Shahrukh Qureshi: Colocation and legacy services and have 5% in market information solutions. I would just like to reiterate that diversification is providing meaningful resilience. The objective remains to scale solutions that drive resilience further, driving the right and recovery of critically failing elements. Cost optimization is the area where we are delivering tangible results, and I am particularly pleased with our progress we have made. We are committed to maintaining a tight control over our cost base and our performance so far state that these efforts are working. Operating expenses, during depreciation and amortization declined by 3.8% year-on-year in Q3, while growth for nine months period was contained at just 1.6%. This reflects deliberate and sustained effort across the group to improve efficiency, optimize solutions, and exercise greater financial discipline. Importantly, we are achieving this while continuing to invest in our diversification and growth strategies.
Shahrukh Qureshi: We have not put our strategic ambitions on hold. Rather, we are becoming more selective in the solution and how we allocate resources, ensuring that investment is directed towards capabilities and initiatives that support future growth and long-term value creation. As you can see on the right, depreciation and amortization increased by 54.6% year-on-year from SAR 80.2 million to SAR 123.9 million as the infrastructure and technology assets supporting our group agenda came online. This non-cash increase accounts for the bulk of the 7.5% rise in the operating expenditure, despite the significant progress in reducing underlying costs. The key takeaway is that we are delivering our cost commitments without compromising our long-term growth agenda. We remain focused on embedding these efficiencies across the business, maintaining a disciplined approach to spending and ensuring that our investments position the group's stronger operating leverage as revenue grows. Next slide.
Shahrukh Qureshi: Operating earnings and cash flow of SAR 299.4 million in the first 9 months of 2025, SAR 195.8 million this year. This shows two principal pressures. SAR 55.6 million reduction in revenue and SAR 53.8 million adverse movement in operating expenditure, partially offset by SAR 5.8 million favorable movement in other income and related items. Lower trading activity and increased depreciation and amortization were the important drivers for the decline in reported profit. Turning to cash generation, free cash flow was SAR 200.5 million, where key capital timing and investment requirements affected the period's cash conversion. Although free cash was lower year-on-year, we continue to manage cash prudently while maintaining a selective approach to strategic investments. Next slide, please. To summarize the financial results, I will leave you with three points. First, our cost discipline is yielding tangible results.
Shahrukh Qureshi: Underlying OpEx, excluding depreciation and amortization, improved or declined in Q3 and increased by 31.6% over 9 months, even as we continued selective investment in business. Second, our revenue mix is becoming more resilient. Non-ADTV revenue remains broadly stable and now represents approximately 61.6% of group revenue, helping mitigate the effect of weaker ADTV linked activity. Third, lower market activity and higher non-cash depreciation weighed on EBITDA and net income. Our response is to continue managing costs through a more diversified source of revenue and position the group for stronger operating leverage as the business conditions evolves. With that, I will hand over to Lee to discuss the execution of our strategic progress.
Lee Hodgkinson: Thank you, Shahrukh. Good afternoon, everybody. As the financial results show, our diversification agenda remains increasingly relevant to our performance. In this context, we remain focused on enhancing the depth and attractiveness of the Saudi capital market through expanding the range of tradable asset classes and the commercialization of our data, technology, and infrastructure capabilities. I will focus this afternoon on two tangible areas of progress, derivatives and our Data & Technology services. Next slide, please. The response to our derivative market enhancements has been particularly encouraging, and activity has exceeded our expectations. As a reminder, the refresh focuses on the MT30 index future and the five single stock futures. In the 6 weeks between the rollout on 19 August and 30 September, the market processed 36,237 futures contracts with a notional value of SAR 1.56 billion.
Lee Hodgkinson: We have also seen that momentum continue beyond the Q3 reporting period. Cumulative activity since the August enhancements has now exceeded 55,000 futures contracts and SAR 2.5 billion in traded value. Of course, to be clear, these are post-period cumulative volumes and should not be interpreted as Q3 results. It is worth remembering that our broader objective here is to establish the conditions for sustained liquidity, more effective hedging, and price discovery, and greater participation by investors and intermediaries. Now that we have established powerful received liquidity, our attention is turning to the marketing and selling of the franchise to institutional actors, both domestic and international. While these are early days, and sustained adoption will take time to build, the initial response gives us great confidence that we are moving in the right direction. Next slide, please.
Lee Hodgkinson: Our other priority is, of course, to build on the Group's market infrastructure and data capabilities to serve a wider range of clients through solutions that generate non-transactional revenue. As Shahrukh highlighted, Data & Technology services revenue increased 5.8% in the 9 months to SAR 200.6 million, which is equivalent to 22.1% of Group revenue. Growth was particularly strong in colocation and Liqaa services, up 29.4%, with market information revenue increasing 5%. These figures provide a tangible link between our strategic priorities and our financial performance. We are progressing the announcement of our data center and colocation offering to deliver greater capacity and more services to our clients, broadening our market data and analytics solutions, and working hard to extend our distribution and client relationships through DirectFN.
Lee Hodgkinson: Looking ahead, our focus is on converting our capabilities into products that clients value, strengthening solutions-led and recurring revenue opportunities, and building a business that serves a wider range of client needs. With that, I will hand back to Engineer Khalid for his concluding remarks.
Khalid Abdullah Al-Hussan: Thank you, Lee. Thank you, Shahrukh. As we conclude today's presentation, I would like to reinforce one important message. Saudi Tadawul Group is progressing through a fundamental evolution in its business model, and the strategic initiatives we have discussed today provide tangible evidence of our growth promise. We are moving beyond our traditional reliance on equity market activity by developing new growth opportunities across derivatives, data technology, market infrastructure, post-trade services, and commodities. The early momentum in derivatives, continued growth in colocation services, potential expansion of data center infrastructure, and ongoing enhancements to our post-trade capabilities demonstrate the breadth of opportunity ahead of us. These initiatives are at a different stage of maturity, and their full commercial potential will take time to develop. However, they are important building blocks to our ambition to establish a more diversified, scalable, and resilient business.
Khalid Abdullah Al-Hussan: We also recognize the importance of delivering this transformation responsibly. Our commitment to cost discipline, capital efficiency, and selective strategic investments remains unchanged, particularly against the backdrop of current market conditions. Our long-term investment proposition is increasingly defined not only by the performance of Saudi equity market, but also by our ability to develop, commercialize, and scale the infrastructure and solutions that support the broader capital market ecosystem. We remain confident in the long-term opportunity presented by the kingdom and the Saudi Tadawul Group ability to play a central role in that transformation. Our focus remains on execution, operational resilience, and delivering sustainable long-term value to our shareholders. Thank you for your continued confidence and interest in Saudi Tadawul Group, and I will now hand the talk back to the Q&A.
Operator: Thank you, Engineer Khalid, Shahrukh, and Lee. We will now open the floor on the line for the questions. Please feel free to raise your hands, and we will then give you the chance to ask a question. The first question from Rahul Bajaj. I will proceed to unmute yourself and ask a question.
Rahul Bajaj: Hi. Thanks for taking my questions. Rahul Bajaj from Citi here. I have three questions, mainly. The first one is on D&A, which has gone up significantly on a Q-on-Q basis in Q3. Just wanted to understand, for our modeling purposes, should we expect the Q3 run rate to be the new base and continue to build higher from these levels? Or you think there were one-offs in Q3, so it might go back slightly to the Q2 level? That is my first question. My second question is on derivatives. I see the relaunch has been quite positive. Just trying to clarify here something that if I remember correctly, there is a fee rebate on derivative products in the first year, right? So you basically do not earn anything for the first year despite this very strong derivative performance. Please correct me if I am wrong.
Rahul Bajaj: On the derivative thing, can you give us an idea where are you seeing this new interest from? Is it coming from retail shareholders or institutionals, local, international? Where is the kind of interest in the new derivative product coming from? That is my second question. My third and final question is on Data & Technology, where I see the year-on-year revenue growth for the 9 months has hovered around the 6% year-on-year mark. Is this roughly the run rate of growth you expect this line item to move going forward? How should we think of Data & Technology revenue growth in the medium term? I understand you have some colocation additions coming up over the next 12, 18, 24 months. What I understood was it will take some time to get the full potential out of those projects.
Rahul Bajaj: How should we in the medium term project the Data & Technology revenue? Is the mid to high sort of single-digit run rate fair for that line item? Thank you.
Shahrukh Qureshi: Yeah. Thanks, Rahul. On the depreciation, I will link the third question, which is the colocation and the depreciation question maybe together. As Najeena highlighted in the beginning and opening remarks, we mentioned that we are working on a primary data center, which gives us more than double the capacity. Currently, the data center already issues capacity. Depreciations, again, Q3 is the run rate that you should look bar in whenever we go live probably next year, early next year. On the primary data center, that depreciation will also kick in on the hardware.
Lee Hodgkinson: Yeah, sure. Fundamentally it is institutional client demand, domestic and international. In particular, from a domestic perspective, a lot of bank treasury departments, corporate treasury departments, are starting to look at that market for hedging purposes, and we have a number of active processes in place to onboard some of those entities. Also, in the international arena, I have been in Europe this past week doing a lot of selling with our Chief of Derivatives, and there is quite some substantial interest in the market. I think looking further ahead to Engineer Khalid’s point earlier about options, we believe that that will have a more relevant interest to retail providers, but that is further down the line. For now, we are getting some pretty good institutional traction and as we said earlier, I think we are very satisfied with progress to date. Long way to go, but we are up and running.
Rahul Bajaj: It is great to hear. Thank you so much.
Operator: Next question coming from Trifan Ash. Trifan Ash, please unmute yourself and you can ask your question.
Trifan Ash Stu: Yes. Hi, good afternoon and thank you for the presentation. This is Trifan Ash Stu from Roma Capital. I have got a few questions. The first one is on OpEx, excluding D&A. Can you please give us a sense on how do you expect this to evolve in 2027? If you have got an early view on how should we think about the costs outside of D&A. The second one is on Data & Technology. I just want to understand a little bit more on the decline of DirectFN revenue year-on-year, and what should we expect going forward. Then the final question related to that is on the colocation revenue. If my understanding is correct, please correct me if I am wrong, you expect the SAR 40 million revenue run rate to double, I think that is what you said, Q3 hopefully next year. Is that correct? Thank you.
Shahrukh Qureshi: Yeah. On the OpEx for next year compared, I think we are too early on this, so we are internally still finalizing. But as we said and committed in today's session, we are keen on cost discipline. We are ensuring that we are spending on the right products, keeping in mind we have our strategic attention and we are continuing the focus. But in terms of numbers, it is a bit early. But I can give you some flavor over how we see the full year landing. I think what we report today is 1.6. Around that same number, we are looking to progress push on our cost initiative till the year end, and we will reach around the same range of numbers. On the Data & Technology and DFN, I think what we see right now is a temporary impact of data macroeconomics.
Shahrukh Qureshi: I think if you see the long-term business objectives and plans, they are aggressively working on those enhancements and delivery of new products, and they are rolling out their new platforms, and we will definitely see some delivery of this. There was a question around colocation. The development because the results are not looking great.
Khalid Abdullah Al-Hussan: Colocation is a straightforward business for us. It is a capacity availability for our clients to be hosted. There is a great demand from our clients. We have around 25 clients now in our data center, and we cannot accommodate more. We have demand. We started contracting for a new data center. Basically, we are in advanced stage of completing our fit outs to the new primary site, which we are aiming to make available in Q2 next year, which is basically going to be very much ready for the addition of the new clients. Our anticipation for that business is to go from SAR 40 million business to over SAR 100 million business over the course of the next 24 months, easily by the new capacity, by the services that we are going to provide and make available for our clients.
Khalid Abdullah Al-Hussan: The difference in our case, compared to any other data center, the demand mainly comes to us by market participants. So high-frequency trades, algo trades, local and international brokers whose latency and risk of infrastructure communication availability for their clients matters to them. That is why we see and we are confident about that demand coming our way, as we saw in the current primary site where the data center got sold quite fast by these type of clients. This is a direct income. There is an indirect income from these colocations, which is basically their activity to the market. For example, HFTs, algo traders care a lot about latency, because they are using algos, they are using machine trading. That means that will allow them to trade more in the market, which is basically going to generate indirect revenue for trading, clearing, and settlement revenue for us.
Trifan Ash Stu: That is very clear, very helpful. Thank you. I just had a quick follow-up regarding the, coming back to the costs. I think in your Q2 presentation, you had kind of a EBITDA kind of pathway in the short term of 26% to 30%. I just wanted to clarify. I think it is on the presentation, Q3. I just wanted to clarify whether that was meant for kind of 2026 or whether that is the range you kind of envisage to be at next year. I appreciate this is depending on market conditions, and that is what makes it really hard to forecast given the very unit volume related. So, I just wanted to maybe clarify that part. Thank you.
Khalid Abdullah Al-Hussan: Well, I think also to address this, the biggest player here at this stage for 2027 is the equity market ADTV. What we have been doing on the last 2, 3 years is focusing on growing the non-ADTV business, while of course not ignoring the core business that we have. It is basically managed by one of our subsidiaries Saudi Exchange. We have been very successful in growing the non-ADTV. Over the last 5 years, there is a CAGR of 22% on non-ADTV growth. We are focusing on that domain, as we mentioned, data, technology, commodities, derivatives, all these are non-equity ADTV except if the market trades at the range of SAR 1 billion additional next year, that is significant impact on EBITDA. SAR 2 billion is a significant EBITDA. We are hoping that the geopolitical, the market condition will continue to grow.
Khalid Abdullah Al-Hussan: Today, if you follow the market today, there is a very good positive sign of market reaction, even during challenging time of performing over 300 points. In conclusion, strategically, we are building that diversification sets to be less dependent on equity ADTV. However, whatever comes on equity ADTV is impacting everything else, so that is an area of focus. However, EBITDA could be totally different than today with simply SAR 1 billion additional on ADTV trade, which is not something that we have not achieved in the last 3 years. It has been there. I just wanted to highlight this important element of how EBITDA would change on equity market condition as the cost base is running, whether it is at SAR 4, 5 billion ADTV or SAR 10 or 20 billion ADTV.
Trifan Ash Stu: Understood. Thank you.
Operator: The next question is coming from Fahim Delhad. Fahim, you could please ask.
[Analyst 1]: Yeah. Hi, everyone. Thank you for your time and for the presentation. With some activity now showing up on the derivatives venue, I was wondering if you all had some sort of KPI or a target in terms of revenue contribution or ADTVs or whatever KPI or benchmark you might have on this. Another question on this would be, how would you plan to balance out the incentives and fee schemes in the medium term to maintain trading activity but to also support profitability in this segment?
Khalid Abdullah Al-Hussan: Of course, we have KPIs, we have revenue targets, we have product targets. Remember that whatever incentive we have provided for the current future contracts are only six contracts out of potentially over 300 contracts, 400 contracts that we can generate. That is only in the future side. On the option side, that is another few hundred contracts that we could generate. The message here, it is a scalable business. How do we manage? Aside from the KPIs, how do we manage the costs of activity? The derivatives market is coming. It is currently running, and has been running since 2019, 2018. We had very limited activity. What we are proving here is significant activity has kicked off on the business. Fee holiday is not impacting us as this was not generating any money for us. However, it is generating momentum, direct activity to the market, and scalable progress.
Khalid Abdullah Al-Hussan: In a year's time, this is part of our, of course, financial modeling, financial forecast, that from August next year, it will start to grow on derivatives revenue. As I said to you, confirming, this is one of the scalable businesses that we have in our portfolio. As we spend more time, more effort, more focus on deepening the activity on the derivatives market today and within the next few months, scaling that market is going to be free of cost.
Lee Hodgkinson: Yeah. Hi.
Khalid Abdullah Al-Hussan: It is clear.
Lee Hodgkinson: Yeah, it is Lee here. Sorry. Yeah, I just wanted to add something to what Anshul said. Remember, this is a well-trodden path that we are following in the international marketplace. It is really designed, the fee scheme, to create seed liquidity with specialist market makers. Once we have those prices up on screen, and we have got activity, we are starting to build open interest. Now we are bringing in, as I mentioned earlier, institutional investors. As that business begets business, and it starts to build, the further down the line you go, the less relevant incentives are, right? Because actually you are starting to see prices up on screen, and people are getting to the core value. Just to be clear, we are not doing anything particularly unusual. This is sort of well thought through in an international context.
Lee Hodgkinson: Once you have built that enduring seed liquidity, the fee schemes fall away, and we start seeing it contribute significantly. Again, I think it is also just worth highlighting that within our flywheel, more derivative members mean more colocation clients, which mean more data, which mean more clearing services, et cetera. So, we have got that well thought through.
[Analyst 1]: That is very clear. Well, I suppose also in terms of derivatives and international exchanges doing the same, is there a sort of a target that you have in terms of another exchange, what they have done, or where you would like derivatives to ramp up to in relative to another exchange as a benchmark, if that is something you look at?
Lee Hodgkinson: It is. It is not something that we disclose publicly, but I think that you guys will know there are plenty of developing markets that have built out substantial derivatives franchises. There is absolutely no reason why we will be any different. I think the underlying fundamentals for the equity derivatives franchise are very strong. We have seen that with demand from the specialist market makers. We are seeing that in demand from the institutions. I see no reason why we will not be able to create similar demand levels with retail clients and the options markets further out. So we do look at other exchanges. We think very much about benchmarking to international gold standard, which is what we are doing. As I say, we are cautiously optimistic. We are on the right path. It is very early days, but I think we have a very promising situation.
[Analyst 1]: That is all very clear. Thank you very much, and best of luck.
Operator: So, we got a couple of written questions in the Q&A box. The first question, how are the membership fee structures? Are they on an annual basis or are they activity-based? The membership fee structures.
Khalid Abdullah Al-Hussan: So membership, we have three types of membership: exchange membership, depository membership, as well as clearing membership. There are two sets of fees on that. There is an initial one-time, first-time fee, and there is an annual fee. That excludes the activity, which is basically the transaction that is done and any other services fee. So this is as long as membership fee is the same.
Operator: The next question, again, from the Q&A box: How does the management assess the Group's sensitivity to interest rates and cost of business income and commissions on clearing collection?
Khalid Abdullah Al-Hussan: Yeah, so we keep a sensitive analysis and some of the analysis also exposed in the financial as part of the risk management disclosures. Each 1%, what kind of impact that will have on our interest rate income stream is already disclosed in the financial statements. May I kindly request you to look at that. So it is all 1%, I think it was around SAR 75 impact.
Operator: Next question: How CMA fees will be revised? Are there any changes to trading, listings, or membership fees under review?
Khalid Abdullah Al-Hussan: So this is an always part of what we discuss with the regulators, not only specifically on transaction costs, but many additional fees for services that we are looking at. From our side, we are always continuously looking at benchmark and how could we make our transaction fees more efficient, whether it is trading, clearing, and settlement. So they are always under review.
Khalid Abdullah Al-Hussan: Whether these will be changed soon or not, nothing is under approval process as we speak. But we look at always how could we be competitive and more competitive compared to regional and global exchanges for our investors.
Operator: Next question, can the management provide any likely EBITDA guidance for Q2 2026 and to 2027? I think this question has been addressed before by the Group CEO. Now we move back into the audible questions. Srikuna, I can see your hand is raised again, so please feel free to unmute yourself and ask your follow-up questions.
Operator: The next question is going to be from Sarah. Sarah, please feel free to unmute yourself and ask your question.
[Analyst 2]: Hello. Thank you for the presentation. I have a very short and quick follow-up on the question regarding the international exchanges. As I understand, the Saudi Exchange is very much dominated by the domestic retail traders, right? So when we are talking about the business opportunities, including the development of the derivatives market, what does it mean from the business-wise perspective? Which specifically markets that mimics the structure of the Saudi could we actually use to see the potential upside from the more sophisticated instruments?
Khalid Abdullah Al-Hussan: If I look at the activity, just to correct that, the Saudi equity market used to be dominated by retail a few years ago. Today, no, and I'll give you an example. Yesterday, foreign investors' activity in the market was around 39%. Retail was around 44%. Saudi corporates were around 15%. So it is a mix of investor types, not only retail. Retail is an important driver of liquidity in the market, but the level we used to be at was 90% retail, 10% institutions. Today, this is changing every day, but I would say on an average, it is 60/40. Institutional 40, retail 60, sometimes it is 50/50. So that gives us a comfort that this is not only a retail market that has institutional, but not only local institutions, but foreign institution are the biggest institutional player in the market from activity base.
[Analyst 2]: I see. Thank you so much for the clarification, and good luck with the project.
Operator: Thank you. The next question is coming from the Q&A box. The notable jump in finance, hosting, and data costs, maybe from the releases, should we expect Q3 as a base or costs around release going forward?
Khalid Abdullah Al-Hussan: Yes, that is correct.
Operator: Next question, also from the Q&A box. Could you give some light on listing revenue pressure this year against expectation for listing activity and revenue trajectory for the segment next year?
Khalid Abdullah Al-Hussan: Listing, it has 2 parts. Basically, there is an annual revenue, which is basically recurring over all of the listed securities in the market, whether these are equities or debts or funds, et cetera, REITs. The growth happens in listing has 2 effects. One, new companies, new securities come to the market that adds a new listing revenue. Second, market performance.
Khalid Abdullah Al-Hussan: The reason I am saying market performance is basically listing fees has a component of market cap element in it. So prices of the market impact listing fees. Also the recurring of listing new securities has also 2 significant income that I just want to make sure that we all understand. Any company that joins the market pays the Group 2 set of fees, the listing, which is an annual recurring listing fees, and registry fees. If you combine both, this is a recurring annual paid to the Exchange and Depository Center consolidated at the Group as coming from listing mainly. I would say how is the market from a listing pipeline? The listing pipeline in the Main Market is still solid, whether we are going to see approval from this. Another decision that I can comment on based on the requirements.
Khalid Abdullah Al-Hussan: The number of applications that has been approved by the Exchange within the previous year's numbers, and we maintain a very healthy IPO pipeline. Main Market. The Main Market has always looked at the equity market's activity, and companies are not as aggressive as normal on taking the companies public. However, we have not seen any withdrawal in applications that we hold. There is a continuation. Maybe the regional conflict has impacted or delayed some of the approvals. However, this did not impact the pipeline review activity. That is my take on those things. Thank you.
Operator: As a reminder, in case if you have any questions, please feel free to raise your hand, or you can drop your questions in the Q&A. The next question, can you please discuss the recent decline in investment income? Is SAR 55 billion the new quarterly run rate?
Operator: How should this evolve over the interest rates? I think it has been already addressed.
Operator: The question has been already addressed.
Operator: We will allow 1 more minute for any questions that you have. Please feel free to raise your hand again, or drop your questions in the Q&A. As we have not received any further questions, I will now hand it over back to Yousef AlBikoori.
Khalid Abdullah Al-Hussan: Thank you. Thank you very much for your time. We are looking forward to touch base with you again on further delivery of what we have talked about today, whether based on our data, derivatives, commodities, or technology. We just want to reassure you that we remain very resilient and efficient on operating our multiple platforms during this period, and we are very optimistic about tomorrow.
Khalid Abdullah Al-Hussan: Please do not hesitate to reach out to our IR team if you have any clarification on what we have talked about today or any future clarification or questions that might come. With that, concluding the call. Thank you.
