In This Article:
Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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NZX Ltd (NZSTF) reported a strong financial result for 2024, with earnings excluding integration and restructuring costs reaching $48.5 million, up 21% from the previous year.
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Capital markets activity levels increased, contributing to a 3.3% rise in capital markets revenues.
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Smart revenues grew by 19.1%, reflecting the growth in funds under management.
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Wealth Technologies achieved cash flow positivity from external client activity, with revenues up 42.7%.
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The company declared a fully imputed final dividend of $0.03 per share, indicating strong shareholder returns.
Negative Points
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Operating expenses increased by $4 million to $72.2 million, driven by costs associated with the Smart business.
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Dairy derivatives revenue was negatively impacted by reduced interest margin fees, which were not fully offset by increased trading volumes.
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The integration and restructuring costs affected the overall earnings, with reported earnings including these costs at $47.2 million.
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The company faces external dependencies in Wealth Technologies, such as client capacity for testing and data provision from current suppliers, which could impact migration timelines.
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There are headwinds in the markets business, including lower levels of audit revenue and the impact of Fonterra's change to the main board.
Q & A Highlights
Q: Can you break out and quantify what a typical near-term or long-term migration looks like for Wealth Technologies, and if there's anything more that could be done to shrink some of those lead times? A: The timing of client migrations depends on several factors, including the complexity of the client's business, the amount of historical data they wish to transfer, and annual cycles like tax. It's not solely dependent on our actions; it also involves the client's readiness and the cooperation of their current suppliers. We work closely with clients to ensure they transition to our platform as soon as possible, but there are external dependencies we can't control.
Q: What is the outlook for NZX Dark, and is its current performance sustainable? A: NZX Dark is performing well and is a standard feature in other markets. We anticipated a slower transition, but the market has embraced it, with on-market activity sometimes reaching 10-12%. It's expected to enhance liquidity by allowing larger orders without information leakage. The pricing structure for trading fees is also beneficial for us.