London Stock Exchange Group Q3 Earnings Call Highlights

Key Points

• LSEG raised its full-year outlook after reporting 8.8% organic revenue growth in the third quarter, now targeting at least 8% growth for 2026, improved EBITDA margins of 100–120 basis points, and at least £2.8 billion in equity free cash flow.
• Growth was broad-based, with subscription revenue up 6.6% and Markets revenue rising more than 12%; OTC derivatives and clearing volumes were especially strong, including nearly 30% growth at SwapClear.
• AI adoption and the Octus acquisition are key growth initiatives: 95% of LSEG’s top 200 customers use at least one AI solution, while Octus will add private-credit data and is expected to generate £300–£320 million of 2026 revenue.

London Stock Exchange Group LON: LSEG reported third-quarter organic revenue growth of 8.8% and said it has raised its full-year outlook for revenue, margins and cash generation, citing broad-based momentum across its subscription and Markets businesses.

Chief Executive Officer David Schwimmer said year-to-date organic revenue rose 8.6%, with every business contributing to growth. The company now expects at least 8% organic revenue growth for 2026, which Schwimmer said would put the group on track for its strongest growth year since 2018.

“Our revised guidance speaks to a business that is growing faster, is more profitable, and is generating more cash than anticipated at the start of the year,” Schwimmer said.

Subscription and Markets Growth

Chief Financial Officer Michel-Alain Proch said Data & Analytics revenue increased 5.2% in the third quarter, while data and feeds rose 7.5%. FTSE Russell grew 10.2%, Risk Intelligence increased 9.8%, and the group’s subscription businesses collectively grew 6.6%, accelerating from 6.3% in the first half.

LSEG said it remains on track for about 6.5% subscription revenue growth for the full year, compared with 6% in 2025. Proch said these revenues are typically about 93% recurring annually and benefit from new sales being recognized once products are installed and activated.

Markets revenue rose more than 12%, with OTC derivatives standing out. Client volumes at SwapClear increased almost 30% during the quarter, while Tradeweb volumes rose 22%. Proch also cited growth in fixed income, equities and foreign exchange activity, against a backdrop of shifting interest-rate expectations and broader economic and political uncertainty.

LSEG said its Post Trade Solutions business signed four new TradeAgent members during the quarter. In response to analyst questions, management characterized growth at its clearing operations as supported both by market activity and structural investment in products, geographic reach and additional asset classes. Proch said SwapClear grew 18% in the quarter, CDSClear grew 15%, and Post Trade Solutions rose 14%.

Higher Guidance for Margins and Cash Flow

The company raised its EBITDA margin outlook to an improvement of between 100 and 120 basis points in 2026, while reiterating capital expenditure guidance of 9.5% of revenue. LSEG also lifted its equity free-cash-flow forecast to at least £2.8 billion.

Proch attributed margin gains to top-line performance, operating leverage and controls over employee, contractor and cloud costs. He said the guidance includes a 30-basis-point benefit from a revised SwapClear agreement, with the remaining improvement reflecting underlying operating performance.

LSEG has returned £3.4 billion to shareholders in the first nine months of the year. It has about £800 million remaining under its current £3 billion buyback program, which is expected to be completed by February of the following year. Management also said it sees capacity for a further £1 billion to £1.5 billion in buybacks during 2027.

AI Adoption and Monetization

Schwimmer said 95% of LSEG’s top 200 customers now use at least one of its artificial intelligence solutions, while 80% of its top 50 customers use two or more. Workspace AI Search had 47,000 users at the end of the third quarter and has since exceeded 50,000 users, with average queries per user rising 30%.

More than two-thirds of the company’s largest customers, and more than 300 customers overall, have connected or are onboarding to LSEG’s model context protocol, or MCP, offering. LSEG said AI-related commercial discussions increased 50% during the quarter, and 80% of AI license sales involved customers purchasing new or additional data sets.

Management did not provide a separate AI revenue figure. Schwimmer said monetization is occurring through a range of arrangements, including AI usage rights, consumption-based pricing and access to MCP content. He said LSEG expects Data & Analytics growth to accelerate over time, though adoption and commercial discussions at large financial institutions may take time to translate into revenue.

Octus Deal Targets Private Credit

LSEG also confirmed its acquisition of Octus, a provider of credit data, intelligence and workflow tools focused on illiquid and private credit markets. Schwimmer said Octus has more than 750 customers, 40,000 users and coverage of about 95% of the private-credit universe.

The acquisition is intended to complement LSEG’s public and liquid credit offerings with Octus’ private-credit and distressed-debt data. Schwimmer said Octus’ datasets include records and documents covering more than 28,000 issuers and 65,000 deals, alongside analysis from financial and legal specialists.

Proch said Octus is expected to generate between £300 million and £320 million in 2026 revenue, with low- to mid-double-digit growth expected in 2027 and 2028. The business has an adjusted EBITDA margin of roughly 40%, according to LSEG. The transaction is expected to be neutral to earnings per share in 2028 and accretive thereafter.

LSEG expects modest cost savings but described the deal primarily as a revenue-growth and cross-selling opportunity. The company expects roughly £100 million of cash costs to integrate Octus, largely across 2027 and 2028, including engineering work to bring its data into LSEG’s infrastructure and develop combined products.

Schwimmer also highlighted Tradeweb’s planned acquisition of electronic credit trading platform Trumid, saying the transaction would expand Tradeweb’s capabilities in credit trading, including gray markets and new issuance.

About London Stock Exchange Group (LON:LSEG)

LSEG is a leading global financial markets infrastructure and data provider that operates connected businesses to serve customers across the entire financial markets value chain. With capabilities in data, indices and analytics, capital formation, trade execution, clearing and risk management, we operate at the heart of the world's financial ecosystem and enable the sustainable growth and stability of our customers and their communities. Together, our five business divisions – Data and Analytics, FTSE Russell, Risk Intelligence, Capital Markets and Post Trade – offer customers seamless access to global financial markets, across the trading lifecycle. LSEG is headquartered in London and has a major presence throughout Europe, the Americas, Asia Pacific and emerging markets.

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