UPDATE 2-LSEG ups growth guidance, plans new share buyback in post-Refinitiv push
(Adds more detail on Microsoft in paragraphs 6-7, on revenue and capex in paragraphs 9-10)
By Huw Jones
LONDON, Nov 16 (Reuters) - The London Stock Exchange Group on Thursday raised its mid-term growth guidance to "mid to high single" digits and said it would return a billion pounds ($1.24 billion) to shareholders in 2024 as it looks beyond the integration of data and analytics company Refinitiv.
LSEG bought Refinitiv in January 2021 for $27 billion to compete more effectively with global market data leader Bloomberg.
Since then LSEG has largely focused on integrating Refinitiv, and Thursday's strategy update marks a new, post integration chapter for the company where data and analytics now account for more than 70% of revenue.
"As we enter the next phase of growth, we will leverage our leading franchises across the financial markets lifecycle to create seamless workflows within and across asset classes," LSEG CEO David Schwimmer said in a statement opening the company's two-day Capital Markets event.
LSEG, which owns London's 300-year old stock exchange, said it was stepping up its growth expectations to mid to high single digit organic revenue growth annually, accelerating after 2024 as customers start to benefit from its investment in platforms and a partnership with Microsoft.
LSEG's data and analytics will be made available through Microsoft Teams, with the exchange also using AI via Microsoft.
LSEG said there is an acceleration in the alliance with Microsoft, with products now well into the build phase, with customers starting to benefit in 2024.
REVENUE 'TO BUILD'
The company said it expects to deliver full-year revenue growth for 2023 towards the upper end of its current 6-8% guidance range.
Looking forward, underlying EBITDA margin, a key measure of profitability, would increase over time, while capital expenditure is set to decline to a "high single digit percentage" of revenue over time after remaining around current levels of 11-12% of revenue in 2024.
LSEG said revenue would build from 2025, and that the new round of share buybacks for next year reflected its continued strong cash generation.
"We will provide more detail on the proposed structure of these buybacks with the 2023 preliminary results. We continue to expect to maintain day-to-day leverage around the middle of our target range of 1.5-2.5x operating net debt to adjusted EBITDA," it said.
The group said it would simplify its internal structure to five divisions from next year: data & analytics, equivalent to about half of 2022 revenues, FTSE Russell, Risk Intelligence, Capital Markets, which includes share trading, and Post Trade that covers clearing.
Thomson Reuters, parent of Reuters News, holds a minority stake in LSEG, which pays Reuters for news. ($1 = 0.8051 pounds) (Reporting by Huw Jones; editing by David Evans and Jane Merriman)
