Deutsche Boerse AG

XETRA:DB1

Earnings Call Transcript 2019-Q3

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Deutsche Börse AG analyst and investor conference call regarding Q3 2019 results. [Operator Instructions] Let me now turn the floor over to Mr. Jan Strecker.

[Jan Strecker, Head of Investor Relations]

Welcome, ladies and gentlemen, and thank you for joining us today to go through our second quarter 2019 results. With me are Theodor Weimer, Chief Executive Officer; and Gregor Pottmeyer, Chief Financial Officer. Theodor and Gregor will take you through the presentation today. And after the presentation, we will be happy to take your questions. The presentation materials for this call have been sent out via e-mail and can also be downloaded from the Investor Relations section of our website. As usual, this conference call will be recorded and is available for replay. Let me now hand over to you, Theodor.

[Theodor Weimer, CEO & Chairman of Executive Board]

Thank you, Jan. Also from my side, ladies and gentleman, warm welcome. Let me start with a short summary of the highlights of the reporting period. Afterwards, as always, Gregor will present the results in full detail.In addition to continued secular growth in line with our strategic plan, we saw additional support in the third quarter from an improvement of the current equity market volatility. Our financial derivatives business Eurex and our commodity from EEX continue to be the main drivers of our secular growth. Eurex saw further growth from product innovation, higher OTC clearing revenues and positive pricing effects. At EEX, we benefited from yet again further increases of market share levels both in Europe and the U.S. The cyclical tailwind in the third quarter was a combination of increased net interest income and temporarily higher equity market volatility in the month of August and September. Because of double-digit net revenue growth in the third quarter, the growth of the adjusted operating cost increased somewhat compared to the first and second quarter. This is fully in line, I repeat, this is fully in line with our expectations and was driven by a number of factors, Gregor will outline in a moment. Because of this development, we saw a strong increase in our adjusted net profit in Q3 by 18%. As planned, we closed Axioma acquisition in mid-September and have created Qontigo as the new umbrella for our index and analytics businesses. Qontigo equips our clients to address trends reshaping the industry -- the investment industry including the rise of passive investing and smart-beta, new technology infrastructure for scale and the shift towards customization of services. Considering the positive development over the course of 2019, we confirm hereby our guidance of around 10% adjusted net profit growth for the full year 2019. This strong set of quarterly results confirms again that we are well on track with regards to our organic growth ambitions. But beyond organic growth, we continue to actively pursue M&A opportunities. Only the combination of organic and inorganic growth fully unlocks the growth potential of this great company. Our M&A strategy is unchanged. We are aiming to increase the scale of selected, still smaller asset classes in our group. With the Axioma transaction, we have strengthened our pretrading offering significantly and improved access to the buy side for the entire Deutsche Börse Group. Qontigo now serves as the platform to also further grow inorganically in the analytics business. In the trading and clearing area, we are generally offering well-established platforms, but size and scale of the less mature businesses like commodities and FX can still be further improved. In Investment Funds Services, we are considering all product services and geographies that add value to our already leading fund offering. With this, we are confident that we can create additional value through inorganic growth. Let me now hand over to Gregor to present the details of our Q3 results.

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. Thank you, Theodor, and welcome, ladies and gentlemen, let me start with the group's financials on Page 2. In the third quarter, Deutsche Börse saw significant improvement of net revenue and earnings growth rate compared to the first and second quarter 2019. Total net revenue increased by 13%, which was a combination of continued secular growth in line with our expectations and a strong cyclical backdrop. As we mentioned during last 2 quarterly calls, the implementation of IFRS 16 resulted in some shift from operating expenses to depreciation. We adjusted last year's numbers in the presentation to ensure a like-for-like comparability. Operating costs amounted to EUR 274 million. They were adjusted for around EUR 46 million mainly relating to the closing of the Axioma acquisition. Operating cost growth was mainly driven by higher investments, higher costs for share-based compensation and consolidation effect. Furthermore, the operating cost base in the third quarter 2018 was comparatively low. Some of the operating costs growth was offset by the efficiencies from the Structural Performance Improvement Programme. Due to the scalability of our business model, the adjusted net profit saw a disproportional increase by 18% and reached EUR 283 million. Let us now turn to the quarterly result of the segment, beginning with Eurex on Page 3. The development of Eurex in the third quarter was driven by around 7% secular growth in net revenue from OTC clearing, new products and pricing. In addition, cyclical net revenue increased by around 12% mainly driven by the spikes of volatility of some of the trading days in August and September. Consequently, net revenue increased 19% and the adjusted EBITDA 25%. Our commodities business EEX continued to perform very well in the third quarter. Net revenue increased by 14% and adjusted EBITDA by 32%. Net revenue growth continues to be mainly driven by power derivatives in Europe and the U.S. In both regions, we expanded our market share further. In Europe, we now see levels consistently about 40% compared to OTC in the main market Germany. Levels in the smaller markets like France, Italy and Spain are even higher. In the U.S., we continue to increase our market share versus the other exchanges to record level of 44% in September. To continue this success, Nodal has expanded its gas offerings in the third quarter. About 35% of the power generated in the United States is from natural gas and it does have a significant impact on the price of power. When using Nodal for both products, participants benefit from significant capital efficiency through gross margins. Let me now turn to Page 5 and the FX business. 360T's net revenue saw an increase by 17% to EUR 24 million. This is now for the first time since the consolidation of GTX ECN last year, a like-for-like number. While the cyclical environment in the FX market continues to be difficult, as you can see from the development of some of our peers, 360T attracted further clients, in particular in the U.S. As a result, September was the best month ever for 360T. Adjusted EBITDA increased 30% and amounted to EUR 12 million. While equity trading volumes in the cash market declined slightly in the third quarter, Xetra further strengthened its position as a reference market for trading German blue chips and increased its market share to 72%. Although, on a positive note, trading volumes in exchange-traded funds increased 15% year-on-year. As a result, Xetra net revenue stood at EUR 55 million and adjusted EBITDA at EUR 31 million. Our post-trading segment, Clearstream, continues to be mainly driven by growth of net interest income. Despite the recent rate reductions in the U.S., slightly high year-over-year rates and increased cash balances, they are contributing to this development. Furthermore, we saw solid growth in cost settlement and custody activities, which more than offset the decline in net revenue from managed services as part of third-party services. In total, net revenue in the Clearstream segment was up by 8% and reached EUR 189 million. Adjusted EBITDA stood at EUR 119 million. The Investment Funds Services segments, which you find on Page 8, showed a strong increase of net revenue by 29% to EUR 48 million. Approximately half of the growth is attributable to the consolidation of Swisscanto Funds Centre in the fourth quarter last year and the acquisition of Ausmaq, which we completed at the end of July. The organic growth of the funds business was fueled by the onboarding of new clients and high level of activity among existing clients in more volatile markets. The adjusted EBITDA grew by 35% and reached EUR 24 million. In GSF, average outstanding in the collateral management business increased by 7% mainly driven by new client wins and growing volumes in initial margin segregation products. In contrast, market conditions in the securities lending business continued to be challenging because of negative interest rates and the ECB's monetary policy, putting added pressure on fees. However, volumes in securities lending recovered somewhat in the third quarter when compared to the first half of the year, supported by new client acquisitions. Overall, the GSF segment's net revenue declined by 10%, therefore, adjusted EBITDA declined to EUR 10 million. Slide 10 shows the new Qontigo segment, which consists of the newly acquired analytics business Axioma and the index businesses of Deutsche Börse. As part of the creation of the new segment, we also transferred around EUR 3 million index-related net revenue from the data segment to the Qontigo segment. Historic figures are adjusted accordingly. The EUR 6 million net revenue we are showing for the analytics business refers to the period since closing of the transaction on September 13. However, due to the revenue recognition under IFRS 15, this number cannot be analyzed. For the full year 2019, we expect Axioma on a stand-alone basis to generate around EUR 65 million to EUR 70 million of IFRS net revenue. Year-over-year, the adjusted EBITDA of the Qontigo segment stood at EUR 29 million, an increase of 15%. Please do keep in mind that around 22% of the net profit will be distributed to the minority shareholders of Qontigo going forward. Net revenue in the data segment was down by 8% on the previous year's figure. The decrease was mainly due to lower audit-related net revenue as they were unusually high in the third quarter of 2018. As a result, the adjusted EBITDA stood at EUR 28 million. On Page 12, I would like to put the Q3 results into the context of first 9 months of 2019. The much stronger net revenue growth rate in the third quarter has helped to achieve net revenue growth of 7% during the first 9 months of the year, which was mainly driven by secular factors. At the same time, the adjusted operating costs increased by 6% and reached EUR 782 million. In total, the adjusted net profit increased by 12% to EUR 863 million. Considering this development, we are confirming our guidance for the full year of around 10% adjusted net profit growth. On Slide 13, we provide you with an overview of the 3 components of net revenue growth for the first 9 months of 2019. Compared to the previous year, secular growth being the key component of our strategy to increase net revenue has developed very well. The increase of 5%, respectively EUR 105 million, was mainly driven by Eurex and EEX but Qontigo, IFS and 360T contributed as well. On the cyclical side, the increased net interest income due to higher U.S. interest rates was still partly offset by lower market volatility. This is despite the pickup of volatility we saw in the third quarter. Consolidation effects resulted in further net revenue growth by altogether EUR 24 million. But the discontinuation of the managed services at Clearstream had a negative effect on net revenue, which amounted to roughly EUR 7 million. Adjusted operating costs, shown on Page 14, increased in the first 9 months of 2019 by around 6% and reached EUR 782 million. This includes inflationary pressure in staff and other operating expenses, which was largely offset by lower provisions for variable compensation. Savings from the Structural Performance Improvement Programme made an important contribution to fund investments in growth initiatives, new technologies and regulations. Net investments grew by EUR 16 million. Furthermore, consolidation effects from M&A activities resulted in an increase of operating costs, which was offset by discontinuation of managed services adjusting. This concludes our presentation. Thank you for your attention. We are now looking forward to your questions.

[Operator]

[Operator Instructions] The first question for today comes from Kyle Voigt with KBW.

[Kyle Kenneth Voigt, Associate]

If I could, just one on M&A, I guess, now that FX is off the table. Could you just give us an update on the M&A environment? And specifically, I'm wondering if you can help us understand where you're seeing the most opportunities for further consolidation in those 5 key areas of focus for M&A. Because it doesn't seem like there is many sizable assets left in FX or index or fixed income. So should the investor be more thinking about commodities and IFS as a focus near term? And are there still plenty of opportunities left there?

[Theodor Weimer, CEO & Chairman of Executive Board]

I'll take this one, Kyle. Theodor speaking. On the M&A side, we constantly screen opportunities alongside our value chain, and trust me we are not getting tired of it. We understand the mechanics of scalability, the growth's importance, and growth is stemming on the organic side and also -- and we need an add-on on the inorganic side on M&A side. And we stick to the areas we have communicated, which is data, FX, IFS, commodities and fixed income. You were asking whether there are certain areas, which are -- which have maybe a little bit higher priority? Indeed, data has high priority. FX continues to be one, but the available targets are limited, as you correctly said, on the post-trade side we're looking into it, and also on the commodity side. So this is -- to your question, we will not fall into the trap to feel pressed to do any kind of transactions that are all prices. You all have seen what happened with Hong Kong and LSE and this kind of stuff, so we want to get it done. We're fully aware that the multiples in the market are very high. In some areas, they are extremely high and we're very conscious not to overpay and create structures situations where we can get it done and where we pay a reasonable price. We will stick to, what I call, financial discipline.

[Operator]

Your next question comes from Johannes Thormann calling from HSBC.

[Johannes Thormann, Global Head of Exchanges and Analyst]

Two questions, if I may. First of all, thanks for the update on Qontigo. Could you give us also a ceiling for the costs associated with this business and the impact on minorities? And technically, Peter Reitz of EEX gave an interview saying you entered the Japanese power market next year. Can you talk a bit about that, how far we are -- is this still the situation and so on?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. So Johannes, thanks for the question. With regard to Qontigo in my speech, you have heard that we guide for some EUR 65 million to EUR 70 million net revenues after IFRS. So that is the net revenue number we guide for the full year. And the cost base is roughly EUR 5 million below in the range of EUR 60 million to EUR 65 million. And with regard to the minorities. Yes, as you are aware that we own now 78% of Qontigo, 19 with GA and 3 with the management, basically. So we own 78%, and that's the number in the range of 20 -- and the minority level is in the range of EUR 20 million. With regards to the -- enter into Japanese market. Yes. Jan, go ahead.

[Jan Strecker, Head of Investor Relations]

Yes. I think this confirms how important the European energy exchange is on a global scale. So it's the largest global power market, and therefore we have the ability here to enter into new markets. Although this is going to be a small contribution in the beginning. So financially, I don't really think you have to start modeling it already. But it really confirms the EEX position on a global scale, if it's about power, power trading, power derivatives trading then we are usually approached to also assist other markets.

[Operator]

Our next question comes from Chris Turner who's calling from Berenberg.

[Christopher Myles Turner, Senior Equity Analyst]

Yes. It's Chris Turner from Berenberg. One question and maybe one classification, if I can. Firstly, the question -- last week number of banks and asset managers pushed a white paper, looking at clearinghouses and suggesting they should hold more capital. I was wondering what your views on those proposals were. And more generally, do you think clearinghouses need to hold more capital? And then just a follow-up. Your question on M&A earlier, can you maybe share some thoughts about how the combined LSE-Refinitiv business may change the competitive landscape for Deutsche Börse in Europe?

[Gregor Pottmeyer, CFO & Member of Executive Board]

I can start with the white paper for the clearinghouses. I think that the constant discussion in the market around the roll of a CCP and clearinghouse. So our view here is very clear. So the clearinghouse does not go for its own risk, right? It's mitigating risks. And therefore, we don't see that there should be a higher capital level what is currently available. And so that's a dialogue again. And -- but we have a very clear view that a CCP is an instrument to mitigate risk in the market and does not basically keep all the risk here. As regard to M&A, yes, yes, you can do it.

[Theodor Weimer, CEO & Chairman of Executive Board]

Yes. Chris, Theodor speaking. On the M&A you asked the question whether LSE and Refinitiv together may change or will change the European and maybe even global landscape on the -- on M&A side. My clear answer is, it changes the chessboard for all the players, right? Because LSE is now busy with Refinitiv for the next couple of years, that is for me pretty clear, right? [indiscernible], as you know, right? Everybody is looking what is going to happen with Brexit as such, that comes on top of it. I do not see a fundamental change or that all the or other major exchanges that are coming into play. I do not see this. Actually, it's still the case that major and large stock exchanges are now being perceived as a national domestic DNA, and therefore, it will also -- will almost be a kind of an exception. This does not mean that one or the other cash market exchange rate may trade, right, or may came up to play. But I think our approach that the competition on M&As will continue and continue to be very fierce on the assets side, right? On the asset class of side this will continue. So quite frankly, it's pretty clear, we have not achieved to get FX -- all FX matching done, right? But there are other deers out, right? Which we call -- which we can go after, right? So that is our situation. But I don't see a massive fundamental change. What happened with Hong Kong and LSE, you have seen the stalled initiative and it pulled back quite early on.

[Operator]

The next question comes from Bruce Hamilton calling from Morgan Stanley.

[Bruce Allan Hamilton, Equity Analyst]

Yes. Maybe quick one on Clearstream. I just -- looking at Q3, obviously, you've grown EBITDA a fair bit less than revenue. So negative operating leverage. Is that something that we should -- why is that happening and should we expect that going forward, firstly? And then clearly, Clearstream offers good stability and cash flow generation to the group, but equally constrains you on strategic optionality. So particularly in the light of LSE-Refinitiv moves, have you in any way sort of rethought how core Clearstream is to the future of the business and the shape of Deutsche Börse Group?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. So starting with the first question, asset development in Clearstream in Q3. So overall, the performance in Q3 was quite positive. With basically, 7%, 8% revenue increase. You're seeing now here also some decrease in the NII, obviously, as we have here now the rate cuts from the Fed. And what we -- immediately impacted our NII. And that's basically the main reason for that kind of development that the profitability level is a little bit lower. The business without NII is right on track so far. Second question with regards to Clearstream's strategic element, and you refer to the rating, obviously. So from our perspective, Clearstream is a core business. We like that business. And if you see what happened with regard to our rating number. So as we constantly produce additional cash, as we constantly increase our earnings, obviously our cash on hand and our debt level capacity increases here. When I told you last time, I said it's roughly EUR 1.5 billion available firepower for M&A transaction. We are now in the level of roughly EUR 2 billion as we have now a little bit more cash on hand and that opportunity is also increased. And so that's EUR 2 billion. I think you can do something with that, and it's a reasonable number. And with regards to this EUR 2 billion, as Theodor already mentioned, we're clean really here to do an M&A transaction to increase the capability of our company to increase the scalability of the certain business. So far no need to change here something.

[Theodor Weimer, CEO & Chairman of Executive Board]

And in addition, Bruce, from my side, right? If you look back over the last 10 years, and if even you look forward, on average every year Clearstream has produced 3% to 5% fee -- fee revenue increase, right? So even without NII it's a solid business. It's a very robust business. We are sitting on 40,000 -- yes, 14,000 -- EUR 14 trillion of assets under custody and servicing. It creates lots of opportunities to complete the market in the backyard of our business, right? We are very nicely positioned in the duopoly game in Europe with one competitor out there. Even despite the fact that we may have a disadvantage shareholder structure, if I may so, we are more dynamic. We are very competitive. And our guys are very commercial, right? It's a very robust business at the end of the day. And therefore, right -- unless somebody comes to me and tells me, if you can get X with a super-duper EBITDA multiple and a huge growth rate, right? Then I can theoretically consider why shall I sell a -- or consider to sell a hugely profitable business, which is growing nicely with a strong EBITDA margin.

[Operator]

The next question comes from Philip Middleton, who's calling from Merrill Lynch.

[Philip David Middleton, Analyst]

I wonder could you say a little bit more please about pricing within Eurex. You cite that as one of your structural growth initiatives. But could you -- is there anything more you can say about that?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. Philip, thanks for all question. As you are aware, so 2 or 3 years ago we changed our philosophy. So over the last 10 years, so we didn't use pricing as an instrument to increase our secular growth. And this changed since the last 2 to 3 years, and we even guided for '17 and '18. So that overall we said pricing impact was roughly 1% of our net revenue number. And even in this year, maybe it's not exactly the same number, a little bit below. But there is a double-digit million euro pricing impact also on Eurex side where you see that the revenue per contract increases. So again, we use that on a constantly periodical basis. And indeed there are opportunities for us what we are using.

[Operator]

The next question comes from Ian White, who's calling from Autonomous Research.

[Ian White, Research Analyst]

So just a couple of clarifications on cost, please. First of all on guidance for the rest of 2019. Should we expect to see the usual seasonality that's on display in the cost base in 4Q as we've seen in prior years? And relatedly, can you provide any updated guidance on cost outlook for 2020 at this stage? And then just lastly, on the exceptionals use of standing by your guidance for EUR 120 million for this year, please?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Okay. Ian, so starting with the first question, seasonality in 2000 -- for Q4. Yes. There will be a comparable seasonality effect in Q4 2019 comparable to the level you have seen in 2018. On top, you should not forget in Q4 that we see the consolidation effect as I gave you some guidance with regard to the -- including of Axioma and the Qontigo segment for the full year. You should also not forget that another consolidation effect out of the Ausmaq on cost for Investment Funds Services here. So that's a consolidation effect what you see in Q4 and also for 2020. Obviously, then we have full consolidation of these 2 business. And therefore, we gave you exactly the guidance on revenue, on cost for these 2 businesses so that you are able to model that a little bit better. With regards to the exceptionals in 2019, you have seen now in Q3 that the EUR 46 million, a bigger increase compared with what we guided at the beginning of the year, but obviously, good news as we were able to conclude our M&A transaction on Axioma. So that was more than half of the EUR 46 million. Obviously, that did not happen in Q4. But nevertheless, I would expect that as a result, we will come some up -- higher than the EUR 120 million we guided last time. With regards to cost outlook for 2020, I think that's a little bit early. So in general, we will give you guidance for 2020 for starting when we publish our full year results 2019. So roughly mid of February, and give you some guidance for the 2020 development. But again, as in the past, we will not specifically guide on costs, we will give you guidance on our secular growth. We will give you guidance around our earnings. And then you can see as a result what is basically then the cost impact out of that. But maybe, Theodor, if you want to add?

[Theodor Weimer, CEO & Chairman of Executive Board]

Yes. In addition, Ian. And I -- listen now to the call and you raised some of your questions on the cost side because we have seen and we reported now pro forma, the increase on the cost of the same as 10% for Q3, right? But I want to assure you, we don't have any type and any kind of a cost issue here, right, at Deutsche Börse. To be very precise, right? What happened was we had the usual 5% to 6% cost increase. We have a higher -- significantly higher increase on the revenue side. So the scalability of our model perfectly works. What happened was we had a consolidation, right? In fact for the first time of Qontigo. And secondly, right, the share price increased. And therefore, the negative effects of the compensation, positive for the guys working for us, right? They were accounting way over 60% of the increase, right?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. So those are concrete numbers for Q3, if you see the 10% operating expense increase. So roughly half of it. So 5% relates to consolidation and to share price payment increase. So then you see the other 5% was basically the normal development, what we really expect. So here this consolidation topic. And in this specific quarter also the share-based payment a specific development, and we will consider how we will better communicate that into future so that you get a better understanding that -- and not the wrong impression that the cost management is not a high priority for the new management, just the opposite is the case.

[Operator]

The next question comes from Mike Werner, who's calling from UBS.

[Michael Joseph Werner, Executive Director and Equity Research Analyst]

I have 3 questions, please. One, I guess, as we look out to 2020 as the focus continues to be on M&A, I guess, is that -- does that leave any room for the potential for share buybacks? I believe if I recall at the beginning of this year, it was indicated that M&A was not -- if you didn't see any M&A this year, that would be something that we could potentially see next year. And I was just wondering your thoughts on that. Second, if you can just provide a little bit more granularity, I apologize if I missed this earlier, in terms of Ausmaq consolidation. How much of that contributed to both revenues as well as expenses within IFS during the Q3? And then finally, just love to hear a quick update in terms of your steps taken towards migrating to the cloud with regards to your regulatory -- with your data and workflow. Is that still on track for 2020?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Mike, thanks for the questions. So with regard to share buyback. As I mentioned earlier, so roughly EUR 1 billion cash on hand. Obviously, we have to do something with that. Our preferred solution is, again, to do an M&A transaction. And as you have heard from Theodor, we are very keen to do something here on a disciplined approach. And so that's our basic understanding that we will invest that in M&A over the next months. If we see that this is not possible, let's say, over the next months, then obviously we have to consider also share buyback. As you've seen in the past, when we did roughly 2x EUR 200 million 1 or 2 years ago. So this shows our principal commitment to do share buyback if we have excess cash. But again, the basic assumption, the base case is that we invest that in inorganic initiatives. With regards to Ausmaq. So on a quarterly basis, roughly we have EUR 2 million net revenues and EUR 2 million costs roughly on a quarterly basis. With regards to the migration into the cloud. Yes, we made good progress here. You've seen our announcement that we found now good cooperation with Microsoft and with Google even we are also in discussions with Amazon Web Services. But with the first 2 we have an agreement how to do business, how to migrate into the cloud. And we are currently detailing our implementation plan. It will take 3 to 4 years. So it's not done within 12 months to migrate certain elements of our IT infrastructure into the cloud and in parallel to do the migration of our data center. So therefore, we see also good chances to increase quality and increase efficiency with that kind of cloud strategy.

[Operator]

The last question for today comes from Benjamin Goy, who's calling from Deutsche Bank.

[Benjamin Goy, Research Analyst]

One follow up on Clearstream. So whatever political Brexit will be, do you feel that your clients are increasingly Brexit-ready and open for new project, of course with the particular link towards your target to securities initiatives. So can we see more out of that in 2020? Or should we expect post-trading be driven by IFS going forward again?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. Benjamin, thanks for the question. So indeed, in this year, in 2019, there was a lot of focus of our customers on Brexit. And even today, we do not know what will finally happen out of that. But our view is that now all our customers are prepared for any Brexit scenarios. Therefore, we see a good chance that prioritization in 2020 goes more into our favor. We specifically expect that in the Investment Funds Services business where we have now really a very strong customer pipeline with this high commitment, and even with some signed contracts. So here we have a high comfort level that on Investment Funds Services, if we get the right prioritization from a customer perspective. And although with regards to target to securities, we see better trends in 2020 to get additional revenues out of that, but our view is unchanged. There should be a secular growth element for Clearstream. But again, it will take a little bit longer than originally planned.

[Jan Strecker, Head of Investor Relations]

With this, we would like to conclude today's call. Thank you very much for your participation. And have a good day.

[Operator]

The conference is no longer being recorded.