LSEG reported 6.4% organic revenue growth in the third quarter, excluding currency effects, and a 6.5% rise in gross profit - both beating estimates.
Growth was broad-based, led by the Risk Intelligence segment, driven by strong demand for screening and identity verification services.
Guidance was largely unchanged, with full-year revenue growth expected between 6.5-7.5%.
LSEG plans an additional £1bn share buyback to be completed before its 2025 results, bringing total buybacks to £2.5bn between March 2025 and February 2026.
The shares were up 6.9% in early trading.
Our view
LSEG has been under pressure this year but continues to perform well and shareholders are being rewarded with a fresh buyback.
It’s not plain sailing though, competitors are upping their game, offering bundles and lower prices to steal growth from LSEG. Management is confident this trend won’t last, and stronger-than-expected recurring revenue growth, alongside upbeat guidance for the coming quarter, has helped ease investor concerns.
LSEG is more than just a stock exchange. It’s a global leader in financial data and technology. After buying Refinitiv in 2021, a major data and analytics business, LSEG now earns most of its revenue from providing tools and services that financial professionals rely on daily.
The company also benefits from its diversified operations. In addition to data and analytics, LSEG generates revenue from services like clearing and settlement, which help ensure that financial transactions are completed smoothly. This variety of income streams makes LSEG’s business more resilient during market ups and downs.
There’s been a push of late to boost profitability, and the results are starting to bear fruit. Margins are expanding and that’s helping top-line growth drop down into profit and cash. We were pleased to hear management reiterate these efforts into the new year, with the guided £2.4bn free cash flow figure expected to have upside.
The balance sheet is in decent shape, with scope for some add-on acquisitions but we don’t expect any major acquisitions anytime soon. In the meantime, it’s supporting increased shareholder returns, though nothing is guaranteed.
Looking ahead, LSEG is expected to keep growing as it integrates new technology like AI and expands its offerings. Its focus on cloud-based solutions and automation is helping financial institutions save time and money. Plus, the partnership with Microsoft is starting to come to life, with LSEG’s analysis products integrated into programs like Excel and Teams increasing their appeal.
As a major player in global finance, LSEG faces some challenges. The financial industry is heavily regulated, so changes in rules could impact its business. The company also relies on cutting-edge technology, which requires constant investment to stay ahead.
Recent weakness now presents a good opportunity to gain exposure to a quality business that’s well positioned to benefit from the digitisation of trading, increasing tech adoption in capital markets, and strong demand for data analytics. But competition is intensifying and the potential disruption of AI on legacy players like LSEG is a key risk to watch.
LSEG key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.