Euronext Athens Holding S.A. (EXAE) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Good morning to those of you listening to us from the other side of the Atlantic. We would like to present the financial results of the group for the first quarter of 2025, which were published yesterday and are available on the IR section of our website and then take as usual any questions that you might have. I will first pass the floor to our CFO, Nick Koskoletos, for some comments, general comments before we present our financial performance in more detail. Nick?

Thank you, Stelios. Good afternoon, and good morning to all. Based on the market performance and our financial results in the first quarter of the year, 2025 is shaping up so far to be yet another strong year of financial results and strategic progress for our group. In the first quarter of 2025, what we've seen, we've seen the average daily traded value increasing by 28% to almost EUR 190 million. And that is compared to the EUR 148 million in the first quarter of 2024. This is the highest level of trading activity since 2009. March was particularly strong at EUR 260 million, but we see that the Q1 strength is holding both in April and in May that is almost over where average daily traded value is hovering around the EUR 180 million mark. The average market cap of the Athens Stock Exchange constituents is 18% higher compared to the first quarter of last year. That's at EUR 112 billion. Breaking that down, we see that obviously listed banks market cap particularly strong, increased by 39% to EUR 32 billion, while the market cap of the rest of the market increased by 11% to EUR 80 billion. The last day of the quarter, March 31, the capitalization of the market was at EUR 118 billion. It is worth noting that this is the highest market cap we've witnessed since before actually the great financial crisis. Overall, just much like value traded, the size of the market continues to expand, and obviously, this supports traded value, supported and further pushed by the continued increase in trading velocity. In the first quarter, we witnessed an over 35% improvement in trading velocity versus the previous 5-year period, marking the highest percentage change in the EU space. We are now fourth in the EU space, whereas -- in terms of velocity ranking, whereas a few years back, we were at the middle of the pack. Interest in our market is picking up [Audio Gap]. In 2025, we had [indiscernible] and another one so far in the [indiscernible]. The group showed a notable increase, and 68% of the revenue overall comes from transactional and market activity. Operating expenses are more muted at 6% growth compared to the previous year, with the main driver being the 8% increase in our personnel. Last but not least, I just wanted to make a point here of saying that we're focused on continuing to expand our operating margins, and this is indicative of the operating leverage embedded in our business model. We reported a 54% EBITDA margin in the first quarter of '25, which is almost 5 percentage points wider than last year. Let me stop here and give Stelios the floor to go through our performance in more detail and then take any questions you might have. Stelios?

Thank you, Nick. And so let's begin our financial performance, our overview in a little bit more detail. So the consolidated turnover of the group in the first quarter of 2025 was EUR 15.8 million compared to EUR 13.5 million in the first quarter of last year. That's up 17%. If we look at the lines, top line, revenue from trading represents 19% of total consolidated turnover in the first quarter of the year. It was up 26% to EUR 3 million compared to EUR 2.4 million last year. The revenue comparison is like-for-like since on January 1, 2024, a new pricing scheme went into effect in the cash market. As you might recall, we implemented -- we introduced trading bands, bundles with minimum guarantee charges, which members have to prepurchase each month. So the fee is -- and then the fee is further differentiated depending on the market phase and the higher the man selected, obviously, the lower the fee. Our effective fee in the first quarter of 2025 was 1.08 basis points compared to 1.02 basis points in the first quarter of last year and the 1.25 basis points flat rate in effect until December 31, 2023. Revenue from post-trading made up 49% of total turnover and amounted to EUR 7.7 million versus EUR 6 million in the first quarter of last year, up 29%, again, on the back of higher trading activity in the cash market. A note here on the derivatives market. As far as revenue from derivatives market is concerned, both trading and post trading, in the first quarter of this year, trading activity, measured by the average daily number of contracts increased by 12% to 48,000 compared to 43,000 in the first quarter of last year. Revenue from derivatives was down 3.2% with the average revenue per contract flat essentially at EUR 0.242 per contract compared to EUR 0.241 contract. Our fees for derivatives contracts depend on the type of investor, the product being traded and the prices of the underlying securities. And as a result, market volumes and our revenue do not always go hand in hand. Lastly, on derivatives, trading and post-trading revenue in the first quarter of 2025 was EUR 614,000 compared to EUR 634,000 last year, corresponding to 5.7% of total trading and post-trading revenue. Moving on to listing. That makes up -- that line makes up 10.5% of total turnover. And this line includes the quarterly subscription fees paid by listed companies, fees on rights issues, IPOs and other services to issuers. And that amounted to 1.66 million this year, up 1.5% compared to the first quarter of 2024. Revenue from data services makes up 7% of total turnover and includes the fees that we collect from data vendors for the provision of Athens exchange market data. Our fees depend essentially on the number of data terminals to which these data vendors disseminate our market data to win in the first quarter of this year, they were up by 7%. We continue to gradually increase our data fee prices, and this is reflected in our revenue. Revenue from IT, digital and other services make up 13%, makes up 13% of total turnover and includes revenue from digital services, infrastructure and technological solutions to the Energy Exchange group. It should be noted here that our consulting contract with Boursa Kuwait ended in -- at the end of last year, 2024. This category includes revenue from services such as EBB, Electronic book Building, AXIAline, AXIA e-Shareholders Meeting, colocation and some other services. Revenue from IT and digital services was down 8% to EUR 2 million compared to EUR 2.2 million last year. And finally, as far as the top line is concerned, revenue from ancillary services makes up 2.5% of total turnover. And in the first quarter of 2025, it was EUR 400,000, up 21%. Ancillary services include revenue from support services to the energy exchange, rents and some other. Moving on to the expense side. Total operating expenses increased by 6% in the first quarter of this year at EUR 7 million compared to EUR 6.6 million last year. If we break that down, we can see that personnel costs are up 8% in the first quarter of this year at EUR 4.3 million compared to EUR 4 million last year, while all other expenses were up 2.4% at EUR 2.6 million. And the key drivers there were third-party remuneration, which was down 11% due to reduced consultant fees, maintenance and IT support costs, which were down 50%, while on the other hand, we had taxes, which were up 20% and some utility expenses, which were up 13%, as you can guess, mainly on increasing electricity costs. Personnel, remuneration and expenses account for 62% of total operating expenses compared to 61% in the first quarter of last year. And group headcount at the end of March this year was 249 compared to 252 at the end of the first quarter of last year. Turning now to profitability. Our earnings before interest and taxes of the group increased by 32% to EUR 7.1 million compared to EUR 5.3 million in the first quarter of last year. And as a result, the net after-tax earnings of the group amounted to EUR 5.7 million, up 31.5% compared to the first quarter of 2024. Just very briefly touching on our margins. Nick already mentioned it, but all of our margins improved this quarter compared to last year. EBITDA margin up 4.8 percentage points, EBIT margin up 5.4 percentage points and our net profit margin is up 4.1 percentage points at 37.8%. And lastly, on the balance sheet, the cash and cash equivalents of the group on March 31, 2025, are EUR 77.4 million compared to EUR 68.6 million at the end of 2024. Finally, as a reminder, the proposed dividend for 2024, which will be brought to the Annual General Meeting on 12 June is EUR 0.29. And that dividend, that proposed dividend is 21% higher than last year's and is very much in line with our bottom line performance. Our proposed -- the proposed payout is 101% of 2024 earnings. And if approved by the AGM, the dividend will be paid to shareholders on June 30. And with this, this concludes our comments, and we would now like to open up this conference -- video conference to any questions that you might have. [Operator Instructions]

We seem to have one raised hand from Mr. Miguel Dias. Miguel, please ask your question.

Can you hear me?

Yes, Miguel.

Congratulations on the strong results. Just two from my side. First, it's regarding costs. It seems like there was some acceleration in personnel costs that imply a rather large annualized increase. Like why was that? Could you give us some color on the dynamics that played out in the first quarter? And where do you think that you will land at the end of the year in personnel expenses in particular and total costs in general? And the second one would be about MSCI, the country classification is coming up in June. So yes, I feel like I need to ask the habituary question. Like how do you feel about the odds of Greece being put on the watchlist? And yes, that will be all for me.

Okay. Miguel, thank you for the questions. I'm not sure I understood the first question in terms of the annualization that you mentioned for the personnel. But let me just give you a few numbers. And then if I haven't covered you, you can probably clarify. So part of our variable compensation is tied to operating performance. So the higher the operating EBIT for that matter, the higher that -- the stronger that particular line performs, that kind of drags personnel remuneration as well. But we do not expect overall OpEx to be in the double-digit area. If anything, we're talking about mid-single digit or a little bit higher than that, and maybe that gets pushed towards the double-digit area, but I do not believe that we will be hitting double-digit OpEx growth per se. That's with regards to OpEx. Now on the MSCI question, yes, we have that coming up in June. You know how the radars work. From our part, everything that we could do and is within our control with regards to market accessibility, all that, all those items have been tackled and streamlined, and that's something that MSCI test that was -- came out with their assessment last year saying that they just want to see how that plays out, but they do see all the improvements. So we're happy with that. Aside from that, it's just a matter of having the size at whatever cutoff date they deem appropriate. So there's nothing more we can say about that. It has to do only on compared to the components with regards to the market size. But it is a scenario given the fact that we have S&P, FTSE as of late stocks as well that has placed on their watchlist, I wouldn't say that we have improbable odds for us to be placed on the watchlist. However, again, it's something that is not in our control. So do you want to clarify the question on the annualization that you mentioned on the personnel because I'm afraid I didn't get that part.

Yes. Okay. So it's just that usually like the first quarter is a little bit more not so heavy on costs. So usually, you see a drop from fourth quarter to first quarter of subsequent year, right? And the bar for the first quarter -- or for the second quarter, actually, it's rather lower than for the first quarter. In the first quarter, you see like 8% increase in OpEx, right? So that was my question. If like in coming quarters, you would see the increase compounding even further because the base was lower on the second quarter of 2024. That was it, but I think you've...

Okay. But on a quarter-by-quarter basis, that might be it. Like in the second quarter of last year, there was like a reduced base. But I think as we're talking about last year, it came out to pretty much what we were talking about that higher single-digit figure, and I think it's pretty much what's going to be the case this year as well.

Okay. Okay. So we can take this increase as sort of like run rate for the whole year.

We have a -- Nick, we have a written question, so I will read it out. It's from [indiscernible]. And the question is, what fees would you expect from the bank's mergers in 2025? And how should we treat them in terms of revenue? So that is the question.

Okay. Well, yes, so we have these corporate -- effectively, these new IPOs of the bank companies that are subsidiaries of the holding companies from 3 banks. And this is something that the Board of Directors have decided. There's obviously Alpha, Eurobank and Piraeus for that matter. So these are IPOs, and these should be treated as such. We expect increased revenues from that activity if you just apply the fee schedule that we have for both the exchange and the CSD, I can give you a rough number, close to EUR 10 million, but that is very dependent on what the market capitalization of these banks will be at the time of these IPOs. And the appropriation of those -- that revenue because the IPOs will be over a 5-year period.

We don't seem to have any other questions. So I don't know if you have any final comments. Otherwise, we can wrap this up.

No.

All right. Then in that case, thank you all for participating at this call, and we'll be happy to speak with you in private if you have any questions later on. Thanks again, and you may all now disconnect.

Thank you all.