LSEG Earnings Call: Growth, Cash Firepower and AI

London Stock Exchange ((GB:LSEG)) has held its Q4 earnings call. Read on for the main highlights of the call.

London Stock Exchange Group’s latest earnings call struck a confident tone, with management highlighting broad-based revenue growth, record free cash flow and meaningful margin expansion. While near-term cash timing, higher expected financing costs and still‑early AI monetization were acknowledged, executives stressed that robust operations and active capital returns more than offset these headwinds.

Group Revenue Growth

LSEG reported revenue growth of 7.6% for FY 2025, with all divisions contributing positively to the top line. Management guided to organic revenue growth of 6.5–7.5% in 2026 and mid‑ to high single‑digit growth through 2027–2029, signalling confidence in sustaining momentum across the portfolio.

Strong Organic Growth and Subscription Momentum

Organic revenue rose 7.1%, underpinned by solid performance in subscription-based businesses such as Data & Analytics, FTSE Russell and Risk Intelligence. These units collectively grew around 6%, with D&A accelerating to roughly 5% organic growth and management expecting further subscription acceleration into 2026 and beyond.

EBITDA Margin Expansion and Profitability

Profitability improved sharply, with full‑year EBITDA margin expanding by about 210 basis points and surpassing 50% for the first time. The company is targeting an additional 80–100 basis points of margin improvement in 2026 and roughly 150 basis points cumulatively over 2027–2029, underscoring continued focus on efficiency.

Earnings and Operating Leverage

Earnings growth outpaced revenue, highlighting operating leverage in the model as adjusted EBITDA grew 11.8% versus 7.1% revenue growth. Adjusted EPS advanced around 16%, with EPS up 19.4% at constant currency, while AOP rose 14.3%, reinforcing the earnings power of the platform.

Record Free Cash Flow and Cash Returns

Free cash flow reached a record £2.45 billion, exceeding guidance and translating into a 14% increase in free cash flow per share for the year and about 60% growth over two years. LSEG returned £2.8 billion to shareholders via dividends and buybacks and announced a further £3 billion buyback plan over the next 12 months.

Dividend Increase and Share Buybacks

The board proposed a final dividend of 103p, up roughly 15.7% and aligned with EPS growth, underlining a progressive payout philosophy. Share repurchases accelerated, with £2.1 billion of buybacks completed in 2025 and a new £3 billion authorization signalling continued commitment to returning surplus cash.

Operational Efficiency and Cost Control

Cost discipline was a standout, as total operating expenses rose only 3.5%, roughly half the pace of revenue, driving margin gains. Third‑party services spending fell 11.6%, headcount declined by about 700 with a higher proportion of internal staff, and integration costs dropped 41% as the Refinitiv integration largely wrapped up.

Digital & AI Progress and Commercial Traction

LSEG showcased early traction from its digital and AI strategy, with over 60 financial institutions connected to its MCP servers and strong interest from prospective users. Partnerships with Microsoft and OpenAI and internal AI deployment have delivered tangible productivity gains, including faster content extraction, fewer data quality issues and higher engineering output.

Markets & Post Trade Strength

The Markets and Post Trade franchises continued to perform strongly, with Tradeweb growing interest rate swaps share by 180 basis points and FX revenues up 7.5%. Equities revenue increased 5.1%, while clearing revenues grew double digits across swaps, FX, CDS and repos, and Post Trade Solutions also delivered double‑digit growth with expanding networks and new bank clients.

New KPIs and Product Innovation

Management introduced new metrics to showcase product momentum, including gross sales running about 11% higher in the second half than the first. Consolidated revenue retention stood at 92.4%, and the New Product Vitality Index reached 24%, indicating that nearly a quarter of revenue comes from products launched or enhanced in the past five years.

Working Capital and Timing Effects

Working capital swung negatively by around £400 million, driven by reduced SwapClear pay accruals, lower creditors linked to treasury income and accelerated supplier payments. These timing effects weighed on reported cash flow but were framed as conscious choices to crystallize procurement benefits rather than signs of operational stress.

Higher Net Financial Expense Expected in 2026

Net financial expense is projected to rise to £260–270 million in 2026 as low‑coupon debt is refinanced at higher rates and buybacks increase interest costs. The 2025 result also benefited from non‑recurring items, so investors were cautioned not to annualize the unusually low net finance charge.

Increased Leverage from Aggressive Buybacks

The new £3 billion repurchase program is expected to lift net debt‑to‑EBITDA to around 2.0x by end‑2026 from 1.8x, modestly increasing leverage. Management argued that this still leaves ample room for selective M&A while optimizing the balance sheet and enhancing returns to equity holders.

AI Monetization and Distribution Still Early-Stage

While AI and the MCP distribution channel show promising early adoption, management stressed that revenue upside remains largely unquantified at this stage. MCP access is incremental to existing distribution agreements, and the timing and scale of usage‑based revenue are still uncertain, leaving AI as a strategic option rather than a fully priced earnings driver.

Continued Non-Underlying and Integration Costs

Non‑underlying and integration expenses are declining but have not disappeared, with some restructuring and remaining integration activities expected to continue into 2026. Management framed these as winding‑down items following the heavy lifting of the Refinitiv integration, suggesting further scope for simplification benefits over time.

Working Assumptions & Short-Term Cash Timing

Looking ahead, the group advised investors to assume a typical working capital outflow of £100–150 million per year. The decision to accelerate supplier payments this year boosted savings but dampened reported cash, emphasizing that short‑term working capital volatility is being managed for long‑term value.

Forward-Looking Guidance and Outlook

LSEG expects organic revenue growth of 6.5–7.5% in 2026, faster subscription growth and EBITDA margin expansion of 80–100 basis points, supported partly by SwapClear revenue‑surplus reductions. The group targets CapEx intensity around 9.5% in 2026, at least £2.7 billion in free cash flow, modestly higher leverage around 2.0x and mid‑ to high single‑digit growth with continued margin gains and double‑digit free cash flow per share growth through 2029.

LSEG’s earnings call painted a picture of a resilient, cash‑generative infrastructure and data business accelerating into a more digital, AI‑enabled future. For investors, the key takeaways are steady mid‑single‑digit to high‑single‑digit growth, expanding margins, aggressive capital returns and a still‑emerging AI opportunity that could provide upside to an already solid financial trajectory.