TMX Group (X) Investor Day 2024 summary

Strategic Vision and Growth Objectives

• Target to double revenue to $2B in seven years, leveraging organic growth, acquisitions, and aiming for 2X market cap, with a focus on accelerating the pace compared to the previous 14 years.

• Four growth strategies: expanding listings/services, growing beyond traders, expanding market data, and increasing global reach, especially in the U.S.

• High-growth businesses now contribute 50% of revenue, up from 33% in 2018, with continued focus on post-trade, data, analytics, and derivatives.

• Over 50% of revenue now comes from outside Canada, meeting a key strategic milestone and reflecting a strong global footprint.

• Strategic focus on expanding products/services for public and private companies, leveraging technology modernization and global talent.

Business Segment Highlights and Innovation

• Capital Formation: Achieved over 6% revenue CAGR (2018-2023), strong global brand, unique TSX/TSXV model, and ETF franchise grew 5.7X in value since 2013.

• Trust and issuer services: Non-listings revenue grew from CAD 17M to over CAD 100M in 10 years, with new platforms like Markette Ventures targeting private placements.

• Trading and post-trade: Derivatives and clearing posted a 12.1% CAGR (2018-2023), with innovations like CCMS, SGC notes, and expansion into new geographies and asset classes.

• Data and analytics: Datalinx delivered 11% revenue growth in FY 2023, with 98% recurring revenue, global expansion, and VettaFi’s index factory enabling rapid ETF product development.

• Trayport: Revenue doubled post-acquisition (2018-2023), expanding into Japan and North America, with 13.2% CAGR and focus on network effects and data-driven trading.

Financial Performance and Guidance

• Top-line revenue has grown at 7% CAGR, surpassing the 5%+ long-term target, with double-digit free cash flow growth and a dividend payout at the top end of the 40-50% range.

• Recurring revenue increased to 55% in Q1 2024 (up 5% since 2018), with 44% from global solutions and 50% from outside Canada.

• High-growth segments (Trust, Trayport, Derivatives, VettaFi) are driving mix shift and margin expansion, with operating leverage expected as capital markets activity rebounds.

• Debt/Adjusted EBITDA reduced to 1.7X in Q1 2024, within the 1.5-2.5X target range, with a deleveraging plan post-VettaFi acquisition.

• Over $277M returned to shareholders in 2023, with free cash flow and operating cash flow nearly doubled since 2018.