambition here, and as we continue to drive significant revenue growth, that allows us to go further. You know, where we sit today, we have a strong path to improve our margin.
So thank you, everyone. I'm going to hand over to David in a second. Just to say, we do have one of our long-standing issuers doing a market close ceremony. We're very happy to stay and watch. But David, if you want to wrap up.
I would be delighted. Peregrine, thank you for your sharing of the events here. Thank you all for coming. Thank you for spending a day and a half with us. I hope you have had an opportunity to see the array of opportunities and the strength of the strategic roadmap that we have laid out. Most importantly, I'm thrilled that you have had the opportunity to meet the broader team. I know Anna and I have spent a lot of time with you over the years. I'm sure you're tired of seeing us, and hopefully, it's been a great opportunity for you all to meet the team, because we have a great team, in its strength, in its expertise, in its vision, and you can see the direction that we are going in.
So again, thank you for your support. Thank you for being here.