Deutsche Boerse Earnings: Cyclical Tailwinds Still a Positive, but Have Likely Reached the Peak

Wide-moat Deutsche Boerse DB1 reported a decent third quarter with net revenue growing to EUR 1.18 billion (up 9%) and EBTIDA of EUR 685 million (up 13%) excluding one-offs. The group continues to enjoy solid structural growth dynamics in the analytics and index business, while cyclical tailwinds remain a positive contributor to the top line. That said, cyclical drivers are starting to become more mixed with volatility and interest rates having peaked or about to do so. We maintain our EUR 180 per-share fair value estimate.

Higher interest rates in Europe and the U.S. continue to flow through to Deutsche Boerse’s income statement, with net interest income growing 130% to EUR 169 million. Cash balances declined 16% as customers are increasingly feeling the higher cost of cash on their collateral balances. With interest rates peaking in Europe and the U.S. further marginal gains from NII should slow, albeit still largely positive on a year-over-year basis through a couple of quarters.

Lower volatility weighed on the exchange group’s trading and clearing operation, lowering demand for equity derivatives from a high level a year ago in particular. Commodities had a stronger performance as the group saw good power trading activity, counterbalancing an overall challenging environment for trading and clearing.