London Stock Exchange Group plc (LON: LSEG) ended in the red on Friday even though the financial information company reported a strong Q3 in the face of economic turmoil in the United Kingdom.
Notable figures in LSEG’s quarterly report
LSEG said its total income went up 5.9% year-on-year to £1.90 billion (better than expected) in the recent quarter. Reacting to its quarterly update, Charlie Huggins – the Head of Equities at Wealth Club said:
Difficult economic backdrop doesn’t seem to be impacting LSE much because three quarters of its revenue is recurring, and products and services it provides tend to be mission critical. This makes the LSE a pretty resilient business.
Gross profit this quarter was £1.70 billion – about a 13% increase from last year. Other notable figures in the quarterly report include £1.27 billion from data and analytics and another £369 million from capital markets – both up more than 15%.
LSEG can stand the inflation
Earlier this week, Invezz reported consumer prices in the United Kingdom returned to a 40-year high in September. But Huggins doesn’t expect that to be much of a threat for London Stock Exchange Group plc.
Inflation is less of a problem for LSE than most businesses, thanks to good pricing power which results in consistently solid margins. Business model is also highly scalable and capital light. This limits the need to take on more staff to grow.
The $27 billion acquisition of Refinitiv in 2021, he added, is helping with cost savings as well. A successful integration of the data provider will unlock significant rewards for investors, he concluded.
LSEG also reiterated its guidance on Friday and said it expects to remain resilient even after the U.K. Prime Minister Liz Truss resigned after just six weeks in office.
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