TMX Group (X) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $367.1 million, up 20% year-over-year, with record performance across all business segments and strong growth in Global Solutions, Insights & Analytics, and trading and clearing, partially offset by lower Capital Formation revenue.

• First half 2024 revenue increased 18% year-over-year, driven by the TMX VettaFi acquisition and organic growth in key segments.

• Strategic focus on expanding global presence, enhancing recurring revenue, and leveraging technology and people for growth.

• Diluted EPS rose 3% to $0.36, while adjusted diluted EPS increased 13% to $0.43, reflecting higher income from operations and a lower share count.

• Organic revenue excluding TMX VettaFi grew 9% in Q2, with notable increases in trading volumes and Trayport licensees.

Financial highlights

• Q2 2024 net income attributable to equity holders was $100.0 million, up 3% from Q2 2023; adjusted net income was $120.5 million, up 13%.

• Operating income increased 12% to $163.9 million; cash flows from operations rose 21% to $209.6 million.

• Q2 2024 operating expenses rose 27% to $203.2 million, mainly due to TMX VettaFi integration, related costs, and higher payroll.

• Net finance costs increased 159% in Q2 2024 due to higher debt from the VettaFi acquisition.

• Quarterly dividend of $0.19 per share approved, with a payout ratio of 44% for Q2.

Outlook and guidance

• Long-term organic growth for VettaFi expected in high single to low double digits.

• Trayport and new asset class/geography initiatives are multi-year growth drivers, with steady progress expected over 1-2 years.

• Deleveraging plan on track to reach 1.5x-2.5x leverage by end of 2025.

• Management remains focused on organic and inorganic growth, with continued deleveraging and integration of VettaFi.

• Forward-looking statements highlight objectives for revenue and adjusted EPS CAGR, with assumptions of stable tax rates, moderate volatility, and disciplined expense management.