Deutsche Boerse AG

XETRA:DB1

Good afternoon, ladies and gentlemen, and welcome to the Deutsche Börse AG Analyst and Investor Conference Call regarding the Q4 and full year 2024 preliminary financial results. [Operator Instructions]

Let me now turn the floor over to Jan Strecker.

Welcome, ladies and gentlemen, and thank you for joining us today to go through our preliminary fourth quarter and full year 2024 financial results. With me are Stephan Leithner, CEO; and Gregor Pottmeyer, CFO. Stephan and Gregor will take you through the presentation today. And afterwards, we will be happy to take your questions. Link to the presentation materials has been sent out via e-mail and they can also be downloaded from the IR section of our website. As usual, this conference call is recorded and will be available for replay. Let me now hand over to you, Stephan.

Thank you, Jan. Welcome, ladies and gentlemen. Great to reconnect. Let me start today's call with an overview of the progress we have made in executing our strategy as well as our financial targets and capital allocation priorities for 2025. As part of our Horizon 2026 strategy, we are further strengthening our position as a leading global market infrastructure provider based on 4 key pillars, as we have always described to you in our recent calls. The first pillar is our strong organic growth trajectory of recent years that has significant further potential.

The secular industry trends to support our strategy remain fully intact, and we are well on track to achieve our targets. As we announced during our third quarter earnings call in October, we are now focusing on net revenue without treasury results as our key steering metric. This will make our underlying operating performance more transparent to you and provide targeted incentives for further growth. In 2024, net revenues without treasury result increased by 8% organically, and we're also targeting a growth rate of 8% over the next 2 years. Growth drivers going forward include further momentum from the fixed income road map in financial derivatives, the revenue synergy momentum in Investment Management Solutions. And finally, continued double-digit growth in fund services, commodities and increasingly the new FX digital complex.

The second pillar of the strategy is to address the growing importance of the buy side for our organization. We are still very focused on getting full momentum and further developing our new Investment Management Solutions segment. This includes the combined ISS Stoxx business and our software platform, SimCorp with the integrated Axioma analytics offering. We have completed all integration efforts in the IMS segment and achieved the run rate cost synergies of EUR 55 million by year-end last year, as we had told you and as we had planned.

[indiscernible] new synergies are on track, and we see excellent opportunities for further synergies with the rest of the group. And I know you will probe us for numbers. We'll continue to stay focused, but be assured there is good momentum. The third axis of our strategy is our digital leadership ambition. Underpinned by our hyperscaler partnership with Google Cloud, Microsoft Azure and SAP that are progressing very well. We now reached a level of about 60% of our load in the cloud. Just in December, we announced 50%. So we have continued to make good progress, and we are very confident that we are leading in the financial industry.

With a focus on facilitating crypto activities for institutional partners in trading and clearing and a unique digital proposition in securities and fund services, we are confident to be leading the change in the industry towards a fully digital offering. Something that has become much more important after recent events and the acceleration that we see globally on the topic.

Our final vector of our strategy is that with Horizon 2026, we committed to a very disciplined approach to capital allocation. I would like to fully reaffirm this commitment and in a minute, take you through our priorities for 2025, including the EUR 4 per share dividend we are proposing for 2024 and the new EUR 500 million share buyback [ program ] we are executing this year.

Let me turn to Page 2, which puts the developments in 2024 and our outlook for 2025 in the context of the Horizon growth trajectory. In 2024, we achieved total net revenues of EUR 5.8 billion well above our original guidance of more than EUR 5.6 billion. The main driver of the outperformance was the treasury result due to fewer interest rate cuts and higher cash balances compared to our original assumptions.

Net revenues without treasury result increased by 8%, as I already mentioned, on an organic basis to EUR 4.8 billion, in line with our expectations. EBITDA without treasury results showed good operating leverage and increased 14% on an organic basis to EUR 2.3 billion, a great number. Our plan for 2025 is very much in line with the 8% average annual net revenue growth without treasury results we are targeting until 2026.

For net revenues without treasury results, we're expecting around EUR 5.2 billion and for EBITDA around EUR 2.7 billion this year. Now that we have removed the interest rate impact from these numbers, we can be more precise in our guidance. It also gives you a better visibility on the scale benefits that we expect to see again with very strong EBITDA growth without treasury result. You should assume that this is our realistic expectation at this point and certainly not an under promise. The guidance is based on further secular growth in all segments of the group and modest improvements in equity market volatility as to these stock's average was only at the level of [ 16 ] last year.

In addition, we currently expect a treasury result of more than EUR 0.8 billion in 2025. This expectation is based on forward interest rates which could change during the year in such a dynamic and volatile market environment. Before turning to our capital allocation priorities for 2025, I would like to comment on the development and revenue growth drivers in the group's various businesses. Let me start with the Investment Management Solutions business. In our MS segment, the Software Solutions business at SimCorp is on track to achieve our targets. We are particularly pleased with our performance in North America.

With the backing of Deutsche Börse Group, we have made good progress with new clients such as the Public Sector Pension Investment Board in Canada, the Texas Teachers and more high-profile logos to come this year. There is also good momentum in the transition to Software as a Service, and we see strong synergies from selling Axioma Analytics to existing SimCorp clients. In summary, all on track.

Our ESG and index business, ISS Stoxx continues to benefit structurally from our clients' need for more sophisticated solutions like customized proxy voting policies and a focus on higher quality and institutional grade data. At the same time, there's no question the business faced headwinds in 2024. The like many of our data competitors resulted in overall growth falling short of the original plan in our Market Intelligence business, in particular, which we have already begun to restructure.

We expect the overall ISS Stoxx business to continue to be a solid contributor to earnings growth. Let me turn to the second big segment. In Trading and Clearing, the key growth drivers are the fixed income road map in financial derivatives and our commodity business. In fixed income, the underlying momentum is very strong. We are the home of the euro yield curve. The fixed income road map is backloaded into 2026 due to the regulatory processes, but we expect further momentum in the middle of this year as the active account requirements and the EMEA 3.0 become effective.

The second big growth area in trading and clearing is the commodities business. Here, we have made much faster progress than originally expected and met our 2026 targets already last year. Despite this fantastic progress, we expect further growth this year and the January momentum supports our expectations. The third leg is our fund business, our fund services business. There, we have returned to double-digit growth in 2024 and expect further progress. I'm really proud of the business. In addition to the major partnerships with HSBC and UBS, there's broad momentum in our fund execution capabilities.

With [ Kneip ] on the data side and FundsDLT on the digital side, we now have a more comprehensive offering than any of our main competitors. Lastly, the development of our Security Services business is certainly beyond what we would have thought possible just a few years ago. This is driven by the ever-increasing amount of debt outstanding globally and the resurgence of fixed income as an anchor asset class. The business is a real gem, combining growth with profitability and cash flow generation.

Talking about cash flow generation. This brings me to Page 3 of the presentation and how we are planning to implement our refined capital allocation principles in 2025. As in the past, we'll continue to prioritize internal organic investments and smaller bolt-on acquisitions that enhance our capabilities. To support the 8% organic net revenue growth without treasury results, our operating costs are expected to increase by around 3% this year. I think that's a great sign of scaling and discipline. We will also remain very disciplined with respect to potential larger acquisitions. For the time being, we will continue to focus on realizing the full potential of our Investment Management Solutions segment.

We also continue to evaluate our options regarding the minority shareholdings held by General Atlantic in our ISS Stoxx business. We're still firmly on a dual-track approach. This includes the potential acquisition of the 20% stake as well as the possibility of an IPO for ISS Stoxx. We are preparing for both scenarios, which also includes exploring the market in the coming months for a potential IPO and publishing more information about the business. In an event of an IPO, we would continue to hold a majority stake and fully consolidate ISS Stoxx. No decisions have been made at this stage as this also depends on our partner and the market environment.

In accordance with the revised dividend payout ratio of 30% to 40% and the new commitment to a continuously increasing dividend per share, we are proposing a dividend of EUR 4 per share for 2024, a strong story. Given the accumulation of excess liquidity last year, which was driven by strong business performance and the absence of larger M&A activity, we are committed to complementing the regular dividend with our share buybacks. Following the initial EUR 300 million share buyback last year, we will launch a follow-on program with a volume of EUR 500 million in 2025.

With that, I would like to turn the call over to Gregor, who will present the details of our results and outlook.

Thank you, Stephan. On Page 4, we show the details of the preliminary full year results. In 2024, we achieved 15% total net revenue growth. In addition to a strong organic growth, the first time consolidation of SimCorp contributed to these results in the first 3 quarters while the fourth quarter reflected a like-for-like comparison. The new key performance indicator net revenue without Treasury result saw an 8% increase in 2024 on an organic basis, aligning fully with our expectations.

All of the group segments contributed to this growth with trading and clearing being the largest contributor in euro terms and fund services being the fastest-growing segment of the group. With organic operating cost growth of just 3% and a favorable contribution from our financial investments in 2024, we achieved significant positive [ jaws ] in terms of EBITDA growth excluding treasury results, which was 14%.

Let me now walk you through the operating cost development in 2024 on Page 5. The overall operating cost increase was mainly driven by the consolidation of SimCorp. The remaining 3% organic cost growth was driven by inflation, higher investments into growth and infrastructure as well as higher share-based compensation. The positive operating cost development in 2024 was also partly due to the reduction of exceptional operating costs related to the SimCorp acquisition.

On a like-for-like basis, the organic operating cost growth last year was closer to 4%. On Page 6, we show the details of the preliminary fourth quarter results. We had our best quarter ever from a net revenue perspective, driven by the expected positive seasonality in Software Solutions and record revenues in commodity, FX and fund services. As a result, net revenue without treasury results increased by 7%. In line with our expectations, operating costs increased by only 2%. This was driven by a combination of lower exceptional costs against inflation and additional investments.

The result from financial investments included positive valuation effects on several assets, which was mainly a result of the current market environment. Overall, the EBITDA without treasury result increased by a strong 18%. Below the EBITDA, the tax line item also included a few positive one-off effects. On an adjusted basis, the tax rate was at the expected level of around 27%.

I'm now turning to the results of the segments, starting with the Investment Management Solutions segment on Page 7. The segment is split into 2 parts. The first part is a software solution, which is a combination of SimCorp software business and Axioma's analytical business. The key performance indicator for this business is the annual recurring revenue or ARR. After experiencing lower growth in the third quarter, the ARR recovered significantly at year-end, reaching EUR 608 million. This represents a 17% increase compared to the end of 2023 and falls within the upper end of our ARR guidance range of 13% to 18%.

While we successfully attracted significant new clients last year, the majority of IRR growth was driven by the expansion of relationships with existing clients. Geographically, above average ARR growth was observed in APAC and the Americas. Net revenue also developed as expected in Software Solutions, and we saw a significant sequential seasonal increase in the fourth quarter to EUR 236 million. But we were also pleased with the 6% year-over-year increase of net revenue against a very strong fourth quarter 2023.

We are expecting a similar seasonal pattern this year. Due to the nature of software business, the quarterly revenue development depends on the conclusion of contracts up until the very last day of a period. In the first quarter this year, for instance, the software solutions comparables are more challenging due to a significant renewal last year at Axioma. The ESG business performed in line with our expectations, with net revenue up 7%. This was primarily driven by a strong performance in governance solutions. The Market Intelligence business continued to face headwinds in the fourth quarter as our clients in the asset management industry are most -- more cost sensitive. As a result, the ISS stoxx non-ESG business was just flat year-on-year.

Let me turn to Slide 8, the Trading and Clearing segment. Financial derivatives at Eurex, the upward trend in equity markets, combined with low volatility was a constraining factor. This led to a decline in net revenue in index derivatives, which was offset by an increase in single equity derivatives. In fixed income, the market environment was much more positive, and we saw double-digit growth in interest rate derivatives and OTC clearing. In commodities, [ EEX ] growth was mainly driven by yet another new record in power derivatives trading in Europe. This was the result of significant market share gains from OTC and business from new customers, including quant-driven participants.

U.S. power derivatives and power spot trading also contributed to the growth. Overall, this more than offset declines in margin fees and the gas market. In our foreign exchange business, 360T, new buy-side clients and faster growth in regions such as the U.S. and Asia Pacific continued to drive most of the growth. But we also saw increased FX volatility due to interest rate speculation, as well as economic and geopolitical sectors.

In the Fund Services segment on Page 9, the market environment continued to improve in the fourth quarter, while cyclical headwinds from the trend toowards passive prevailed, higher equity market levels were supporting the business. Together with the continued onboarding of new clients and funds, we achieved 19% net revenue growth in custody and 42% net revenue growth in settlement. Fund assets under custody in December reached a new record level of more than EUR 4 trillion. Funds distribution also benefited from new clients and saw a net revenue increase of 13%. This even slightly declining operating costs, there was a significant operating leverage in this business, and we achieved high double-digit EBITDA growth.

I'm now turning to our Security Services segment on Slide 10. Despite accumulated 100 basis points interest rate cuts by the Fed and the ECB last year, the net interest income increased 17% year-over-year in Q4. This was mainly driven by an increase in total cash balances to more than EUR 19 billion in the fourth quarter. The increase in cash balances was mainly driven by the strong underlying performance of the business, with international settlement transactions being up almost 40%, reflecting significantly higher activity in fixed income markets.

Custody continued to benefit from the growth in global debt outstanding and a higher equity market levels. As a result, assets under custody reached a new record level of EUR 15.7 trillion in December. This brings me to Slide 11, our shareholder returns for 2025. In accordance with the refined capital allocation principles we announced in 2023, we proposed to pay a dividend of EUR 4 per share after our AGM on May 14, an increase of 4% and a payout of 38%.

Since excess liquidity continues to increase, we are complementing the dividend with a EUR 500 million share buyback program. Therefore, the total distribution this year will increase by 24% to a record level of more than EUR 1.2 billion. The share buyback will start as soon as practicable and is expected to be completed well before the end of the year. Taking this dividend payment and share buybacks into account, we expect excess liquidity of around EUR 1.5 billion at the end of 2025.

On the last page of today's presentation, we show the details of our guidance for 2025. As we have announced already in October, the new steering KPI net revenue without treasury result is expected to grow at 8% on average 2025 and 2026. Since the development is broadly linear over these 2 years, we expect net revenue without treasury result to be around EUR 5.2 billion this year. This would result in EBITDA without treasury result of around EUR 2.7 billion. Both is very much in line with the current market expectations. For the treasury side, we expect more than EUR 0.8 billion. This is based on the current forward rates in the U.S. and Europe, and broadly stable cash balances compared to last year's average.

With further modest tailwind from lower exceptional cost items, operating costs are expected to increase again by only about 3% this year. Based on our current business mix and geographic footprint, we expect our tax rate to be around 27% this year. This concludes our presentation, and we are now looking forward to your questions.

[Operator Instructions] And first up is Arnaud Giblat from BNP Paribas.

I've got one question on SimCorp and Axioma. You -- can you explain the discrepancy we're seeing between the 17% ARR growth and the 6% revenue growth for that division. Where is the discrepancy and also just to follow up there, given the 17% ARR growth you've had this year, how well does that underpin a double-digit growth for that division into 2025?

Yes. Thanks, Arnaud, for the question as I have, again, the opportunity to explain a little bit our Software Solutions business. So as you are aware, the annual recurring revenue number is really the key KPI, and that shows the expected revenue growth for the next year. So therefore, at least 17% is really the key number when you look from a cash flow perspective. So the number is different when you look from a revenue recognition perspective by IFRS standards, right? As I explained now many times. So an on-premise contract, create some 50% point in time revenue. And therefore, it's obviously very important whether the -- in the comparables or in the current quarter, such kind of on-premise contracts with point-in-time revenues.

Therefore, overall, you could argue. Yes, the 8% growth on SimCorp, why is it so below the 17% ARR, right? So -- and it's a part of the SaaS transformation, right? So -- with regard to the SaaS transformation, our SaaS revenue increased by 1/3 this year, right? And the on-premise was reduced by minus 2%. So on average, it's a plus 12% on a revenue recognition perspective and they are the professional services for implementing such projects, what is also flattish, right? So -- and this is also not calculated in the 17% ARR number. And therefore, these are the main differences.

So from our perspective, we fully achieved our target with a 17% ARR growth and are rightly on track to deliver our Horizon 2026 target, where we said we want to achieve overall for the IMS segment a 9% growth. And if you do a little bit the split up between ISS Stoxx and SimCorp and SimCorp is definitely double-digit growing also from a revenue IFRS perspective. So perfectly on plan to deliver.

The next question comes from Johannes Thormann from HSBC.

Some questions from my side, please. First of all, can you elaborate a bit more how you restart your non-ESG business with ISS, especially in the light of a potential IPO also because this is mainly the drag on the intended CAGR in the investment management solution. Do you have pricing opportunities? Or are you fully affected by political headwinds and cost savings on the buy side. That's the first thing. And secondly, on the -- there is a discussion in the newspapers that you are thinking about a cap on gas prices. And how much would this affect your business as gas volumes have been lackluster in the last year? What's your view on that? .

Starting with the first question on the non-ESG element in the ISS Stoxx business. So we basically say that is overall some flattish, right? So in Q4, so the ESG business is growing by 7%. I think that's a good number that's comparable with the others. But you are specifically asking on the non-ESG business. And therefore, first element here is the index business, right? So that's purely a 2% or 3% growth for 2024. The main driver that is below the 7% or so, let's say, what would be our expectation here is that we had a strong headwind on our Eurex business. So volatility stock was going down by 9% compared to 2023. So there was headwind and there were less volumes here and Eurex pays a fee to stocks for that. And so that's the reason why that's below the 7% and it was last year just 2%.

The other is still what we, I think, also addressed now many times is the Market Intelligence business, where we see headwinds. So that's a shrinking business or 3 percentage, something like that. And here, we are in the phase to restructure it. I think we already made good progress. So that the performance here continue to increase. So these are basically the measures. And from the index business, we will enhance our product spectrum. So talking to clients what is expected from these guys. There are good ideas in the pipeline. So overall, we expect that we are also coming back in the index business to growth rates above the level we have seen in 2024.

Your second question, the cap on gas price. So far, the gas business is obviously not as big as the others. So overall, we do not see a big impact out of that. We always are interested and when we talk to politicians, go for market-led solutions, right? And we just had the opportunity in our meeting New Year's reception this week, also [indiscernible] the 2 or 3 guys from the politician perspective, that a cap on prices is not what politicians should do. Nevertheless, you cannot rule it out. But for these specific items or it will not materially hurt our business.

I think important in building on what Gregor was saying is that the [indiscernible] business, very much the structural trends continue. We have seen a strong January, as I already alluded to. And I think the broader commitment as I also speak with the political environments in Brussels and elsewhere. -- is a market-based solution, the strong extension also around many of the CO2 concepts that are covered. All of that is supporting market-based solutions as we go forward and [indiscernible] will benefit from that.

And the next question comes from Enrico Bolzoni from JPMorgan.

So the first one, can you tell us how excited we should get for 2025 with respect to these regulatory changes you mentioned. So on one hand, we had the [indiscernible] the requirement to have an active account. But at the same time, the -- as expected, they rolled over the equivalent. So do you expect despite the equivalents being rolled over, any meaningful transition of volumes? And can you just help us quantify the opportunity for this year. So that's the first one.

And then the second one, just very quickly on the IMS and SimCorp. You were targeting, I think, EUR 600 million of revenue and EUR 400 million of EBITDA. Can you just confirm that these targets have been met.

Yes. So starting with the second question. As I already mentioned, so we fully achieved our target with regard to the ARR number. And we guided the EUR 600 million 20 months ago where we had not fully transparent of revenue recognition. Therefore, we are slightly below the EUR 600 million. If you would take SimCorp on a stand-alone basis. But I can also confirm SimCorp on a stand-alone basis are more than EUR 200 million EBITDA, what we guided. So the reason for that is that we are an EBITDA slightly above that level that we achieved faster our synergies than originally thought. So again, SimCorp is fully on track to deliver.

Your first question with regard to EMEA active account, yes, we are positive on this development because the market participants have now to comply with the new requirement already starting in January. And then from an active account perspective, they have to execute in June this year and to show you what is the size out of that. So currently, we have 660 clearing members. Just 30%, so let's say, 200 are active. The other 460 are not active at all doing just 1 test [ trade ] a year. In addition, the 660 will most probably increase to 1,000 as a smaller asset manager, pension funds also have to follow that new rules.

So there are roughly in clients that are not active at all today. And if they would come into a comparable active account activity, what we see in today's 200 clearing members that are active, that obviously will trigger strong growth, and that's exactly what we expect over the next 18 months. [indiscernible] regardless with regard to the equivalent announcement, but what you have seen that there is another 3 years because they have to follow this active account rules, and it doesn't matter what the equivalent tells you. Therefore, we continue to expect that we achieve our fixed income roadmap target and specifically also our OTC clearing target.

And sorry, just a very quick follow-up on that. And you said that you expect to be positive. I assume that all of that is already included and reflected in your guidance. Is that fair?

Yes, it is, obviously, yes.

The next question comes from Bruce Hamilton from Morgan Stanley.

So on the short-term interest rate futures progress, I think based on sort of the latest data on sort of open interest, your -- in terms of esters, you are about a bit less than half the amount of omininterest that ICE is doing and obviously, ICE has Euribor. So is that kind of progressing as you'd expect? And what will help move you to a stronger position that might drive success? Or would you feel you're kind of on track? So just understanding sequencing there? And then just circling back, if I can, on the IMS business. So basically growing at 6%, and that will more or less double to hit your '26 targets. Are you saying that narrowing is simply going to be a function of revenue recognition changing as you move to SaaS? Or is it going to be because of improved traction with clients. I'm just trying to understand the main driver of that acceleration that we should expect over the next 2 years.

Starting with the first question on the short-term interest rate. Yes, you are right. So we have roughly 50%. That's obviously a good number. More importantly is that the market share of the short-term interest rate now is significantly increased. So half year ago, it was below 5% compared to Euribor contract, now it's 15%, something like that, right? And out of owning from this 15%, so 50% to 7.5%, it's obviously a big, big improvement. We continue to incentivize market participants to use our platform because it's always very important to get the liquidity here. We will see also strong support out of this active account regulation because the active account regulation does not only refer to the interest rate swap business, but it refers also separately on the short-term interest rate. So we will get here a tailwind out of that.

And with our specific exposure we own our strong [indiscernible] future. We have the repo business. We have a strong OTC interest rate swap business, and we start with the short-term interest rate. So doing netting effects between these 4 businesses, I think we are best positioned to make the most attractive offers to our clients, right? So that's why we continue to invest in this business via incentive programs, getting the reasonable market share. And so continue to be optimistic that we get double-digit million euros out of that over the next 2 to 3 years.

The second question with regard to the IMS growth. Yes. So obviously, we expect to continue in the range of 13% to 18% ARR. So that's our main and focused target. And so we assume for 2025 and 2026, we are again in that range, hopefully at the upper end, but we will finally see. And if this development continues, and the SaaS transformation will then increase from, I told you, close to 50% in 2024. So it will increase to 60% to 70% over the next 2 years. So you should see also higher growth out of that in the revenue recognition element. So continued ARR growth, 13% to 18% will lead to that number from a revenue recognition IFRS perspective.

Next up is Benjamin Goy from Deutsche Bank.

Also a question on ESG, just to try to better understand opportunities and potential risks here. If you break it down in the E, S and G, how much is still actually coming from governance? And then related to that, in the E&S and I guess, maybe E, how much of the growth in the past has been driven by Europe as compared to Americas. And if I can squeeze in the second question, I think you said treasury results, you assume stable cash balances. I know it's year-end, but it looks like you're already 8% ahead versus the average of '24. So is it conservative? Or is there some reason for being more negative on the volume outlook?

I'll start with the treasury cash finances, and Stephan will take the ESG question. So the cash balances in Q4 was some EUR 19 billion, obviously, very strong with increased settlement activity. For the guidance, when we say we expect something like around EUR 600 million NII for the combined Clearstream business. So the assumption is roughly EUR 18 billion customer cash balances with 1 rate cut in U.S. and 3 further rate cuts in Europe. So that is the market expectation, so that's not our expectation, it's the market expectation, and we purely calculated it through. And the U.S. dollar is currently continue to be 55% of our cash balances Euro is 20 to 25 and the others are 15 to 20 hope that adds up. But so that's the split. So if you do that math, then you -- then you end up at roughly EUR 600 million clearstream NII.

Let me turn on your ESG question. First of all, the blend between the proxy versus the sort of more traditional rating businesses, that is roughly 2/3 proxy and 1/3 is the core rating and data business. I think the structural drivers on both of them in a way are driven by the complexity and the additional sort of requirements into higher quality data that has dramatically stepped up over the last 2 years. On the core ESG business, there is in addition, also a consolidation in the market that is happening as few players really meet the requirements. So that makes us from a structural long-term outlook on both of those confident as with the proxy voting. We also continue to see a move and sort of more increasing importance of different and differentiated client-related policies when it comes to voting. The most important point is that around all of that, it's very much the clients that make the choices and that creates additional differentiation, additional revenue opportunities.

The next question comes from Andrew Coombs from Citi.

A quick couple of numbers once, please. Firstly, you called out a large renewal Axioma this time last year. So perhaps you could just quantify that? And then secondly, on the valuation effects on financial investments, quite a big positive this quarter. We welcome any more commentary on what drove that, which of the minorities saw that improvement in pricing. And then any implications going into this year for that P&L line as well.

Yes, referring to your first question. So when we said in our speaking notes that there's high one-off in Q1 2024. So it's roughly EUR 10 million to EUR 15 million positive impact, what we have seen here out of point-in-time revenues. Your second question, financial investments, what is the impact here? Yes, there's -- there was an impact out of some minority investments. But all of these things are basically one-offs and we have to consider market conditions here, right? So that's -- therefore, it's quite difficult to give a precise guidance, and we avoided that, but the number what I've seen in the consensus is not a bad number.

Okay. Just on the latter, I think previously, you used to talk about Clarity AI and 360x and Illuminate and all of these investments that you held. You're saying here that actually the valuation effect was on minorities that were in runoff. So this isn't something you necessarily expect to repeat.

It's a bunch of different things. What you see here, and we don't disclose all the details there are even pluses and minuses here. So -- but again, the number I've seen in the consensus is not a bad number again.

And next up is Hubert Lam from the Bank of America.

Just question on SimCorp. Can you just give us an update on wins that you had in the quarter and also the upcoming pipeline? Where do you see potential wins coming from -- and also, can you talk about the competitive dynamics within Software Services. In the U.S., we've seen consolidation of a couple of the smaller players. I'm just wondering what it means to you? And what do you expect in terms of competition going forward?

Thank you very much for the question. Let me take up on the wins. I think we have announced some of the logos, if I call it, underlyingly, the trend we see is that the logos are increasingly uncomfortable in going public with some of that. The reason is obviously -- and that leads to your second question, the competitive dynamics. I think we are very excited in a way in a positive way around the momentum we see, especially in the U.S., and that makes many of those decisions and we hope to have some very public and high-profile names like last year where we were able to add the Texas teachers, just like the PSP in Canada, I mean, those are really lead clients. And I can reassure you, we have a number of lead clients in the same category. So the competitive competition situation is intense, but it is also intense because SimCorp is making so much more progress and has really been winning in prior situations that before one just wouldn't have expected them.

And just to add from my perspective, so from an Americas perspective, as we really focus on this region. So the ARR number was really 20% compared to the 17% overall. As you can see, that in America is really making over-proportional success here out of the overall business. So we are rightly on track here, have a strong pipeline, and it's really a positive development.

The next question comes from Tobias Lukesch from Kepler Cheuvreux.

My question is on the ISS STOXX. I understood that you apply a dual track approach and that in case of an IPO, you will keep the majority stake and continue to consolidate the business. Does that mean that you keep your 80% stake in the ISS STOXX unchanged? And if you were to decrease the stake, what should we think about the usage of the additional free funds? Is it M&A or buybacks. Secondly, if I may, you mentioned the potential further synergies. You haven't quantified that. I mean, the fact that you were quite fast and the fact that there might be synergies across the other group, is it fair to assume that this should if it happens come rather sooner than later, so really have an important Q1, Q2 effect.

Let me start on both of your questions. So indeed, absolutely correct. We're working in line with or together with GA on the dual track approach here. I think the key message is that this is a core part of Deutsche Börse's group sort of remit in a way. That's why we are very articulate around the majority that we will retain and the full consolidation that we expect. We have not made any detailed decisions around how the mechanics of the IPO would work. And therefore, it would be really premature to give any details in guidance.

The same is true in terms of the proceeds. I mean our capital policy or capital deployment policy that we have now announced sort of 15, 18 months ago, and we have been very diligent. And if you just look at today's announcement of the additional EUR 500 million or yesterday's announcement of an additional EUR 500 million buyback that just signals to all of us, or it confirms hopefully to all of us, the amount of discipline that we work under. And we'll continue to do that. with the same sequencing that we have always talked about, top line growth and therefore, the organic investments where they make sense. We have clear M&A guidelines, how we're going to work. And then after that, we will continue to look at dividend and buyback as we get to the point in time when we do have proceeds potentially.

So I think the main, it's far too early at this point. The dual track is a lot of prep work that we need to do. And as we also said, we will spend more time in giving transparency to investors and testing and getting a better understanding for each of the 2 avenues.

With respect to the further synergies, very much in line with our message that we remain very focused on implementing IMS, that's why the relentless focus on each of the individual targets remains what we are very much putting at the center. I've explained before that for that very reason, we stay away from giving additional overlay synergy targets because all it does it distracts from what is the core winning the battleground so we really want to win. And those I always go back is the SaaS transformation on the software side. And that is secondly is also the U.S. market, as Keigo was explaining.

But let me just give you a little link in that context. For example, what we have implemented in Q4 is the full integration capability between 360T and the SimCorp Dimension platform. Very easy win, and we see a number of similar things that doesn't quantify it. We don't give -- we don't want to distract the sales forces around those, but they would just naturally open up the platform and feed it into what is some of our infrastructure offering. So I hope Tobias that, that gives you a good context.

And the next question comes from Oliver Carruthers from Goldman Sachs.

Oliver Carruthers from Goldman Sachs. Just one question for me. If I look at your revenue and EBITDA guidance, excluding the treasury result that you provided on Slide 2. You're basically looking to add EUR 900 million of revenues with EUR 800 million of this flowing to EBITDA over the next 2 years. so effectively hitting a 90% incremental margin. So I appreciate a small part of this is cost synergies at SimCorp. But can you help us square the moving parts on how you're going to achieve this 90% incremental margin, which is pretty high even for the market structure industry.

Yes. I can confirm that the EBITDA margin with our treasury result will significantly go up, right? So this year in 2024, we had some 49 percentage. So without treasury result, and this would definitely increase with the new guidance by 2 to 3 percentage points already in '25 and continue to increase next year. Yes, here you can really see our commitment looking for economies of scale, right? So that's our commitment. If our revenues increased by 8% and the cost guidance we have seen by 3%, then obviously, there's a double-digit 14 percentage number in the EBITDA, and that's what we included in our guidance, and that's our commitment to increase efficiency.

Measures are the continuation of our digitization process to take the most prominent one. Working in the direction of having a digital CSD and the digital ICSD creating an exchange 24/7, tokenize all the assets using AI as a strong instrument to support that. So these are all the things that we continue to do, and we will harvest out of that over the next years.

If I just add Oliver, in one dimension that is important. I mean as we have grown more global or there are some of the opportunities that we see where there's more lessons learned across the platform in a tangible way of how we use global development capacity, how we set up sort of the data activities. So I think in parallel, it's not as though we are standing still on the traditional. It's the big innovation moves that give a very different economic. But in parallel, there's still headways of what we're doing on our core sort of platform setup as we globalize and learn from each of the different businesses.

Got it. So landing in kind of a mid-50s ex treasury EBITDA margin, 2026 is looking -- is where you're looking to land?

It's more like the 60%, right, 58% to 60% that we've seen over the last couple of years, Oliver. So mid-60s seems a little too high all-in.

But I'm saying stripping out the treasury? So you've effectively provided this guidance on EBITDA without the treasury results, assuming full pass-through?

Yes, correct.

The next question comes from Ian White from Autonomous Research.

There are 2 follow-ups, if that's okay. Just firstly, with respect to IMS and particularly SimCorp, sorry if I'm the only person who's now struggling to understand this. But can I just explore a bit more this dynamic between ARR at the top of the guidance and then the reported revenue is what we've seen in 4Q, a faster-than-expected migration to recurring revenue agreements or SaaS rather than a real acceleration in net new sales or growth potential?

I'm just trying to work out if there are any other details you would share regarding the 4Q performance that would indicate that, that interpretation is incorrect basically and that the long-term growth potential of the business is sort of progressing as expected or is increasing -- so just a bit more help around that, please, if that's okay.

And just secondly, if I could have a short follow-up. On Crypto finance AG, I just wondered crypto currency is obviously the asset classes you're at the moment. And I wondered how you're thinking about that business now on maybe an 18-month horizon. Is there a meaningful change in the revenue outlook and optionality, more conversations with clients, anything else notable there, please?

Let me start on your second the crypto finance. So I think definitely we see sort of a changed environment. There's no question on that. There is more opportunities which started with a different usage of ETFs and in many areas of that space. At the same time, I think an important part for us since we are focused on an institutional offering is to connect sort of what is the crypto finance and the custody offering we have there as a subcustodian basically into Clearstream, that's where we expect a very relevant sort of opportunity. Now this is in absolute numbers. I mean, crypto-finance is still a relatively small part of what is the total. It's now part and integrated with 360T. So we already have a very good and aggressive growth rate at 360T, the numbers you have seen also from last year. I think that shows that, that momentum is coming through. Is this a step change that we have already planned in? No, we haven't.

And with regard to the first question, so again, taking the revenue recognition topic at SimCorp, taking again the development in 2024. So overall, the SaaS revenue increased by 1/3. I already said that. The on-premise was going down by minus 2% as planned as staff transformation is accelerated. So overall, the software business grew by 12%. So I'm taking that together. So -- and the difference to the 17% is basically the revenue recognition topic.

Again, in the overall revenues, what leads to 8% is the other, what is minus 3%, and that is the professional services for implementing projects, specifically on the on-premise side. And if we are through in the cycle with the SaaS transformation, then obviously, this maintenance professional services will continue to go down and therefore, it takes a certain point of time through that kind of transformation process.

But again, as we said, we expect for the next 2 to 3 years, double-digit IFRS revenue growth in parallel to this SaaS transformation process. I hope this helps.

Your next question comes from Ben Bathurst from RBC CM.

Just on the General Atlantic stake. I wondered, are there any relevant time lines you can share about the options you have? Do you have to make a decision on the dual track in 2025? Or is there some scope -- some flexibility around that? .

And then if I could just do another short follow-up as well on capital. You referenced the emergence of excess liquidity as a consideration in the buyback decision. And I think you've guided to EUR 1.5 billion at the end of 2025. But I just wondered, as a baseline, could you quantify the total level of access that you see in the group at the end of 2024 following the EUR 500 million buyback that you've announced? Thank you.

Let me take your first one on the GA stake. I mean we have been partnering with them since 2019. So that was the original stocks Contigo situation, which you may recall, then they have increased their investment in 2023. So I think with the integration of ISS and STOXX now moving to completion. We clearly get much closer to what is the window when them as a private equity player will look to start to monetize the market. But there's no narrowly predescribed sort of time line that will play out as we watch together with them the 2 tracks as well as the market environment.

With respect to the excess liquidity question?

I can do that. So -- we start with an excess cash of roughly EUR 850 million end of 2024. And so in principle, the current run rate is that the excess cash will increase by every year by more than EUR 1 billion. So that's why we said we expect some EUR 2 billion before considering the share buyback, then we deduct the EUR 500 million. So we have now EUR 1.5 million. So if you would ask me for 2026, again, it will be more than EUR 1 billion added as excess cash. So that's the number that you could expect.

And the next question comes from Roland Pfänder from ODDO BHF.

First question would be on Eurex repo, your GC Pooling business volume-wise increased more by 50% in January, while the repo market declined by 30%. Could you maybe help me to square this? And what would be the outlook for the current year? Are there some tailwinds to be expected? Second question, what would be the incremental investment opportunities you might start looking into for the year '25 and which direction our business segments, you think it's the most likely focus of these incremental investments going forward?

Okay. I'll start with the Eurex repo business, and Stephan will take the second one. So Eurex repo business, obviously, you have seen a decline in 2024, and that's due to the Central Bank policy impacted. So in principle, and you ask me for, let's say, for the next 2 to 3 years, we expect to have continued growth on this level because the interest rate policy, at least in Europe will normalize going down in the direction of the 2%. We will see how fast it will finally happen.

And then there is also a need for that kind of repo business. So that's our basic assumption that we expect growth over the next 2 to 3 years.

With respect to your incremental investment question, let me just, first of all, and it links back to the earlier question we had, many of our businesses have in a really good scaling environment. Let me emphasize that. So it's this disconnect that we talked about before is an expression that in a number of growth areas, there is a much lower investment need. But nevertheless, if you look at our EX business, we have continued to invest there. So that outperformance that exceptional growth. I mean it comes with the onboarding of additional markets like we have added Ireland, like the business is now really focused very much on Japan. These global expansions are definitely in our high-growth businesses, come with investments, and we are happy to do those. We are very proud of those businesses.

The second big lag, which is our digitalization leadership. Also we will continue in partnership with Google and just as much with Microsoft Azure on the SimCorp side. but in particular, around the digital securities journey, we'll continue to invest. Our partners are investing alongside but those remain a priority. And I think important to us is that we are not only leading like we have been with numerous cases of the ECB test cases, but that we always move rapidly into fast implementation and live production. That's why D7 is one of the platforms we have invested. We continue to invest, but they, for example, are EUR 10 million, more than EUR 10 billion live volume in real production other than just conceptual work that we are doing. So those are the two areas, high-growth businesses and the digitization journey.

And the next question comes from Michael Werner from UBS.

And congrats on the results. Just had a quick question or two questions on the Security Services segment. We saw -- I think this is really one of the few business areas where we didn't see much in terms of operating leverage, ex treasury revenues were up 7%. EBITDA was, I think, flat year-on-year. So I was just wondering if there was anything specific there or when we can expect better operating leverage from this business?

And then second, we did see some weakness in the settlement revenues in this division for Q4. We saw volumes up high single digits quarter-on-quarter and yet revenues were down high single digits or mid- to high-single digits quarter-on-quarter. So I was just wondering if there's any one-offs in there.

Yes, Mike, thanks for the very detailed questions. So in both areas, it's basically driven by one-offs. So in the operating expenses, there are close to 10 million one-offs included. So if you would deduct that, then everything is right on track here. So our expectation is that the security service business is again growing with 7% and the costs will be closer in the 3%, what we have also on a group level. So that is our expectation, our commitment.

With regard to settlement, there were also some one-offs what we have included here. And there's also some product mix between international business and local business. So basically driven by one-offs. So in both areas, you asked that is not a sustainable development, it's one-off driven.

All right. This was the final question for today. Thank you very much for your participation, and we wish you a good day. Thank you.