Euronext NV

PAR:ENX

Earnings Call Transcript 2021-Q3

[Operator]

Hello, and welcome to the Euronext Third Quarter 2021 Results Call. My name is Courtney, and I'll be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions]And I will now hand you over to your host, Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext, to begin today's conference. Thank you.

[Stéphane Boujnah, Chairman of the Managing Board & Group CEO]

Good morning, everybody, and thank you for joining us this morning for the Euronext Third Quarter 2021 Results Conference Call and webcast. I am Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext. And I will start with the highlights of this third quarter. Giorgio Modica, your next CFO, will then develop further the main business and financial highlights.Euronext reported a strong third quarter performance with very strong revenue growth and double-digit growth in adjusted EPS. Revenue increased by EUR 145.8 million, up plus 71.2% to EUR 350.6 million. And this solid revenue performance was driven by 2 main drivers. The first one is a double-digit organic revenue growth, driven by good performance on our listing, on our training and on our clearing businesses. This true organic performance is the clear translation of our leadership position now in listing and cash equity trading in Europe. During this quarter, Euronext was once again the European leading equity listing venue with 51 new listings and the leading ETF listing venue.And the second driver of this very strong organic revenue growth was the fact that it is the first quarter of full consolidation of the Borsa Italiana Group contributing EUR 121.1 million to revenue in Q3 2021. Over the first 9 months of 2021, despite a very tough comparison base of '20, which you may remember, 2020 was a very strong year and Q3 2020 was a strong quarter in a very strong year.Despite this comparison effect, organic growth was up 3%. And this shows the ability of Euronext to capture value. As you know, we keep close eyes, we monitor very closely the share of our non-volume-related revenue in our revenue mix. And this share of non-volume-related revenue rose this quarter to 55% of total revenue and covers now 131% of our operating expenses, excluding D&A.On the cost side, the reported increase that you have seen is mainly related to 2 factors. The first one is the consolidation costs from Borsa Italiana Group and from the VP Securities in Copenhagen cost base. And the second driver are the costs related to the integration of the Borsa Italiana Group, which is the major post-merger integration project for Euronext at the moment. But this cost has been anticipated and announced previously.Overall, these numbers, both on the revenue side and the cost side translated into a group EBITDA increase of plus 72.3% (sic) [72.4%] to EUR 203 million, and an EBITDA margin of 57.9% in Q3 2021. But on a like-for-like basis, our EBITDA margin in Q3 2021 increased to 60.4% hence by 1.8 points. So this solid group business performance resulted in a plus 18.1% increase in adjusted EPS at EUR 1.21 per share. And on a reported basis, net income was up plus 64.9% to EUR 115.8 million, also boosted by a EUR 9.2 million dividend received this quarter.I now hand over to Giorgio Modica for the detailed review of our businesses.

[Giorgio Modica, Chief Financial Officer]

Thank you, Stephane, and good morning, everyone. I'm now on Slide 6. In the third quarter of 2021, Euronext consolidated revenue reached EUR 350.6 million, with an increase of EUR 145.8 million, which translated 71.2%. These results were driven by the double-digit organic growth in trading, clearing and leasing activities and by the contribution of the Borsa Italiana Group that is consolidated for the first time for a full quarter.Please note that VP Securities was consolidated on the 4th of August 2020, and thus accounting only for a part of the organic growth. On a like-for-like basis and at the current currencies, Euronext's consolidated revenue was up 10.2% vis-a-vis the third quarter of last year.Moving now to the different business lines. Trading revenue increased to EUR 124.2 million, up 63.6% thanks to the consolidation of Borsa Italiana and MTS trading activity as well as the good revenue capture and efficient market share management in cash trading activities.Post-trade activities revenue, including net treasury income, increased [ 115.2% ] to [ EUR 96.1 million ] as a result of the consolidation of Monte Titoli and CC&G activities. This offset the lower activity in our Nordic CSDs, reflecting the normalization of repair activity and a seasonal effect in the third quarter of this year.Advanced data service revenue increased to [ EUR 46.5 million ], up [ 29.7% ], benefiting from the good performance of market data and indices and from the consolidation of the Borsa Italiana Group. The strong listing revenue growth up 42.1% to EUR 50.8 million, results from the consolidation of Borsa Italiana Group and from the continued momentum in equity leasing. At the same time, Corporate Service continued record good performance despite the usual seasonal summer slowdown.In terms of revenue mix, in the third quarter of 2021, non-volume-related revenues accounted for 55% of total group revenue versus 54% in the third quarter of 2020, reflecting the increased diversification in our revenue mix. Please note that those non-volume-related revenues include the net treasury income from CC&G.Lastly, non-volume-related revenues covered 131% of our operating costs, excluding D&A compared to 128% of last year.I now move to Slide 7 for listing. Listing revenue was EUR 50.8 million in the third quarter of '21, with an increase of 42.1% compared to the third quarter of 2020. It was driven by the consolidation of the Borsa Italiana leasing activity, of course. But it's also driven organically by record activity in equity and ETF listing and a very positive traction in ESG bond listing and the good performance of Euronext Corporate Services.With regards to equity listing, the third quarter of 2021 showed the continuation of a strong primary equity listing momentum with 51 new listing on Euronext, including 5 large cap Universal Music Group, [indiscernible] Group, [ on-time infrastructure partners ], [indiscernible] Group and Exclusive Network and [ Fixed Sparks ]. Euronext continues to demonstrate its strong value proposition for innovative companies with most listings being tech companies.In the third quarter of 2021, EUR 4.8 billion were raised on Euronext primary markets and quadrupled compared to EUR 926 million in the third quarter of last year. After [indiscernible], we again confirmed our position as the #1 listing venue in Europe for equities and EPS. Secondary markets reported a solid third quarter of 2021, with EUR 39.7 billion raised in secondary equity issues compared to EUR 9.4 billion in the third quarter of last year.Let's move now to our trading business on Slide 8, and let's start with cash trading. On a pro forma basis, including Borsa Italiana, ADV increased 14.6%, reflecting an unexpected positive volatile third quarter when we usually see a cyclical summer slowdown. The average revenue capture over the quarter reached 0.52 basis points and a market share of 71.4%. The consolidation of cash trading activity of Borsa Italiana in this strong volume environment resulted in cash trading revenue increasing 42.7% to EUR 75 million.Moving on to derivative trading. Derivative trading revenue was up 25.9% to EUR 13.5 million, making the third quarter this year. Pro forma average daily volumes on financial derivatives slightly increased 3.4%, reflecting the low volatile environment for equity derivatives. Commodities products reported a record quarter with average daily volumes, up 34.4%, reflecting the successful commercial expansion in the dynamic agricultural market. The average revenue capture over the quarter for derivative trading was EUR 0.31 per lot.Moving to fixed income trading. I remind you that fixed income trading includes the trading activity of MPS, cash and repo and the fixed income trading activity of Euronext and Borsa Italiana such as [ Mot ] and Euro CLX.Fixed income trading reported revenue at EUR 23.8 million in the third quarter of this year. This is 50x more what we had in Euronext in the third quarter 2020 as a result from the consolidation of the Borsa Italiana Group. In the third quarter '21, MTS cash generated EUR 17.1 million of revenue and MTS Repo generated EUR 4.8 million of revenue. The strong performance at MTS Cash trading activity up 66% versus the third quarter 2020 reflects the positive momentum in cash bond trading supported by the steady issuance and support from ECB and EU recovery fund and by the political stability in Italy that support trading volumes.Continuing with trading on Slide 9. Euronext reported average spot effects trading daily volume of $17.5 billion in the third quarter this year, down 9.4% compared to the third quarter of 2020, resulting from a less volatile trading environment. As a result, spot effects trading revenue decreased 4.2% to EUR 5.6 million. Power trading was stable at EUR 6.3 million, reflecting lower trading activity, offset by positive foreign exchange impact. In the third quarter 2021, average daily -- day-ahead power traded was 2.02 terawatt hour and average day intraday power traded was 0.06 terawatt hour.Moving to Slide 10. Revenue from post-trade activities, including net treasury income, increased by 115.2% as we discussed, to EUR 96.1 million. Clearing revenue was up EUR 85.3 million (sic) [85.3%] in the third quarter of 2021 to EUR 27.5 million as a result of higher clearing revenue and treasury income received from LCH SA and the consolidation of CC&G activities. On a like-for-like basis and at the current currency, clearing revenue was up 14.8% compared to the third quarter of 2020. Net treasury income through CCP business of CC&G was EUR 12.9 million.Custody and settlement and other post-trade and [ compassion ] activity of our 4 CSDs reported strong revenue growth to EUR 55.6 million compared to the second quarter. This year, we witnessed slower activity in our Nordic CSD, reflecting a normalization of the retail trading activity, as we have anticipated in the previous quarters.Moving to Slide 11. Advanced Data Services revenue was up 44.3% to EUR 49.8 million in the third quarter of 2021, driven by solid index business, a robust market share in Market Data and the consolidation of the Borsa Italiana Group values data activities.Proceeding now with investor services. Revenue were up 9.3% to EUR 2.1 million in the third quarter of 2021, reflecting continued commercial development. Lastly, on Technology Solutions, revenue doubled in the Q2 2021 to EUR 12.4 million, as a result of the stronger [ safety co-location ] revenue improvement in the fee grid and the consolidation of the technology businesses of the Borsa Italiana Group, namely Gatelab and X2M.Moving to Slide 13 for the financial highlights of the third quarter, and I would like to start with the EBITDA bridge. Euronext EBITDA for the quarter was up 72.4% to EUR 203 million. The EBITDA margin increased at 57.9% in the third quarter this year despite the ongoing integration costs. This quarter, we had in our P&L around EUR 7 million of integration cost in OpEx. On the like-for-like basis, the EBITDA margin was 60.4%, up 1.8 points and EBITDA increased by 13.7%.From a revenue perspective, revenue at constant perimeter increased double digits in absolute amount by EUR 19.8 million compared to last year, reflecting the very good performance of listing, trading and the organic growth rate in our clearing business.The Borsa Italiana Group contributed for EUR 121.1 million to the top line and the other business acquired contributed for an additional EUR 3.7 million. Looking at costs. Group operating costs, excluding D&A, were EUR 147.6 million, as a result of EUR 55.5 million of additional cost coming from the change of scope and mainly as a result of the consolidation of the Borsa Italiana Group, VP Security and other smaller recent acquisition. And also from the integration costs, mainly related to the Borsa Italiana Group we just discussed around EUR 7 million this quarter. And EUR 4.3 million of additional organic costs, mainly reflecting higher staff costs.Moving to Slide 14. Now I would like to comment the bridge of net income. Net income increased this quarter 64.9% to EUR 115.8 million, resulting from the following elements. D&A mechanically increased impacted by the consolidation of recent acquisitions, D&A and the PPA. PPA this quarter accounts for around EUR 20 million on the total D&A. Exceptional costs were EUR 1.5 million lower than last year. Net financing expenses for the third quarter of 2021 were EUR 3.9 million higher compared to the last year, reflecting mainly the cost of the debt recently issued. Results from equity investments increased EUR 9.9 million, reflecting the contribution from LCH SA and the dividend received from Euroclear.Lastly, income tax for the third quarter 2021 was [ EUR 48.5 million ], which translates into an effective tax rate of 29%. This tax rate reflects as well some integration costs, which are not tax deductible. Adjusted for PPA and exceptional items, adjusted net income was EUR 132.4 million, translating into an adjusted EPS increase of 18.1% to EUR 1.21 per share this quarter.Moving to Slide 15 for the cash flow generation and leverage. Net operating cash flow amounted to EUR 213.5 million, excluding the impact of CCP activities in mainly Nord Pool and CC&G. On the changes of working capital, 86% of the EBITDA was converted into cash flow after tax.Our net debt-to-EBITDA ratio was at the end of the quarter, at 2.8x versus 3.1x in the second quarter 2021. At the end of September 2021, we are [ the floor ] below the targeted leverage announced at the time of the acquisition of the Borsa Italiana Group that was expected for the end of 2022.Last slide on my side, I'm on Slide 16, and I would like to comment on the evolution of our liquidity position over the quarter. Our liquidity position was and remains strong, above EUR 1.4 billion, including the undrawn RCF of EUR 600 million.This is all for me, and now I hand over the floor back to Stephane Boujnah.

[Stéphane Boujnah, Chairman of the Managing Board & Group CEO]

Thank you, Giorgio, and thank you again for participating to this call. And we will be happy to introduce next week, on Tuesday, the 9th of November our new strategy plan, and we hope to meet some of you in Milan where this plan will be released and discussed.We are now available for your questions with Giorgio Modica, CFO; and Antonio [indiscernible], Global Head of Primary Markets and Post-Trade.

[Operator]

[Operator Instructions] And our first question comes in from the line of Kyle Voigt calling from KBW.

[Kyle Kenneth Voigt, Managing Director]

Maybe a few questions for me. So the first would be on fixed income, very strong quarter, you cited strong issuance across Europe. Just wondering if you could help us understand how much of the gross MTS is seeing is related to the environment versus market share. So maybe trying to understand how much is secular versus secular growth -- secular versus cyclical growth. Sorry about that.Second question is on the settlement and custody line. I guess we were a little bit surprised to see the revenue down sequentially from 2Q into 3Q, given the full quarter consolidation of Monte Titoli in 3Q. I think in the deck, you cited a normalization of retail trading activity in the Nordics. Can you help us understand whether most the normalization has already happened or there could be further declines from here with a further normalization of that activity?And then lastly for me is on expenses. You mentioned there were EUR 7 million of integration cost in OpEx. Can you give us a sense of that EUR 7 million of integration costs? Is that something you anticipate will have to continue for some time into the future and through the duration of the integration? Or were some of these more one-off in nature?

[Giorgio Modica, Chief Financial Officer]

Okay. So when it comes to your first question, One element that I would like to highlight is that, as you know, MTS has 2 main activities, the cash and the repo. And from a financial standpoint, the cash activity is very beneficial from the bottom line. Now in these very specific circumstances we are living, where we have -- the combination of positive effect, traders are more inclined to take a straight position in cash trading rather than getting exposure to repo. So the conditions are very favorable, and this translates into the increase of 66% that we have highlighted, which is certainly a very high level of activity.And just to give you another data point, I believe that in the last week, MTS had its record day for cash trading ever. So we're certainly at the high point of the cycle. And again, this is supported by the environment and by the stability of the Italian government. Going forward, we believe the MTS will remain a growth asset for Euronext. But again, we will focus on expanding the activity of MTS to make it more internationally relevant.With respect to your second question on custody. As you can see, if you look, the organic growth year-on-year, you still see a very strong performance. So what has happened between the third quarter this year and the second quarter, A couple of factors. First, as you might know, comparing consecutive quarter might lead to their own conclusions because there is a seasonal effect because certain activity, which are charged by the CSDs are -- do not take place at the same rate throughout the year, and there are specific seasonal effects. So this is one element.And the second element which is something that we anticipated. As you might know, the business model in the Nordic is different from the rest of the other CSDs and therefore, more exposed to the interaction of daily day trading which has reduced and therefore the revenues had suffered from that.Now going forward, what we anticipate is that we are now at a more normalized level and future growth is going to come using a level similar to the one that we have witnessed in the third quarter in the quarters to come.Finally, on -- when it comes to the integration, I mean I don't want to spoil the surprise for the Investor Day, but clearly, we see those integration costs remaining in our P&L for quite a while. We have quite an ambitious integration plan. But for further details around that, I believe it makes sense to wait a couple of days and we will be much more explicit on the 9th of November.

[Operator]

The next question comes in from the line of Benjamin Goy calling from Deutsche Bank.

[Benjamin Goy, Research Analyst]

Two questions from my side, please as well. First, coming back on the cost. So OpEx plus 5% on a like-for-like basis doesn't sound very much Euronext-like. And now you mentioned the EUR 7 million, which is essentially almost the entire increase. Is that the right way to think about it? Or do you calculate it differently? So i.e., excluding cost merger integration, you would be flat on a cost base?And then the second question is on the revenue capture in cash trading, another good quarter outperforming your expectations. Was it more retail activity or you see the first benefits of sort of say working with Borsa and improving the revenue capture?

[Giorgio Modica, Chief Financial Officer]

When it comes to your first question, it's always tricky and would not be a Euronext-like trying to highlight the one-off impact on the quarter. So what I can say is that the EUR 7 million are fully in the OpEx. So it's a mix effect because the real -- the good way to look at that is that we keep reducing costs every quarter. But on the other side, we have integration cost and we have the evolution of our OpEx. So it's very difficult to split and would be a bit [ inefficient ] to do that. But what I can say with certainty is that if you look at the increase in the increase EUR 7 million of integration costs were included in the OpEx.The second element that I would like to highlight on the revenue capture is that the revenue capture, as you correctly pointed out, remains strong. And what I would like to highlight as well is that comparing the revenue capture with respect to the previous quarter would be misleading because in the previous quarter, we did not have the full integration of Borsa Italiana, which is dilutive on the overall impact. So again, this points to the fact that revenue capture was strong.And we believe remains higher than what we project longer term. As we said, we see more of a normalization at or slightly below the 0.50 basis points. The second element that comes -- that relates to the advantage of having Borsa Italiana. Now it's far too early for that. Borsa Italiana operates on a different technology platform, which is still the one of the London Stock Exchange. And it's going to remain this way until the migration [ tour ] peaks. So it's too early to think of a common trading platform and a common pricing strategy. So no impact from the integration of Borsa Italiana on the revenue capture.

[Operator]

Next question comes in from the line of Arnaud Giblat calling from Exane BNP Paribas.

[Arnaud Maurice Andre Giblat, MD & Research Analyst]

Two questions, please. First, on costs. Thanks for splitting up the integration costs. I was wondering if you could tell us how much of your planned cost synergies have been delivered over the quarter and what that could look like in Q4?My second question was a follow-up on what you just said in terms of revenue capture. Is there a firm plan to align the pricing of Borsa Italiana cash equities to that of Euronext group? I mean from [ NSE ] times, I think the pricing structure is very different, actually, it's more skewed towards a trade basis more than a [indiscernible]. I'm wondering if that could change.And my third question is, I'm wondering about MTS. Could you shed a bit more color on the actual pricing model. I'd like to understand a bit more how sensitive revenues are to various volume items.

[Giorgio Modica, Chief Financial Officer]

So when it comes to the clearing -- when it comes to the time to change the fees structure at Borsa Italian, this is really too early to tell. We are discussing with the teams. We will be engaging with the regulators and with clients. And this is something that will come later in the process. And as you know as well, we will need to make sure that this is done the right way to make sure that the contribution of the local ecosystem remains as strong as it is today. So this is part of a process that has started, but we conclude after the migration to peak.What I can confirm on the other side, is the fact that the pricing structure of Borsa Italiana is fairly different from the one of Euronext. Your question with respect to the integration costs, again, I would like to wait a couple of days to tell you where we are because commenting targets now and projection for the end of the year and in the next year, it's a bit premature. So all the -- a few days more, and then we can clarify on that. Then when it comes on the MTS model, I believe that what you have and what we provide is the split of volumes and revenues by liquid cash.Now on the -- to give you more information on how sensitive an evolution in the different parameters, I believe it will be early for this call. Let me come back to you on that, and we can see what we can do.

[Arnaud Maurice Andre Giblat, MD & Research Analyst]

If I can just follow up. I mean, can you tell us how much of the synergies have been realized in this past quarter?

[Giorgio Modica, Chief Financial Officer]

Again, on this, we would like to give a complete picture at the day of the Investor Day. So because as you might understand, things might have slightly evolved. And therefore, rather than commenting a few days before the Investor Day, we prefer to give a few -- a full and holistic picture in a couple of days. Sorry for that.

[Operator]

The next question comes in from the line of Johannes Thormann calling from HSBC.

[Johannes Thormann, Global Head of Exchanges and Analyst]

I just have 2 questions, 2 follow-up questions, please. First of all, on the settlement activity in the Nordic market. Just understanding the seasonal pattern or help me to understand the seasonal pattern. In U.S., we have quarterly dividend payments. In Europe in some countries, we have as well our half-year payment. Can you probably provide some more detail what has driven up the activity in Q2 and what is now down in Q3 in the Nordic business? Or if you can quantify the fee amount which you would consider as one-off in that kind business?And secondly, sorry, coming back to your EUR 7 million one-off costs in the operating cost base. If you say yourself, it's difficult and artificial to strip them out. The auditor doesn't want to strip them out. So why is it then in your view, still one-off costs? What kind of costs are these? Or is this -- we need more details to understand this?

[Stéphane Boujnah, Chairman of the Managing Board & Group CEO]

[Audio Gap] and the CSD business in the Nordic region and then Giorgio on the treatment of those one-off costs.

[Unknown Executive]

Thank you, Stephane. As Giorgio explained earlier, we have seasonality in the CSD business, and the seasonality that is increased by the exposure to retail activities in VP Securities in Denmark and DPS in Norway. The seasonality translates into several things. One is the peak of revenues in Q2 due to dividend payments and general meetings organizations. So it's related to coproductions. And in Q3, we have the usual summer decrease of activity, in particular for the retail.

[Giorgio Modica, Chief Financial Officer]

And so when it comes to the KPIs that we track, the key KPIs are assets under custody. Then we have the number of accounts opened, we have the number of corporate action and the number of settlement transactions. Those KPIs account for -- in excess of 2/3 or even higher of the revenues of CSDs.Now what has happened is simply that the under custody keep going up. The number of accounts have remained stable. What has decreased is the number of settlement instruction and the number of corporate actions. So those are the KPIs that decreased.Now coming to your question, when I said it is artificial. I didn't mean that it is artificial the EUR 7 million. What I meant is I fully appreciate that you would like to understand what costs are not run rate. What I say is artificial, the exercise itself. To make the list of all the good news and bad news. And this is the reason why different from many of our peers, so we don't do that. You do not have an adjusted EBITDA for bad news.On the other side, the integration costs are very well specified, and include things like if we need to migrate. And if we need to migrate the data center to [indiscernible], we need to have a specific engineer to work on the project, and this is going to be one-off because it's going to be over. If we need to migrate the millennium technology to peak. Again, we need to have efforts, which are defined in time and which are aimed to reach the integration of Borsa Italiana. So those are the cost that we consider in the revenue. And again, we are not proposing any KPI on -- and we do not adjust our accounts for that. So our 57%, 58% margin you see today includes everything.Then if I get the question, what portion of your OpEx is related to costs, which are specifically aimed at the integration of Borsa Italiana, the answer is EUR 7 million.

[Operator]

The next question comes in from the line of Ian White calling from Autonomous Research.

[Ian White, Research Analyst]

Just a couple of follow-ups, please. Firstly, on M&A, can you just clarify, are there any firm commitments that you've made to the rating agencies regarding the group's leverage prior to another substantial deal? Or is it all some short-term flexibility there? I wondered if you might be prepared to comment on the recent situation involving ICE's Euroclear stake and kind of why that wasn't attractive to Euronext, if possible.And just secondly, is there any update you can provide regarding the progress of the data center migration at this stage? I just wondered if it was your expectation that all Euronext market makers will make the shift with you to Bergamo? Or do you anticipate some attrition there, please?

[Stéphane Boujnah, Chairman of the Managing Board & Group CEO]

So I'll take your question ICE and your question on the data center, and Giorgio will answer the questions on ratings. So we are aware of the situation that is being -- that is taking place, whereby ICE is disposing its 9.8% stake in approximately in Euroclear. We have taken note of the announcement they have made that they have entered into an agreement with Silver Lake in this respect. And we analyzed the situation as a shareholder in Euroclear, which is represented at the Board. I can't say more about the situation for the moment.On the data center migration, we will have detailed description of the update on this front in Milan on the Investor Day because it's a significant part of the integration process. What I can tell you is that things are proceeding extremely well. The vast majority and more, I mean, I will disclose the details on Tuesday of our clients that were located in [indiscernible] are taking the appropriate steps in a timely manner to be co-located in the new data center [ near Bergamor ]. So there is no concern about that. And for the moment, we can reiterate that the target date for implementing the migration remains the 6th of June 2022.

[Giorgio Modica, Chief Financial Officer]

Now with respect to your first question, we did not take any commitment with S&P, which means that we defined our financing structure now in August last year. So it's more than 12 months ago. And the financing structure was aimed at having a solid BBB rating. Now what has happened is that the actual performance of the business has been vastly superior to the one that we were expecting at that time. It was the case when then we finalized the financing mix of the Borsa Italiana transaction, but we decided to keep the mix unchanged and therefore, we gained, if you want some flexibility in this respect.And then until this very first day, the results have been better than expected, especially because it was difficult to anticipate that despite the exceptional 2020, we would have been able to generate an organic growth in excess of the previous year in the 9 months of this year.So what I can tell you is that there is no commitment, the business has performed better. This has given us more room to maneuver. And Euronext and S&P will assess where we are in the deleveraging journey every quarter, and we'll base his assessment and will give us a rating.But again, no formal commitment on -- we gave to them on a specific deleveraging profile. And by the way, we will meet them at the end of the month for our yearly discussion. When it comes to speculation around potential transaction, I believe Stephane already answered.

[Operator]

The next question comes in from the line of Philip Middleton calling from Bank of America.

[Philip David Middleton, Analyst]

I just wondered if you could say a little bit about tax, because the tax rate seemed a little bit higher than I had expected, but you're suggesting that this is coming from integration reasons. I wonder if you could for us give us a bit more detail there, please.

[Unknown Executive]

Is there any other questions from this group, please?

[Operator]

Of course, the next question comes in from the line of Andrew Coombs calling from Citi.

[Andrew Philip Coombs, Director]

Before I ask my question, I don't think Philip's was asked. I think that Philip was asking the thoughts on the tax rate so perhaps you'd like to address that first. [Technical Difficulty]

[Operator]

It appears as though we may be having some technical difficulties. Please stand by once we reestablished the connection with your speakers.

[Stéphane Boujnah, Chairman of the Managing Board & Group CEO]

The Investor Relations team at Euronext in particular, [indiscernible]. And in any event, I look forward to talking to you, to meeting with you in person if you travel to Milan on Tuesday, 9th of November, but feel free to reach out to us at any time before that date. Have a good day.

[Operator]

Thank you for joining today's call. You may now disconnect your handsets.