TMX Group Ltd (TMXXF) Q2 2024 Earnings Call Highlights: Strong Revenue Growth and Strategic ...

GuruFocus News
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In This Article:

  • Revenue: $367.1 million, a 20% increase compared to Q2 last year.

  • Organic Revenue Growth: 9% over the same period.

  • Adjusted Diluted Earnings Per Share: Increased by 13%.

  • Global Solutions, Insights, and Analytics Revenue: Grew by 40%, including $32 million from TMX VettaFi.

  • TMX VettaFi Revenue Growth: 18% in Canadian dollars or 15% in US dollars compared to the same period last year.

  • TMX Trayport Revenue Growth: 18% in Canadian dollars or 16% in pound sterling.

  • Derivatives Trading and Clearing Revenue (excluding BOX): Increased by 20%.

  • Equities and Fixed Income Trading and Clearing Revenue: Increased by 14%.

  • Operating Expenses: Increased by 27% compared to Q2 last year.

  • Debt to Adjusted EBITDA Ratio: 3.2x as of June 30.

  • Quarterly Dividend: $0.19 per common share.

Release Date: August 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • TMX Group Ltd (TMXXF) reported a strong revenue increase of 18% in the first half of 2024 compared to the same period in 2023.

  • The acquisition of TMX VettaFi contributed significantly to revenue growth, adding $69.9 million in the first half of 2024.

  • TMX Trayport showed robust performance with a 19% revenue growth, driven by a 24% increase in total licenses.

  • Derivatives trading and clearing revenue, excluding BOX, increased by 8% year over year, with notable growth in interest rate products.

  • The company is making significant progress in expanding its listing franchise beyond Canada, with over 230 international companies now listed on TSX or TSX Venture Exchange.

Negative Points

  • Capital formation revenue decreased by 4% in the first half of 2024 due to lower revenue from additional listing fees on the TSX Venture Exchange.

  • Operating expenses increased by 27% in Q2 2024 compared to the same period last year, largely due to the inclusion of TMX VettaFi and integration costs.

  • The company faces challenges in the macroeconomic environment, impacting capital market conditions over the last 2.5 years.

  • There was a modest shortfall in capital formation revenue, partially offsetting the overall revenue gains.

  • The transition from BAX to CORRA in derivatives trading resulted in a gap between volume growth and revenue growth.

Q & A Highlights

Q: Can you share details on your long-term expectations for net flow growth and potential market share gains for VettaFi? A: We aim for high single to low double-digit growth rates for VettaFi, aligning with our acquisition expectations. Growth will come from market value changes, fund inflows, and expanding the number of funds we provide.

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