TMX Group (TMXX.F) 2025 Conference Transcript

TMX Group (TMXX.F) 2025 Conference Summary Company Overview - Company: TMX Group - Date: September 03, 2025 - Speaker: John McKenzie, CEO Key Points Strategic Vision and Growth - TMX Group's strategy includes the Core Plus Four approach, focusing on core business reinvestment and identifying four growth vehicles: beyond listings, beyond borders, beyond data, and beyond traders [4][5] - The company reported an 18% year-over-year growth for the first half of the year, with 16% organic growth, despite a turbulent capital market [6] - The TM2X vision aims to change the growth paradigm, focusing on doubling the franchise rather than incremental growth [7] Market Conditions and Government Initiatives - The Canadian government is taking measures to improve the investment climate, which is expected to benefit TMX Group, especially in capital raising for companies [10][11] - TMX has proposed six strategies for capital market reforms, with one successful reform being the equalization of R&D tax credits for public and private companies [12][13] Growth Initiatives and Execution - TMX is focused on growing its core business and executing large-scale initiatives, including a seven-year post-trade modernization program and the launch of a U.S. ATS [14][15] - The U.S. ATS has seen a 300% increase in activity in the second quarter compared to the first quarter, indicating strong market reception [70][71] Global Insights and Competitive Advantage - The Global Insights portfolio is crucial for TMX's resilience, with a focus on proprietary data and integrated SaaS solutions [20][21] - TMX aims to grow its data links business and enhance its analytics capabilities, with a target of increasing the share of higher-margin data business to 50% of total revenue [47][48] Trayport and Market Expansion - Trayport is identified as a major growth engine, with plans to expand into the Japanese power market, which is comparable in size to France and Germany combined [34] - The company is also exploring opportunities in other regions, including Australia, New Zealand, and South America [36] Digital Assets and Innovation - TMX is preparing for digital assets but emphasizes that current digital securities are already fully digital through existing infrastructure [52][53] - The company is focused on being token-ready and exploring how digital assets can create liquidity events for private companies [56][57] Derivatives Market Growth - TMX has launched new futures products and is focusing on enhancing liquidity through revenue-sharing regimes [59][60] - The company plans to introduce credit futures and expand its OTC programs to improve capital efficiency [62][63] M&A Strategy - TMX's M&A strategy is centered on accelerating its core fundamentals, particularly in data and insights [73] - The company is actively looking for acquisitions that can enhance its capabilities in the ETF market, which is robust in Canada [75][76] Valuation and Investor Outlook - TMX acknowledges its historical valuation discount but believes it should trade at a premium due to its growth potential and recurring revenue mix [79][80] - The company aims to continue delivering on its growth promises to justify a premium valuation compared to peers [81][82] Additional Insights - The company is focused on operating leverage by growing higher-margin data businesses and improving lower-margin segments [50][51] - TMX is committed to nurturing its proprietary networks and enhancing customer relationships to maintain competitive advantages [24][29] This summary encapsulates the key insights and strategic directions discussed during the TMX Group conference, highlighting the company's growth initiatives, market conditions, and future outlook.