Euronext NV
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Earnings Call Transcript

Earnings Call Transcript
2024-Q1

from 0
Operator

Hello, and welcome to the Euronext Q1 2024 Results Call. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator instructions]. Today, we have Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext, joined by Giorgio Modica, CFO, as our presenters.I will now hand you over to your host, Stéphane Boujnah to begin today's conference. Thank you.

S
Stéphane Boujnah
executive

Good morning, everyone, and thank you for joining us this morning for the Euronext First Quarter 2024 Results Conference Call and Webcast. I am Stephane Boujnah, CEO and Chairman of the Managing Board of Euronext. And I will start with the highlights of this quarter. Giorgio Modica, our CFO, will then develop the main business and financial highlights of the first quarter of 2024.As an introduction, I would like to highlight 3 main points. First, Euronext has demonstrated its capabilities to deliver strong growth, thanks to its diversified business model. We have delivered plus 8% revenue growth in Q1 2024, bringing revenue and income to a record level of EUR 401.9 million.This very good performance was driven by solid growth in nonvolume-related businesses, in record performances in fixed income, record performance in power trading as well as the benefits of our successful expansion of Euronext clearing to Euronext European cash market in November '23.Second, thanks to our continued cost control and some positive one-offs. We reduced significantly our underlying expenses by minus 2% year-on-year to $150.7 million despite inflation that affected all of us, and we reached, therefore, an adjusted EBITDA margin of 62.5%.Third, we are definitely on track to complete the integration of the Borsa Italiana Group. We completed the migration of Italian derivatives to Euronext proprietary trading platform Optiq in March. The last step of the integration will be delivered in Q3 '24 in a few weeks' time when we migrate all Euronext financial derivatives and commodities listed on our European markets to Euronext clearing to complete our presence on the entire trading value chain.Thanks to our continued progress with the delivery of the Borsa Italiana Group integration, we delivered EUR 79 million of cumulative run rate synergies at the end of 2024. So, we are perfectly on track to achieve our growth for Impact 2024 target of EUR 115 million of annual run rate synergies by the end of this year, just 3 years after this transformational acquisition was completed.Since the beginning of the year, we have continued to innovate for the benefit of the attractiveness of European capital markets and for the benefit of our clients. Euronext successfully launched dark midpoint and sweep functionalities in Q1 '24, hosted in our core data center in Bergamo.These new functionalities are critical in continuing to provide the highest liquidity to all our trading members. And we have rolled out a harmonized corporate action services across a OECDs in order to tackle post-trade fragmentation in Europe.Lastly, we have strengthened and diversified our data index franchise with the announced acquisition of global rate set systems, GRSS, a leading and highly respected provider of services to benchmark administrators. DRSS is a mission-critical service provider to the benchmark administrators that produce 3 of Europe's critical interest rate benchmarks; EURIBOR, CIBOR and LIBOR.Together with the DRSS teams, we aim to reinforce significantly the positioning of GRSS in order to become the goal tool provider in the contributed data and in its space, leveraging on Euronext's global leadership and recognition.Let me give you a quick overview of the performance of the first quarter of 2024 on Slide 4. Euronext, we reported a very strong first quarter of '24 posting revenue growth of plus 8% year-on-year, up to EUR 401.9 million. The quarter was more by strong dynamism in post-trade and nonvolume-re-driven activities together with the record performance of fixed income and Power Trading.First, post-trade revenues saw double-digit growth. Euronext clearings performance was driven by the first full quarter of contribution from its expansion to European cash instruments as well as very dynamic commodities clearing activity.Euronext Securities posted a strong plus 6% increase in revenue this quarter, thanks to the growth in insurance and custody services. Second, our trading revenues posted strong growth, supported by record quarter for fixed income and power trading. This is the proof of the group's successful diversification.Despite lower equity and derivative volumes, our total trading revenues grew by over 7%. Third, non-volume-related revenue posted a strong performance overall, notably in listing and Advanced Data Services. We remain this quarter, again, the leading listing venue in Europe. We also observed in the second quarter so far, a very encouraging dynamic of our listing activity with 2 large IPOs in April, Planisware and CVC Capital.This translated into nonvolume-related revenue accounting for 58% of the total Q1 revenue and covering 155% of underlying operating expenses, excluding D&A. We continued our trademark disciplined approach to cost control, combined with a positive one-off accrual release, Q1 2024.Underlying operational expenses, excluding D&A, decreased slightly to $150.7 million, down minus 2% compared to our cost base of the first quarter 2023, and all that despite inflationary pressure.Overall, we reported a strong growth in adjusted EBITDA of plus 15% to EUR 251.3 million and an adjusted EBITDA margin that increased by 3.8 points to 62.5%. This strong performance, combined with the continued positive interest rate environment for cash in the bank led to a plus 15% increase in adjusted EPS at EUR 1.58 per share. And it also led to an adjusted net income of EUR 164.2 million.On a reported basis, EPS for this first quarter also benefited from the positive comparison base related to the provision of the EUR 36 million termination fee of the clearing agreement that we paid in Q1 2023. Consequently, reported EPS increased by plus 49.1% to EUR 1.35.Lastly, we continued to deleverage massively, reaching 1.6x net debt to last 12 months adjusted EBITDA at the end of March 2024. This compares to 3.2x at the completion of the Borsa Italiana Group acquisition in April 2021.Our ongoing delivering impact has been praised by S&P, who upgraded us to BBB+ positive outlook in April. As I mentioned earlier, we are now entering the final phase of our 2024 strategic plan and the Borsa Italiana Group integration with only one step ahead of us to complete this integration journey.In March '24, we successfully migrated Italian derivative trading operations to Optiq. This migration was the last in the ambitious integration plan of Italian cash and derivatives markets and to the Euronext single trading platform. And it was completed less than 3 years after the acquisition of the Borsa Italiana Group completed in April 2021.This success contributed to the synergies delivered this quarter, and we reached $79 million of cumulative run rate EBITDA synergies at the end of Q1 '24. You have understood that we are well on track and on schedule to deliver the last step of our growth for Impact 2024 strategic plan.The expansion of Euronext clearing to all financial and commodity derivatives listed on our Euronext markets in the third quarter of 2024 will be the final step to achieve the targeted delivery of EUR 115 million of cumulative EBITDA synergies at the end of 2024.Furthermore, the expansion of our clearing house will unlock a new set of strategic organic growth opportunities for us, which I'm looking forward to share with you on our Capital Markets Day on the 8th of November 2024 in Paris. I now give the floor to Giorgio for the review of our first quarter 2024.

G
Giorgio Modica
executive

Thank you, Stephane, and good morning, everyone. Let us now have a look at the strong performance of this first quarter of 2024. I'm now on Slide 7. As already mentioned by Stephane, total revenue this quarter reached EUR 401.9 million, up 8% compared to last year and 8.5% at constant currency.This quarter, there is no change in Scope impact and the full performance is organic. Non-volume-related share of revenue remains high at 58%, highlighting the success of our diversification and despite the record quarter for some of our trading businesses like fixed income and Power Trading.Our diversified businesses delivered strong growth in this first part of the year with a record top line. Let me deep dive into the drivers of this excellent performance, starting with listing on Slide 8. Listing revenue was EUR 57.7 million, up 5.5% driven by the increased volume of equity and debt activity versus last year and the good performance of Euronext Corporate Services.Euronext confirmed its leadership in equity listing in Europe and debt listing worldwide. On the equity side, in Q1 2024, Euronext welcomed 10 listings. Furthermore, we observed an encouraging dynamic in this first part of the second quarter with 2 large IPO in April, Plansware and CVC Capital. On the debt side, we reached, for the first time, 57,000 bonds listed on our markets while we also strengthened our leading position on ESG bond listing.Euronext Corporate Services continued to deliver a solid performance with revenue growing to EUR 12 million in this Q1 2024, up 12.5% compared to the first quarter of 2023, resulting from the strong performance of the SaaS offering.Slide 9 illustrates how data and investor services activity continued to drive growth this quarter. Advanced Data Services reached EUR 59.4 million, revenue up 5.5%, driven by the increased demand for nonprofessional usage and solid demand for fixed income and power trading data.Investor Services reported EUR 3.1 million revenue in the first quarter of 2024, representing a 17.4% increase compared to the first quarter of 2023, resulting from a continued commercial expansion cementing the franchise among the largest global investment managers.On the other hand, Technology Solutions reported EUR 26.7 million of revenues down 3.3% due to the reduction of logical access revenue following the completion of the migration of Borsa Italiana cash and derivative market to Optiq. In other words, our clients benefited from the savings of connecting to only one system.Moving to trading on Slide 10. Euronext trading revenues at EUR 138.4 million, up to 7.4% from the EUR 128.9 million in the first quarter of 2023, not only shows the benefit of the diversification of Euronext trading activity, but it also showed the resilience of our cash trading model in a low-volume environment. Cash trading revenue was EUR 70.6 million, down 1.6% versus the first quarter of 2023.It reflects lower trading volumes by 9.2%, primarily offset by improved average fees. Cash revenue captures averaged 0.54 basis points despite the average order size remaining very high. It demonstrates the benefit of the new field scheme implemented in Italy following the migration of Borsa Italiana case market Optiq.Cash equity market share averaged unhealthy 64.6%. Derivative trading decreased by 10.9% to EUR 13.4 million in the first quarter of 2024 due to lower financial derivative volumes with ADV down 12.6%, partially offset by stronger performance of commodity derivatives with volume up 34.3% versus last year. Average revenue capture on derivatives trading reached EUR 0.33 per loan.Lastly, FX trading grew 12.7% to EUR 7.1 million of revenues in the first quarter of 2024, up 12.7%, mostly supported by growing volume, slightly offset by a negative volume mix impact. Continuing with trading on Slide 11. Fixed income trading revenue grew 34.5% and reached another record quarter at EUR 35.2 million, reflecting strong performance of MTS Cash, MTS Repo and the increased traction of the Euronext fixed income retail franchise.Our fixed income franchise continued to be supported by an economic environment favoring money markets, sustain sovereign issuance activity and supportive volatility. For the first quarter of 2024, MTS Cash recorded EUR 34.7 billion of ADV and MTS Repo reached EUR 492 billion of term adjusted ADV. MTS EU continued to post the encouraging results.Power Trading revenue grew to $12.2 million in the first quarter of 2024, up 23.7% compared to the first quarter of 2023. This record performance was driven by another all-time high Intraday volume and a solid year-on-year day ahead trading activity.I conclude this business review on Slide 12. Clearing revenue was up 23.1% to EUR 37 million this quarter, reflecting the increased equity clearing volumes following the expansion of Euronext clearing to the cash trading market in Belgium, France, Ireland and the Netherlands and Portugal in the fourth quarter of 2023 and high clearing revenues from the dynamic commodity activity.Non-volume-related clearing revenue accounted for EUR 11.1 million, and the total clearing revenues in the Q1 2024 reached, as I said, EUR 37 million. Net treasury income amounted to EUR 11.7 million in the first quarter of 2024, representing a 57% increase from Q1 2023. As a reminder, Q1 2023 NTI was still impacted by the runoff of the Euronext clearing investment portfolio.Lastly, revenue from custody settlement and other postpaid activity reached EUR 67.8 million this quarter. This is a 6% increase, reflecting a dynamic issuance activity, the good performance of new services and higher assets under custody. On a like-for-like basis, custody settlement and other postpaid revenue was up 7.1% compared to the Q1 2023.Moving on with the financial review of the quarter. I will start now with the EBITDA bridge on Slide 14. Euronext adjusted EBITDA for the quarter was up 15% to EUR 251.3 million. This translated into an EBITDA adjusted margin of 62.5%. This quarter, up 0.8 points compared to the first quarter of 2023.Loan underlying costs for the quarter were EUR 8.7 million, primarily in relation to the ongoing work related to the clearing expansion and new Optiq migration. As a reminder, in the first quarter of 2023, we provisioned EUR 36 million fee for the termination of the clearing agreement with FDSHA, which has been paid this quarter in Q1 2024.The underlying operational expenses, excluding D&A, decreased 2%, reflecting continued cost discipline in an inflationary environment and the release of some cost and provision totaling around EUR 3.5 million. As you can imagine, it's too early now to discuss about changing the cost guidance for 2024. That remains as announced with the results of 2024 at EUR 625 million.Moving to net income on Slide 15. Adjusted net income this quarter is strongly up at EUR 164.2 million, which represents an increase of 11.7% compared to Q1 2023. So, as you can see, I will not comment on the increase of the net financing income as this is obvious reflecting an increased yield on our cash balance. You see as well that we have a decrease from equity investment, and this is mainly linked to the fact that we will not receive the one-off dividend from SICO Bank we received last year. We will receive it in Q4 this year.And, we don't benefit anymore from the results of associate-link to LCH SA that was disposed last year. Lastly, net income tax for the first quarter of 2024 was EUR 54.7 million. This translated to an effective tax rate of 26.9% for the quarter. Minority interest were as well higher due to the very good performance of Nord Pool and MTS.As a result, reported net income increased 44.8% to EUR 139.7 million, and adjusted EPS basis was up 15% in the first quarter of 2024 at EUR 1.58 per share. To conclude with the cash flow generation and leverage I'm now on Slide 16. As you can see, our balance sheet position is very solid as well as cash flow generation.S&P recognized our consistent leverage process and upgraded Euronext to BBB+ positive outlook in April 2024. In Q1 2024, Euronext reported a net cash flow from operation activities of EUR 184.6 million compared to EUR 318.2 million in the first quarter of 2023. The latter reflected the strong positive movement in net working capital related to Nord Pool and the Euronext clearing CCP activity.Excluding the impact on working capital from Euronext clearing and Nord Pool CCP activities, net cash flow from operation activity accounted for 68.6% of EBITDA in the first quarter of 2024 or EUR 184.6 million. The reduction versus Q1 2023 is explained by the payment of the EUR 36 million termination fee to LCH SA.Net debt to adjusted EBITDA was at 1.6x at the end of the quarter and 1.7x on the reported EBITDA basis, and with this, I would like to give back the floor to Stephane.

S
Stéphane Boujnah
executive

Thank you, Giorgio. Q1 2024 clearly demonstrated that the benefits of our diversification strategy are coming through, and they translate into high single-digit growth, boosted by non-volume-related and diversified trading activities. Now that the integration phase is coming to an end, our efforts are focused on innovation for the benefit of the attractiveness of Euronext and European capital markets.We maintain our trademark cost discipline in an inflationary environment, and we continue to deliver on the key projects of the Borsa Italiana Group integration to enable us to complete the value chain and to be on track to achieve all 2024 targets on synergies.Meanwhile, we are advancing and that's probably the most important dimension of our agenda for the next few months. We're advancing with the exploration of strategic opportunities, which I'm looking forward to share with you during our Investor Day on the 8th of November 2024 in Paris.Thank you for your attention. We are now ready to take your questions together with Giorgio, Anthony Attia, the Global Head of Derivatives and Post Trade; and Nicolas Rivard, Head of Cash Equity and Data Services and, of course, the IR team with me.

Operator

[Operator instructions] We will now take our first question from Bruce Hamilton of Morgan Stanley.

B
Bruce Hamilton
analyst

Congratulations on the quarter. On the synergy delivery, obviously, as you say, well on track. I make it that the, I think the cost or the payment to LCH is about GBP 35 million, which is basically give or take the gap between the GBP 79 million and the $115 million. So, should we assume that really there is a much revenue synergy for clearing derivatives baked into that run rate number and the residuals or costs? Or am I thinking about that incorrectly?And then secondly, on the cash trading business, so that's a pretty good print given that ADV was down 10% in Q1 and Q2 so far is running positive, which is also helpful. On the average yield, though, it sounds as though 0.54 bps is despite larger order sizes. So, in a normalized environment, should we be thinking sort of cash yield well above the sort of 0.52 minimum that you've talked about in the past?

S
Stéphane Boujnah
executive

So, Giorgio will answer your question on the synergies and Nicola Rivard will take a view on the ADV.

G
Giorgio Modica
executive

So, I mean when it comes to the synergies, as you pointed out, and you are correct, we will reach EUR 35 million run rate savings for the termination of derivative clearing arrangement of LCH SA and it's very tempting to do the 79 plus 35%.Reality is that there are a number of plus and minuses that you would need to count to get to the actual number of synergies. And still, as you can imagine, we aim to reach and exceed the objective. So, having said that, it is difficult now to comment on whether this is the only element. Just to give you one element, at the moment, as you can understand, we have some number run cost for our clearing activity that after the termination will move from non-underlying to underlying. And so, this is going to be a reduction.So, we are very confident to make the EUR 115 million. On the other side, the EUR 35 million is not the only element that will play in the bridge.

N
Nicolas Rivard
executive

And thank you for your question on the cash trading and mathematically, your reasoning is correct. I just want to point out some important elements. At the end of the Q1 '23, as I mentioned by Giorgio and you made on this call, we did the migration of Borsa Italiana to Optiq. And in this situation, we adapted the fee scheme of Borsa Italiana to the Euronext fee scheme and we optimize our revenue capture.So, the yield difference between Q1 '24 and Q1 '23, is to a large extent, not only, but to a large extent, explained by the migration of Borsa Italiana to Optiq. Now, when it comes to the yield, there are a number of different elements in the yield. On the positive side, if I may say, for the yield, but not for the volume, when the volumes are low, the yield is higher.So, you should not necessarily consider that the yield is in a higher volume environment is going to remain at this level or to go. Secondly, as you mentioned, the order size is high, and it remains very high and it's very difficult to predict where it's going to go. And in this environment, the yield is negatively impacted.However, we did in April this year, a change in those schemes of our main fee scheme for large Timan brokers, whereby we are less dependent to order size than we were before. So, it's obviously a positive in the other side are continuing to grow, but also if the order size is going down, then it will be less impactful for Euronext.And lastly, there is also another dynamic, is the relative market share of the different participants, which is fluctuating from one capital to another. Bottom line in conclusion, I think we should not over engineer the change of years moving forward depending on the average executed order size.

Operator

And we will now move on to our next question from Arnaud Giblat of BNP Paribas Exane.

A
Arnaud Giblat
analyst

I've got 3 questions, please. Clearly, you had quite some strength at MTS. I'm just wondering how much of the volume surge is linked to the increase in BTP issuance, specifically there? And if maybe you could give a bit of color whether the activity is mostly primary or secondary.Secondly, I'm wondering on the deleveraging. You've done some progress there of 1.6x net debt to EBITDA. How are you thinking about capital management? Is there share buyback eventually or other form of capital return? Could that come back on the table?And my third question is on custodian settlement. I'm just wondering if you could give us a bit more color in terms of what the split in revenues looks like between custody and settlement. Is it a typical 3 quarters custody, 1 quarter settlement?

S
Stéphane Boujnah
executive

Okay. So, I'll take your question on capital allocation. Giorgio will provide you some flavor on the dynamic on the MTS business and particularly in relation to BTP Insurance. And Antonio will cover your question on the structure of custody and settlement dynamics.Capital allocation is the output of a series of decisions related to growth and profitability. And what we are going to do is to build a strategic plan for the 3 years to come to decide within our governance, the financial requirements and the allocation of resources needed to fund the enablers of growth and performance for the group. And we will decide accordingly as a consequence, what's the best way to allocate capital by default in the absence of any clear new decisions.We intend to continue by default as of today, with the current dividend policy. And when it comes to share buyback, again, it's not appropriate to make any decision on share buyback now. As we have not finalized what would be our investment needs for the years to come. So, more on this topic on our Investor Day on the 8th of November 2024. Over to you, Giorgio.

G
Giorgio Modica
executive

Yes. When it comes to your question on MTS, so, the first element, Italian government bonds remain a large portion of the volume, which are traded on MTS, even though other sovereigns are traded every day on MTS, but the lion's share remains Italian government bonds.The relationship between primary issuance and SICO net  activity is very linked. New bonds tend to be traded more than all bonds to a certain extent. So, answering your question, the revenues are mostly linked to the secondary activity. However, the positive dynamic of issuance triggers a positive impact on the secondary market.However, the market remains very dynamic because as the volume grow, then the spread between bid and after gets tighter and tighter and the cost of getting in and out lowers and this triggers further activity. So, this is the dynamic we are seeing at the moment. So, good primary issuance is a driver, but it's not the main driver of this performance.

A
Anthony Attia
executive

Thank you, Giorgio. Thank you, Stephane. On the custody and settlement revenue numbers. So, in Q1, as you know, we were up 8.1% on the assets under custody, which is a good progression. And the total number was $67.8 million of revenues. We don't provide the exact breakdown following the different activities between custody and settlement but I can give you some indications.So, in the EUR 67.8 million of revenues, we have around EUR 60 million that are coming from the core CSD activity in  opposition to the added value services. And you can speed the evolution between around 50% on the assets under custody, 1 quarter on the insurance and 1 quarter on settlement. Thank you.

Operator

And we'll now take our next question from Hubert Lam of Bank of America.

H
Hubert Lam
analyst

I've got 3 of them. Firstly, on your deal for GRSS, can you talk a bit more about the deal, how many revenues it will add and how you expect to grow the business further?The second question is on costs. I know Giorgio is not changing the year-end guidance as of now. But obviously, in Q1, you're tracking well below your target. Can you just let us know if there's any investment expense that you have for the rest of the year or seasonality that can drive the cost closer to your target?And lastly, you've had strong growth in both the advanced data services and custody, which you mentioned. Can you talked about the sustainability and the strength in both of these segments going forward?

S
Stéphane Boujnah
executive

Okay. So, I'll let Giorgio cover your question on cost and the sustainability of growth on the growing segment you have mentioned. And Anthony, who runs our derivatives and GRSS business, will share with you the rationale and the prospect of the integration of DRSS, although we do not disclose numbers at this stage.

A
Anthony Attia
executive

You, Stephane. So, as Stephane explained earlier, DRSS is a key provider of benchmark indices across the world, including the EURIBOR. So, for us, it's a strategic acquisition that comes to reinforce and complement our existing index franchise.Our index franchise, as you know, was built on historical indices, such as the CAC 40 in France or the IX in the Netherlands. It's been growing over the past few years with bespoke white labeling indices that are used in particular by buy side and sell side on ESG topics. So, we have developed that very strongly.GRSS is coming as a third pillar to provide us with contributed indices capabilities. And so, that's a key cornerstone of the development of our index franchise.

G
Giorgio Modica
executive

Yes. So, when it comes to your question on cost, I'm trying to give you some heads up towards with the bridge. So, the underlying cost for the quarter is around EUR 151 million, then, as I said, with some releases of around EUR 3.5 million. Then another element that you should consider as well is that the annual review process in Euronext that takes place in March, which means that in the first quarter, you don't have the impact of salary increases that will touch more the other quarters.And with that, you might add another couple of million euros. And so, you see that with only these adjustments, you get closer to the run rate, which is implied in our target. Then clearly, and you would be correct, there are a number of savings that still we need to deliver especially the termination of the LCH contract, EUR 35 million run rate, EUR 17.5 million P&L.But to offset that, there are going to be a number of items. First, we highlighted last year that our willingness to invest EUR 10 million in organic growth. And then my final remark is that in the non-underlying costs, there are some double run costs. Let me explain, for example, at the moment, we're running 2 different cost base, one for the LCH contract and another one to run Euronext clearing progressively when we will terminate the LCH contract, those non-underlying contract costs will become underlying, and this will contribute as well to any increase of the underlying costs.So, what I'm trying to say, you can see that the adjustment I mentioned we would be around EUR 156 million, $157 million and the EUR 17 million of P&L savings on the LCH contract will be largely offset by investment of growth and movement of cost from non-underlying to underlying. So, this is a bit the bridge to get to the EUR 625 million.

A
Anthony Attia
executive

Absolutely. And then when it comes to the sustainability of growth in the growth of market data, as we have always said, there is an element of yearly price adjustment and this element is going to remain for the rest of the year, then we will need to see the dynamic of, as usual, of the growth of clients and demand for advanced data services.But again, the key driver for the year is going to be mainly the price adjustment. And when it comes to the sustainability of custody and settlement revenues, here, we have seen a positive dynamic so far in the asset under custody. So, we remain positive in this respect.Then clearly, what we have posted in the first quarter is a very strong growth rate. But again, we remain positive that the growth is going to be such to allow us to deliver the ambition of 2024.

Operator

And we will now take our next question from Ian White of Autonomous Research.

I
Ian White
analyst

Actually, 2 follow-ups in similar areas, actually, just on GRSS just to be sort of clear, I guess I'm trying to understand sort of why it is useful for you to enter the value chain for sort of benchmark administration for benchmarks, I believe, are all provided by your competitors, things like your EURIBOR and STIBOR.So, can you just help us understand a little bit more about the rationale there? Do you intend to compete, for example, in providing interest rate benchmarks or fixed income indices? Or am I sort of misunderstanding the sort of the rationale for the deal?And just secondly, on Advanced Data Services, can you just call out how much of the growth year-over-year was driven by sort of growth that might be linked to activity? The release talks about nonprofessional usage and fixed income and power data versus sort of recurring demand or the price effect that you just mentioned, please? That are my 2 questions.

S
Stéphane Boujnah
executive

So, Anthony is going to provide complementary comments on GRSS business model and split with the Euronext strategy. And Nicolas Rivard is going to answer your questions on the ADS business.

A
Anthony Attia
executive

Thank you, Stephane. Thank you for your question. Look, GRSS is to be seen as a building block and the capability acquisition to complement our existing index franchise. There are several angles to the answer to your question. But looking first at the value chain, as you know, indices are part of an ecosystem linking with ETF structured product listed derivatives.And in this value chain is being unlocked also by our TCP expansion. And so, we will discuss about how we leverage on these new capabilities and this value chain in the presentation of the new strategic plan in November, but it gives you a flavor of the exploration that we are doing right now, as Stephane mentioned earlier.The other angle is to look at the index business from a critical mass perspective. And as I explained, it's acquiring contributed indices, capabilities will help us scaling up our index franchise in the future.

N
Nicolas Rivard
executive

Thank you, Antony, and thank you for your question on Advance Data Services. So, we don't provide quantitative split of the revenue in drivers in the sub businesses or depending on the growth drivers. But let me give you a bit of a qualitative comment. The Advance Data Service business is composed of real-time market data for all asset classes traded on Euronext being equity derivatives, fixed income MTS power derivatives.And this is by far the largest contributor to ADS top line. And on top of this business line, we have a nonreal-time market data revenue, which are composed of a number of analytic products, [Indiscernible]. The dynamic on the real-time-market data is the following: we have, first, as mentioned by no driver #1 is the change of prices at the beginning of the year. This is a classical yearly review linked to inflation mainly.And, the second element is the positive development on volume for retail investors. We are very proud in Q1 '24 to have more than 4.3 million retail investors using Euronext data to trade on Euronext market, which is a record high. And obviously, the good dynamic on more derivatives trading and NPS trading has a positive element, I would say, it is a driver for real-time market data that are on those asset classes.On the nonretirement quantitative project, we have good development. We continue to have a good pipeline and good traction of our new home product. And we see that it's going to continue moving forward. But again, this is a part level to considering the size of the real-time market data business. Thank you.

Operator

And we'll now take our next question from Herve Drouet of CIC.

H
Herve Drouet
analyst

2 questions on my side. First one, back on the margins, and it's a good momentum on margin. You mentioned some positive one-off. Could you be a bit more specific on that front? And what was the size of those one-offs? And what was the drivers of those positive one-off?And the second question is, I understand, I mean, you've launched commercially platforms of dark pool recently. I was wondering if you can share to us what impact you will estimate, especially on cash trading. And do you have any target you can share in terms of where you see market share, for instance, for example, for cash trading to evolve for you? I mean I understand it's currently at 64.6% in Q1. How do you see that evolving over time?

S
Stéphane Boujnah
executive

Giorgio will take your question on margins and one-off releases of attracting all cost base. And Nicolas Rivard will comment on the dynamic of the Dark project, which is still at an early stage.

G
Giorgio Modica
executive

Yes, absolutely. When it comes to the positive one-off, as I said, the euro amount is around EUR 3.5 million, and this is largely related to the release of a number of small provisions and accruals. I mean, I would just mention too, but it's really the sum of many small items.We have some releases of bad debt provision and some releases of bonus accruals and many others. The sum of these releases is around EUR 3.5 million.

N
Nicolas Rivard
executive

Thank you, Giorgio, and thank you for your question. You're right. On April 8, we have launched our dark offering on Euronext optic on Euronext data center in Bergamo for the client to benefit from the real midpoint price delivered by Optiq by our trading platform. The launch is obviously early stage, still recent. We are very happy to have a very strong commitment from clients to join the platform.So, we have a good number of clients already live, but more importantly, we have a very important number of clients who are getting ready in the user test environment to join the production. And what also is important is we have a good mix of large brokers, a good mix of local brokers and a good mix of service providers who are very important because they are the technology provider for local brokers to join this platform.So, we are very happy with the pipeline of clients. And in the next couple of months, we should see a good lineup of clients joining the production. Now, to your question, just to give you a few elements. In Q1, we see that Dark is now a well-established feature of the European market structure.In Q1, '24, it represented around 9% with up and down of volume on Euronext credit stocks. And this is what we are targeting, right? So, we are not going to provide targets, but this is the market we are looking for. It's going to be, as you mentioned, a positive on the market share because the official market share we provide to you include dark in the calculation, which we were absent from before April 8. That's the second point.And the third point is that thanks to the integration of this dark offering in our Optiq platform. We have an interesting functionality, which allow brokers to sweep from the dark to the lead. So, they can first interact with the dark and then move to that. And we were absent from this again from this offering, and this should have a positive effect on our market share.

Operator

And we'll now move on to our next question from Tom Mills of Jefferies.

T
Thomas Mills
analyst

I just had one on a recent announcement by Cboe confirming that they'll launch a European listings venue by year-end. I appreciate there's no a huge amount of detail on that yet, but it seems like they would allow shares to be traded through any of its markets, including the U.S., potentially adding to liquidity.I guess just given all the noise that's going on around European listed companies at the moment and the attractions that they see in the U.S. market, how compelling competitor do you think that could be? I guess it's easy to be kind of dismissive around rival listings venues, but it does seem like a more compelling offering than perhaps you've seen in the past. And how would you think about responding to that?

S
Stéphane Boujnah
executive

It's very difficult for me to comment on competitors' initiative at this level of headline announcement. What I can tell you is that we welcome competition. We have been developing the company in a very competitive environment.There was a time when London whether is a very fierce competitor for international listings, things have evolved. And over the recent years, the dynamics has changed massively because liquidity goes to liquidity and what has happened with the consolidation of Euronext is that we now have a liquidity pool, which is by far with the deepest in Europe with about EUR 10 billion average daily volumes, which is approximately twice the size of the volumes traded on the equity segment in London.Aggregate market capitalization of companies listed on Euronext market on the single liquidity policing or the book, the single-tenant platform, amounting to approximately EUR 7 trillion, which is again more than twice the size of the aggregate market capitalization of companies listed in London.And we have 25% of the shares traded on Europe that aren't traded on Euronext. And we had last year close to 50% of the IPOs in Europe and definitely more than 90% of the international listings from the rest of Europe or the rest of the world coming to Euronext.So, we are in a totally different situation than the one we were in 5 or 10 years ago, and we are in a totally different situation from the one of our competitors, just because in one asset class, which is equity, which is not the focus of many of our competitors, we have been able, over the past 10 years to consolidate the market and to make it relevant, attractive and deep.Now, one of the features of this market is a proper single order book, single technology platform, single liquidity book. And we do know the difference between secondary trading in geography and another one and one single of the book, which is what we have.And if some of our competitors claim that they can offer liquidity than transatlantic liquidity, I must tell you that when Euronext was part of the New York Stock Exchange, it was part of the dream, and it never existed for real. So, I want to be clear, we welcome competition, but the full ecosystem and the close relationship between the equity research community, the local brokers, the large global players is, for the moment, created an environment that we see more favorable than the other way around to the growth of our listing business.And if CVC a few weeks ago, decided to lease on Euronext, that's probably because they had made their numbers and their strategic assessment of the alternatives. So, we are very confident about the growth prospects of our listing business and we welcome competition wherever it comes from.

Operator

And we will now take our next question from Julian Dobrovolschi of ABN AMRO.

J
Julian Dobrovolschi
analyst

I have just a follow-up, frankly, and most of the other ones who already explained in detail, but just a follow-up on the fixed income business. I understand this is somewhat linked to the interest rate environment, which is rather elevated at this point in time. But can you please give us a sense of how do you expect this business to develop over the next quarters in 2024?Just trying to understand, for example, have we reached a peak in revenue generation in Q1? Or is there more upside left to be expected in the next quarters?

G
Giorgio Modica
executive

So, I mean, it's a tough question, your question. So, what I can say is that clearly, we were already posting a good performance in the fourth quarter last year. This performance is increasing. And, as always, giving short-term targets for volumes is always complicated. What I can share with you is that the team feels that unless there are significant changes in the environment, the type of levels of volumes that we have seen in the last month can be repeated in the following quarters.Then being more precise than that would be difficult or impossible.

S
Stéphane Boujnah
executive

And maybe one ancillary point. And I cannot provide you numbers, but if you can get to your own conclusions. MTS was selected as the electronic platform for the secondary training of the next generation in new bonds. That will represent the peak, a total volume of EUR 750 billion of issuance. Most of it has already been issued by the EU.And we are seeing good tractions with the platform. I mean, liquidity on these instruments is moving to MTS. And over time, the monetization of these volumes is going to start in the course of '24. So, I think today, when you look at the assets traded on MTS, you have first Italian govies, then Spanish globes then next-generation EU instruments.So, that's a new area of growth for the platform.

Operator

And we'll now take our last question from Mike Werner of UBS.

M
Michael Werner
analyst

Two questions for me, please. One, I believe you mentioned this previously, but can you confirm with regards to the timing of the internalization of your derivative clearing and ultimately, when you will stop allocating costs to LCH SA on this. When will that happen in Q3? I believe it's at the beginning of Q3, but from a modeling perspective, is it safe to assume it's done in the very early portion of Q3?And then second, I think Q1 is the first full quarter where you've been clearing the cash equities for your business. And I was just wondering if you can get a sense of what the market share has been, i.e., how much of the total volume executed on your markets have been cleared through your next clearing? And maybe how that progressed from when this was first introduced in November last year to today.

G
Giorgio Modica
executive

2 great questions. I will do my best. So, when it comes to the timing of the migration and therefore, stopping paying as LCH SA, the best I can tell you is that the contract period of 18 months, and we have served notice at the beginning of January last year. You can do your own computation, but the official timing remains Q3.Then when it comes to the market share, I cannot comment further. What I can tell you is that we feel that the full market share that was LCH SA now it's fully transferred to us without IX.

Operator

There are no further questions in queue. I will now hand it back to Stephane for closing remarks.

S
Stéphane Boujnah
executive

Thank you very much for your time. And as always, our CFO, Giorgio Modica, our Head of Investor Relations and the full team already on and all the teams are available to answer your follow-up questions. Have a good day.

Operator

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.