By Huw Jones
LONDON (Reuters) -London Stock Exchange Group is on track to end the year towards the upper end of its income growth targets, with a closely-watched indicator recovering from a dip in the prior quarter, it said on Thursday.
In a trading statement for the three months to Sept. 30, it said that annual subscription value (ASV) growth, which refers to recurring revenue and is closely tracked by analysts since LSEG's $27 billion takeover of data and analytics firm Refinitiv in 2021, came in at 7.1%, after a dip in the prior quarter rattled investors.
LSEG shares were down 0.8% at 8,006 pence in early trading.
“LSEG delivered another quarter of strong, broad-based growth," LSEG Chief Executive David Schwimmer said in a statement, adding that he was confident that total income growth for the full year will be towards the upper end of a guidance range of 6% to 8%.
Data and analytics, which now make up the bulk of LSEG income, was up 7.2% year on year at 1.29 billion pounds ($1.57 billion) on improving sales, rising retention of existing customers and a higher annual price increase, LSEG said.
Total income for the group was up 8% at 1.96 billion pounds, excluding recoveries, with a gross profit of 1.77 billion pounds.
Organic ASV growth remains broadly around the level seen in the first and second quarters, LSEG said, adding that all 2023 guidance is reiterated, including EBITDA margin and capital expenditure.
JPMorgan (NYSE:JPM) Cazenove analysts said third-quarter gross profit was in line with company-compiled consensus, but "most importantly" organic ASV growth recovered after dipping to 6.9% in the second quarter.
"We believe that the quarter-on-quarter increase in ASV should be well received, as the decline in Q2 generated some concern among investors," JPMorgan Cazenove said in a note to clients.
RBC Europe analysts said that while revenue from the data and analytics division was narrowly below consensus, an increase in ASV "should further reassure around prospects for that business".
Analysts will now focus on LSEG's capital markets event on November 16 and 17, when it will present a new strategic plan and provide new targets, JPMorgan said.
"We continue to make very good progress building new products with Microsoft (NASDAQ:MSFT) and are on target to launch with customers in the second half of 2024," LSEG said.
($1 = 0.8236 pounds)