TMX Group Q2 Earnings Call Highlights

Key Points

• TMX Group delivered strong Q2 results: Revenue rose 16% to C$487.5 million, adjusted diluted EPS increased 19%, and all major business segments posted double-digit growth.
• Capital markets and data businesses gained momentum: First-half capital raised climbed 51%, new listings increased 44% to 251, derivatives volumes rose 18% in Q2, and Global Insights revenue grew 18%, helped by acquisitions and higher indexing assets.
• TMX is expanding through acquisitions and investments: It plans to invest about US$800 million in the proposed MEMX-BOX combination for an expected 59% stake, while also advancing RAFI Indices and Cboe-related transactions; the board approved an 8% dividend increase to C$0.26 per share.

TMX Group TSE: X reported double-digit revenue growth across its businesses in the second quarter and first half of 2026, while outlining a series of acquisitions and investments intended to expand its presence in global exchange, data and indexing markets.

Chief Executive Officer John McKenzie said the company’s first-half results reflected “balanced strength” across transaction-based and recurring-revenue businesses. Total revenue rose 16% in the first six months of 2026, while organic revenue, excluding acquisitions completed in 2025, increased 14%. Adjusted diluted earnings per share increased 27% for the period.

Second-Quarter Revenue and Earnings Growth

For the second quarter, TMX reported revenue of C$487.5 million, up 16% from a year earlier. Chief Financial Officer David Arnold said the company delivered its eighth consecutive quarter of double-digit growth in both total and organic revenue.

Adjusted diluted earnings per share rose 19%, supported by a C$35 million, or 18%, increase in income from operations. Reported diluted earnings per share increased 96%, which Arnold said also reflected a non-cash foreign-exchange accounting gain on U.S.-dollar intercompany loans, compared with a loss in the prior-year period.

• Global Insights segment revenue increased 18% in the quarter.
• Derivatives Trading and Clearing revenue rose 15%.
• Equities and Fixed Income Trading and Clearing revenue increased 13%.
• Capital Formation revenue grew, led by higher listing activity and corporate services revenue.

Operating expenses increased 13% in the second quarter. The increase included C$15.6 million in acquisition-related expenses tied to ETF Stream, Verity and nuclear-sector index acquisitions, along with integration expenses and acquired-intangible amortization. Excluding acquisition-related items, litigation-related costs and prior-year strategic realignment expenses, comparable operating expenses increased about 10%, largely due to compensation, headcount, technology investments and certain non-cash items.

Listings, Trading and Global Insights Performance

McKenzie said Capital Formation revenue increased 20% in the first half, driven by listing fees and TSX Trust. Capital raised increased 51% in the first six months, led by corporate financings in the mining sector. TSX Venture equity capital raised totaled C$6.9 billion, up 108% from a year earlier.

The company added 251 new listings during the first half, a 44% increase from the comparable period. McKenzie highlighted several initial public offerings, including Apotex’s C$1.5 billion June IPO, which he described as the largest life-science IPO in Canadian history, and Lumina Metals’ C$406 million IPO.

Revenue from Equities and Fixed Income Trading increased 25% in the first half, as combined volumes rose 32%. In the second quarter, equities and fixed-income trading revenue rose 16%, while clearing revenue increased 9%. Equities market volumes increased 15%, including gains of 17% on the TSX and 25% on TSX Venture. Alpha volumes declined 25%.

TMX’s combined market share for TSX- and TSX Venture-listed securities was approximately 59% in the quarter, down 3% from the prior-year period. Arnold said a lower proportion of higher-yielding auction trading relative to continuous trading affected revenue capture.

Derivatives Trading and Clearing revenue increased 23% in the second quarter, as derivatives trading volumes rose 18%. Montréal Exchange average daily volume reached 1.1 million contracts in the first half, while total open interest set a record of 35.6 million contracts on June 18.

Within Global Insights, TMX VettaFi revenue rose 40% in Canadian dollars, including C$4.1 million from recent acquisitions. Excluding those acquired businesses, revenue increased 29%, supported by growth in assets under indexing. Assets under indexing finished the quarter just below $90 billion.

TMX Datalinx revenue increased 22%, including a C$8.2 million contribution from Verity. TMX Trayport revenue growth was affected by lower non-recurring consulting revenue compared with the prior-year quarter, though recurring revenue expanded 8% and its annual recurring revenue reached C$293.5 million.

MEMX Group Investment and Other Expansion Plans

TMX also announced a strategic investment in the proposed combination of U.S. exchanges MEMX and BOX, which would create MEMX Group. TMX plans to contribute approximately US$800 million in cash and its existing BOX ownership stake. Following the transaction’s closing, expected in the second half of 2027 subject to regulatory approvals, TMX expects to own approximately 59% of the combined entity.

The overall transaction values MEMX Group at approximately US$2.3 billion. Arnold said MEMX and BOX generated combined 2025 revenue of approximately C$280 million and adjusted EBITDA of approximately C$134 million. Their combined revenue has grown at an average annual rate of about 27% over the last three years, though the company said that performance also benefited from higher market volatility.

TMX expects the investment to be accretive to adjusted earnings per share within the first 12 months after closing, before synergies. Arnold said management sees the more significant synergy opportunities as revenue-related, although expense synergies are also expected.

McKenzie said the combined business would represent approximately 10% of the U.S. options market, in addition to a growing U.S. equities-market presence. He said the transaction would combine complementary offerings, technology and client relationships from BOX and MEMX.

The company intends to finance the MEMX investment with debt. TMX said its leverage ratio could reach as high as 3.4 times on a conservative pro forma basis that assumes several pending transactions close simultaneously. Management expects actual leverage to be lower because closings are likely to be staggered and said it expects to return to its 1.5x to 2.5x long-term leverage target within two years of closing.

TMX also expects its acquisition of RAFI Indices to close by the end of the third quarter and said the acquisition would more than triple VettaFi’s assets under indexing. Its purchase of Cboe Australia was described as nearing closing, while the Cboe Canada transaction remains subject to a separate Canadian regulatory review process.

Separately, the board approved an 8% increase in TMX’s quarterly dividend to C$0.26 per common share, payable Aug. 28 to shareholders of record on Aug. 14.

About TMX Group (TSE:X)

TMX Group Ltd is a company that operates several global markets to provide investment opportunities for its clients. TMX Group's key operations include Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montreal Exchange, Canadian Derivatives Clearing Corporation, and Trayport, which provides listing markets, trading markets, clearing facilities, depository services, technology solutions, data products, and other services to the global financial community.

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