LSEG Flexes Its Financial Muscle
Right then, let’s unpack this rather tasty set of H1 results from the London Stock Exchange Group. When a financial infrastructure giant like LSEG starts throwing around phrases like “strong and consistent growth track record” alongside a £1 billion share buyback, it’s worth paying attention. CEO David Schwimmer isn’t just whistling Dixie here – the numbers back up the confidence.
The Headline Acts: Growth & Cash
First, the growth story. LSEG delivered a robust 7.8% organic constant currency increase in total income (excluding recoveries). More impressively, they’ve managed to convert that top-line growth into even juicier profitability:
- Adjusted EPS surged 20.1% to 208.9p – a metric that cuts through accounting noise
- EBITDA margin expanded 100 basis points to 49.5%
- Equity free cash flow exploded 43.6% to £935 million
This isn’t accidental. It’s the result of disciplined execution – lower capital intensity, savvy debt management, and tax efficiency all playing their part. When a business generates cash like this while improving margins, it’s firing on multiple cylinders.
Division Deep Dive: Where’s the Growth Coming From?
No weak links here – every division contributed positively:
- Data & Analytics (+5.1%): The steady engine room
- FTSE Russell (+7.6%): Indexing power in full swing
- Risk Intelligence (+12.2%): The standout performer – regulatory complexity is LSEG’s friend
- Markets (+10.7%): Riding volatility beautifully
Special note on ASV (Annual Subscription Value) growth – sitting at +5.8% despite “expected competitor response” to LSEG’s improved offerings. Translation: they’re good enough to worry rivals.
Shareholder Feast: The £1.5 Billion Giveback
Now we get to the really fun bit for investors. LSEG isn’t just hoarding that cash:
- £500 million buyback already completed in H1
- Another £1 billion buyback coming in H2
- Interim dividend hiked 14.6% to 47p per share
That dividend will hit accounts on 17 September if you’re on the register by 15 August (mark 14 August as ex-dividend day in your diary). Combined with the buybacks, we’re looking at serious capital return – almost £1.5 billion within a year. That’s not just generosity; it’s a statement of confidence in sustainable cash generation.
The Engine Under the Bonnet: Strategic Shifts
Beyond the numbers, three strategic plays stand out:
- Product Blitz: 250 Workspace enhancements, Eikon sunset (good riddance), DigitalAssetClear launch, and Treasury Futures clearing. This isn’t tinkering – it’s aggressive modernisation.
- Microsoft Marriage Deepens: Excel/PPT add-ins, Teams integration, and Data-as-a-Service expansion. They’re embedding themselves in workflows.
- Engineering Insourcing: 52% of engineering now in-house – crucial for controlling their destiny and margins.
Upping the Ante: Guidance Upgrade
Management didn’t just report – they raised the bar:
- Constant currency EBITDA margin guidance lifted to +75-100bps (from +50-100bps)
- Maintained organic growth (6.5-7.5%) and cash flow targets (£2.4bn+)
That margin upgrade is particularly telling – it signals they’re pulling operational levers more effectively than even they expected.
The Takeaway: A Virtuous Cycle in Motion
What we’re seeing here is a beautiful alignment of strategy and execution. LSEG is positioned squarely at the intersection of three megatrends: data hunger (especially for AI), market digitisation, and regulatory complexity. They’re investing in innovation while simultaneously delivering margin expansion and showering shareholders with cash.
The £1 billion buyback isn’t just a nice-to-have – it’s evidence that Schwimmer & Co. believe their transformation is yielding sustainable results. For investors? It suggests LSEG isn’t just weathering uncertainty; it’s using it as rocket fuel.
