This release contains revenues, cost of sales and key performance indicators (KPIs) for the three months ended 31 March 2022 (Q1). All figures quoted in this release are on an underlying basis. Q1 2022 is compared against Q1 2021 on both a statutory and pro-forma basis. Pro-forma figures assume that the acquisition of Refinitiv took place on 1 January 2021. Revenues and cost of sales associated with the BETA+ divestment have been classed as discontinued and are excluded from all periods. Revenues and cost of sales associated with the Borsa Italiana Group divestment, which completed in H1 2021, are also excluded. Constant currency variance is calculated on the basis of consistent FX rates applied across the current and prior year period. For more information on accounting treatments and approach to FX please refer to the “Accounting and modelling notes” section below.
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Q1 2022 highlights – continued strong financial and operational progress Note: Unless otherwise stated, variances refer to growth rates on a constant currency basis, with the comparator, Q1 2021, on a pro-forma basis which also excludes the impact of a deferred revenue accounting adjustment1.
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1 The deferred revenue impact is a one-time, non-cash, negative revenue impact resulting from the accounting treatment of deferred revenue within Refinitiv’s accounts which have been re-evaluated upon acquisition by LSEG under purchase price accounting rules. This reduced Q1 2021 revenue by £22m, mainly in Data & Analytics with a smaller impact in the FX business within Capital Markets. There is no material impact in 2022. More details can be found in the “Accounting and modelling notes” section
2 Growth rates excluding the Ukraine / Russia conflict impact have been calculated by excluding income in the region and from sanctioned customers and related business from both periods
David Schwimmer, CEO said:
“LSEG has delivered a good first quarter, with strong underlying performance across all divisions. During the quarter we announced two acquisitions to enhance our product offerings in Trading & Banking and Customer & Third-Party Risk. We also announced the divestment of BETA+, which will simplify and refocus our Wealth Solutions business.
“Our ability to invest for growth, make strategic acquisitions and return capital to shareholders demonstrates the strength of the Group and its high-quality recurring revenues. The Group is well positioned and we look forward to further progress during the rest of 2022.”
Q1 2022 Summary
Variances are provided on a pro-forma and constant currency basis. Unless stated otherwise, commentary is provided on the constant currency variance (excluding the deferred revenue adjustment) to provide insight into performance on a comparable basis. Revenues and cost of sales associated with the BETA+ divestment have been classed as discontinued and are excluded from all periods. Revenues and cost of sales associated with the Borsa Italiana Group divestment, which completed in H1 2021, are also excluded.
|
Continuing operations |
Q1 2022 £m |
Pro-forma Q1 20211 £m |
Variance2 % |
|
Constant Currency Variance3 % |
Constant Currency Variance (excl. deferred revenue adjustment) 3,4 % |
|
Trading & Banking Solutions |
378 |
372 |
1.6% |
|
1.0% |
(0.9%) |
|
Enterprise Data Solutions |
304 |
279 |
9.0% |
|
8.8% |
6.5% |
|
Investment Solutions |
308 |
274 |
12.4% |
|
10.8% |
9.4% |
|
Wealth Solutions |
63 |
61 |
3.3% |
|
2.2% |
0.9% |
|
Customer & Third-Party Risk Solutions |
94 |
85 |
10.6% |
|
9.9% |
7.8% |
|
Data & Analytics |
1,147 |
1,071 |
7.1% |
|
6.3% |
4.5% |
|
|
|
|
|
|
|
|
|
Equities |
67 |
61 |
9.8% |
|
10.0% |
10.0% |
|
FX |
60 |
57 |
5.3% |
|
2.7% |
2.4% |
|
Fixed Income, Derivatives & Other |
232 |
200 |
16.0% |
|
15.2% |
15.2% |
|
Capital Markets |
359 |
318 |
12.9% |
|
11.9% |
11.9% |
|
|
|
|
|
|
|
|
|
OTC Derivatives |
93 |
87 |
6.9% |
|
7.5% |
7.5% |
|
Securities & Reporting |
64 |
63 |
1.6% |
|
5.1% |
5.1% |
|
Non-Cash Collateral |
24 |
22 |
9.1% |
|
10.5% |
10.5% |
|
Net Treasury Income |
57 |
55 |
3.6% |
|
5.2% |
5.2% |
|
Post Trade |
238 |
227 |
4.8% |
|
6.6% |
6.6% |
|
|
|
|
|
|
|
|
|
Other |
7 |
5 |
40.0% |
|
44.1% |
44.1% |
|
Total income (excl. recoveries) |
1,751 |
1,621 |
8.0% |
|
7.6% |
6.3% |
|
Recoveries |
80 |
88 |
(9.1%) |
|
1.6% |
(0.5%) |
|
Total income (incl. recoveries) |
1,831 |
1,709 |
7.1% |
|
7.3% |
6.0% |
|
Cost of sales |
(240) |
(230) |
4.3% |
|
2.9% |
2.9% |
|
Gross profit |
1,591 |
1,479 |
7.6% |
|
8.0% |
6.4% |
1 The Q1 2021 comparator is pro-forma and assumes that the acquisition of Refinitiv took place on 1 January 2021
2 Variance is the difference between current and prior year periods using FX rates prevalent at each time, therefore any changes in the FX rates are reflected in the variance percentage alongside business performance
3 Constant currency variance shows underlying financial performance, excluding currency impacts, by comparing the current and prior period at consistent exchange rates
4 Excludes the deferred revenue adjustment further explained in the “Accounting and modelling notes” section
Q1 2022 Highlights
Group Income (excluding recoveries) grew 6.3% at constant currency and up 6.8% adjusting for the actions LSEG has taken in response to the Ukraine and Russia (U/R) conflict. The revenue impact of U/R is anticipated to be c.£60 million in 2022. Most of the impact reflects the suspension of Data & Analytics services to customers in Russia, with the largest impact in Trading & Banking.
- Data & Analytics: revenues up 4.5%; up 5.1% excluding U/R impacts
- Trading & Banking Solutions down 0.9%; but grew 0.1% excluding U/R impacts – Driven by better understanding and servicing of customer needs, with growth in Banking products and an improved performance in Trading revenues. Acquisition of TORA, expected to complete in H2, will enhance customers’ ability to trade multiple asset classes across global markets through our platform
- Enterprise Data Solutions up 6.5% – Continued acceleration in revenue growth reflects our investment in broadening and deepening our data & analytics offering, and innovation in our delivery of this content. This has reinforced our #1 position in real-time data and continues to support market share gains in pricing and reference data
- Investment Solutions up 9.4% – Good growth in FTSE Russell with subscription revenues up 10.3%. Asset-based revenues rose 17.0%, despite volatile market conditions over the quarter. Further revenue synergy realisation in the quarter from cross-selling of FTSE Russell and Refinitiv data products
- Wealth Solutions up 0.9% – Steady growth in our subscription-based services providing data and analytics to Wealth advisory companies. Contribution from the transaction-orientated BETA+ business moved to discontinued operations ahead of expected divestment in H2 2022
- Customer & Third-Party Risk Solutions up 7.8% – Double-digit organic growth maintained in Q1, reduced on a reported basis by disposal of ERMT business in November 2021. Strong growth in the core screening business, WorldCheck, reflecting market share gains and customer demand for comprehensive, reliable and timely sanctions and KYC data
- Capital Markets: revenues up 11.9%
- Equities up 10.0% – Robust secondary market activity in Q1, reflecting the value customers place on the breadth and depth of LSEG’s liquidity, especially during periods of heightened volatility. This more than offsets the impact of weaker primary market issuance and suspension of securities impacted by the U/R conflict
- FX up 2.4% – Strong growth in our leading global dealer-to-client FX platform, FXall, reflects investment in customer service and platform functionality. Performance partially offset by weaker volumes on Matching platform, our dealer-to-dealer FX trading venue. We continue to make good progress towards transitioning Matching to our modern, proprietary trading architecture in 2023
- Fixed Income, Derivatives & Other up 15.2% – Strong performance at Tradeweb1 which saw $1.17 trillion of total Average Daily Volume traded in the quarter, an increase of 11%. Growth was driven by continued market share gains and a more volatile macroeconomic backdrop
- Post Trade: total income up 6.6%
- OTC Derivatives up 7.5% – Strong volumes seen across SwapClear, ForexClear, CDSClear and SwapAgent, as we support OTC market participants’ need for robust risk management and capital optimisation
- Securities & Reporting up 5.1% – Good volume growth at RepoClear and EquityClear as they continue to provide an essential service through volatile markets and the introduction of Central Securities Depository Regulation (CSDR)
- Non-Cash Collateral up 10.5% – Mainly driven by an increase in average non-cash collateral balances
- Net Treasury Income up 5.2% – Reflecting the benefit of larger cash collateral balances due to increased clearing activity in Q1
1 Tradeweb Q1 2022 results will be released on 28 April 2022 and will provide more detailed commentary on performance
Statutory financials1
|
Continuing operations |
Q1 2022 £m |
Q1 2021 £m |
|
Trading & Banking Solutions |
378 |
247 |
|
Enterprise Data Solutions |
304 |
194 |
|
Investment Solutions |
308 |
238 |
|
Wealth Solutions |
63 |
40 |
|
Customer & Third-Party Risk Solutions |
94 |
57 |
|
Data & Analytics |
1,147 |
776 |
|
|
|
|
|
Equities |
67 |
61 |
|
FX |
60 |
39 |
|
Fixed Income, Derivatives & Other |
232 |
141 |
|
Capital Markets |
359 |
241 |
|
|
|
|
|
OTC Derivatives |
93 |
87 |
|
Securities & Reporting |
64 |
63 |
|
Non-Cash Collateral |
24 |
22 |
|
Net Treasury Income |
57 |
55 |
|
Post Trade |
238 |
227 |
|
|
|
|
|
Other |
7 |
4 |
|
Total income (excl. recoveries) |
1,751 |
1,248 |
|
Recoveries |
80 |
58 |
|
Total income (incl. recoveries) |
1,831 |
1,306 |
|
Cost of sales |
(240) |
(171) |
|
Gross profit |
1,591 |
1,135 |
1 The comparator Q1 2021 figures are statutory results, incorporating Refinitiv from acquisition at the end of January 2021. Revenues and cost of sales associated with the BETA+ divestment have been classed as discontinued and are excluded from all periods. Revenues and cost of sales associated with the Borsa Italiana Group divestment, which completed in H1 2021, are also excluded
Additional information can be found at www.lseg.com
Q1 investor and analyst conference call:
The Group will host a conference call on its Q1 Trading Statement for analysts and institutional shareholders today at 08:30am (UK time). On the call will be David Schwimmer (Chief Executive Officer), Anna Manz (Chief Financial Officer) and Paul Froud (Group Head of Investor Relations).
To access the telephone conference call or webcast please register in advance using the following link and instructions below:
- If you wish to participate in Q&A, questions can be submitted by clicking the 'Ask a question button' on the page or by emailing the LSEG Investor Relations team at ir@lseg.com. Questions can be submitted in advance and during the event itself
- If you wish to ask a question live, you will need to register for the telephone conference call here: https://cossprereg.btci.com/prereg/key.process?key=PQ6N49EQ8
- NOTE: Once you have registered for the conference call, you will be provided with the information you need to join the conference, including dial-in numbers and passcodes. Please save this information to your calendar or print this information
Presentation slides can be viewed at https://www.lseg.com/investor-relations
