TMX Group (X) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached CAD 353.8 million, up 23% year-over-year, with adjusted diluted EPS up 17% to $0.41, while reported diluted EPS declined 3% due to higher net finance costs.

• Growth was driven by strong performances in Global Solutions, Insights and Analytics, Derivatives, and Equities and Fixed Income Trading and Clearing, partially offset by lower capital formation activity.

• Strategic focus on expanding beyond core listing and trading, with investments in global solutions, analytics, and capital formation.

• Integration of recent acquisitions (Indxx, Newsfile, INDEX Research) is progressing well, enhancing capabilities in index management and regulatory filings.

• Nine-month revenue rose 20% to $1,066.8 million, with adjusted diluted EPS up 10% to $1.21 and net income up 19% to $322.2 million.

Financial highlights

• Q3 operating income increased 24% to $155.5 million; adjusted net income rose 18% to $114.1 million.

• Q3 revenue reached CAD 353.8 million, up 23% year-over-year; organic revenue growth was 12%.

• Operating expenses rose 22% year-over-year, mainly from acquisition-related costs and incentive compensation.

• Net finance costs surged to $29.1 million in Q3 2024, mainly due to higher debt from the VettaFi acquisition and FX losses.

• Cash flows from operating activities in Q3 2024 were $170.5 million, up 46% year-over-year.

Outlook and guidance

• Targeting low single-digit core expense growth in 2025, aligned with inflation.

• Recent acquisitions expected to be accretive to Adjusted EPS in 2025.

• Continued focus on deleveraging to reach 1.5–2.5x leverage by end of 2025.

• Ongoing investments in trading and clearing modernization, with key launches planned for 2025.

• Long-term objectives include growing recurring revenue, expanding outside Canada, and maintaining disciplined expense management.