Good morning and welcome to the Investor and Analyst Call for LSEG First Quarter 2025 Trading Update. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session through the phone lines, and instructions will follow at that time. I would like to remind all participants that this call is being recorded. I will now hand over to Peregrine Riviere, Head of Investor Relations, to open the presentation. Please go ahead.
Thanks, Polly. Good morning, everyone, and welcome to LSEG First Quarter Update. I'm here with David and Matt. Matt will make some brief opening remarks on our Q1 performance, and then we'll open up to questions on the conference call line. Let me hand over to him right now.
Thanks, Peregrine, and good morning, everyone. Glad to be with you today. We have started the year well with total income growth of 8.7% on a constant currency basis. This includes 90 basis points of M&A benefit, mainly from the ICD acquisition within Tradeweb. That leaves organic growth of 7.8%, and I will actually refer to this metric through the rest of my comments. Our subscription businesses all performed well, with D&A showing continued slight acceleration, while our market businesses capture the upside of higher volumes. This good all-around performance shows the strengths of our diversified all-weather model. Turning first to Data & Analytics, organic growth was 5.1%, a slight acceleration from the previous quarter, 4.8%. All three businesses performed well. Workflows revenue was up 3.4%, with commodities an area of particular strength in the quarter.
We continue to enhance the platform with a very strong pipeline of new features in the months ahead. We are closely supporting customers on the final Eikon migration, and we are on track to sunset Eikon at the end of June. In Data and Feeds, growth of 6.6% was a little ahead of the Q4 rate, with both real-time and PRS performing well. We continued to add new low-latency feeds and cloud solutions, and we saw good demand for fixed income corporate action data and our expanded evaluated pricing offering. In Analytics, we showed strong acceleration to 7.4%, driven by demand for Yield Book and Lipper, and enhanced by the good take-up of our Analytics API, one of the first products we've built with Microsoft. Product development with Microsoft continues to make good progress, with a number of significant launches in the second half of 2025, including Open Directory.
Finally, a couple of weeks ago, we were delighted to announce the co-heads of D&A. We have hired Gianluca Biagini from S&P Global, bringing over 25 years of financial information industry experience with him, and he will be joined by Ron Lefferts, who moves over from his role running sales and account management. They bring together highly complementary skills and track records. Turning now to FTSE Russell, our index and benchmark business. Overall organic growth was 9.6%, very similar to the growth rate seen through 2024. Subscription growth was 8.2%, reflecting ongoing demand for flagship equity indices and benchmarks. Asset-based revenue was up 12.5%, supported by good inflows and higher average market values. The decline in U.S. markets over the past weeks, as well as flows from the U.S. fund into global fund, will likely lead to a slightly lower contribution to growth from asset-based fees in the coming quarters.
Risk intelligence continued to grow double-digit at 10.7%. World-Check maintained its strong momentum, and our digital identity and fraud business also performed well. Now a word on ASV, which encompasses all of the subscription business of the three divisions I just covered. ASV grows to that 6.4% at the end of Q1, a small increase from the end of Q4. Within this, D&A has improved strongly year on year, reflecting the good progress we've made with new products and displacement. FTSE Russell and risk intelligence are showing slightly slower ASV growth than a year ago, which just reflects some normalization of the growth rates. Moving on to our New Markets division, which combines the previous Capital Markets and Post Trade division. This reflects both their management under Daniel Maguire and also how customers think about their own businesses.
Growth in Q1 was 10.7%, a slight improvement on Q4, and a continuation of the double-digit growth over the last four quarters. Tradeweb started the year well, combining strong execution with favorable market conditions. The business continued to grow its shares in rates and credit. Fixed income growth overall was 17.3%. ICD, acquired in August last year, is performing very well, and the integration is progressing as planned. Equities growth was 3.1%. We saw strong volume-driven growth in secondary markets, although this was partly offset by subdued primary revenue growth. FX achieved a third consecutive quarter of double-digit growth at 12.3%, mainly reflecting a very active market. We have continued to see strong trading volumes across all asset classes throughout April.
Moving on to our post-trade businesses, performance here continued to be very strong considering the headwinds of the Euronext exit, which will last through August of this year, with an impact of around GBP 30 million. OTC derivative was up 16.8%, reflecting elevated financial market volatility in the period and greater uncertainty over the global outlook for of risk in the market, but have subsequently fallen back again. I will end my opening remarks on capital allocation and our balance sheet. As you know, we announced a buyback with our full year result in February. As of last night, we have completed GBP 245 million of the GBP 500 million program at an average price of GBP 110.31. We also undertook another tender offer of our 2031 bond.
They've lost audio on the Zoom line, so it looks like the microphone's dropping out. Just bear with me one moment.
Okay. Let me start again. I go back to the capital allocation and the balance sheet, okay? As you know, we announced a buyback with our full year result in February. As of last night, we had completed GBP 245 million of the GBP 500 million program at an average price of GBP 110.31. We also undertook another tender offer of our 2031 bond, buying back a further $250 million in a repeat of our December tender in another NPV-positive transaction. All in all, it has been another good quarter, and we have started the year well. The combination of attractive growth in our subscription businesses and the market exposure in our high-quality market infrastructure platform is continuing to deliver positive results. The rate of investment and innovation remains high, ensuring a strong pipeline of new services in the months and years ahead.
We are reconfirming all our financial guidance, demonstrating the resilience of our all-weather model in the face of an uncertain outlook. Now we are happy to take your question, Peregrine.
Thank you, Matt. Operator, please would you open the line to questions? Again, please can you limit yourselves to one question and a follow-up? Thank you.
Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Arnaud Giblat from BNP Paribas Exane. Please go ahead.
Yeah, good morning. I've got my question follow-up on the FTSE Russell division, please. I was wondering if you could give us a bit more color on the drivers behind the subscription growth at FTSE Russell. You mentioned the flagship equity products doing particularly well, but I was just wondering if you could split out the growth for me in terms of maybe new products, new clients, pricing. I mean, a bit more color there could be helpful. My second question is on the asset-based part of the business. Historically, you had a bit less, you weren't as sensitive to growth in AUM. You have less pass-through in terms of revenue growth, and that seems to have changed. I was just wondering what's happening. Is this a dilution of Vanguard contracts, or are you having more AUM that are better priced? A bit more color there could help as well.
Thank you.
Hi. Maybe I take the first part of the question on the growth, and David will answer on the second part of your question. I mean, the main message here on FTSE Russell is that we really see a solid performance, both in subscription and in AUM. In regards to the contribution of price to growth, actually, it has not substantially changed, and it's very similar to the rest of D&A. As far as the different products are concerned, to give you some color, we really had an increasing usage of our flagship equity indexes benchmark and products, particularly Global Equity Index Series, as well as a very strong demand for our multi-asset offering across the board. David, do you want to give more color?
Sure. Arno, morning. On your second question, you're absolutely right that we do have collar structures on some of our relationships with respect to FTSE Russell. It just so happens that in the context of the flows that we've seen over the past quarter or so, we have exposure in some areas where we don't have those kinds of collars in place. We are just being transparent around that. Again, you're right about the broader picture. We do have collars on a number of the different products, so we tend to see muted performance on both the upside and the downside.
That's helpful. Thank you very much.
Sure.
The next question is from the line of Russell Quelch from Redburn Atlantic. Your line is open.
Yeah, good morning, Matt and David. Thanks for having us on the call. I wanted to ask a question on the ASV growth. Now we've fully lapped the impact of Credit Suisse and the data access deal, both that came in the first quarter of last year. You will have got the 70 basis points back in the ASV base in Q1. The 10 basis points improvement we've seen in the quarter appears about 60 basis points short, all else being equal. I was wondering why we're not seeing that coming back. Has there been a deterioration in growth in subscription revenue outlook across the business to offset that? If you can unpack this as much as possible, that would be great around pricing retention because I think it's key to people's outlook for growth in the subscription businesses. Thanks.
Hey, Russell. Thank you for the question. A couple of data points here. ASV this quarter is 6.4, so about 10 basis points more than Q4 2024. When you compare with Q1 2024 to a 6%, and we explained at the time that Credit Suisse was dragging it down by 30 basis points. When you take the 6% plus the 30 basis points, that is 6.3. We are posting 6.4. I mean, overall, I think we are in line there. Again, I am just repeating what we have said at previous calls, which is I do not think you should be hanged on variation of ASV from one quarter to another. I think the most important thing is the trajectory. Now, if you look at the dynamics of the ASV, what we have in there in this quarter is an acceleration of D&A, which is continuing on its trajectory.
We have a normalization of FTSE and Risk Intelligence. That's what makes the combination at 6.4%.
Okay. Thanks, Matt.
Yeah, next question is from the line of Hubert Lam, Bank of America. Your line is open.
Hi, good morning. Thanks for taking my questions. First one is on the sales cycle. I'm just wondering if you've seen any changes to the sales cycle, the sizes of potential contracts, or any delayed decision-making, just given the macro uncertainty. Is this uncertainty delaying any potential wins that you may be getting? That's the first question. I guess my follow-up question is on the Microsoft pipeline. I think, Matt, you briefly mentioned around Open Directory. I'm just wondering if the pipeline is still on track for most of the products to be launched by year-end, particularly around Workspace. Thank you.
Thanks, Hubert. No real change that we're seeing in terms of the sales cycle. I think pipeline looks good. Really nothing dramatic to report on there. In terms of Microsoft pipeline, we've got a lot going on this year. Matt touched on some of this in his remarks, but we are continuing to build out the content sets in data as a service. We're adding some functionality in terms of the Excel add-in coming into Workspace, the interoperability with Workspace, more coming with Open Directory back half of this year. You've seen some early impact from the new functionality in analytics. As I said, a lot of activity, and we're excited to keep delivering.
Great. Thank you.
Yep. Thank you.
Your next question is from the line of Ben Bathurst of RBC. Please go ahead.
Good morning. Thanks for taking my question. It's on the Data & Analytics division. You've recently announced the appointment of new co-heads there. Just wondered if you could shed some more light on the thinking behind that decision and perhaps how different you envisage Ron's role being going forwards in terms of involvement in the sales effort for Data & Analytics. Thank you.
Sure. Thanks, Ben. Data and analytics is a big division. We got a lot going on there. As we looked at that, we thought it made sense to have a co-head structure with complementary leaders. You all know Ron, who's done a great job in terms of leading the sales function over the last few years. He obviously knows our customers and knows our product really well. Excuse me. Gianluca has terrific experience in this industry, having worked for three of our big peers or competitors, and just a great level of expertise in the data space. Lots of complementary skills, a good geographic mix. One will be based in Europe. One will be based in New York. We think that that structure will work very, very well. We also have a good leadership cadre beneath them.
The performance of this business, this division, continues to go well. I'm pleased with the construct that we have in place.
Thank you.
Thank you.
Your next question is from the line of Enrico Bolzoni from JPMorgan. Please go ahead.
Morning, and thanks for taking my question. One on workflow. The sequential growth quarter on quarter in constant currency has stopped in Q1 after three quarters of marginal improvements sequentially. I was wondering whether you could provide any color there and whether you can confirm that this is the line that we should see accelerating from later part of this year or perhaps early next year once the new products with Microsoft are launched. Alongside that, given the stability in growth quarter on quarter, can you give maybe some color on new client wins or competitor displacement that might have occurred during the quarter? Thank you.
Sure. Thanks, Enrico. First, I would not get too hung up on quarter-over-quarter trajectories here. With workflows, this is a business segment that you will recall very well a few years ago was basically shrinking. There was a lot of skepticism about this segment. We said a few years ago that we would get it growing to low single-digit growth. I think the performance there has been consistently positive. Again, I would not get too hung up over one quarter where you see no change in terms of the quarter-over-quarter growth trajectory. As I just mentioned, we have a lot of new product coming in that area. Workspace is landing very well and lots of the additional features and functionality coming out over the back half of this year. We continue to feel very good about how that is performing.
I would say the last part of your question on displacements, we continue to see displacements. We do not win everything, but it is a very different business today compared to what it was a few years ago where this was a market share donor for many, many years, and now we are gaining share. We continue to feel good about that as well.
Thank you.
Thank you.
Your next question is from the line of Bruce Hamilton of Morgan Stanley. Please go ahead.
Hi, morning, guys. Thanks for taking my question. That was useful color on the no change in the sales cycle. I just wanted to check on the Data as a Service progress. Can you give a bit of an update on where we are in terms of sets migrating, how many clients are signed up, maybe how that sort of momentum is building as we move through next year? I think previously you said sort of critical mass in terms of data moving to the cloud would be probably sometime in mid-2026. Is that still kind of the case? Just keen to get some more color on that. Thanks.
Yeah. That still holds, Bruce. We're making good progress in terms of the migration and some of the various data sets. We have the ESG data set up there. I think we're making progress on some of the fundamentals data sets. You nailed it. Basically, if you are a customer using a number of our different data sets, it's not ideal for you to be partially in the old world and partially in the new world until, so it's more likely that we'll have that critical mass in place before we see a lot of the customer activity in the new world, if I can put it that way.
Great. Thank you.
Thank you.
You have a question from Michael Werner at UBS. Your line is open.
Thank you very much for the presentation, guys. A quick question on SwapAgent. I just wanted to know if there was an update as to the progress there within LCH. Yeah, just wanted to see if any information with regards to kind of revenue contribution or how you anticipate the trajectory of that contribution in the coming quarters would be helpful. Thank you.
Oh, thanks, Michael. Nothing in particular around SwapAgent. It continues to do fine. We have seen good, strong growth across the different businesses in Post Trade. SwapClear tends to get a lot of the focus, but we have seen good performance in ForexClear. We've seen good performance in CDSClear and SwapAgent as well. It's not a clearing part of the business, but it's a nice piece of the Post Trade Solutions capability in the uncleared space. That also continues to do well.
Thank you.
Thank you.
Your next question is from the line of Benjamin Goy of Deutsche Bank. Please go ahead.
Yes, hi, good morning. In workflows, you mentioned it was particularly strong in commodities, which is one of your strong businesses historically. I was wondering, going forward with the product innovation, should we expect commodities and FX outperform, or do you expect to catch up in other businesses like equities or maybe wealth management, or with you as wealth managers? Thank you.
Thanks, Benjamin. We have seen strong performance in commodities. We also saw pretty strong performance in a few other asset classes. It's hard to know exactly how that will play out over the coming quarters. I think it's really one of the strengths of our business that we don't have a particular concentration or over-concentration of exposure to any particular asset class or to any particular customer segment or to buy-side or sell-side. I'm tempted to say that your guess is as good as mine in terms of how the volatility will play out across different asset classes in the coming quarters. The strength of our model is that we have a broad, diversified platform where we're serving customers across lots of different asset classes, lots of different geographies, buy-side, sell-side. That includes wealth management. That includes equities.
I think it's the strength of that diversification that is really an important part of our model.
Thank you.
Thank you.
Yeah, the question from Andrew Coombs at Citi. Your line is open.
Yeah, a couple for me, please. One on the markets, revenues versus volumes, and then just a factual one on the gain on the bond purchase. Let me start with the latter because it's kind of a very quick one. Can you just quantify the gain on the GBP 250 million bond purchase in March? On the revenue versus volumes, both on the equities and the OTC derivatives line. On the equities line, U.K. value traded is up 28% year on year. Obviously, the revenue growth is much more subdued, which you flagged is due to lower primary, but perhaps you can just pick that one a little bit. On the OTC derivatives, notional traded up 14% on SwapClear, but the number of client trades is up 37%. Yet the revenues are up 17% in that line.
Again, anything you can unpack there would be helpful. Thank you.
Sure, Andrew. Maybe Matt will take the bond question.
Yeah, sure. So Andrew, we executed, as I was referring to, we executed a second bond buyback in this first quarter for the same amount in NPV positive transaction. It will derive pretty much the same positive impact on net financial expense. Overall, it will compensate the increased interest cost coming from our debt because of the share buyback. Overall, I think we'll have a slight positive, I would say. One is kind of compensating the other.
Let me unpack the question on kind of volumes on the equities. I'll go through this pretty high level, but hopefully this gets you there. Andrew, equities volume growth about 28%. We have volume-based discounts for a number of our customers. If you include that, then it's about a 16% growth there. There was a small one-time item in Q1 of 2024. We had a modest price decline in Turquoise, which is in the same line. You put all that in there, that gets you to about 8% growth quarter-over-quarter or year-over-year. The secondary trading revenue is roughly half of that business. As you all are very well aware, the primary market, the capital raising has been relatively subdued. That gets you down to the 3% numbers. Hopefully, that helps there.
On the OTC derivatives, some sort of similar math, although slightly different dynamic, as you mentioned. Client trades in SwapClear up 36.8%. As you will recall with our members, they are on more of a fixed fee model. To go from that 36.8% down to the 16% or so is really how you get to that. Does that help?
Very helpful. Thank you.
Sure.
Your next question is from the line of Ian White of Autonomous Research. Your line is open.
Morning. Thanks for taking my questions. Just two from my side, please. Firstly, could you provide some detail around how sign-ups and usage of Meeting Prep have developed over the last few months? I think this was something that you highlighted with the full-year update, that this was something now people could sign up for via Teams, if I remember correctly. I was just trying to understand kind of how that has tracked so far. Secondly, any thoughts on evolution in the sort of M&A dynamics, seeing more pressure on the private equity industry in terms of ability to exit investments. I wondered if that had created any new or different conversations for you in terms of looking at bolt-on acquisitions. Thank you.
Sure. Thanks, Ian. Meeting Prep, we have got it out there with our customers. It is really at what we call the minimum viable product phase. We are looking at subsequent developments in that and adding additional capabilities, additional features in that as we go forward. On the M&A dynamics, I would say we continue to look at a lot. No change in terms of our capital allocation policy. We continue to be very focused on what makes sense for us in terms of strategic fit and really making sense from a strategic perspective, but also financially, what makes sense in terms of financial returns. To the extent that we are entering an environment where sellers have more realistic value expectations, that would be a helpful thing for us. I cannot tell you at this point that there is a massive flow of distressed sellers.
We continue to evaluate the opportunities that are out there.
Thanks. Just to clarify on Meeting Prep, is it kind of the case at the moment that you have this with a set of sort of core clients, if you like, and we would not necessarily see more meaningful growth or sort of heavier usage until you had done some of the developments that you mentioned? Or is this a product where you see significant usage and value add for customers already? Is there any detail you can provide around that, please?
Yeah, sure. No, that's a good question. I would say it's more the former. In other words, that's why I described it as kind of MVP, minimum viable product. The technology is changing. When we put it out there, there was no real concept of agentic AI. We are looking at whether there are ways that we should be adjusting it and changing the product and working with our key customers to evaluate what could make the most sense in terms of adding the most value for them.
That's great. Thank you.
You got it.
You have a question from Iulian Dobrovolschi of ABN Amro. Your line is open.
Good morning, gentlemen. Thanks for taking my questions. I have a follow-up on the Workspace and then another one on a different topic. To begin with the Workspace, given your plan for migration away from Eikon by June 2025, I was just wondering if you could remind us again on the pricing, but also timing strategy of that from the, say, June 2025 onwards, assuming that all users will be on the new product as of the third quarter of 2025. One on a different topic to the recent announcement of your partnership with AWS. I was wondering if you could share more color which services you plan to migrate to AWS and which will go to the Microsoft Cloud, broadly speaking, but also if you could share some thoughts behind the decision-making.
For example, why sticking to AWS Cloud and not Microsoft given your long-term partnership agreement with them?
Sure. First of all, the Workspace migration continues to go well and very much on track. I think implied in your question was an expectation of a pricing change when we switched from Eikon to Workspace. That is not the way it works. I think one of the reasons we have seen a very successful migration.
Retention.
Yeah, and retention during the migration is that we've been giving our customers a significantly better product in Workspace at the same price that they were paying for Eikon. That will continue for the customers that are going through that migration this year. The price adjustment will take place as it does every year on an annual basis in January. No pricing change in year during the migration. On the question around AWS, AWS has long been a partner of ours. We have been very clear throughout the very successful partnership with Microsoft that we will continue to work with other cloud providers. There's no exclusivity to the Microsoft relationship either way. It continues to be very productive, I think, for both sides. The cloud relationship with AWS is also a strong one for us and an important one for us.
We have other cloud relationships as well. Just to break it down, and I think the press release on AWS mentioned this, but for a number of years, we have had cloud activity for FTSE Risk Intelligence and different parts of our markets business with AWS. That is the extension that we announced earlier this week.
Got it. Thank you.
Thank you.
Your next question. It's from the line of Thomas Mills of Jefferies. Please go ahead.
Hey, good morning, guys. I hear what you're saying on sales cycle earlier, which was reassuring. I'm just wondering, buy and sell-side and markets feel a little bit less healthy at the end of April than perhaps people were expecting immediately post the U.S. election. I'm just curious if you see any early modifications in the nature of the conversations you're having with either of those types of counterparties. Is there any greater willingness to expand the scope of enterprise agreements, product bundling in the environment to try and generate incremental savings?
Excuse me. These enterprise agreements tend to be multi-month discussions, in some cases longer than that. I would not say that we have seen over the last month or so any kind of dramatic change in terms of interest in those kinds of conversations. We do have a number of those conversations ongoing, but I would not say it is driven by the volatility over the last month or two. That is why I would say we have not seen any meaningful change in terms of the sales cycle or any of those kinds of dynamics.
Great. Thank you.
Thank you.
There are no further questions on the conference line. I will now hand the presentation back to David Schwimmer, CEO of LSEG, for closing remarks.
Thank you all for your questions and for your interest. Of course, you know where Peregrine and the team are if you have any further questions. We look forward to seeing you all soon. Thanks.
Thank you.