Euronext publishes Q3 2021 results

Euronext publishes Q3 2021 results

Strong revenue growth, driven by double digit organic growth in listing, trading and clearing activities, and significant contribution of the Borsa Italiana Group.

Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris – 4 November 2021 – Euronext, the leading pan-European market infrastructure, today publishes its results for the third quarter of 2021.

• Revenue and income at €350.6 million (+€145.8 million, +71.2%, +10.2% like-for-like¹):
  • Borsa Italiana Group contributed €121.1 million to revenue for full quarter of consolidation.
  • Trading revenue grew to €124.2 million (+63.6%), primarily driven by the consolidation of Borsa Italiana capital markets, as well as increased cash equity volumes combined with strong yield. Fixed income trading revenue increased to €23.8 million, driven by double-digit growth in MTS cash trading activities.
  • Post-trade revenue grew to €83.1 million (+86.2%), mainly due to the consolidation of the Italian CSD, Monte Titoli, and of the clearing activities of the Italian CCP, CC&G. Custody and settlement revenue growth in the Nordic CSDs was less dynamic than previous quarters reflecting notably normalised levels of retail activity. Clearing revenue increased to €27.5 million. Net treasury income generated by CC&G was €12.9 million.
  • Advanced Data Services revenue grew to €49.8 million (+44.3%) due to robust index and core data businesses and the consolidation of the Borsa Italiana Group data activities.
  • Listing revenue grew to €50.8 million (+42.1%), resulting from strengthened leading position for the listing of equities, with 51 listings, and of ETFs, together with the continued growth of Euronext Corporate Services, and the consolidation of the Borsa Italiana Group.
  • Non-volume related revenue accounted for 55% of Q3 2021 total revenue (vs 54% in Q3 2020) and covered 131% of operating expenses, excluding D&A (vs. 128% in Q3 2020).
• EBITDA at €203.0 million (+€85.3 million, +72.4%, +13.7% like-for-like), EBITDA margin at 57.9% (+0.4pts); EBITDA margin like-for-like at 60.4% (+1.8pts):
  • Operating expenses, excluding D&A, grew to €147.6 million (+69.5%) as a result of the consolidation of costs from acquired businesses, for €54.8 million, and costs related to the integration of the Borsa Italiana Group, as previously announced.
• Reported net income, share of the parent company shareholders, at €115.8 million (+€45.6 million, +64.9%):
  • Exceptional items were €2.0 million and net financing expenses were €7.3 million.
  • Results from equity investments amounted to €11.8 million mainly resulting from a received dividend of €9.2 million.
  • Income tax rate was 29.0%.
• Adjusted EPS² at €1.21 (+18.1%)³.

Stéphane Boujnah, Chief Executive Officer and Chairman of the Managing Board of Euronext, said:

“In the third quarter of 2021, Euronext revenue grew by 71.2% to reach €350.6 million, driven by double-digit organic revenue growth, especially in listing, trading and clearing activities, and the continued good performance of Borsa Italiana, MTS, CC&G and Monte Titoli. EBITDA grew faster than revenue, to €203.0 million, thanks to a strong cost discipline to limit the impact of integration costs. Adjusted EPS increased by 18.1% to €1.21 per share as a result of this solid operating performance.

We confirmed again this quarter Euronext’s position as the leading listing venue in Europe, for equity, debt and ETFs. We welcomed 51 new equity listings, including 21 Tech companies IPOs, and 97 new ETFs. We launched mid-October, together with Borsa Italiana, the MIB ESG index, the first ESG blue-chip index for Italy following the launch of the CAC 40 ESG earlier this year.

We are pleased to welcome Fabrizio Testa as CEO of the Borsa Italiana Group, Head of Fixed Income trading for the Group, and member of the Managing Board of Euronext N.V. as of 28 November 2021.

Euronext’s new strategic plan, including 2024 financial guidance, will be presented on 9 November in Milan.”

Euronext Q3 2021 financial performance

Revenue

In the third quarter of 2021, Euronext consolidated revenue and income increased to €350.6 million, up +71.2%, primarily resulting from (i) the first full quarter of consolidation of the Borsa Italiana Group and from (ii) double digit organic growth especially in listing, trading and clearing activities, partially offsetting lower custody and settlement activity. As a reminder, VP Securities was consolidated from 4 August 2020. On a like-for-like basis and at constant currencies, Euronext consolidated revenue and income grew double-digit (+10.2%) in Q3 2021, at €213.4 million, compared to Q3 2020.

Non-volume related revenue accounted for 55% of total Group revenue in Q3 2021, compared to 54% in Q3 2020, reflecting the expanded post-trade business. The operating cost coverage ratio was at 131% in Q3 2021, compared to 128% in Q3 2020.

EBITDA

Operational expenses excluding depreciation & amortisation increased to €147.6 million, up +69.5%, primarily as a result of the consolidation of the costs from the Borsa Italiana Group, VP Securities (until 4 August) and 3Sens (part of Corporate Services) for €54.8 million, as well as integration costs. On a like-for-like basis, operational expenses excluding depreciation & amortisation increased by +5.3% compared to Q3 2020.

Consequently, EBITDA for the quarter was up at €203.0 million, representing an EBITDA margin of 57.9%, up +0.4 points compared to Q3 2020, despite integration activity. On a like-for-like basis, EBITDA for Q3 2021 was up +13.7%, to €128.9 million, and EBITDA margin was 60.4%, up 1.8 points compared to the same perimeter in Q3 2020.

Net income, share of the parent company shareholders

Depreciation and amortisation accounted for €37.9 million in Q3 2021, up +145.8%, resulting mainly from the consolidation of the Borsa Italiana Group, including its related PPA for €14.0 million (for a full quarter of consolidation). On a like-for-like basis, depreciation & amortisation was down -2.7% compared to Q3 2020 at €13.7 million.

Operating profit before exceptional items was €165.1 million, a +61.3% increase compared to Q3 2020. On a like-for-like basis, operating profit before exceptional items was up +16.0% compared to Q3 2020, at €115.2 million.

€2.0 million of exceptional costs were reported in Q3 2021, mainly related to the Borsa Italiana Group transaction acquisition.

Net financing expense for Q3 2021 was €7.3 million compared to a net financing expense of €3.4 million in Q3 2020. This increase results from the costs of the newly issued debt in relation with the financing of the acquisition of the Borsa Italiana Group

Results from equity investments amounted to €11.8 million in Q3 2021, reflecting a dividend received from Euroclear, accounting for the payment of the 2020 dividend (€9.2 million), and the contribution from LCH SA, in which Euronext owns an 11.1% stake. As a reminder, in Q3 2020, Euronext reported €1.8 million of results from equity investments solely reflecting the contribution from LCH SA.

Income tax for Q3 2021 was €48.5 million. This translated into an effective tax rate of 29.0% for the quarter (Q3 2020: €25.6 million and 26.4% respectively), impacted by non-deductible exceptional costs.

Share of non-controlling interests mainly relating to the Borsa Italiana Group and Nord Pool amounted to €3.2 million in Q3 2021.

As a result, the reported net income, share of the parent company shareholders, for Q3 2021 increased by +64.9% compared to Q3 2020, to €115.8 million. This represents a reported EPS of €1.08 basic and fully diluted in Q3 2021, compared to €0.92 basic and fully diluted in Q3 2020⁴. The number of shares used was 92,447,841 for the basic calculation and 92,678,838 for the fully diluted calculation⁵.

Adjusted EPS is up +18.1% in Q3 2021, at €1.21 per share, compared to an adjusted EPS of €1.02 per share in Q3 2020.

In Q3 2021, Euronext reported a net cash flow from operating activities of €213.5 million, compared to €71.7 million in Q3 2020, reflecting higher positive changes in working capital. Excluding the impact on working capital from CC&G and Nord Pool CCP activities, net cash flow from operating activities accounted for 86% of EBITDA in Q3 2021.

Q3 2021 Business highlights

Listing

Listing revenue was €50.8 million in Q3 2021, an increase of +42.1% compared to Q3 2020, driven by record in equity listing, positive traction of ESG bond listing and the performance of Euronext Corporate Services despite the usual slower summer months. On a like-for-like basis at constant currencies, listing revenue increased by +11.7% compared to Q3 2020. Euronext confirmed its position as the leading listing venue in Europe, with 154 listings over the first nine months of 2021.

The third quarter of 2021 saw the strong primary equity listing dynamic continue, with 51 new listings on Euronext, including five large company listings (Universal Music Group, Azelis Group, Antin Infrastructure Partners, Majorel Group and Exclusive networks) and six SPACs. Euronext continues to demonstrate its strong value proposition for innovative companies with most listings being tech companies. In Q3 2021, €4.8 billion was raised on Euronext primary markets, and quadrupled, compared to €926 million in Q3 2020.

Euronext was the leading exchange in Europe for the listing of ETFs, for the third quarter in a row.

Secondary markets reported a solid third quarter of 2021, with €39.7 billion raised in secondary equity issues, compared to €9.4 billion in Q3 2020.

Debt listing activity was solid in Q3 2021, notably supported by the continued momentum in ESG bond listing. In Q3 2021, €336.2 billion in debt was raised on Euronext’s markets, compared to €212.9 billion in Q3 2020.

In total, €380.7 billion in equity and debt was raised on Euronext’s markets in Q3 2021, compared to €223.3 billion in Q3 2020.

Euronext Corporate Services reported a strong performance, generating €9.0 million in revenue in Q3 2021, increasing from €7.8 million in Q3 2020. This performance results from continued commercial development and an enhanced digital offering meeting high demand for digital solutions, despite the seasonality impact of slower summer months.

Trading

Trading revenue on a reported basis (Q3 2020 excludes Borsa Italiana Group revenue). All trading volumes data on a pro forma basis to include the Borsa Italiana Group trading activities. 2020 data has been restated accordingly

• Cash trading

Cash trading revenue increased by +42.7% to €75.0 million in Q3 2021 as a result of the consolidation of the cash trading activities of Borsa Italiana and robust yield in a higher than usual volatile environment. During the third quarter of 2021, on a pro forma basis, cash market recorded average daily volumes of €10.9 billion, up +14.6% compared to Q3 2020.

Over the third quarter of 2021, Euronext cash trading yield averaged 0.52bps and the market share on cash trading averaged 71.4%.

On a like-for-like basis at constant currencies, cash trading revenue was up +17.0% in Q3 2021 compared to Q3 2020.

• Derivatives trading

Derivatives trading revenue increased by +25.9% to €13.5 million in Q3 2021 as a result of the consolidation of Borsa Italiana derivatives trading activities and of a record third quarter for commodity derivatives trading. During the third quarter of 2021, average daily volumes on financial derivatives was 583,691 lots, up +3.4% from Q3 2020 reflecting a low volatility environment for equity derivatives, while average daily volumes on commodity derivatives was 82,846 lots, up +34.4% from Q3 2020 reflecting successful geographical and client expansions.

Euronext revenue capture on derivatives trading was €0.31 per lot for the third quarter of 2021.

On a like-for-like basis at constant currencies, derivatives trading revenue was up +2.6% in Q3 2021 compared to Q3 2020.

• Fixed income trading⁷

Fixed income trading reported revenue at €23.8 million in Q3 2021, compared to €0.5 million in Q3 2020, resulting from the consolidation of MTS. MTS reported a strong performance reflecting the continued positive momentum in cash bonds trading supported by steady issuance level in Europe. For the third quarter of 2021, MTS Cash reported €17.1 million of revenue and MTS Repo reported €4.8 million of revenue.

On a like-for-like basis at constant currencies, fixed income trading revenue (solely Euronext perimeter) was down -18.7% in Q3 2021 compared to Q3 2020.

• FX trading

FX trading reported revenue at €5.6 million in Q3 2021, down -4.2% from Q3 2020, reflecting lower trading volumes as FX markets recorded a low volatility quarter. Over the third quarter of 2021, US$17.5 billion average daily volumes were recorded, down -9.4% compared to Q3 2020.

On a like-for-like basis at constant currencies, Spot FX trading revenue was down -3.4% in Q3 2021 compared to Q3 2020.

• Power trading

Power trading reported €6.3 million in revenue in Q3 2021, stable compared to Q3 2020 as lower trading volumes were offset by foreign exchange impact. Over the third quarter of 2021, average daily day-ahead power traded was 2.02TWh, down -7.8% compared to Q3 2020, and average daily intraday power traded was 0.06TWh, down -10.7% compared to Q3 2020.

On a like-for-like basis at constant currencies, power trading revenue was down -3.3% compared to Q3 2020.

Investor Services

Investor Services reported revenue up +9.3% to €2.1 million in Q3 2021 reflecting its continued commercial development.

On a like-for-like basis at constant currencies, Investor Services revenue was up 24.0% compared to Q3 2020.

Advanced Data Services

Advanced Data Services revenue was €49.8 million in Q3 2021, up +44.3% from Q3 2020, driven by a dynamic index activity, resilient market data business and the consolidation of the various Borsa Italiana Group data activities.

On a like-for-like basis at constant currencies, Advanced Data Services revenue was up +4.5% compared to Q3 2020.

Post Trade

• Clearing

Clearing revenue was up +85.3% to €27.5 million in Q3 2021, as a result of higher clearing revenue and treasury income received from LCH SA and the consolidation of CC&G activities. In Q3 2021, CC&G revenue included €1.3 million from derivatives clearing, €4.2 million from equities clearing, €2.1 million from bonds clearing and €2.9 million of other revenue.

On a like-for-like basis at constant currencies, clearing revenue was up +14.8% compared to Q3 2020.

• Net treasury income

Net treasury income through the CCP business of CC&G was €12.9 million in Q3 2021.

• Custody, Settlement and other Post-trade

Custody, Settlement and other Post-trade revenue, encompassing the activities of the Euronext CSDs (Interbolsa, Euronext VPS, VP Securities, Monte Titoli), was €55.6 million in Q3 2021, up +86.7% from Q3 2020, as a result of the consolidation of the Italian CSD, Monte Titoli (as of 29 April 2021) and of VP Securities (from 4 August 2020). Euronext Nordic CSDs recorded lower volumes of activity, reflecting a normalization of retail trading activities.

Over the third quarter of 2021, the four CSDs operated by Euronext reported 29.9 million of settlement instructions and the total asset under custody at the end of September 2021 was €6.3 trillion.

On a like-for-like basis at constant currencies, Custody, Settlement and other Post-trade revenue was up +8.7% compared to Q3 2020.

Euronext Technologies and other revenue

Euronext Technologies and other revenue was €24.4 million in Q3 2021, up +104.3% from Q3 2020 as a result of the consolidation of the technology businesses of the Borsa Italiana Group, including Gatelab and X2M and of an increase in SFTI / Colocation revenue and fee grid improvement.

On a like-for-like basis at constant currencies, Euronext Technologies and Other revenue was up +6.8% compared to Q3 2020.

Corporate highlights since 30 September 2021

Euronext acquires remaining interest in Commcise

On 30 September 2021, Euronext acquired the remaining 21% interest in Commcise, a Software as a Service provider of research evaluation and commission management solutions for financial services firms. Commcise has been part of Euronext’s Investor Services offering since its acquisition in December 2018.

New CEO for Borsa Italiana, to further grow the business in Italy and in Europe

On 28 October 2021, Euronext announced that the Board of Directors of Borsa Italiana and the Supervisory Board of Euronext N.V. have respectively nominated Fabrizio Testa, currently CEO of MTS, as CEO of Borsa Italiana, and as Head of Fixed Income trading for the Group and member of the Managing Board of Euronext N.V., subject to regulatory and shareholders approvals. Raffaele Jerusalmi will step down from his position as CEO of Borsa Italiana as of 28 November 2021, by mutual consent.

Fabrizio Testa will take up his functions as CEO of Borsa Italiana and Head of Fixed Income trading for the Group on 28 November 2021. He will step down from his position as CEO of MTS in the course of Q1 2022. Fabrizio Testa will actively work to develop the Borsa Italiana business in Italy, implement the integration of Borsa Italiana within the Euronext European project and lead the Euronext Fixed Income trading ambition. Fabrizio Testa will join the Managing Board of Euronext N.V. to be a key contributor to the Euronext Group strategy. Angelo Proni has been appointed by the Board of Directors of MTS as new CEO of MTS and will take office after the approval of the 2021 financial results by MTS’ Board of Directors in Q1 2022. Angelo Proni will join the extended Managing Board of Euronext N.V. and continue to be supported by the MTS Chairwoman Maria Cannata, the General Manager Ciro Pietroluongo and all other senior executives.

With the appointment of Fabrizio Testa at the Managing Board of Euronext N.V.1, Italian business leaders contribute to every single level of the Euronext Group governance: the CEO of MTS and Giorgio Modica, Group CFO, are members of the Extended Managing Board; CDP Equity (CDPE) and Intesa Sanpaolo are members of the Committee of Reference Shareholders; Piero Novelli is an independent member of Euronext N.V Supervisory Board, which he chairs since 1 September 2021; Alessandra Ferrone is a member of the Supervisory Board representing CDPE as one of the two largest shareholders in Euronext N.V; Andrea Sironi is Chairman of the Board of Borsa Italiana; and Consob has joined the College of Regulators of Euronext N.V.

The combination of Borsa Italiana with Euronext’s European project is a unique opportunity to leverage the strengths and the high level of expertise of the teams in Italy, and across the European locations of the combined Group, for the benefit of our clients and to enhance the financing of the real economy in Italy and in Europe.

Agenda

A conference call and a webcast will be held on 5 November 2021, at 09.00am CET (Paris time) / 08.00am BT (London time):

Conference call:

To connect to the conference call, please dial:

Password: Euronext

Live webcast:

Webcast:

A live audio webcast and replay after the call will be available via this link and on our Euronext Investor Relations website

About Euronext
Euronext is the leading pan-European market infrastructure, connecting local economies to global capital markets, to accelerate innovation and sustainable growth. It operates regulated exchanges in Belgium, France, Ireland, Italy, the Netherlands, Norway and Portugal. With close to 1,920 listed issuers and around €6.5 trillion in market capitalisation as of end September 2021, it has an unmatched blue-chip franchise and a strong diverse domestic and international client base. Euronext operates regulated and transparent equity and derivatives markets, one of Europe’s leading electronic fixed income trading markets and is the largest centre for debt and funds listings in the world. Its total product offering includes Equities, FX, Exchange Traded Funds, Warrants & Certificates, Bonds, Derivatives, Commodities and Indices. Euronext also leverages its expertise in running markets by providing technology and managed services to third parties. In addition to its main regulated market, it also operates a number of junior markets, simplifying access to listing for SMEs. Euronext provides custody and settlement services through central securities depositories in Denmark, Italy, Norway and Portugal.

For the latest news, go to euronext.com or follow us on Twitter (twitter.com/euronext) and LinkedIn (linkedin.com/euronext).

Disclaimer
This press release is for information purposes only: it is not a recommendation to engage in investment activities and is provided “as is”, without representation or warranty of any kind. While all reasonable care has been taken to ensure the accuracy of the content, Euronext does not guarantee its accuracy or completeness. Euronext will not be held liable for any loss or damages of any nature ensuing from using, trusting or acting on information provided. No information set out or referred to in this publication may be regarded as creating any right or obligation. The creation of rights and obligations in respect of financial products that are traded on the exchanges operated by Euronext’s subsidiaries shall depend solely on the applicable rules of the market operator. All proprietary rights and interest in or connected with this publication shall vest in Euronext. This press release speaks only as of this date. Euronext refers to Euronext N.V. and its affiliates. Information regarding trademarks and intellectual property rights of Euronext is available at www.euronext.com/terms-use.

© 2021, Euronext N.V. - All rights reserved. 

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Appendix

Non-IFRS financial measures

For comparative purposes, the company provides unaudited non-IFRS measures including:

• Operational expenses excluding depreciation and amortisation
• EBITDA, EBITDA margin.
• Non-IFRS measures are defined as follows:
• Operational expenses excluding depreciation and amortisation as the total of salary and employee benefits, and other operational expenses
• EBITDA as the operating profit before exceptional items and depreciation and amortisation
• EBITDA margin as the operating profit before exceptional items and depreciation and amortisation, divided by total revenue and income.

Non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures and should be read only in conjunction with the consolidated financial statements.

Adjusted EPS definition

Consolidated income statement

The figures in this document have not been audited or reviewed by our external auditor

Consolidated comprehensive income statement

The figures in this document have not been audited or reviewed by our external auditor.

Consolidated balance sheet

The figures in this document have not been audited or reviewed by our external auditor.

Consolidated statement of cash flows

The figures in this document have not been audited or reviewed by our external auditor.

Volumes for the third quarter of 2021

• Cash markets⁸⁹

• Fixed income markets¹

• FX markets

• Power markets

• Derivatives markets¹⁰

• Derivatives open interest¹¹

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1 Like for like revenue at constant currencies exclude in Q3 2020 and Q3 2021 VP Securities (until 4 August), the Borsa Italiana Group, 3Sens, Ticker, OMS and Centevo as well as related integration costs
2 Definition in appendix
3 Weighted average number of shares at 92,447,841for 9M 2021, 9M 2020 outstanding shares adjusted for the rights issue to 76,120,331 shares
Unless specified otherwise, percentages refer to Q3 2021 data compared to Q3 2020 data
4 Number of outstanding shares used in 2020 adjusted for the rights issue to factor in the bonus element at 76,120,331 shares
5 Number of outstanding shares used to compute 9M 2021 EPS
6 Prior to the acquisition of the Borsa Italiana Group, Euronext fixed income trading revenue was included in cash trading revenue. Data for Q3 2020 has been restated accordingly.

8 Q3 2021 data is published on a pro forma basis to include the trading activities of the Borsa Italiana Group. Q3 2020 data has been restated accordingly.
9 Cash Market includes shares, warrants, ETFs. Following the acquisition of the Borsa Italiana Group, Euronext fixed income trading activity is now reported under Fixed income markets. 2020 data has been restated accordingly
10Q3 2021 data is published on a pro forma basis to include the trading activities of the Borsa Italiana Group. Q3 2020 data has been restated accordingly.
11 Q3 2021 data is published on a pro forma basis to include the trading activities of the Borsa Italiana Group. Q3 2020 data has been restated accordingly.

Attachment

• 20211104_ENX_Q32021_PR vf