Q1 2024 TMX Group Limited Earnings Call
Good morning, ladies and gentlemen, and welcome to the <unk> Group Limited Q1, 2024 financial results Conference call. At this time all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.
Operator: Good morning, ladies and gentlemen, and welcome to the TMX Group Ltd Q1 2024 Financial Results Conference call. At this time, all lines are in a listen-only mode.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call was recorded on Friday, May 3rd, 2024. I would now like to turn the conference over to Mr. Amin Mousavian. Please go ahead.
If at any time during this call you require immediate assistance. Please press star zero for the operator.
This call is being recorded on Friday may three 2024, I would now like to turn the conference over to Mr. Amin with savvy Young. Please go ahead.
Amin: Thank you Joel and good morning, everyone. Thanks for joining us today to discuss the 2024 first quarter results for <unk> group.
Amin Mousavian: Thank you, Joel, and good morning, everyone. Thanks for joining us today to discuss the 2024 first quarter results for TMX. It is a beautiful day here in Toronto, and it looks like winter is finally deciding it's time to leave.
Amin: It is a beautiful day here in Toronto, and it looks like winters. Finally, deciding it's time to leave as you know we announced our results late yesterday and copies of our press release and MD&A are available on <unk> Dot com under Investor Relations.
Amin Mousavian: As you know, we announced our results late yesterday, and copies of our press release and MDNA are available on TMX.com under investor relations. This morning, we have with us John McKenzie, our Chief Executive Officer, and David Arnold, our Chief Financial Officer. Following the opening remarks, we'll have a question and answer session. But before we begin, let's discuss our forward-looking legal disclosure. Certain statements made during this call may relate to future events and expectations and constitute forward-looking information within the meaning of Canadian securities law. However, actual results may differ materially from these expectations, and additional information is contained in our press release and periodic reports that we have filed with the regulatory authorities. Now, I will turn the call over to John.
Speaker Change: This morning, we have with US John Mckenzie, our Chief Executive Officer, David Arnold, Our Chief Financial Officer.
Speaker Change: Following the opening remarks, we will have a question and answer session.
Speaker Change: Before we begin let's cover our forward looking legal disclosure certain statements made during this call may relate to future events and expectations and constitute forward looking information within the meaning of the Canadian Securities laws actual results may differ materially from these expectations and additional information is contained in our press release and periodic reports that we have filed with the Reg.
Speaker Change: Regulatory authorities now I will turn the call over to John.
John D. McKenzie: Well, thank you, Amin, and good morning, everyone. Thank you for joining us today to discuss TMX Group's financial results for the first quarter of 2024. And to everyone listening in, as Amin said earlier, thank you for joining us on such a beautiful spring Friday. Now today's actually a more formal Friday than usual for us in the Toronto office today because it's AGM day here at TMX, and we look forward to hosting our special annual general meeting this afternoon at 2pm and the rare occasion of doing it while the Maple Leafs are still in the playoffs, and I'm sure we all appreciate that.
John D. McKenzie: Well, thank you Amanda and good morning, everyone. Thank you for joining us today to discuss <unk> group's financial results for the first quarter of 2024.
John D. McKenzie: And to everyone listening in as it means that earlier, thank you for joining us on such a beautiful spring Friday.
John D. McKenzie: Now today is actually a more formal friday than usual for us in the Toronto office today, because its AGM day here at <unk> and we look forward to hosting our special annual General meeting. This afternoon at two P. M.
John D. McKenzie: And for the rare occasion, I'm doing it while the Maple Leafs are still in the playoffs and I'm sure. We all appreciate that.
John D. McKenzie: Now turning to the business at hand this morning.
John D. McKenzie: Now turning to the business at hand this morning, our first quarter results reflect solid performances from key components of our business, including areas of recent global expansion as we continue to build on our growing information business. Also reflected in TMX results is the fact that we are not immune to challenging market conditions. Macroeconomic factors continued to weigh heavily on important segments of our ecosystem during the first three months of this year, creating uncertainty and inhibiting growth.
John D. McKenzie: Our first quarter results reflect solid performances from key components of our business, including areas of recent global expansion as we continue to build on our growing information business also reflected in <unk> results is the fact that we are not immune to challenging market conditions matter.
John D. McKenzie: Macroeconomic factors continue to weigh heavily on important segments of our ecosystem. During the first three months of this year, creating uncertainty and inhibiting growth.
John D. McKenzie: And as a result, capital markets activity and some of our traditional key performance indicators are down year over year. Importantly, these environmental challenges are not exclusive to TMX. Many of our stakeholders are negatively impacted by sustained short-term uncertainty. And that is why now, and through all market turns, our focus is squarely on seeking out ways to create meaningful and lasting competitive advantages for our growing client base here and around the world.
John D. McKenzie: And as a result capital markets activity in some of our traditional key performance indicators are down year over year.
John D. McKenzie: Importantly, these environmental challenges are not exclusive to <unk>. Many of our stakeholders are negatively impacted by sustained short term uncertainty.
John D. McKenzie: And that is why now and through all turns of the market market. Our focus is squarely on seeking out ways to create meaningful and lasting competitive advantages for our growing client base here and around the world.
John D. McKenzie: Now while David will take you through the Q1 results in greater detail in a few minutes I'd like to focus my comments. This morning on outlining some key performance highlights during the quarter and update you on progress we have made in advancing some important strategic initiatives.
John D. McKenzie: Now, while David will take you through the Q1 results in greater detail in a few minutes, I'd like to focus my comments this morning on outlining some key performance highlights during the quarter and updating you on progress we have made in advancing some important strategic initiatives. So, first, I will discuss TMX's first quarter performance.
John D. McKenzie: So turning first to <unk> first quarter performance.
John D. McKenzie: Overall revenue increased 16% from Q1 of 2023, largely as a result of higher revenue from Global Solutions Insights and Analytics, which included $37.9 million from TMX Vetify, which was fully reflected in our results for the first time following the close of the acquisition on the first business day of the year. Q1 results also featured year-over-year growth from TMX Trayport, partially offset by lower revenue from capital formation, equity, and fixed income trading. Organic revenue, excluding the addition of TMX Vetify, increased 3% year-over-year. Diluted earnings per share was 38 cents on an adjusted basis for Q1, also a 3% increase from the first quarter of last year.
John D. McKenzie: And total operating expenses increased compared to Q1 2023, largely due to the inclusion of TMX Vetify. And David will take a little closer look at these Q1 expenses in his remarks to follow. Moving now to our business area, revenue from GSIA in Q1 was 48% higher than Q1 of 2023, or 11%, excluding TMX Zetify. TMX verifies that revenue was 33% higher in U.S. dollars compared to the same period last year prior to the acquisition.
John D. McKenzie: Overall revenue increased 16% from Q1 of 2023, largely as a result of higher revenue from global solutions insights and analytics, which included $37 9 million from <unk> identify fully reflected in our results for the first time following the close of the acquisition on the first business day of the year.
John D. McKenzie: Q1 results also featured year over year growth from Tms, Shreveport, and partially offset by lower revenue from capital formation equities and fixed income trading.
John D. McKenzie: Organic revenue, including the excluding the addition of <unk> identify increased 3% year over year diluted earnings per share was <unk> 38 cents on an adjusted basis for Q1 also a 3% increase from the first quarter of last year.
John D. McKenzie: And total operating expenses increased compared to Q1, 'twenty three largely due to the inclusion of Tms identify and David will take a little closer look at these Q1 expenses in his remarks to follow.
David Arnold: Moving now to our business areas.
David Arnold: Revenue from GSI, a in Q1 was 48% higher than Q1 of 2023 or 11% excluding <unk> identify.
David Arnold: <unk> revenue was 33% higher than U S dollar compared to the same period last year prior to the acquisition.
John D. McKenzie: And that year-over-year growth was primarily driven by higher indexing revenue and reflecting organic growth in assets under management and revenue also from the 2023 acquisitions of RoboGlobal and the EQM Indices, as well as higher revenues related to events. February Mark TMX Vedify's premier annual event, Exchange. Now this is a three-day conference built as an advisor-centric networking and educational experience.
David Arnold: And that year over year growth was primarily driven by higher indexing revenue and reflecting organic growth in assets under management and revenue also from the 2023 acquisitions of <unk> global and the EQM indices as well as higher revenues related to events.
David Arnold: February marked Tms verifies Premier annual event exchange now this was a three day conference build as an adviser centric networking and educational experience.
John D. McKenzie: This year's edition was a phenomenal success, with nearly 2,000 attendees from across the ETF and financial services industry, and the feedback our team received was overwhelmingly positive. It also served as a powerful networking opportunity for our various business development teams, including listings, trading, and TMX DataLink. Now, upon announcing the deal late last year, David and I talked about how the addition of Vetify, a U.S.-based indexing, digital distribution, analytics, and thought leadership company, would create value for our clients.
David Arnold: And this year's edition it was a phenomenal success with near 2000 attendees from across the ETF and financial services industry and the feedback our team received was overwhelmingly positive.
David Arnold: It also serve as a powerful networking opportunity for our various business development teams, including listings trading and Tms data links.
David Arnold: Now upon announcing the deal late last year, David and I talked about how the addition to verify a U S based indexing digital distribution and data analytics and thought leadership company would create value for our clients strengthening our ability to meet the needs of the indexing and ETF community here in Canada and around the world.
John D. McKenzie: Strengthening our ability to meet the needs of the indexing and ETF community here in Canada and around the world. And we were also clear on how the acquisition would accelerate TMX's strategic, financial, and transformational objectives, increasing the proportion of our revenue derived from recurring sources, adding to our fastest growing business area, and increasing our global footprint. And this remains a compelling story.
David Arnold: And we were also clear on how the acquisition would accelerate <unk> strategic financial and transformational objectives.
David Arnold: Increasing the proportion of our revenue derived from recurring sources, adding to our fastest growth business area and increasing our global footprint.
David Arnold: And this remains a compelling story.
David Arnold: Our experience working together from the time of <unk> initial investment in early 2023.
John D. McKenzie: Our experience working together from the time of TMX's initial investment in early 2023 gave a strong indication of the caliber of talent across the team and some of the opportunities in front of us. And to be candid, we set the bar pretty high for TMX Vetify. And while it's still early, they have exceeded our initial expectations in every way.
David Arnold: Dave a strong indication of the caliber of talent across the team and some of the opportunities in front of us and to be candid, we set the bar pretty high for Tms identify and while it's still early they have exceeded our initial expectations in every way.
David Arnold: GSI a sustained growth momentum in other areas as well it was another strong quarter for Tms Shreveport revenue grew 21% to Q1 of last year or 16% in pound Sterling driven by a 26% increase in trader subscribers annual price adjustments and the impact of a favorable FX.
John D. McKenzie: GSIA sustained growth momentum in other areas as well. It was another strong quarter for TMX Tradeport. Revenue grew 21% to Q1 of last year, or 16% in Pound Sterling, driven by a 26% increase in trader subscribers, annual price adjustments, and the impact of a favorable FX rate. TMX Trayport continues to benefit from an innovative and adaptive approach to serving world commodity markets. Big wins in the quarter included existing clients expanding their usage and including large European energy utilities and adding 11 new trading firms.
David Arnold: Right.
David Arnold: <unk> continues to benefit from an innovative and adaptive approach to serving world commodity markets Big wins in the quarter featured existing clients expanding their usage and.
David Arnold: And including large European energy utilities, and adding 11, new trading firms.
David Arnold: We are also seeing significant growth in Tms Shreveport, combined data driven trading offering featuring data analytics trade signal.
John D. McKenzie: We are also seeing significant growth in TMX Tradeport's combined data-driven trading offering featuring data analytics, trade signals, and Autotrader. Client subscriptions to this powerful combination of analytics, advanced technical charting, and algorithmic trading capabilities now account for nearly 11% of overall TMX Tradeport revenue. Focused on future growth, TMX Tradeport continues to seek out opportunities to move into new asset classes and geographies and to meet the rising demand for advanced trading tools, insights, and solutions. For example, we are seeing intriguing signs of growth in the Japanese power market, currently in a transitional period due to deregulation.
David Arnold: And auto trader client.
David Arnold: Client subscriptions to this powerful combination of analytics advanced technical charting and algorithmic trading capabilities now account for nearly 11% of overall <unk> revenue.
David Arnold: And focused on the future growth Tms Shreveport continues to seek out opportunities to move into new asset classes and geographies and to meet the rising demand for advanced trading tools insights and solutions.
David Arnold: For example, we are seeing intriguing signs of growth in the Japanese power markets currently in a transitional period due to deregulation and while this is still a nascent market that has been slow to develop we are encouraged by the more than 200% year over year growth in OTC cleared volumes and 180% increase inactive users.
John D. McKenzie: And while this is still a nascent market that has been slow to develop, we are encouraged by the more than 200% year-over-year growth in OTC cleared volumes and 180% increase in active users. And TMX Data Links revenue grew as well, growing 4% year-over-year due to higher revenue from benchmarks and indices driven by the new term CORA benchmark, as well as higher revenue from co-location, data feeds, and price adjustments in Q1 of 2024.
David Arnold: <unk> group revenue grew as well growing 4% year over year due to higher revenue from benchmark indices, driven by the new term core benchmark as well as higher revenue from co location data feeds and price adjustments in Q1 of 2024.
David Arnold: Now I'd like to turn my attention to derivatives.
John D. McKenzie: Now, I'd like to turn my attention to derivatives. Derivatives trading and clearing revenue, excluding box, decreased 3% year-over-year. The decrease included a 9% lower revenue from MX due to an unfavorable product mix and a 3% decrease in overall volumes traded.
David Arnold: Derivatives trading and clearing revenue, excluding box decreased 3% year over year.
David Arnold: The decrease included a 9% lower revenue from Amex due to an unfavorable product mix and a 3% decrease in overall volumes treated <unk>.
John D. McKenzie: Lower revenue from derivatives trading was partially offset by a 9% increase in revenue from CDCC due to the positive impact of the pricing changes which came into effect in January 2024 and higher repo volumes. And while sustained volatility across fixed income markets and monetary policy uncertainty continue to drive strong volume activity and liquidity in many of our key products, volumes traded in equity options were down 11% when compared to the first quarter of last year, which was a period of pronounced growth.
David Arnold: Lower revenue from derivatives trading was partially offset by a 9% increase in revenue from CDC due to the positive impact of the pricing changes, which came into effect in January 2024, and higher repo volumes.
David Arnold: And while sustained volatility across fixed income markets and monetary policy uncertainty continued to drive strong volume activity and liquidity in many of our key products volumes traded in equity options were down 11% when compared to the first quarter of last year, which was a period of pronounced growth.
John D. McKenzie: And we're encouraged, though, by the continued upward momentum in other areas. Some of the key MX KeyOne highlights included 11% higher volumes and shared futures. 6% higher volumes in interest rate products, including continued strength in our Bond Futures products; volumes in our two-year and five-year coverage of the Canada Bond Futures contracts grew by 66% and 25%, respectively, when compared to Q1 of 2023. And overall open interest on March 31st was 16% higher than at the same date last year.
David Arnold: And we're encouraged though by the continued upward momentum in other areas. Some of the key Amex Q1 highlights included 11% higher volumes and share futures.
David Arnold: 6% higher volumes and interest rate products <unk>.
David Arnold: Including continued strength in our bond futures products volumes in our two year and five year camera, Canada bond futures contracts grew by 66% and 25% respectively, when compared to Q1 of 2023.
David Arnold: And overall open interest at March 31 was 16% higher than at the same date last year.
David Arnold: IMAX is three months core futures contract or CRA has been a tremendous success trading growth has grown trading has grown substantially over the past year and set a new record in Q1 with more than 93000 contracts traded.
John D. McKenzie: AmEx's three-month Core Futures Contract, or CRA, has been a tremendous success. Trading has grown substantially over the past year and set a new record in Q1 with more than 93,000 contracts traded. The CRA is now established as the product of reference for short-term rate management as the industry prepares for the transition from CDOR to the Canadian Overnight Repo Average Rate, or CORA, planned for next month.
David Arnold: The CRA has now established as the product of reference for short term rate management as the industry prepares for the transition from SEDAR to the Canadian overnight repo average rate or Cora planned for next month.
David Arnold: Now in keeping with our corporate purpose <unk> client driven innovative mindset extends to our post trade business.
John D. McKenzie: Now, in keeping with our corporate purpose, TMX's client-driven, innovative mindset extends to our post-trade business. Earlier this week, in collaboration with Clearstream, we were pleased to announce the successful launch of the new Canadian Collateral Management Service, the first tri-party repo capability in the Canadian market. Developed over the past year by TMX and Clearstream, CCMS is designed to modernize Canada's funding market, automating the lifecycle of all secured funding transactions, starting off with repo, to enable participants to better mobilize, track, and optimize their collateral securely. And we are excited about it. Efficient markets are more liquid, they're more attractive, and they are more competitive.
David Arnold: Earlier this week in collaboration with Clearstream, we were pleased to announce the successful launch of the new Canadian collateral management service. The first Tri Party repo capability in the Canadian market.
John D. McKenzie: So CCMS is a game changer for Canada's money market, accelerating the evolution of a well-functioning modernized market, supporting the expansion of tri-party repos for the first time in Canada, and as a viable investment option for buy- and sell-side participants. It's providing an important optimized financing solution as bankers' acceptance comes to an end with the cessation of CDOR at the end of next month, and providing a platform for participants to manage collateral in support of the critical transition to T plus one settlement, the reduction of the standard settlement date from two days to one day later this month.
David Arnold: Developed over the past year by <unk> clear stream Ccs is designed to modernize Canada's funding market automating the lifecycle of all secured funding transactions starting off with repo to enable participants to better mobilize track and optimize their collateral securely.
John D. McKenzie: And while this is still very early, we're seeing strong industry demand. Five major Canadian banks were among the first to participate in live transactions this week, and we will be onboarding new clients over the coming months. And then looking a little further down the road, we are planning to expand this new service beyond repos into additional collateral exposure. Now, as you may recall, last year, Canadian regulators, in conjunction with the SEC, announced the timeline for T plus one. We made the decision at that time to defer delivery of our post-trade modernization program to ensure industry participants seamlessly transitioned to one-day settlement aligned with regulatory requirements.
David Arnold: And we are excited about it efficient markets are more liquid they are more attractive and they are more competitive.
David Arnold: So Ccs is a game changer for Kansas money markets accelerating.
David Arnold: The evolution of a well functioning modernize market supporting the expansion of Tri Party repos for the first time in Canada, and as a viable investment value for buy and sell side participants.
David Arnold: <unk> is providing an important optimized financing solution as bankers acceptance come to an end with the cessation of SEDAR at the end of next month.
David Arnold: And providing a platform for participants to manage collateral and supported the critical transition to T. Plus one settlement the reduction of the standard settlement date from two days to one day later this month.
David Arnold: And while this is still very early we're seeing strong industry demand.
Five major Canadian banks were among the first to participate in live transactions. This week, and we will be onboarding, new clients over the coming months.
David Arnold: And then looking a little further down the road. We are looking to plant. We are planning to expand this new service beyond repos into additional collateral exposures.
David Arnold: Now as you may recall last year Canadian regulators in conjunction with the SEC announced the timeline for T plus one we.
David Arnold: We made the decision at that time to defer delivery of our post trade modernization program to ensure the industry participants seamlessly transitioned to one day settlement aligned with the regulatory requirements.
David Arnold: But we expect our PGM program to be ready for implementation as planned by the end of this year.
John D. McKenzie: But we expect our PTM program to be ready for implementation as planned by the end of this year. Our team is working closely with our participants and stakeholders on re-engagement activities, as this is a collaborative exercise. And thus, that timing may change if there is any significant delay in the T-plus-one go-live date, which is currently May 27th, or gaps in terms of participant readiness.
David Arnold: Our team is working closely with our participants and stakeholders on Reengagement activities. As this is a collaborative exercise and thus that timing may change. If there is any significant delay in the T. Plus one go live date, which is currently made 27th or gaps in terms of participant readiness.
But quickly I actually would like to take this moment to thank our industry stakeholders for working closely together with us on these transformative initiatives and for their ongoing partnership and making our markets better.
John D. McKenzie: But quickly, I'd actually like to take a moment to thank our industry stakeholders for working closely together with us on these transformative initiatives and for their ongoing partnership in making our markets better. Now, moving on to capital formation. Revenue was $60.6 million, a 5% decrease from Q1 of 2023, reflecting lower revenue from additional listing fees due to a decrease in the number of financing transactions, despite an increase in total dollars raised on the Toronto Stock Exchange and a decrease in the financing transaction dollars raised on the TSX Venture Exchange.
David Arnold: Now moving on to capital formation.
David Arnold: Revenue was $60 6, million% to 5% decrease from Q1 of 2023, reflecting lower revenue from additional listing fees due to a decrease in the number of financing transactions. Despite an increase in total dollars raised on the Toronto stock exchange and a decrease in the financing transaction on dollars raised on the <unk> venture exchange.
And while difficult conditions have impacted capital markets activity not just here in Canada, but across world markets. We are seeing important wins in our ecosystem and compelling evidence that the spirit of entrepreneurship endures.
John D. McKenzie: And while difficult conditions have impacted capital markets activity, not just here in Canada but across world markets, we are seeing important wins in our ecosystem and compelling evidence that the spirit of entrepreneurship endures. And we are confident that as confidence returns to Canadian markets, activity is due to pick up. It is not a question of will it; it's a question of when it will.
Speaker Change: And we are confident that as confidence returns to Canada markets activity is due to pick up it is not a question of will it. It's a question of when it.
Speaker Change: Among our 55, new listings in the quarter, which included 31, new listings on the <unk> venture exchange, where for companies who uplifted. Our graduated from other domestic markets to our ecosystem during the quarter, including Hypercharge networks and electric vehicle supply equipment company breaking into the rapidly growing EV charging market.
John D. McKenzie: Among our 55 new listings in the quarter, which included 31 new listings on the TSX Venture Exchange, were four companies who uplisted or graduated from other domestic markets to our ecosystem during the quarter, including Hypercharged Networks, an electric vehicle supply equipment company breaking into the rapidly growing EV charging market with a simple and efficient charging solution, and ATHA Energy, a Canadian mineral company engaged in the acquisition, exploration, and development of uranium assets in the Together, TSX and TSX-V are proven means to access a broad range of global investors and a viable pathway to sustainable long-term growth.
Speaker Change: With a simple and efficient charging solution and.
Speaker Change: And a T H E <unk> energy a Canadian mineral company engaged in the acquisition exploration and development of uranium assets and the pursuit of a clean energy future.
Speaker Change: Together <unk> and <unk> are proven means to access a broad range of global investors and a viable pathway to sustainable long term growth.
John D. McKenzie: Vital Hub is another great example of the power of our two-tiered ecosystem. The company went public on the TSX Venture Exchange in 2016 through a qualifying transaction via our signature capital pool company program, and then graduated to the Toronto Stock Exchange in 2021. Vital Hub has sustained growth over the last five years and closed a $40 million financing last month.
Speaker Change: Litle hub is another great example of the power of our two tiered ecosystem the.
Speaker Change: The company went public on T. S X venture exchange in 2016 through of qualifying transaction via our signature capital Pool Company program and then graduated to the Toronto stock exchange in 2021.
Speaker Change: Vital hub has sustained growth over the last five years and closed a $40 million financing last month.
John D. McKenzie: And as always, our teams are closely connected to the listed issuers and prospect communities, and we're working to bring the next great companies to the market. And we continue to work with ETF providers to support the ongoing strong growth of that industry as well. 14 new ETFs from 11 different providers listed on TSX in the first quarter, representing a dynamic range of investments, including thematics and factors, as well as commodities and income-oriented ETFs.
Speaker Change: And as always our teams are closely connected to the listed issuers and prospect communities and we're working to bring next great. The next great companies to the market.
Speaker Change: Yes.
Speaker Change: And as we continue to work with ETF providers to support the ongoing strong growth of that industry as well.
Speaker Change: 14, new Etfs from 11 different providers listed on T. S X in the first quarter, representing a dynamic range of investments, including thematic and factors as well as commodities and income oriented Etfs.
And overall <unk> business model has continued to prove resilient.
John D. McKenzie: The overall TMX business model has continued to prove resilience, and this is largely a reflection of the intrinsic and enduring strength of Canadian markets. Our markets more than measure up to markets around the world, but measuring up is a continuous pursuit.
Speaker Change: And this is largely a reflection of the intrinsic and enduring strength of Canadian markets.
Speaker Change: Our markets more than measure up to markets around the world.
Speaker Change: But measuring up as a continuous pursuit.
John D. McKenzie: And in any competition, we strongly believe that winning is a worthy ambition. Canada has what it takes to be an economic powerhouse: rich natural resources, a highly educated workforce, and a healthy spirit of innovation, investment, and entrepreneurship.
Speaker Change: And in any competition, we strongly believe that winning is a worthy ambition.
Speaker Change: Canada has what it takes to be an economic powerhouse rich natural resources are highly educated workforce and a healthy spirit of innovation investments and entrepreneurship.
John D. McKenzie: And we need to continue to create the conditions for sustained success. TMX is a vocal and engaged advocate at all levels of government in this country for measures to unlock the flow of capital and create the environment that investors look for, regulatory certainty, and clear, globally competitive incentives for entrepreneurs, workers, and investors to share in the success of Canadian companies. And while we have seen some signs of progress and evidence that our voice is being heard, we have a good deal of work ahead of us, specifically to help policymakers better understand the scope of the impact of their decisions on crucial components of our ecosystem.
Speaker Change: And we need to continue to create the conditions for sustained success.
Speaker Change: <unk> is a vocal engage advocate at all levels of government in this country for measures to unlock the flow of capital and create the environment that investors look for regulatory certainty.
Speaker Change: And clear globally competitive incentives for entrepreneurs workers and investors to share in the success of Canadian companies.
Speaker Change: And while we have seen some signs of progress and evidence that our voices being heard we have a good deal of work ahead of us specifically to help policymakers better understand the scope of the impact of their decisions, which have on crucial components of our ecosystem.
Speaker Change: And the recent federal budget announcement, the government indicated that they will explore the expansion of Canada's signature R&D support program to include public companies.
John D. McKenzie: In the recent federal budget announcement, the government indicated that it will explore the expansion of Canada's signature R&D support program to include public companies. This is a welcome and encouraging development on a key recommendation we have been pursuing for a number of years. And it is an important step forward. However, at the same time, we share the concerns of many across Canada's business and investment community about the unintended consequences of the announced increase in the capital gains tax inclusion rate.
Speaker Change: This is a welcome and encouraging development on a key recommendation we are pursuing for a number of years.
Speaker Change: And it is important step forward. However at the same time, we share the concerns of many across Canada's business and investment community.
About the unintended consequences from the announced increase in the capital gains tax inclusion rate.
John D. McKenzie: This increase will add another disincentive to investing in Canada at a time when we need to be focused on attracting talent, capital, and competing for global investment flows. We need to collectively find new ways to incent risk-taking, measures which could include an expansion of the provenly effective mechanism flow-through-share program, as we have suggested, rather than imposing stricter limits on rewards.
Speaker Change: This increase will add another disincentive to invest it in Canada at a time, where we need to be focused on attracting talent capital and competing for global investment flows.
Speaker Change: We need to collectively find new ways to incent risk taking.
Speaker Change: Measures, which could include an expansion of the proven Lee effective mechanism flow through share program as we have suggested rather than imposing stricter limits on rewards.
John D. McKenzie: So our ask is simple, for governments to take a pause, to engage directly with representatives from the industry most effective and most affected, and to gain a better understanding of the impact of what is essentially a 33% tax increase on investing activity, and then work with us all towards viable alternatives and mitigation. Now, in closing today, I want to re-emphasize TMX's pledge to serve stakeholders across our marketplace, around the world, with excellence and integrity.
Speaker Change: So our ask a simple for governments to take a pause to engage directly with representatives from the industry. Most effective most affected and to gain a better understanding of the impact of what is essentially a 33% tax increase on investing activity.
And then work with us all towards viable alternatives and mitigates.
Speaker Change: Now in closing today, I want to reemphasize cms's pledge to serve stakeholders across our marketplace around the world with excellence and integrity are people are clear eyed and United in our commitment to the enduring success of our capital market's ecosystems and <unk> pursuit of Tms as long term strategic financial and.
John D. McKenzie: Our people are clear-eyed and united in our commitment to the enduring success of our capital markets ecosystems and in pursuit of TMX's long-term strategic financial and transformational objectives. With that, I will pass the call over to David. Thank you.
Speaker Change: Transformational objectives with that let me pass the call over to David Thank you.
David Arnold: Thank you, John, and good morning, everyone. As John mentioned, macroeconomic factors continue to weigh heavily on important segments of our ecosystem during the first three months of the year, creating uncertainty and inhibiting growth. As a result, capital markets activity and some of our traditional key performance indicators are down year over year. But despite this, we continue to benefit from our deep and diverse business model in the first quarter of 2024. We reported record revenue, both including and excluding Vedify, which joined the TMX family at the beginning of this quarter.
David Arnold: Thank you John and good morning, everyone.
David Arnold: As John mentioned macroeconomic factors continue to weigh heavily on important segments of our ecosystem. During the first three months of the year, creating uncertainty and inhibiting growth.
David Arnold: As a result capital markets activity and some of our traditional key performance indicators are down year over year.
David Arnold: But despite this we continue to benefit from our deep and diverse business model in the first quarter of 2024.
David Arnold: We reported record revenue, both including and excluding verify which joined the <unk> family at the beginning of this quarter.
David Arnold: Our revenue increased 16% compared with Q1 last year, and organic revenue grew 3% over the same period. Our diluted earnings per share was $0.50, representing an increase of 56% compared with $0.32 in Q1 of last year.
David Arnold: Our revenue increased 16% compared with Q1 last year and organic revenue grew 3% over the same period.
David Arnold: Our diluted earnings per share was <unk> 50 reps.
David Arnold: Representing an increase of 56% compared with 32 cents in Q1 of last year.
David Arnold: This increase included a gain of $0.21 per share related to the revaluation of our previously held minority interest in Vetify, which was fully acquired on January 2nd of this year and is now being referred to as TMX Vetify. Our adjusted diluted earnings per share increased by 3%, reflecting lower income tax expense of $5.4 million and higher income from operations of $2 million, primarily driven by growth in our businesses with a higher percentage of recurring revenue.
David Arnold: This increase included a gain of 21 cents per share related to the revaluation of our previously held minority interest and verify which was fully acquired on January 2nd of this year and is now being referred to as <unk> verify.
David Arnold: Our adjusted diluted earnings per share increased by 3%, reflecting lower income tax expense of $5 $4 million and higher income from operations of $2 million, primarily driven by growth in our businesses with a higher percentage of recurring revenue.
David Arnold: This was partially offset by higher net finance costs related to the acquisition of TMX Verify. Since John has already covered our revenue relative to Q1 of last year, I will pick up where he left off by taking a closer look at our expenses on a year-over-year basis. Operating costs in the first quarter increased by 28% compared to Q1 of last year on a reported basis, driven by the following items.
David Arnold: This was partially offset by higher net finance costs related to the acquisition of <unk>.
David Arnold: Since John has already covered our revenue relative to Q1 of last year I will pick up where he left off by taking a closer look at our expenses on a year over year basis.
David Arnold: Operating costs in the first quarter increased by 28% compared to Q1 of last year on a reported basis driven by the following items first.
David Arnold: First, Q1 of this year includes $20 million of operating expenses related to TMX Verify. Now, it's worth noting that Q1 expenses for TMX Verify would typically be higher than the rest of the year as they include costs related to the annual exchange conference held in Miami in early February. As such, going forward, on all things being equal, we will see higher expenses in Q1 for TMX Verify. And, all things being equal, higher revenue as well in Q1, as the revenue earned from the exchange conference would also be accounted for in Q1 of each year.
David Arnold: First Q1 of this year includes $20 million of operating expenses related to <unk>.
David Arnold: Now it's worth noting that Q1 expenses for <unk> would typically be higher than the rest of the year as they include costs related to the annual exchange conference held in Miami in early February.
David Arnold: As such going forward and all things being equal we will see higher expenses in Q1 for Tms verify and all things being equal higher revenue as well in Q1 is the revenue earned from the exchange Conference will also be accounted for in Q1 of each year.
David Arnold: I say all things being equal because, depending on business growth in other business lines in TMX Verify, results could differ. For example, revenue linked to assets under management for indices and benchmarks, digital distribution activity, and so forth.
David Arnold: I'd say, all things being equal because depending on business growth in other business lines and TNX verify results could differ for example revenue linked to assets under management for indices and benchmarks digital distribution activity and so forth. We continue to point you to our December disclosures, when we announced the transaction, which focus on the full year.
David Arnold: We continue to point you to our December disclosures when we announce the transaction, which focus on the full-year outlook for TMX Verify. Second, an additional $18.7 million relating to TMX Verify now being part of the group results, namely $11.8 million relating to the amortization of acquired TMX Verify intangibles, $5.4 million increase in acquisition and related expenses, and finally $1.5 million in higher integration costs. Third, we incurred $1.3 million of expenses in the first quarter related to our U.S. expansion initiative. And lastly, there was a $1.6 million increase in box markets' regulatory-related expenses.
David Arnold: Your outlook for <unk>.
David Arnold: Second an additional $18 7 million relating to <unk> identify now being part of the group results, namely <unk>.
David Arnold: $11 8 million relating to the amortization of acquired <unk> verify intangibles $5 4 million increase in acquisition and related expenses, and finally, $1 5 million in higher integration costs.
David Arnold: Third we incurred $1 3 million of expenses in the first quarter related to our U S expansion initiatives and lastly, there was a $1 6 million increase in box markets regulatory related expenses.
David Arnold: Somewhat offsetting the increases Q1 of last year included a $2 2 million one time write off of receivables and 0.6 million related to Sigma logic.
David Arnold: Somewhat offsetting the increases, Q1 of last year included a $2.2 million one-time write-off of receivables and $0.6 million related to SigmaLogic. Excluding these items, our operating expenses increased by approximately 4%, or 3.8% to be exact, on a comparable basis, reflecting higher headcount as we continue to invest in growth and increased employee performance incentive plan costs relative to Q1 of last year. Now, turning to a comparison of our results on a sequential basis.
David Arnold: Now excluding these items, our operating expenses increased by approximately 4% or three 8% to be exact on a comp on a comparable basis, reflecting higher head count as we continue to invest in growth and increased employee performance incentive plan costs relative to Q1 of last year.
David Arnold: Now turning to a comparison of our results on a sequential basis.
David Arnold: Revenue in Q1 is up $44.4 million versus Q4, mostly driven by the inclusion of TMX Verify. In addition, there were also sequential revenue increases from the rest of our Global Solutions Insights and Analytics segment, namely TMX Trayport and TMX DataLinks, as well as our Derivatives Trading and Clearing and Equities and Fixed Income trading segments. This was somewhat offset by lower revenue in capital formation.
David Arnold: Revenue in Q1 is up $44 4 million versus Q4, mostly driven by the inclusion of Tms verify.
David Arnold: In addition, they will also sequential revenue increases from the rest of our global solutions insights and analytics segment, namely <unk> <unk> and <unk> ex data links as well as our derivatives trading and clearing and equities and fixed income trading segments.
David Arnold: This was somewhat offset by lower revenue and capital formation.
David Arnold: The inclusion of <unk> verify increased revenue by $37 9 million in the first quarter, excluding <unk> <unk> revenue was up $6 5 million or 2% compared with Q4.
David Arnold: The inclusion of TMXVetify increased revenue by $37.9 million in the first quarter. Excluding TMXVetify, revenue was up $6.5 million, or 2% compared with Q4. Now, as I mentioned earlier, all else being equal, Q1's revenue for TMX Verify would typically be higher due to the inclusion of the annual exchange conference revenue. So going forward, all else being equal, it is reasonable to expect some seasonality in TMX Verify revenue. Operating expenses this quarter were up $30.9 million, or 18% from Q4 of 2023, including $20 million of operating expenses relating to TMX Verify, $11.8 million relating to the amortization of acquired Verify Intangibles, $1.2 million in integration costs, and $1 million in acquisition and related expenses.
David Arnold: Now as I mentioned earlier, all else being equal Q1s revenue for <unk> identify would typically be higher due to the inclusion of the annual exchange conference revenue, so going forward all else being equal it is reasonable to expect some seasonality in the Tms verify revenue.
David Arnold: Operating expenses this quarter were up $30 9 million or 18% from Q4 of 2023, including $20 million of operating expenses relating to <unk> $11 8 million relating to the amortization of acquired verify intangibles $1 2 million in integration costs and $1 million in.
David Arnold: <unk> and related expenses.
David Arnold: These increases were partially offset by a $5.7 million decrease related to strategic realignment costs incurred in the fourth quarter to create capacity for further investments in growth, $1.8 million lower expenses related to BOXX's regulatory-related expenses, and savings resulting from the strategic realignment beginning in Q1 of this year. Accounting for these items, a comparable operating expense increased 3% sequentially, mainly reflecting higher payroll and IT costs.
David Arnold: These increases were partially offset by a $5 7 million decrease related to strategic realignment costs incurred in the fourth quarter to create capacity for further investments in growth $1 8 million lower expenses related to boxes regulatory related expenses and savings, resulting from the strategic realignment beginning in Q1.
This year.
David Arnold: Accounting for these items, our comparable operating expense increased 3% sequentially, mainly reflecting higher payroll and it costs.
David Arnold: Now, as you will recall, in Q4 of 2022, we disclosed our three key transformational measures. Now, while these are long-term objectives, we have made meaningful progress over the last five quarters. And this quarter, we have reached a milestone on one of the three. Our revenue outside of Canada was 50% in the first quarter, a 9% increase from 2023, 6% of which is from the inclusion of TMX Verify, and 3% from organic growth. We have for the first time met the low end of our transformational objective for this measure.
As you will recall in Q4 of 2022, we disclosed our three key transformational measures now while these are long term objectives, and we have made meaningful progress over the last five quarters.
David Arnold: And this quarter, we have reached a milestone on one of these one of the three.
David Arnold: Our revenue outside of Canada was 50% in the first quarter, a 9% increase from 2023, 6% of which is from the inclusion of <unk> and 3% from organic growth. We have for the first time met the low end of our transformational objectives for this measure.
Global solutions insights and analytics revenue as a percentage of total revenue was also up 9% from 2023% to 44% of which 7% is from the inclusion of <unk> and 2% from organic growth and last but certainly not least recurring revenue as a percentage of total <unk>.
David Arnold: Revenue increased by 2% to break through the 55% Mark this quarter, primarily driven by the addition of <unk> identify.
David Arnold: Now turning to our balance sheet you may recall from my Q4 remarks, the verify my Q4 remarks of Edify transaction, which closed on January 2nd. This year was financed to term credit facilities totaling 963 million U S dollars divided into three tranches.
David Arnold: Global Solutions, Insights, and Analytics revenue as a percentage of total revenue was also up 9% from 2023 to 44%, of which 7% is from the inclusion of TMX Verify and 2% from organic growth. And last but certainly not least, recurring revenue as a percentage of total revenue increased by 2% to break through the 55% mark this quarter, primarily driven by the addition of TMX Verify. Now turning to our balance sheet, you may recall from my Q4 remarks... In my Q4 remarks, the VETIFY transaction, which closed on January 2nd this year, was financed through term credit facilities totaling US$963 million divided into three tranches.
David Arnold: Term A facility of 600 million U.S. dollars, maturing 12 months from closing; and Term B facility of 163 million U.S. dollars, maturing 18 months from closing. And finally, a Term C facility of 200 million U.S. dollars, maturing 24 months from closing. The weighted average yield of the term credit facilities was SOFR plus 120.5 basis points. Now, on February 16th, in this quarter, we completed a Canadian private placement offering totaling $1.1 billion across our Series G, Series H, and Series I debentures.
David Arnold: Term a facility of $600 million maturing 12 months from closing term b facility of $163 million maturing 18 months from closing and finally term C facility of $200 million maturing 24 months from closing the weighted average yield of the term credit facilities.
David Arnold: With Sofer, plus 125 basis points.
David Arnold: Now on February 16th in this quarter, we completed a Canadian private placement offering totaling $1 1 billion across our series G series H N series I debentures. These proceeds from the debentures were mainly used for the full repayment of the term a facility in outstanding commercial paper.
David Arnold: These proceeds from the debentures were mainly used for the full repayment of the Term A facility and our outstanding commercial paper. Since we termed out the Term A credit facility at a lower rate, all things being equal, the net financing costs in the first quarter can be considered a high watermark. The weighted average interest rate for our total outstanding debt of approximately $2.3 billion was lower by over 55 basis points as of March 31st compared to January 3rd.
David Arnold: Since we termed out the term a credit facility at a lower rate all things being equal the net financing costs in the first quarter can be considered a high watermark.
David Arnold: The weighted average interest rate for our total outstanding debt of approximately $2 $3 billion was lower by over 55 basis points as of March 31, compared to January 3rd.
On March 31, 2020 for a debt to adjusted EBITDA ratio was three six times. We also held close to $468 million in cash and marketable securities, which was $293 million in excess of $175 million, we target to retain for regulatory and related purposes.
David Arnold: On March 31st, 2024, our debt-to-adjusted EBITDA ratio was 3.6 times. We also held close to $468 million in cash and marketable securities, which was $293 million in excess of $175 million we target to retain for regulatory and related purposes. Net of excess cash, our leverage ratio was 3.2 times, and we remain confident in our deleveraging plan and ability to return to our target range of 1.5 to 2.5 times within two years.
David Arnold: Now net of excess cash our leverage ratio was three two times and we remain confident in our deleveraging plan and ability to return to our target range of one five to two five times within two years.
David Arnold: In March 2020 for a normal course issuer bid program expired and we elected not to renew the program at this time as we focus our efforts on executing our deleveraging plan.
David Arnold: In March 2024, our normal course issuer bid program expired, and we elected not to renew the program at this time as we focus our efforts on executing our deleveraging plan. Last night, our board approved a 6% increase to our quarterly dividend to $0.19 per common share, payable on May 31st to Shelders of Record as of May 17th. This increase is a reflection of our confidence in the ability to generate cash while continuing to make progress on our deleveraging plan.
David Arnold: Last night, our board approved a 6% increase to our quarterly dividend to <unk> 19 per common share payable on may 31 to shareholders of record as of May 17. This increase is a reflection of our confidence in the ability to generate cash while continuing to make progress on our deleveraging plan with this increase.
David Arnold: With this increase, we will have paid out 50% of our adjusted earnings per share for Q1, which remains at the top end of our target payout range of 40-50%. So that concludes my formal remarks, and I'd like to turn the call back to Amin for our Q&A period.
David Arnold: We will have paid out 50% of our adjusted earnings per share for Q1, which remains at the top end of our target payout range of 40% to 50%.
Speaker Change: So that concludes my formal remarks, and I'd like to turn the call back to our mean for a Q&A period.
Speaker Change: Thanks, David Joe would you. Please outline the process for the question and answer session.
Amin Mousavian: Thanks David. Joel, would you please outline the process for the question and answer session?
David Arnold: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone you will hear three Tom pump acknowledging your request and your questions will be pulled in the order. They are received should you wish JD com from the polling process. Please press star followed by the two if you are using a speaker phone.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be answered in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please for your first question. The first question comes from Ben Budish with Barclays. Your line is now open.
David Arnold: Please lift the handset before pressing any keys one moment. Please for your first question.
David Arnold: Your first question comes from Ben <unk> with Barclays. Your line is now.
Benjamin Elliot Budish: Hi, good morning, and thanks for taking the question. Maybe starting with Vetify, can you give a little bit more color?
Ben: Good morning, and thanks for taking the question.
Ben: Maybe starting with verify can you give a little bit more color you talked about the seasonality of Q1, but perhaps we would if things kind of go right. Maybe we wouldn't wouldn't see it as much can you talk a little bit about what the typical seasonality looks like.
David Arnold: You know, you talked about the seasonality of Q1, but perhaps we would, you know, if things kind of went right, maybe we wouldn't see it as much. Can you talk a little bit about what the typical seasonality looks like and, you know, what is the sort of typical Q1 versus the rest of the year? And then I'm wondering if there's any other stats you can kind of share, even into April, like the sort of index-linked AUM, how is that sort of trending throughout the year?
Ben: Awesome.
Ben: What is the sort of typical Q1 versus like the rest of the year.
Ben: And then I'm wondering if there's any other stats you can kind of share even into April like the sort of index linked.
Ben: And how is that sort of trending throughout the year I think we have a general sense of how much of the revenues that contributes but anything else that can kind of help us think about our models at least for Q2, and then the seasonality a bit.
David Arnold: I think we have a general sense of how much of the revenues that contributes, but anything else that can kind of, you know, help us think about our models, at least for Q2 and then the seasonality bit.
Speaker Change: Yes, happy to and good morning so.
David Arnold: Yeah, happy to, and good morning. So thanks for the question, because I think that's a really important one for us to unpack for everyone. The seasonality piece really is limited to Q1. So the majority of Vetify's business is subscription-based, and it's growing over time, and so as we continue to build it as one of our high-growth businesses over the long term, you will see long-term quarterly growth. Now the difference with Q1 is really about the conference that I mentioned in my remarks as well, the exchange conference which took place in Miami in February.
Speaker Change: So thanks for the question because that's a really important one for us to unpack for everyone.
Speaker Change: The seasonality piece really is limited to Q1.
Speaker Change: So the majority of Edifies businesses subscription base, it's growing over time and so as we continue to build it as one of our high growth businesses over the long term you will see long term quarterly growth now the difference in Q1 is really about the conference that I mentioned in my remarks, as well the exchange conference, which took place in Miami in February.
Speaker Change: To give you a bit of perspective, approximately 6 million U S. <unk> revenue that comes from from managing that conference on behalf of the industry and while it is a contributor.
David Arnold: To give you a bit of perspective, approximately US$6 million in revenue comes from managing that conference on behalf of the industry. And while it is a contributor to EBITDA, it's not a material contributor. So the margins in the quarter are also not reflective of what the long-term margins are.
Speaker Change: To EBIT dive, it's not a material contributor so at the the margins in the quarter are also not reflective of what the long term margins are and so that gives you kind of the context, both on the revenue and the expense side and so if you. If you think about that and adjust for it and then use the appropriate growth throughout the quarters as we build the business quarter by quarter.
David Arnold: And so that gives you kind of context both on the revenue and the expense side. And so if you think about that and adjust for it, and then use the appropriate growth throughout the quarters, as we build the business quarter by quarter, it gives you a good indication of how the business is growing. And that's why we also provided kind of that context of how Q1 compared to Q1 of Vetify a year ago before we bought it, and you saw that double-digit organic growth in the quarter as well. So unpacking those pieces.
Speaker Change: <unk>. It gives you a good indication of how the business is growing and that's why we also provided kind of the context of how Q1 compared to Q1 of verified a year ago before we bought it and you saw that double digit organic growth in the quarter as well. So unpacking those pieces now in terms of the the AUM that is the right piece to look at it we're going to guide you.
David Arnold: Now, in terms of the AUM, that is the right piece to look at. We're going to guide you to the Vetify website for that. I don't have that on hand for me right now, but that is the best indicator. Now it's not going to be uniform across the products because some products have different pricing built into them, but it will give you guidance in terms of the overall assets under management that are linked to Vetify indices. And we'll see about how we bring more of that into our disclosures in the future.
Speaker Change: The verify website for that I don't have that on hand for me right now, but that is the best indicator.
Speaker Change: Now, it's not going to be uniform across the products because some products have different pricing built into it but it will give you the guidance in terms of the overall assets under management that are linked to verify indices and we will see about how we bring more of that into our disclosure in the future.
Speaker Change: Great very helpful.
John D. McKenzie: Great, very helpful. Maybe just one more on Vetify. I mean, it's been a couple of months now since we last spoke. I think you've owned the assets since the beginning of the year. Any more updates in terms of what TMX can do to sort of accelerate the growth of this business? Are there sort of learnings from Trayport that you can kind of apply here, or does the strategy look a little bit different?
Speaker Change: Maybe just one more on verify I mean, it's been a couple of more months now since we last spoke I think you've owned the asset since the beginning of the year any more updates in terms of what.
Speaker Change: What <unk> can do to sort of accelerate the growth of this business are there sort of learnings from trade port.
Speaker Change: That you can kind of apply here or is the strategy look a little bit different.
John D. McKenzie: Well, can I say yes and yes? There are certainly learnings from our trade port experience, and we are applying them both in terms of how we manage the business, how we integrate the business, and how we create scale with the different teams. But one of the pieces that I think is unique about this one is the ability to work between TMX Zetify and other parts of our TMX ecosystem to create joint product opportunities for our clients.
What can I say, yes, and yes.
There are certainly learnings from from our <unk> experience and we are applying a it both in terms of how we manage the business how we integrate the business how we create scale with the different teams, but one of the pieces that I see.
<unk> is unique and this one is the ability to work between <unk> identify in other parts of our <unk> ecosystem Decreet joint product opportunities for our clients.
John D. McKenzie: Again, I'm going to take you back to the exchange conference for a second. That was a conference that, you know, Vetify leads, but we also had participation from all other parts of TMX. And jointly generated, like I talked to you about the amount of revenue the conference generates, we generated an equivalent amount of what is called a pipeline of new client prospects of jointly developed products for new clients from those engagements at that conference.
Speaker Change: Again, I'm going to take you back to the exchange conference for a second there was a conference that verify leads but also we had participation from all other parts of <unk> and jointly generated like I talked to you about the amount of revenue the conference generates.
Speaker Change: We generated an equivalent amount of what I'll call pipeline of new client prospects of jointly developed products for new clients from those engagements at that conference and so while it's a really important industry conference. It's up it's a sales pipeline builder for us as well and what we can do now differently as part of the same organization is actually work with clients like <unk>.
John D. McKenzie: And so while it's a really important industry conference, it's a sales pipeline builder for us as well. And what we can do now, differently, as part of the same organization, is actually work with clients like ETF providers on a whole host of solutions, including both the index creation, the digital distribution capability, the listing on exchanges, as you build volume, then the options traded on the MX on that listed ETF. So it's an ecosystem opportunity that didn't exist for us in separate organizations before.
T F providers with a whole host of solutions, including both the index creation, the digital distribution capability. The listing on exchange as you build volume than the options traded on the <unk> on that list with ETF. So it's an ecosystem opportunity that didn't exist to us in separate organizations before and we.
John D. McKenzie: And we are in multiple client discussions now that really are a product of that partnership. So really excited by both how we help Vetify grow faster but also how Vetify and the capabilities of the ETF community allow us to serve a broader suite of ETF clients and bring more issues to market. So it is one plus one plus three in terms of the growth potential for both parts of the franchise. Thank you for taking the questions.
Speaker Change: We're in multiple client discussions now that really are a product of that partnership so really excited by both how we help verify grow faster, but also how ratify and the capabilities for the year to have community allows us to serve a broader suite of ETF clients and bring more issues to market. So it is a one plus one is three.
Speaker Change: In terms of the growth potential for both parts of the franchise.
Benjamin Elliot Budish: Great. Thank you for taking the questions.
Speaker Change: Great. Thank you for taking the questions.
Speaker Change: Okay.
Speaker Change: Your next question comes from Ken <unk> with BMO capital markets. Please go ahead.
Operator: Your next question comes from Etienne Ricard with BMO Capital Markets. Please go ahead.
Etienne Ricard: Okay, thank you, and good morning. In VEDIFY, digital distribution was previously highlighted as a source of synergy. Could you please share an update on how you plan to integrate Vedify within TMX Datalinks and the resulting synergy potential?
Ken: Okay. Thank you and good morning.
Ken: By digital distribution was previously highlighted.
Ken: Synergy.
Ken: So could you please share an update on how you plan to integrate to satisfy what Dan.
Ken: Yeah mix data links and the resulting.
Ken: Synergy potential.
John D. McKenzie: Yeah, it's a great question. We started with the way we organized the company. So both Datalinks and Vetify, while they have separate leadership teams, they actually do report both into Jay Rajaratnam in terms of leading that part of the franchise. So we look to get the ability for those teams to work together to create those joint opportunities, and it's a two-way street. So there's sources of data within Datalinks that haven't been commercialized in an index product, and so we're jointly working with what are the datasets that can be commercialized through indices created by Vetify, and vice versa, what are the opportunities to create new products that Datalinks can co-sell.
Speaker Change: Yes, it's a great question. So I mean, we started with the way we've organized the the Oregon The company, so both add lengths and verify.
Speaker Change: While they have separate leadership teams. They actually do report both into J Rashid RASM in terms of leading that part of the franchise. So we look to get the ability for those teams to work together to create those joint opportunities and it's two way.
Speaker Change: So there's also there's sources of data within data links that haven't been commercialized in index product and so we are jointly working with what are the datasets that can be commercialized through indices created by verify.
Speaker Change: And vice versa, what are the opportunities to create new products that data links can cross sell them and we have actually two different sales teams that are now working together because they have a unique client basis, but we have the ability to now cross sell and so the as you said the digital distribution tools.
John D. McKenzie: Now, we actually have two different sales teams that are now working together because they have unique client bases, but we have that ability to now cross-sell. And so, as you said, the digital distribution tools, those are often sold to ETF clients. That could be a lead that's generated by a listing ETF manager that's passed to Vetify or through the Datalinks team. So it's really creating that sales coordination between the different sales groups that focus on different client bases.
Speaker Change: Those are often sold to ETF clients that could be a lead that is generated by our listings ETF manager that's passed to verify or through the data links teams. So it's really creating that sales coordination between the different sales groups that focus on different client bases.
John D. McKenzie: That's why I just say, I'm not actually sure we've announced this to our team yet, but we will be holding an annual sales conference here in Toronto in the summer designed exactly around bringing those sales teams together so they can also not only understand the different product availabilities but how they do that lead-pass relationship and then provide a better and greater service quality to the client.
Speaker Change: Why do you say.
Speaker Change: I'm actually not even sure we've announced this to our team yet, but we will be holding.
Speaker Change: On annual sales conference here in Toronto in the summer at.
Speaker Change: Designed exactly around bringing those sales teams together. So they can also not only understand the different product availabilities, but how they do that lead pass relationship and then provide a better and greater service quality to the client.
Speaker Change: Okay I appreciate the details.
John D. McKenzie: Okay, I appreciate the details. Indices matched by Betaflight are currently overweight certain sectors of the economy. I know Vetify has been active on the acquisition front over the past year to diversify the sector exposure. Do you expect to continue deploying capital into targeted acquisitions, or do you see a path for continued AUM diversification given the pipeline of new indices being launched?
Speaker Change: Indices managed by better by are currently overweight certain sectors of the economy.
Speaker Change: I know <unk> been active.
Speaker Change: On the acquisition front over the past year to diversify these sector exposure do.
Speaker Change: Do you expect to continue deploying capital into targeted acquisitions or do you see a path for continued EUM diversification given the pipeline of new.
Speaker Change: New indices being launched.
Etienne Ricard: Yes and yes. So we are both in the process of organically building new indices that would diversify the asset classes that Betify has under management, and we are actively pursuing other tuck-ins like things like RoboGlobal and EQM that you saw in 2023.
Speaker Change: Yes, and yes.
Speaker Change: So we are both in the organic construction of new indices that would diversify the asset classes that I bet. If I has under management and we are actively pursuing other tuck ins like things like Robo Global and EQM that you saw in 2023.
Speaker Change: Great. Thank you very much.
Operator: Great. Thank you very much.
Speaker Change: Your next question comes from Arab Linda gathered pace with Canaccord Genuity. Please go ahead.
Aravinda Galapatagay: Your next question comes from Aravinda Galapatagay with Canaccord Genuity. Please go ahead.
John D. McKenzie: Good morning. Thanks for taking my question. I just wanted to focus a little bit on Trayport. Obviously, the jump in subscribers was certainly notable, particularly on the trader side. I was wondering if you could talk a little bit about that and how that can play out in the local currency growth that we can expect to see. I know it's a really good number in Q1, 16%, but I'm seeing the trader-subscriber jump at almost 26%. I just wanted to understand how that would fit into the upcoming quarters.
Arab Linda: Good morning, Thanks for taking my question I, just wanted to focus a little bit on trade port.
Arab Linda: Obviously the jump in subscribers.
Arab Linda: Suddenly notable particularly on the trader side I was wondering if you can talk a little bit to that and how that can kind of play out in the sort of the.
Arab Linda: The local currency growth that we can expect to see I know, it's a really good number in Q1, 16%, but I'm seeing the trader subscribers jump at almost 26%.
Arab Linda: Just wanted to kind of understand how that would blend into the upcoming.
Cortes.
Speaker Change: Happy to but let me first take a moment to welcome you to your first call with US. So really appreciate you having onboard.
John D. McKenzie: I'd be happy to, but let me first take the moment to welcome you to your first call with us. We really appreciate you having us on board. With respect to the Trayport subscriber fee, I recognize that that was a positive surprise for a lot of folks following the story. But it was not a positive surprise for us. It was positive and not surprising because we can see the activity that's going on with the team during the quarter.
Cortes: With respect to the trade part subscriber because they recognize that.
Cortes: That was a positive surprise for a lot of folks following the story it was not a positive surprise for us it was.
With positive and not surprising because we can see the activity that's going on with the team during the quarter. So you.
Aravinda Galapatagay: You saw in my remarks, or you may have heard my remarks, we actually signed up 11 new clients, trading firms, during the quarter. Those are all net new ads that would bring a number of subscribers with them. But even more impactful is the process that we do around enterprise clients and the renewal of those clients. These are clients that have an enterprise relationship where they can use Trayport throughout their shop. They do it over a multi-year period.
Cortes: You saw in my remarks are you may have heard in my remarks that we actually signed up 11 new clients.
Cortes: Trading firms during the quarter and so those are all net new ads that would bring a number of subscribers with them, but even more impactful Lee is the process that we do around enterprise clients and the renewal of those clients.
Cortes: So these are clients that have an enterprise relationship where they can use shreveport throughout their shop. They do it over a multiyear period and when those clients come for renewal, we reset based on where they are using it in their environment and so we had a number of client renewals in the first quarter.
John D. McKenzie: When those clients come for renewal, we reset based on where they're using it in their environment. We had a number of client renewals in the first quarter with revenue uplifts of anywhere from 30% to 90% because, over the time period, they really expanded the use of Trayport on multiple desks in their shop. That's exactly the relationship we want to create with clients, give them the incentive to use it everywhere, and then we adjust over time.
With revenue uplifts of anywhere call it 30% to 90% because over the time period, they really expanded the use of Shreveport on multiple desks in their shop and that's exactly the relationship we want to create with clients give them the incentive to use it everywhere.
Cortes: And then we reset over time.
John D. McKenzie: Similarly, with the additional products, we talked a bit about the fact that we've got faster-growing revenue in things like analytics and algorithmic trading. Again, we build those into the enterprise agreements and then can expand them across the client base. That's actually now almost 11% of the Trayport revenues coming from these additional services that, if we were talking about this a few years ago, wouldn't have existed at all. Those are the two color points, really a combination of the additional new clients we added and the renewals that we're adding additional trader subscribers to them.
Cortes: Similarly, with the additional products. So I mean, we talked a bit about the fact that we've got a growing revenue faster growing revenue actually in things like analytics algorithmic trading again, we build those also into the enterprise agreements and then can expand them across the client base and so that's actually now almost 11% of the triple revenues coming from these additional services that.
Cortes: If we were talking about this a few years ago didn't exist at all until those are those are the two color points.
Cortes: Really a combination of that additional new clients, we added and the renewals that were adding additional trader subscribers to them.
Speaker Change: Great. Thanks, so much that's great color just one quick question before handing over.
Aravinda Galapatagay: Great. Thanks so much. That's a great color.
David Arnold: Just one quick question before handing over. On the sustaining listing fees, I noticed that you had alluded to some sort of client discounts. I was trying to kind of reconcile the 2% decline there versus what I understood was sort of an upward adjustment to the maximum fee. I was wondering whether it kind of came into effect in Q1 or perhaps it was offset by these client discounts. I just wanted to understand the dynamics a little bit better.
Speaker Change: On the sustaining listing fees.
Speaker Change: I noticed that you had alluded to some set of client discounts.
Speaker Change: Trying to kind of reconcile the 2% decline.
Speaker Change: This is what I understood was sort of an upward adjustment to the maximum fee.
Speaker Change: I was wondering whether it kind of came into effect in Q1 or perhaps it was offset by these client discounts I just wanted to understand the dynamics a little bit better. Thank you.
Speaker Change: Thanks, Hey, Robyn, it's David So yeah, you're right. So there were two really two things when.
David Arnold: Thank you. Thanks, Irvin. It's David. So, yeah, you're right.
David Arnold: Thanks, Irvin. It's David. So yeah, you're right. So there were really two things. When we provide the disclosure in Q4, it's effectively preliminary because we do the full reconciliation and billings in the first quarter. And effectively, a lot of the market cap that you saw in Q4 increase year over year was in a lot of companies that were in excess of the maximum fee cap. But then what you also have is you have a couple of D listings and also then some bulk discounts for ETF manufacturers and so on.
David: When we provide the disclosure in Q4, it's effectively preliminary because we do and the full reconciliation and billings in this in the first quarter and effectively.
David: A lot of the market cap that you saw in Q4 increase year over year was in a lot of companies that were in excess of the maximum fee cap.
David: But then what you also have is you have a couple of de listings and also then some bulk discounts for ETF manufacturers and so on so that's kind of why there's that minor reconciling difference between Q4, and what we know disclosure in Q1 and once again, it's not material, but that kind of gives you the color as to why the number changed.
David Arnold: So that's kind of why there's that minor reconciling difference between Q4 and what we're now disclosing in Q1. And once again, it's not material, but that kind of gives you some color as to why the number changed.
Speaker Change: Great. Thank you.
Speaker Change: Your next question comes from Graham Ryding with TD Securities. Your line is now open.
Operator: Your next question comes from Graham Ryding with TD Securities. Your line is now open.
Graham Ryding: Hi, good morning.
Graham Ryding: Hi, good morning. Maybe I can just start by just making sure that I'm getting the message right on Vetify. So given that there's the seasonality of Q1, is it still accurate to say that you're guiding towards US $100 million in revenue in 2024 and a 60% overall margin on the EBITDA line?
Graham Ryding: Maybe I can just start just to make sure that I'm getting the message right on that.
Graham Ryding: <unk> so given that there is seasonality in Q1.
Graham Ryding: It still accurate to say that youre guiding towards.
Graham Ryding: U S $100 million in revenue in 2024, and a 60% overall margin.
Graham Ryding: On the EBITDA line.
David Arnold: That's correct. That is exactly correct.
Speaker Change: That's correct that is correct so.
Speaker Change: The disclosures, we gave when we announced the transaction still hold but we're very pleased with the performance in Q1, and we need to build onto what John said right. So obviously there'll be the seasonality in Q1 and you see in our MD&A. If you look on the.
Graham Ryding: So, you know, the disclosures we gave when we announced the transaction still hold, but we're very pleased with the performance in Q1. And really to build on what John said, right, you know, so obviously there will be seasonality in Q1, and you see in our MD&A, if you look at, you know, page 14 where we talk about Vetify, we really break down that there are three components to that business, the indexing part of the business, the digital distribution analytics, and then the events. So the event piece is typically a Q1 item.
Speaker Change: Page 14, where we talk about identifying really breakdown. It there are three components that business. The indexing part of the business the digital distribution analytics and in the event. So the event pieces typically a Q1 item indexing.
David Arnold: Indexing, that will fluctuate quarter to quarter based on a couple of factors. One is, you know, those that are linked to assets under management. It will fluctuate as the assets under management grow and, hopefully, don't decline. But then there's also the addition of new indices that John touched on, both organic, but then there's also switches, right, where individuals switch from one index provider to TMX Vetify. So that can kind of create some fluctuation in the indexing line in quarters to come.
Speaker Change: That will fluctuate quarter to quarter based on a couple of factors one as is.
Speaker Change: Those that are linked to assets under management it will fluctuate as the assets under management grow and hopefully don't decline, but then there's also the addition of new indices that John touched on both organic but then there's also switches right aware and individuals' switch from one index provider to <unk> identify that can kind of create some.
Speaker Change: Some fluctuation in the indexing line in quarters to come and then digital distribution analytics is one of those interesting ones, where it typically builds through the year and if you look at the prior year numbers, you can kind of see how it how the aggregate <unk> data find numbers kind of build because a lot of that has also to do with our marketing budgets and capacity at some of the.
David Arnold: And then digital distribution analytics is one of those interesting ones where it typically builds through the year. And if you look at the prior-year numbers, you can kind of see how the aggregate TMX Vetify numbers kind of build because a lot of that has to do with marketing budgets and capacity at some of the ETF manufacturers who tend to go a little slower in Q1 and then build through Q2, Q3, and Q4 during the year. Not material, but it is a subtle seasonal piece that I wanted to highlight.
Speaker Change: T F manufacturers, who tend to go a little slower in Q1, and then build through Q2 Q3 and Q4 during the year not material, but it is a subtle seasonality piece that I wanted to highlight.
Graham Ryding: Okay. Okay, that's helpful. What was Vetify's organic revenue growth in Q1 after he adjusted for the two acquisitions you did last year, Robo and EQM?
Speaker Change: Okay. Okay. That's helpful.
Speaker Change: What is it what was the what was <unk> organic revenue growth in Q1.
Speaker Change: Adjusting for the.
Speaker Change: The two acquisitions, you did last year Robo and EQM.
Speaker Change: We haven't disclosed that Graham.
David Arnold: We haven't disclosed that, Graham, but what I will say is robust organic growth in line with what we put in our long-term objectives, so high single to double digits.
Speaker Change: But what I will say it is a robust organic growth.
Speaker Change: And in line with what we put in our.
Speaker Change: Long term objectives, so high single to double digits.
Speaker Change: Okay.
Speaker Change: Okay.
Graham Ryding: Okay. And then maybe I would just jump to the trust line in your capital formation. I just want to make sure that I get the timing right on that one. Should we expect a similar jump in Q2 versus Q1 for that line item? I think you flagged before that there might be some sort of AGM and some sort of event-specific fees that you would earn in Q2. Is that still a dynamic that we should be expecting?
Speaker Change: And then maybe.
Speaker Change: I would just jump to the trust line and your capital formation I, just want to make sure that.
Speaker Change: I get the timing right on that one.
Speaker Change: Should we expect a similar jump in Q2 versus Q1 for that line item I think you flagged before that there might be like for the AGM in some sort of adventures specific themes that you would be.
Speaker Change: During Q2 is that still a dynamic that we should be expecting.
David Arnold: Yes, but not to the degree you saw in Q2 last year. I'll remind you of the disclosure we had last year in Q2, where we had a couple of very large corporate action transactions with high balances and rate impacts. Those were, you know, really good, they're really important pieces of business, but they are not predictable, and that did have an impact on Q2 much beyond the AGM pieces.
Speaker Change: Yes, but not to the degree you saw in Q2 last year.
Speaker Change: Mind, you to the disclosure we had last year in Q2, where we had a a couple of very large corporate action transactions with high balances and rate impacts.
Speaker Change: Those were those are those are really good they are really important pieces of business, but they are not predictable and that did have an impact on Q2 much beyond the AGM pieces.
Speaker Change: Okay. That's helpful.
Graham Ryding: Okay, that's helpful. And then, David, on the net finance cost, I appreciate you giving some color that you sort of have turned some of your debt into lower rates, so we should try to factor that in. There was also a net gain in the quarter of $7M that impacted your net finance costs. Should we be factoring that in when we're trying to figure out a run rate for your overall net interest costs?
And then David on the net finance cost I. Appreciate you gave some color that you've sort of you've termed out some of your debt into lower rates. So we should try to factor that in.
David: There was also I think.
David: Net gain in the quarter.
David: 7 million that impacted your net finance costs should we be soccer.
David: Factoring that in and we're trying to figure out that sort of run rate for your overall net interest costs.
David Arnold: Good question, Graham. No, you shouldn't be.
David Arnold: a good
David: Good question Graham No you shouldnt be that was actually inextricably linked to the refinancing activity, we undertook in the middle part of the quarter.
David Arnold: That was actually inextricably linked to the refinancing activity we undertook in the middle part of the quarter. So those were as a result of hedging instruments we put in place to manage both currency and interest rate risk. So those are now closed out.
Graham Ryding: So that those were as a result of hedging instruments, we put in put in place to manage both currency and interest rate risk so and those are not closed out.
David Arnold: And yeah, absolutely refer back to the fact that we're carrying about $2.3 billion, and I point you to note five in the financial statements. You'll see that our financing costs in March or the first quarter were around $30.1 million. You'll see it on that one line. And if you look at the $2.3 billion of outstanding debt at the end of the quarter, and you kind of use our weighted average rate of 4.59, or let's round it to 4.6% to get to a kind of 55 basis point saving,
Graham Ryding: And yes, absolutely refer back to the fact that we're carrying about $2 3 billion and I point you to note five in the financial statements, you'll see that our financing costs in March.
Graham Ryding: The first quarter were around $31 million, you'll see it on that on that one line and if you look at the $2 3 billion of outstanding debt at the end of the quarter and you kind of use a weighted average rate of $4 $5 nine or to be.
Graham Ryding: Rounded to four 6% to get to a kind of 55 basis points saving you get an idea of what that number might look like in Q2.
But.
Graham Ryding: Obviously, we continue to sharpen our pencils on ways to keep reducing our weighted average cost of debt.
Speaker Change: Okay does that give you enough Graham.
Graham Ryding: Did that give you enough, Graham? Yeah.
Speaker Change: Yes.
David Arnold: Yeah. That's helpful. I'll reach you.
Speaker Change: I'll re queue. Thank you.
Speaker Change: Yeah.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the one.
Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star followed by 1. Your next question comes from Jaeme Gloyn with National Bank Financial. Your line is now open.
Jaeme Gloyn: Yeah, thanks. A few clarification questions. First off, when you mentioned the $6 million in revenue from the conference at Betafi, is that USD or is it Canadian?
Speaker Change: Your next question comes from James <unk> with National Bank Financial Your line is now open.
Yeah. Thanks, a few clarification questions.
David Arnold: That was in USD.
James: First off when you mentioned the $6 million in revenue from the conference identify is that USD or is that Canadian.
James: That was USD.
David Arnold: And I assume the expenses attached to that will likely be in that $6 million range as well.
James: Okay.
James: And I assume the expenses attached to that likely in that $6 million range.
James: Well.
Jaeme Gloyn: Yes, slightly below. It actually is an earnings contributor, but it's not a high-margin activity, so it's not a material contributor.
James: Yes, slightly below it actually is a it is an earnings contributor, but it's not a high margin activity. So it's not a material contributor to earnings.
David Arnold: I understand you're not going to give the organic growth rates for Robo and EQM, but can you size those businesses for us? Are they the same size, or is one bigger than the other?
Speaker Change: Okay got it thanks.
Speaker Change: I understand you're not going to give the organic growth rates for robo and EQM, but can you can you size those businesses for us are they equal size or is one bigger than the other.
Jaeme Gloyn: Oh yeah, of the two of them, the Robo was a bigger piece in terms of those acquisitions.
Speaker Change: Oh, yeah of the two of them. The Robo was a bigger piece in terms of those acquisitions.
Speaker Change: Alright double or.
David Arnold: Like double or any other one color on that?
Alright.
Jaeme Gloyn: No, no more color on that, Jaeme, but I appreciate the effort there. We will give you a bit more color, though, on the organic piece. It was, what, 17% in the first quarter. So the organic revenue growth for Vetify, excluding acquisitions in Q1, was 17% in U.S. dollars. And so that will help you kind of get to the other pieces, and robo is the bigger of the two.
Speaker Change: No no more color on that Jane but I appreciate the effort there.
Speaker Change: We will give you a bit more color, though on the organic piece of it was it was David 17%.
In the first quarter, so the organic revenue growth for verify excluding acquisitions in Q1 was 17% in U S dollars and so that'll help you kind of get to the other pieces and robo is the bigger of the two.
David Arnold: Thank you, that's very helpful. And then last clarification question on the other issuer services line. Do you have that handy, the contribution from those large corporate transactions? I assume if we X that out, we should see something similar this quarter, you from that line item. I don't know. Let me know if that doesn't sound too fair.
Speaker Change: Thank you that's very helpful.
Speaker Change: And then last clarification question just on the.
Speaker Change: On the other issuer services line.
Speaker Change: You have that handy.
Speaker Change: The contribution from those large corporate transactions I assume.
Speaker Change: If we ex that out we should see something similar.
Speaker Change: This quarter end.
From from that line item that I don't know, let me, let me know if that doesn't sound too fare.
David Arnold: No, no, no. That's a fair question, Jaeme. So the best way to answer that question is to have a look at the Q2 transcript from last year as well as the disclosures, and you'll get a good indication as to the kind of the material amounts that John referred to that occurred in Q2 of last year. And while Q2 is not finished, we still have lots of time to go to June 30th; there may be other actions that come in the quarter, but right now, if there weren't to be similar corporate actions like what we encountered in Q2 of last year, then absolutely there would be a year-over-year decrease.
Jaeme Gloyn: No, no, no, that's a...
No no no. That's a fair question James So to the best way to answer that question is have a look at the Q2 transcript from last year as.
Speaker Change: As well as the disclosures and Youll get a good indication as to kind of the.
Speaker Change: The material amounts that John referred to that occurred in Q2 of last year.
And while Q2 is not finished we still have lots of time to go to June 30th.
Speaker Change: There may be other actions that come in the quarter, but right now if they werent to be similar corporate actions like what we encountered in Q2 of last year, then absolutely that would be a year over year decrease.
Speaker Change: Okay does that help John.
Jaeme Gloyn: Yes, it does. And then last one, just around the U.S. trading initiative, have we reached a point now where, with staff and maybe some... Some sizing and conversations, you'd be able to share some expectations around contribution from that initiative?
John D. McKenzie: Yes, It does and then.
John D. McKenzie: Last one.
John D. McKenzie: Just around the U S trading initiative.
Speaker Change: Have we reached a point now where with staff.
Speaker Change: And maybe some.
Some some sizing and any conversations that you'd be able to share some expectations around contribution from that from that initiative.
No not at this stage James I mean that will come later in the year when we get closer to what a go live looks like and we have an idea of when we would go live with which worked with clients.
John D. McKenzie: No, not at this stage, Jaeme. I mean, that will come later in the year when we get closer to what a go-live looks like, and we have an idea of when we would go live with clients. I will give you an update in terms of our progress in delivery. We have really moved ahead in both the technology solution, the partnering with the provider that's doing the cloud-based delivery, the filings with, particularly FINRA, and testing and delivering the viability of the system to them, and filings with other regulatory agencies, so everything is progressing on the expectations that we shared with you last time, but we're not far enough along to have Thanks very much. I know you'll ask me again next quarter anyway, so..., probably a few times in between.
Jaeme Gloyn: It's probably happened a few times in between.
Speaker Change: I will give you an update in terms of our progress of the delivery that we have actually over the quarter really moved ahead on both the technology solution the partnering with the provider that's doing the cloud based delivery.
Speaker Change: The filings with particularly FINRA and testing and delivering the viability of this system to them.
Speaker Change: Filings of other regulatory agencies, so everything is progressing.
Speaker Change: On the expectations that we shared with you last time, but we're not far enough along to have a firm go live which with with what clients are signed up to give you that indication of what we think the early contribution would be.
Speaker Change: Okay I appreciate that thanks very much.
Speaker Change: I know, you'll ask me again next quarter anyway. So.
Speaker Change: And probably a few times in between.
Speaker Change: [laughter].
Speaker Change: Yes.
There are no further questions at this time I will now turn the call over 10 mean for closing remarks.
Operator: There are no further questions at this time. I will now turn the call over to Amin for closing remarks. Oh, I'm sorry. There's another question from Graham Ryding with TD Securities. Please go ahead.
Speaker Change: Oh I'm sorry, there's another question from Graham Ryding with TD Securities. Please go ahead.
Graham Ryding: Yes, I just thought I would ask you about the recent update from the CSA on the market data piece sort of suggesting that they're going to review.
Graham Ryding: Yeah, I just thought I would ask you about the recent update from the CSA on the market data piece. They're sort of suggesting that they're going to review, I guess, the data fee methodology and also the idea of, you know, retail advisors accessing a consolidated market data feed. Just wondering, maybe you can size that up and how you feel about any potential impact on your market data business here.
Graham Ryding: I guess the data fee methodology and also the ideas.
Graham Ryding: Retail advisors accessing a consolidated market data feed just wondering maybe you can size that up and how you're feeling about any potential impact on.
Graham Ryding: On your <unk>.
Graham Ryding: <unk> data business here.
John D. McKenzie: Well, Graham, when you re-queued in there, I was going to say, since it sounds like it's the last question, it better be a good one, and that is a good question, so I appreciate you asking it. There are a couple of pieces that came out of that, and I want to give a lot of credit to our team that works very proactively with the CSA in partnership so that we can really talk about the market, the structure, unintended consequences, and impacts.
Speaker Change: Well Graham when you re cute and they're always going to say since it sounds like it's the last question it better be a good one and that is a good one. So I. Appreciate you asking there are a couple of pieces that came out of that and I want to give a lot of credit to our team that works very proactively with the CSA in partnership so that we can really talk about the market structure unintended consequences impacts.
So the <unk>.
John D. McKenzie: So, two key pieces that came out of the response. One was around some strong industry committees to help advise on the future developments of the market data structure going forward. We absolutely support that. We think it's the right way to do it.
Speaker Change: Two key pieces that came out of the response one we're around some strong industry committees to help advise on the future development of market data structure going forward.
John D. McKenzie: We get the right people around the table to look at how you think about the fee model, and what contributes to those types of things in the future. The new regime, or the recommended regime around disclosure of fee changes, we're supportive of as well. We think that was well thought out, and it's actually something that we believe in generally, which is transparency around what you're doing with your fee model. I think it starts to bring all other markets up to the level that we set for the marketplace, so we think that was positive as well.
Speaker Change: We absolutely support that we think thats the right way to do it we get the right people around the table to look at how do you think about the.
Speaker Change: The fee model, what contributes to those types of things in the future the new regime or the recommended regime around disclosure of fee changes were supportive and as well, we think that was well thought out and it's actually something that we believe and generally which is transparency around what youre doing with your fee model and I think it starts to bring all other markets up to the law.
Speaker Change: Will that we set for the marketplace. So we think that was positive as well the interesting piece. The other piece you mentioned around kind of the lack of consolidated data for for retail.
John D. McKenzie: The interesting piece, the other piece you mentioned around kind of the lack of consolidated data for retail, the demand for that wasn't often coming from retail. It was coming from other marketplaces and other participants that were questioning whether or not retail could trade if they were only looking at TMX data. So we've actually taken that on our own initiative. We announced to our clients, I think just over a week ago, that we are going to be building out a consolidated data product, which will help provide more multi-market depth to pricing, essentially for that retail audience.
Speaker Change: The demand for that wasn't often coming for retail it was coming from other marketplaces and other participants that were questioning whether or not a retail could trade. If they were only looking at Tms data.
Speaker Change: So we've actually taken that under our own.
Speaker Change: The initiative, we announced to our clients I think just over a week ago that we are going to be building out a consolidated data product, which will help provide more multi market depth to pricing essentially for that retail audience. So this is not a regulatory asked we're doing it on the basis of our clients and.
John D. McKenzie: So this is not a regulatory ask. We're doing it on the basis of our clients, and particularly those clients that want to make sure that retailers are seeing the depth of data across multiple marketplaces. So that actually is an initiative that we're taking on. We announced it to the market just last week.
Speaker Change: Vicki Lee around those clients that want to make sure that retailers seen the depth of data across multiple marketplaces. So that actually is initiatives that we're taking on we announced that the market just last week.
Speaker Change: Okay understood.
Graham Ryding: Okay, understood. And the actual review of the data feed methodology? Should I be thinking of beer when I look at your Market Insights business? Is everything sort of that's outside of Vetify and outside of Tradeport, does that fall into this? review of data feed methodology. And that's really more about...
Speaker Change: Actual the review of the data fee methodology.
Speaker Change: Should I be thinking of your when I look at your market insights business.
Speaker Change: Everything sort of.
Speaker Change: Outside of <unk> and outside of trade Port does that fall into this review of the data feed methodology.
Speaker Change: And that's really more about subscribers and feeds. So there are a lot of other things within our market data business like index revenues.
John D. McKenzie: And that's really more about subscribers and feeds. So there are a lot of other things within our market data business, like index revenues, and co-location, that are not part of that scope.
Speaker Change: Co location that are not part of that scope.
Speaker Change: Okay understood.
Speaker Change: Okay. That's it for me thank you.
Graham Ryding: Okay, that's it for me. Thank you.
Speaker Change: Thank you for the question.
Speaker Change: There are no further questions at this time I will now turn the call over time mean for closing remarks.
Amin Mousavian: That will do it for the questions at this time. I will now turn the call over to Amin for his closing remarks.
Thank you everyone for listening in today before we close I want to take this opportunity to remind you that in just 48 days, we will be hosting our investor day here a market center in downtown Toronto, We look forward to seeing you at this engaging event on June 20th that will showcase our top priorities for accelerating growth.
Operator: Thank you, everyone, for listening in today. Before we close, I want to take this opportunity to remind you that in just 48 days, we will be hosting our Investor Day here at our Market Centre in downtown Toronto. We look forward to seeing you at this engaging event on June 20th that will showcase our top priorities for accelerating growth. Further details are posted on our website under Shareholder Events. As usual, if you have further questions, contact information for Investor Relations as well as the media is in our press release, and we will be more than happy to get back to you. Until next time, goodbye.
Speaker Change: Further details are posted on our website on their shareholder events as usual if you have further questions contact information for Investor Relations as well as media is in our press release and moving more than happy to get back to you until next time Goodbye.
Speaker Change: Yes.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating in assay you. Please disconnect your lines.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Operator: BF-WATCH TV 2021
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