Euronext’s Q1 Revenues Consolidate Despite Volumes Pullback

A strong performance of listings activity helped allay weaker volumes during Q1.

Euronext, Europe’s largest exchange, reported its financial results for Q1 2017, which showed a tight consolidation of key figures in spite of a decrease in volumes. The latest results corroborate an industry-wide trend in the institutional space of exchanges suffering from mitigated volumes in 2017.

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In Q1 2017, Euronext saw its revenues come in at $141.1 million (€126.6 million), virtually unchanged year-over-year from $141.0 million (€126.5 million) in Q1 2016. The group managed to hold onto its revenues due to a strong performance in its listing business, which climbed 33.0 percent on a yearly basis in Q1 2017. Moreover, yield management contributed to this strength, preventing any decline in this area.

Euronext’s volumes were not as resilient in Q1 2017, with its average trading volumes decreasing by 15.9 percent on a year-over-year basis from Q1 2016 for its cash products chain – the group also recorded an 8.0 percent year-over-year decrease in trading volumes in Q1 2016 for its derivatives products as well.

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Furthermore, Euronext experienced an increase in operational expenses, excluding depreciation and amortization – this corresponded to an uptick in costs incurred by IT projects and business initiatives related to ‘Agility for Growth’, which climbed 2.6 percent in Q1 2017 to $62.5 million (€56.1 million) from $61.0 million (€54.7 million) in Q1 2016.

The group also recorded a tepid decrease in its EBITDA during Q1 2017, having inched lower to $78.6 million (€70.5 million), or -1.8 percent year-over-year from $80.1 million (€71.8 million) in Q1 2016.

Stéphane Boujnah

According to Stéphane Boujnah, Chairman and CEO of the Managing Board of Euronext NV, in a statement on the quarterly earnings: “The deployment of our strategic plan is gathering pace, and I am extremely proud to announce two developments that show our commitment to deliver value to shareholders and clients.”

“Firstly, through the long-term agreement negotiated with ICE Clear Netherlands, Euronext secured similar financial benefits to those of the current agreement with LCH Clearnet SA, while significantly improving the client value proposition for the clearing of its derivatives products. Second, the introduction of a floor in our dividend policy will provide shareholders with a minimum return and reduce any possible dividend volatility.”

Euronext rolled out a series of changes to its market structure earlier this week, helping facilitate improvements for mid-cap companies and other listings. The group will implement a laundry list of new measures beginning as early as June 2017, which will see targeted changes in its market structure, also yielding several alterations to its issuing, listings, and sponsors.

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