NZX Demonstrates Resilience with Strong Earnings Growth Amid Market Challenges

Excluding costs related to acquisitions, integrations, and restructuring, the Group’s operating earnings were $22.9 million, marking an 11.5% increase. Operating revenue for the period rose by 7.3% to $57.9 million, while operating expenses, excluding acquisition and restructuring costs, increased by 4.7% to $35.0 million. The rise in expenses was primarily driven by changes in Smartshares’ cost base, following the full period impact of the QuayStreet Asset Management acquisition and Superlife Superannuation Master Trust integration.

Mark Peterson, CEO of NZX, highlighted the resilience of the company’s diversified business model. “In an ongoing challenging environment for global markets, NZX’s earnings result shows the benefit of having interrelated businesses and a diverse range of offerings available for companies to access capital,” he stated.

NZX achieved an underlying net profit after tax (NPAT) of $8.0 million for H1 2024, up 10.9% from the previous year. When accounting for a $7.3 million adjustment related to the fair value of the QuayStreet earnout provision, reported NPAT surged by 119% to $15.3 million.

Strategic Growth Amid Economic Challenges
NZX’s growth strategy remains focused on expanding its Capital Markets product range and leveraging scale across its financial market businesses. Despite the headwinds in equity raising and trading due to macroeconomic conditions, the company saw steady progress in delivering its strategic objectives during the first half of 2024.

Peterson noted, “While the macroeconomic environment remains challenging for equity raising and trading activity – affecting new issuance and market liquidity – NZX expects to see activity levels rise as interest rates begin to fall. Nevertheless, secondary and debt issuance have remained solid, reinforcing the value of being NZX-listed as a platform for access to capital.”

Key Highlights of H1 2024
Launch of NZX Dark: In June, NZX successfully launched New Zealand’s first midpoint order book, NZX Dark, providing an additional trading mechanism that enhances client order execution and leads to price improvements.

Dairy Market Growth: Continued volume growth in the Dairy Market was noted within the derivatives partnership with the Singapore Exchange.

Smartshares Success: Smartshares introduced new funds and saw QuayStreet win the 2024 Morningstar KiwiSaver and Fund Manager of the Year awards. As of June 30, 2024, funds under management (FUM) stood at $11.9 billion, up 11.3% year-over-year, driven by positive market returns and net cash inflows.

QuayStreet Performance: Despite slower-than-expected net FUM inflows post-acquisition, QuayStreet is performing strongly with revenue ahead of the acquisition business case.

NZX Wealth Technologies: The platform transitioned five new clients, boosting annual recurring revenue from $7.2 million in December 2023 to $8.9 million by the end of H1 2024, marking strong progress towards becoming cash flow positive.

Looking Ahead
NZX is progressing in market development initiatives, including the planned relaunch of the S&P/NZX20 Index Futures, anticipated later this year or in early 2025, pending regulatory approvals.

The NZX Board has declared a fully imputed interim dividend of 3.0 cents per share, consistent with H1 2023, to be paid on October 3, 2024, to shareholders registered as of September 19, 2024.

NZX’s full-year 2024 operating earnings are expected to track towards the upper end of the $40 million to $44.5 million guidance range, subject to market conditions.