LONDON Stock Exchange Group said on Thursday (Apr 25) its first quarter growth was in line with plans for the roll out of products from its partnership with Microsoft, although the bourse’s shares briefly hit a five-month low.

LSEG was “confident of continued growth and improving profitability”, adding that it was on track to meet all the financial guidance it had given in November 2023.

Shares in LSEG hit lows last seen in November before edging higher after analysts digested explanations for a drop in a closely-watched metric tracking recurring subscription revenue.

LSEG said total income, excluding recoveries, in the first quarter was £2.089 billion (S$3.6 billion), with gross profit of £1.893 billion, in line with analysts’ consensus forecasts compiled by the company.

LSEG, which provides financial market data and analytics to banks and other financial institutions, said that organic annual subscription value (ASV) growth, came in at 6 per cent in the first quarter, short of some analysts’ expectations, and a drop on the prior quarter.

The ASV pullback was due to the continued impact of loss of business from Credit Suisse, which was taken over by UBS, and the start of a new multi-year contract with a major global bank that included a “modest discount” in the first year, though helping to grab “desktop” business from rivals, LSEG said.

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Despite only half of the Credit Suisse impact felt so far, ASV growth is still expected to remain around 6 per cent this year, it added in an analyst call.

“Given the solid income number and reiteration of all previous guidance, we don’t expect any material changes to consensus on the back of the release,” analysts at RBC Capital Markets said.

LSEG CEO David Schwimmer urged analysts “not to get hung up” on small changes in ASV from quarter to quarter.

“We are not seeing any broad based weakness in terms of our business. We are still seeing modest improvement in retention,” Schwimmer told an analysts call.

“We continue to make strong progress in our Microsoft partnership, with a number of products expected to be in external pilot or general release this half,” Schwimmer said.

Shareholders at LSEG’s annual meeting later on Thursday are being asked to give the green light to potentially doubling Schwimmer’s total annual pay.

LSEG is looking ahead to developing its partnership with Microsoft as it completes the integration of data and analytics company Refinitiv, which it bought in 2021. The deal turned the 300-year-old bourse into a company where data and analytics account for about 70 per cent of the business.

LSEG said that £500 million in a directed buyback was completed in the first quarter, and that it was targeting £1 billion in total buybacks in 2024.

Thomson Reuters, owner of Reuters News, holds a minority stake in LSEG, which pays Reuters for news. REUTERS