Deutsche Börse Q3 2024 $DB1 (+1,3 %)

Financial performance:

Deutsche Börse Group delivered a strong financial performance in Q3 2024, with net revenue up 18% to €1,403.9 million compared to Q3 2023. Growth was driven by both organic expansion and the acquisition of SimCorp, which contributed 9% to the increase in revenue. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 17% to EUR 801.8 million. Net profit attributable to shareholders rose to EUR 444.9 million, compared to EUR 400.3 million in the third quarter of 2023. Earnings per share increased by 12% to EUR 2.42.

Balance sheet analysis:

The balance sheet shows an increase in total assets to EUR 301,326.3 million as at September 30, 2024, compared to EUR 237,726.9 million at the end of 2023. This growth is mainly due to the acquisition of SimCorp and the increase in financial instruments held by central counterparties. Shareholders' equity also increased to EUR 10,527.7 million, compared to EUR 10,100.2 million at the end of 2023.

Income statement:

Return on sales increased by 21% to 1,452.0 million euros for the third quarter of 2024. Operating costs increased by 20% to 603.4 million euros, mainly due to the SimCorp acquisition. The result from financial assets amounted to EUR 1.3 million and was down slightly compared to EUR 1.4 million in the third quarter of 2023.

Key figures and profitability:

Earnings per share (EPS) increased by 12% to 2.42 euros and cash EPS increased by 10% to 2.61 euros. The EBITDA margin remains robust, indicating efficient cost management despite rising operating costs.

Segment analysis:

• Investment Management Solutions: Net sales increased by 69%, driven by client wins in software solutions and higher demand for ESG solutions.
• Trading & Clearing: Net sales increased by 10%, supported by strong demand for interest rate derivatives and record trading volumes in commodities.
• Securities Services: Benefited from higher global debt issuance and trading activity in bonds, resulting in a 7% increase in net sales.

Competitive analysis:

Deutsche Börse Group strengthens its market position through strategic acquisitions such as SimCorp and benefits from secular growth trends in commodities and ESG solutions. The focus on digitalization and the introduction of cloud solutions give the company a further competitive advantage.

Management forecasts and comments:

The company has revised its annual forecast for 2024 upwards and expects net sales of around EUR 5.8 billion and EBITDA of between EUR 3.3 and 3.4 billion. Management is confident of achieving the goals of the Horizon 2026 strategy, with a focus on organic growth and the successful integration of acquisitions.

Risks and opportunities:

The main risks include regulatory challenges and market fluctuations. However, there are opportunities in the expansion of the ESG offering, the use of digital assets and the exploitation of secular growth trends in the commodities sector.

Conclusion and strategic implications:

Deutsche Börse Group's strong financial performance in Q3 2024 underscores its strategic focus on organic growth and acquisitions. The successful integration of SimCorp and the emphasis on digitalization position the company well for future growth. The upward revision to 2024 guidance reflects management's confidence in maintaining this momentum and remaining aligned with the Horizon 2026 strategy. I naturally remain invested in one of the best German stocks.

Positive statements:

• Net sales increased by 18% to € 1,403.9 million compared to the third quarter of 2023, driven by both organic growth and the acquisition of SimCorp.
• Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 17% to € 801.8 million.
• The Investment Management Solutions division reported a 69% increase in revenue, driven by significant client wins and higher demand for ESG solutions.
• Trading & Clearing reported a 10% increase in revenue, supported by strong demand for interest rate derivatives and record commodity trading volumes.
• Group net profit attributable to shareholders increased to € 444.9 million, compared to € 400.3 million in Q3 2023, with earnings per share increasing by 12% to € 2.42.

Negative statements:

• Operating costs increased by 20% to € 603.4 million, mainly due to the acquisition of SimCorp.
• In the same period of the previous year, there was a write-down of around € 25 million on intangible assets at Crypto Finance AG in the Trading & Clearing division.
• Despite the overall growth, the Trading & Clearing equity unit recorded a 2% decline in revenue in the first nine months of 2024.
• Net interest margins from the banking business in the Fund Services unit fell by 1% in the third quarter of 2024 compared to the third quarter of 2023.
• The financial result showed a significant increase in financial expenses, with a rise of 295% to € -43.4 million.