London Stock Exchange Group plc (LSEG) Ordinary 6,79/86p

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London Stock Exchange Group (LSEG) reported 7.7% organic growth in full-year income, ignoring currency moves, to £8.5bn (£8.5bn expected). Growth was broad based, with the Data & Analytics business securing annual subscription value (ASV) growth of 6.3%.

Underlying operating profit rose 9.0% to £3.2bn (£3.1bn expected), outpacing revenue growth as margins improved.

Free cash flow rose from £1.6bn to £2.2bn. Net debt rose from £6.1bn to £6.5bn, driven by acquisitions.

£1bn was returned via buybacks in 2024, with a further £0.5bn to be completed by July. A dividend of 89p per share was also announced.

For 2025, full year income is expected to rise between 6.5-7.5% with free cash flow of at least £2.4bn.

The shares rose 3.4% in early trading.

Our view

There had been some fears of a slowdown in sales heading into results, but LSEG is continuing to execute well. Full year results were strong, with management setting an upbeat tone on the outlook for some of its key growth drivers.

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, its 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 are 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.

We think LSEG is an attractive business well placed to benefit from growing trends around the electronification of trading, embedding tech into capital markets, and growth in demand for data analysis. But some of that has already been priced in, and if it wants to continue bridging the valuation gap to US peers, it needs to deliver, and there are no guarantees.

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 Refinitiv. 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. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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