Euronext Earnings: Higher Revenue Capture a Positive in Trading As Volatility Continues To Weigh

We maintain our EUR 88 per-share fair value estimate after Euronext ENX posted a quarter within our expectations, with revenue down 1.8% to EUR 368 million and adjusted EBITDA down 2.5% to EUR 216 million. Much like the first quarter of this year, nontrading-related revenue performed well, underlining management’s strategy to further diversify income streams. However, lower volatility after increased levels of activity through last year did prove challenging for the group in its trading activities again this quarter, as was to be expected. Our narrow moat rating is unchanged.

Trading revenue declined across the board except for good results in power trading. However, higher revenue capture in cash equities and derivatives did stand out positively. The improved cash equity yield of 0.53 basis points versus last quarter’s 0.48 basis points was a good showing by the exchange group, showcasing the rationale for Euronext to take over national exchanges and move them onto their proprietary Optiq trading platform.

Advanced data services and technology solutions showed further progress growing revenue by 9% and 13%, respectively. The offering of new data products and greater revenue capture from co-location services, after the migration of Euronext’s data center, are paying off nicely.

Euronext also announced a share repurchase program worth EUR 200 million, which comes on top of its 50% dividend payout ratio. Given that we view Euronext as undervalued currently, we welcome management’s decision to lower its share count at an opportune time.