Euronext N.V. (ENX) Earnings Call Transcript

Hello, and welcome to the Euronext Third Quarter 2026 Results Conference Call. On today's call, we have Stephane Boujnah, CEO and Chairman of the Managing Board; and Giorgio Modica, CFO. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Stephane Boujnah, to begin today's conference. Please go ahead, sir.

Good morning, everybody, and thank you for joining us for the Euronext Third Quarter 2026 Results Call. I'm Stephane Bourne, CEO and Chairman of the Managing Board of Euronext. And I will start with the highlights of this outstanding quarter. Giorgio Modica, Yonex CFO, will then cover the main business and financial highlights before I conclude and open the floor for your questions with the representatives of our management team. I'm now on Slide 4. This quarter, we delivered the strongest quarterly performance since our IPO with record revenue and income of EUR 547.4 million, up 24.9% compared to last year, almost 25% growth in revenues and income. We have delivered the tenth consecutive quarter of double-digit revenue growth. Such sustained performance over 2 years is clear evidence that the diversification of Euronext has transformed the group into a stronger and more resilient business capable of generating solid growth across different market environments. 10 consecutive quarters of double-digit growth is not luck. This is performance. Adjusted EBITDA increased by 31.6%. As a result, the EBITDA margin reached 66.5%. This represents a plus 3.3 fresh point improvement compared to Q3 2025 despite continued investment in growth. Adjusted net income increased by 32% to $223.2 million. Adjusted earnings per share [ closed ] by 31.5% to EUR 2.21 per share, highlighting our consistent value creation for shareholders. Non-volume-related revenue accounted for 55% of total revenue and income and increased by 14.8%, almost 15% increase of nonvolume-related revenue year-on-year. This robust performance was driven by the contributions of Euronext Athens alongside commercial expansion and sustainable growth in custody and settlement. The strong results were also supported by renewed momentum in primary markets, especially in listing and advanced data solutions. Volume-related revenue increased by plus 48.1%, driven by record volumes across asset classes resilient revenue capture and the contribution of our strategic initiatives in Power Futures. We consistently diversify our volume-related revenue by adding new products and expanding into new geographies. Our underlying expenses, excluding D&A, amounted to EUR 183.3 million, representing an increase of plus 13.5% compared to last year. This reflects or investments in innovation and talent to support long-term growth as well as the impact of the acquisition of Euronext Athens. On a comparable basis, excluding the impact from acquisitions, our under cost grew by plus 8%, while our revenue grew on a like-for-like basis by 18%. Net debt-to-EBITDA stood at 1.1x at the end of September 2026. Normalized for cash in transit at Napo, our leverage was 1.2x in the lower end of our target range of 1 to 2. Supported by our strong position, we are pleased to announce a new EUR 350 million share repurchase program. Our financial strength enables us to deliver attractive shareholder return today and invest in building the capital markets infrastructure for tomorrow. This ensures Euronext remains at the forefront of rapidly evolving industry. And at the time where we returned $350 million to shareholders, we are also paying EUR 3,000 of a special bonus to all Euronext employees across the globe, who make a fixed salary below EUR 120,000. Euronext continued to deploy the planned level of growth investments, thanks to our rigorous cost discipline. And beyond that, fundamental rigorous cost culture across the organization on recurring expenses, we are able to upgrade our guidance for underlying operating expenses, excluding D&A, in 2026 to EUR 760 million. This is EUR 10 million less than the EUR 770 million initially announced in February 2026. Turning to Slide 5. I would like to take a few minutes to illustrate the successful delivery of the strategic projects announced in November '24. Just 2 years later, thanks to consistent execution to disciplined operating performance, we are well positioned to capture the future trends on a wide range of diversified classes. We are building scalable businesses. And let me focus on 4 critical projects. First, we have consolidated our leading positions on ETFs after the launch of ETF Europe in September 2025. the first fully integrated European marketplace for ETF. Retail participation in ETF almost doubled in Q3 2026 compared with last year. That demonstrates the attractiveness of this asset class for individual investors with a growing number of initiatives announced and implemented across Europe to household savings and to encourage retail participation, Euronext is very well positioned to capture this long-term growth opportunity. Second, in November 2024, we shared our ambition to expand our fixed income commodities and currency trading and clearing franchise. Since then, we have further integrated the European energy market with new products new geographies and new services, fast-growing scale power activity and the successful launch of our power future business in the Nordics in March '26 away for further geographical expansion to our power franchise across Europe in order to penetrate larger energy markets. Third, we have transferred our fixed income trading and clearing franchise into a pan-European offering. Today, we clear all major European government bond markets and super nationals. We accept collaterals in euro, dollars, sterling and Norwegian kroner. And we are the only Continental European CCP connected to all leading 3-party agents. Combined with the efficiencies brought by our risk framework, this provides a highly competitive clearing proposition for market participants. In October, we successfully completed the third and final migration [ work ] of our repo expansion program. Most of the building is of this critical initiative is behind us. Now the focus is commercial development. More than 20 existing members have already extended their activity to European debt markets through Euronext clearings. Several major international banks are onboarding. And finally, our sponsored access model opens the door to the buy side. Fourth, the successful launch of Euronext Securities new European CSD model on September 21, is a game changer for European capital markets. By connecting trading clearing and post-trade activities through a common infrastructure, Euronext does reduce fragmentation and does improve the petitiveness of European capital markets. What began as a strong convention in November 2024 is the reality in November 2026. The first clients are actively using our innovative model, benefiting first from greater efficiency; second, from increased choices and third, a single European framework within an enhanced commercial value proposition. The remarkable performance over the last quarter demonstrates the resilience of our diversified business and the growing revenue contribution of our strategic initiatives. As you can easily understand, after 10 consecutive quarters of double-digit revenue growth, all results are tracking well ahead the Innovate for Growth 2027 financial targets that we shared with you 2 years ago in November 2024. Our scalable business model, integrated value chain and our disciplined execution position us ideally to deliver the next level of growth for European capital markets. I will now hand over to Giorgio Modica for the business and financial review of Q2 2026.

Thank you, Stephane, and good morning, everyone. Let's now focus on the drivers of the performance for this 10 consecutive quarter of double-digit growth. I'm now on Slide 7. This quarter, we delivered record result, with double-digit growth across all business lines. This performance reflects the strength and diversified business model, disciplined execution and contribution from Euronext Athens. Total revenue and income in the third quarter 2026 reached EUR 547.4 million, up 24.9% compared to the last year. 5% of revenues and income was non-volume related. This represents a decrease compared to the 60% in the third quarter 2025, driven by the dynamic trading environment. This part of our revenues, the nonvolume-related one covered 165% of underlying operating expenses, excluding D&A. . Let's take a closer look now at the key drivers behind this exceptional growth beginning with nonvolume-related revenue and income on Slide 8. Nonvolume-related business grew 14.8% compared to last year. Security Services revenue reached EUR 86.7 million this quarter, a solid 12.2% increase compared to last year. Custody and settlement revenue grew by 11.8% compared to the third quarter to EUR 78.9 million. This strong performance was driven by growing asset under custody reaching [ EUR 8.1 trillion ] in September 2026 up 5.6% year-on-year. This increase was also supported by strong settlement activity and demand for Issuer Services. Other post-trade revenues increased by 17.1% compared to the same quarter last year to EUR 7.8 million, explained higher guaranteed deposit and the contribution from Power Futures. Net treasury income was up 34.8% and compared to the third quarter 2025 at EUR 22.5 million. The increase is driven by a combination of higher cash deposit linked to the power future clearing volatility and higher average spread. Turning to Capital Markets and Data Solutions on Slide 9. Revenue reached EUR 192.2 million, marking a 14.1% increase compared to the third quarter 2025. Primary market generated $53.3 million of revenue, up 15.6% compared to the third quarter 2025. This was driven by continued strong admission activity and follow-on transactions despite a volatile market environment. The performance was also supported by contribution of Euronext Athens. Advanced Data Solutions revenue grew to EUR 73.8 million, up 11.5% and compared to the third quarter of 2025. This performance reflects increasing demand and diversified data sets. Corporate and Investor Solutions and Technology Services reported EUR 65 million revenue in the third quarter of 2026, up 16%. This performance is driven by the growth in Investor Solutions, governance solution and a steady upward trend in colocation and logical access. Moving to Slide 10. Our volume-related revenue saw an increase of 40.1% compared to last year. Revenue for FICC markets reached EUR 121.3 million, delivering a 48.1% increase compared to the third quarter 2025. Fixed income, Trading and Clearing revenue grew by 56.2% to EUR 73.1 million. This reflects record performance of MDS cash, reaching EUR 88.1 million average daily value traded. The activity was supported by favorable market condition greater use of cash bond alongside derivatives for hedging and a robust debt issuance across Europe. The activity was also supported by growing of non-Italian volumes and the expansion in the dealer to client space. Commodities trading and clearing revenue increased by 42.1% to EUR 39.3 million in the third quarter 2026. The strong growth was driven by the addition of Power Futures and record intraday today power trading, printing an impressive 40% volume growth year-on-year. The result reflects strong customer engagement and confidence in [indiscernible] market as Euronext continue to expand to power offering across Europe. The good performance of commodity trading and clearing was also supported by strong activity in agriculture commodities powered by volatility and a supportive market environment as well as the expansion in trading option and the extended trading hours. FX trading Revenue reached EUR 8.9 million, up 19.6% compared to the third quarter of 2025. This reflects high volatility at the end of the quarter. Continuing with our review of volume revenue now on Slide 11. Equity market revenue increased by 33% and compared to the same quarter last year, reaching EUR 124.6 million. Cash equity trading and clearing revenue grew by 34.3%, and compared to the third quarter of 2025, reaching EUR 110.8 million. Average daily volumes traded on Euronext cash market reached EUR 1.7 billion, reflecting a 24.4% year-on-year increase on a pro forma basis, including [ ATEX ]. This quarter, Euronext reached an average revenue capture on cash trading of 0.52 basis points. Euronext market share on cash equity averaged 66.8%. The performance this quarter was also supported by the dynamic growth in ETFs and the strong contribution from Euronext attends. Lastly, financial derivatives trading and clearing revenue was at EUR 13.3 million, a 23.6% increase compared to the third quarter of 2025. This reflects higher volume resilient revenue capture and the contribution from Euronext Athens. Moving with the EBITDA bridge on Slide 13. Euronext reported EBITDA for the quarter grew by 29.3% to EUR 355.8 million -- this was mostly driven by EUR 77.8 million of organic revenue growth at constant currencies. And 28.2 million of additional revenue from Euronext tens -- when we look at cost, Euronext reported EUR 14.4 million of additional cost at constant perimeter and EUR 7.4 million of cost from change of scope. The increase in costs mainly reflect investment in growth and the impact of the strong share price performance on long-term incentives for Euronext employees. In the third quarter 2026, non-underlying expenses increased by EUR 6.8 million, mostly related to the integration of Euronext tens and costs linked to the acquisition of the remaining 25% of GRSS in August 2026. As a reminder, Euronext acquired 75% of GRSS, the leading provider of services to benchmark administrators in June 2024. Total non-underlying items, excluding D&A accounted for EUR 8.4 million this quarter. To conclude with this slide, Euronext, adjusted EBITDA for the quarter grew by 31.6% to EUR 364.2 million with an adjusted EBITDA margin of 66.5%, up compared to the third quarter 2025. Moving to net income on Slide 14. Adjusted net income this quarter reached EUR 223.2 million Depreciation and amortization increased by EUR 5 million, plus 10.1% and with respect to the third quarter in 2025. This increase is mostly explained by the inclusion of the PPA related to Euronext Athens and admin control. Net financing expenses increased by EUR 1.6 million. The increase is mainly explained by higher interest expenses linked to the new bonds issued in November 2025 and FX in Income tax increased by EUR 19 million as a result of the higher profit before tax this quarter. The effective tax rate amounted to 26.4% for the quarter. Share of noncontrolling interest increased by EUR 10.1 million, mostly due to the very strong [indiscernible] Nord Pool as well as the consolidation of Euronext Athens. As a result, the reported net income share of parent company shareholders reached EUR 194.9 million in the third quarter of 2026, up 30.2% compared to the third quarter 25million Reported EPS basic was at EUR 1.92 per share, up 28.9% compared to the same quarter last year. Adjusted net income, share of parent company shareholders was up 32% to EUR 123.2 million. Adjusted EPS basis was at EUR 1 per share this quarter, up 31.5% compared to the same quarter last year. I'm now on Slide 15 for cash flow generation and leverage. In the third quarter, '26, Euronext reported a net cash flow from operation activities of EUR 208.3 million compared to EUR 401 million in the third quarter 2025. The difference reflects higher profit before tax, negative changes in working capital from CCP activities and higher income tax. Excluding the impact of working capital, net cash flow from operating activity accounted for 88.5% of EBITA in the third quarter 2026 versus 99.9% and in the same quarter last year. Net debt-to-EBITDA ratio was at 1.1x at the end of the quarter at the low end of our target leverage. It includes EUR 141 million of cash in trade or pool at quarter end. Excluding this element, leverage at the end of the quarter was 1.2x. I will conclude now on Slide 16. At our Investor Day 2 years ago, we have announced that we would have proactively assessed special shareholder returns according to our capital allocation principle, in line with those principles, Euronext has decided to launch a share repurchase program of maximum of EUR 360 million. which represent 2% of Euronext outstanding share capital. The share repurchase will start off on November 9 for a maximum duration of 12 months. This program underlines our strong confidence in the growth prospect of the group and will not impact the flexibility from a strategic standpoint nor the capability to invest and capture market opportunities. And with this, now I would like to give the floor back to Stephane.

Thank you, Giorgio. Before we conclude, I would like to insist on the outstanding performance of several businesses and the growth opportunities ahead. And let me focus on 4 critical developments that pave the way for future growth. First, the integration of Euronext items continues to deliver very tangible results. In October, we welcome the third shipping company to list on Euronext Athens, reinforcing the group's position as a global hub for the maritime sector. And this is a very fundamental new development of the Athens Stock Exchange. The momentum of the Greek market is further strengthened by the reclassification of Greece to develop market status that led to exceptionally high trading volumes this quarter, and this is to continue. In October, we also saw a strong pickup in follow-on transactions with the completion of multiple large capital increases, including some multibillion euro transactions. Third, the FICC markets revenue grew by plus 48.1% compared to last year as underlined by Giorgio. Although growth was supported by the favorable market environment, our continuous innovation and geographical expansion made the difference and is going to continue making the difference. First, we continue to extend the MTS model internationally, and we innovate in the dealer to client space with new product launches. Second, the energy transition and electrifications are reshaping the European power market, building on the successful launch of Power futures in the Nordics and the Baltics and the structural growth of intrade tradings. We are now expanding our physical and financial power offering across Europe, in particular, in the most promising large electricity markets in the rest of Europe. And third, the dynamic growth in agricultural commodities was strengthened by the expansion in trading options and the extended trading hours that made the difference over the past few months. Fourth, the savings and investment union has the potential to become a major catalyst for European capital markets by encouraging households to invest a greater share of their savings in capital markets, Europe can unlock a significant source of long-term funding for businesses, innovation and infrastructure. As retail participation increases and defined contribution pension systems developed capital markets become deeper, more liquid and more attractive to issuers and investors. This policy shift has started in most countries where Euronext operates an exchange. Governments are building the bridges between savers and markets. A growing number of EU countries are implementing initiatives to increase retail participation to that market. with increased amount of savings moving to pension funds, hence to long-term investments and to defer liquidity. This is going to translate into significantly higher volumes of equities trading in the next years. These developments are encouraging and closely aligned with Euronext long-standing vision. For Euronext, this supports structural growth opportunities across trading, clearing, settlement, custody, indices and market data while strengthening the competitiveness of Europe Capital Markets as a whole. Finally, earlier this week, we have announced that the Supervisory Board of Euronext intends to dominate David Kleber as Chief Executive Officer and Chairman of the Managing Board at the Annual General Meeting on May 25, 2027. The appointment of [indiscernible] follows a rigorous succession process conducted by the Supervisory Board, which considered several candidates and profiles. The Supervisory Board concluded that Mr. David [indiscernible] leadership experience and track record make him well placed to lead Euronext into its next phase of growth. Given that David [indiscernible] is expected to join Euronext in May '27, there is little more to add at this stage beyond what has already been communicated. So for today's call, I suggest that we focus on Euronext excellent business performance and the continued execution for our strategic objectives because 2027 will not be a transition year for Euronext, it will be another year of success and continued growth. Thank you for your attention. We are now ready to take your questions.

[Operator Instructions] The first question comes from Andrew Lowe of Citi.

I had questions in 2 areas. The first is in your new markets for CSD. In your opening remarks, you referenced client wins clients that have already started in your offering. Could you give us an idea of the quantum here. And there was an issue switch announced last week. So if you could give maybe some color about the pipeline for Q4 and 2027. That would be Very, very helpful. The second question is just on your commodity business. So you've had another really strong quarter for Nord pool and the rest of the commodities business. So could you just outline the drivers of Nodal's grow specifically in the intraday spot market looks like you've been taking a lot of market share from your competitors in Central Europe. So what's driving this? And how does your offering compare to the competition? And what benefits have you seen so far from running the Power Futures franchise along that spot franchise, that would be really helpful.

Thank you very much for your questions. For the sake of completeness, I'll give the floor to Pierre Davoust in charge of our CSD expansion project, and he'll answer your first question. And then Camille Beudin, our Chief Diversification Officer, who is responsible, among other things, for our commodities business and our power business is going to answer your second question.

Thank you for the question. As you know, this project is not a migration. It's a project we offer a new choice to clients that have started on the 21st of September. As a result, what clients look at is early adopters that are willing to be the first ones to test an unprecedented route. And the first adopters are there, as mentioned by Stephane, on the 2 sides of the market. First, on the side of the is wars, we already have around 16 shares listed in Paris, Brussels and Amsterdam who use the Euronext securities model including 4 of them who joined recently the model in the context of our project. And this is the beginning, as you rightly noticed, there are further issuers who are willing now to follow suit and join oronasecurities value proposition. And very concretely, one of them, Eurocommercial Properties announced last week publicly their decision to migrate to Euronext Securities and others are following. So we see on the [ adopters ] side, First, adopters having already moved to Euronext securities and a healthy pipeline of issuers who are willing to follow and are taking steps to move to uronic securities. On the other side of the market, we have the first trading members who are live on the model. It's a couple of them. But in to this first doctor already using the model and demonstrating the relevance of the new offering we have a pipeline of clients who are actively onboarding into the new urine executed settle model. So on both sides, we have the first adopters who are live on the model. We have a healthy pipeline of clients who are taking steps to move to Euronext securities. It takes time. It takes time because -- it's unprecedented for clients to change the CSD post rate structure, but we see a healthy pipeline of clients gradually moving from the incumbent settlement model to the new European settlement model delivered by Euronext. .

Then to your question on energy offerings. Let me start by your question related to the intraday offering. There are 2 underlying drivers behind the growth. The first 1 is the market. The market for intraday is growing, fueled by the growth of renewable into the grid. And the second driver is basically the growth of our market share due to the quality of our platform and the superior customer experience we offer to our clients. When we acquired -- no back in -- it was primarily Nordic business, but we have significantly expanded the offering across Europe, and we now generate more revenues from our intraday offering outside the Nordics than within the Nordics. So indeed, the market share has grown significantly across Europe, especially in Germany, in France, in the Netherlands and in Belgium. . Now when it comes to the power derivatives offering, it was also an important driver of growth during the quarter. Actually, the month of September was the highest month in the power derivatives market for the last 5 years. So it demonstrates the confidence of the customers in the offers that Euronext has been rolling out in March last year. The market share in the power derivatives market in the Nordics for [indiscernible] has been during the third quarter, above 95%, [ 95% ]. And the open interest rigid on our platform reached a new record at 1.97 terawatt hour, so growing 14% since the migration. As Stephane and Giorgio alluded to during the introductory remark, it is an important source of growth for us going forward. And we are going to expand this power derivatives offering in Q2 next, starting with Germany and then progressively rolling out this offering to the rest of the European continent.

The next question comes from Julian Dobrovolschi of ABN AMRO-ODDO BHF.

Maybe to begin with the fixed income business. again, another outstanding quarter. If you look at for the fixed income trading and clearing up 56% year-over-year and 30% quarter-over-quarter and clearly very strong -- just wondering if you could split and kind of talk about what's coming from the structural expansion, i.e., let's say, international expansion in the business, what's driving the part of the growth on that and how much is then coming from the volatility side? And also in light of your international expansion agenda, which I think is going really well. Just wondering how should we think about the new run rate growth in the fixed income business. And then the second part on the minorities, the noncontrolling interest now pretty much doubled if you compare it to Q3 '25. Just wondering what's your appetite to buy out the minority stakes that you currently have in MTS, Nord Pool or the Euronext.

Thank you for your question. I'll let Giorgio answer both questions, the one on the fixed income dynamic and on the minority interest where we have a clear view, which is that we manage businesses that are jointly owned by some of the users in a very effective manner. And our intention is that as long as they want to stay with us as partners for these ventures. We are going to continue developing this business with them. But over to you to answer the specific situation of MTS. .

Yes, absolutely. So when it comes to MTS. I believe it does make sense to look at the evolution of volumes throughout the year to give a sense of what is seasonal, what is recurring. So what we have seen is at the beginning of the year, we have started seeing a good growth of MTS running double-digit growth. And then that growth has keep increasing until the volatility of the market has spiked. And what we have seen is that when the volatility spiked, the volume of the platform have temporarily reduced for some weeks. And then the growth has restarted, even stronger than what it was at the beginning of the year. The reason why I'm mentioning that is that what we are currently seeing in the market is something which is similar to what has happened at the beginning of the year. We have recorded in the third quarter, exceptional volumes that were mainly triggered by a prolonged period of stability that helped market participant to build large fixed income portfolios. But with the increased volatilities over the last 2, 3 weeks, we have seen a reduction of volumes, which with the gradual normalization of market condition has partially recovered. So to make a long story short, what I would say is that we are still looking at very sustained growth across the cycle, which from time to time is altered by spikes of volatility to return them back to the previous level when market conditions normalize. And in this respect, the exceptional quality, which is widely recognized is a source of confidence for future growth.

The next question comes from Grace Dargan of Barclays.

Maybe I could just come back on the fixed income because it's been a great performance. I guess I just wanted to come on the revenue margin just the volumes within fixed income. Obviously, there will be a mix effect in there. But by product, should we be thinking about broad stability within the revenue margins? And then secondly, on Athens, that continues to surprise the upside. So how are you thinking about Athens growth into next year across all the business lines? And where do you think there is the greatest upside now?

Okay. I'll take the question on Athens and then Giorgio will answer the question on fixed income. The acquisition of the [indiscernible] Exchange that became Euronext [indiscernible] is an absolute success for several reasons. Number one, and you need to look at what we are doing in Greece in analytic manner. Number one, we believe that the equity market in Greece is going to continue growing because what we have made is to connect the Greek market that we are relatively insulated to global markets. There is a defining event that's going to happen in June '27, which will be the connection of the Greek equity market to the single liquidity pool, the single book and the second technology platform of Euronext that will be a significant accelerator of volumes in big markets. . Second, we are actively working on primary market development in Greece. I mean there is a significant number of Greek shipping companies that up until now, we are listed everywhere in the planet except in Greece. We have created a momentum for those large Greek shipping companies to be listed back at home. And this is possible because they see the prospects of enhanced liquidity on the Greek markets and enhance visibility to global investors. And this is going to continue beyond chipping, which is already a significant sector in Europe and in particular, for Greek technology and services companies. And we are confident that it's going to play a significant one. Third, Greece has been redefined by various index players like MSCI, [indiscernible] as a developed market. And this is changing completely the perception by versus asset managers in the [ planet ] vis-a-vis Greece. So this is also a significant source of [indiscernible] . In addition to that, we are growing our business in fixed income with the debt management office of Greece with -- we are growing and expanding various into various projects with NX, which is the Greek energy market, which is owned 40% by Euronext Athens. And beyond that, across all the value chain, we are working on various synergies that to be extracted from the business. We are already very advanced, actually well more advanced than we thought at this stage on extracting synergies. We announced to the market that we would be extracting EUR 12 million of synergies, and we are going to probably beat that guidance because we are making huge progress. Never forget that there is something more or not, which is as important as what we do in Greece for the Greek market. which is that we have decided to create in Athens technology and support center that is going to operate for the benefit of the rest of the group, taking benefits of the top quality of green talents which have a cost which is lower than the one in other geographies. So just as we have now 500 people during IT in Portugal for the rest of the group. We are building a team that is going to increase significantly in Athens to serve the rest of the group. And that will have, over time, a significant impact on the cost base of the group. So that's for Athens. On fixed income?

When it comes to fixed income, the pricing of fixed income is relatively stable with respect to changes in volumes. So when it comes to the profitability, what you should look at is 2 things: increase of volumes generally trigger a very similar chain revenues. And as is the same for other platform business, the cost base is largely fixed.

[indiscernible] from Michael Werner of UBS.

Thank you guys for the presentation. Two questions from me, please. I guess, first on -- I think in the past couple of years, you've alluded to some AI-driven cost savings. I was just wondering if you can update us on your views there. And any quantification would be great. And then second, on MTS, just going back to kind of the fixed income volumes. And again, going back to Giorgio's comments about the decline in volumes more recently, the volatility. The declines were quite substantial, let's call it, 50%, 60% and essential most overnight. I was just wondering if you could give us a little bit more color as to kind of what drives that change in the client behavior in terms of activity? And why ultimately, it seems to happen or at least did in October, so suddenly?

Thank you. So Giorgio is going to answer your question on MTS. I'll take your question on the cost base to the extent it's related to AI development. AI is being deployed across the organization in a very systematic way. As I said on a few occasions, that creates some debate of the total cost of operating and deploying AI. Second, create all sort of strategic issues about what are the risks associated to outsourcing to AI agents, some significant parts of our business. And third, it creates a question about the sustainability of this deployment and the way we manage our talent pool in the new context. Within that framework, we are deploying -- which is much broader than just cost and just face value of AI deployment -- we are definitely observing stronger-than-expected cost reduction related to AI. We do not communicate any specific number in this respect because the fundamental decision from our side of the call is how much of these productivity gains we capture and return to shareholders and how much we reinvest in terms of spare capacity into new projects. So when you are facing a company that does a 6.5% EBITDA margin and a share buyback of EUR 250 million and a revised cost guidance. You have to assume that AI is contributing to that strong performance in terms of cost, is contributing to the capability for us to invest in new projects by releasing spare capacity, but the permanent decision we have to take is to do it in a sustainable manner, addressing all the 3 constraints I've mentioned earlier, [indiscernible] profile of outsourcing decisions and management of the tenant pool and total cost of operating those agents because this is not free like Internet, it's expensive. And then precisely decide where we allocate productivity gains. And that's the way we address something. So there are more productivity gains than what you see, and a part of them are reinvested in the business.

Yes. And then when it comes to MTS, one way to look at it is the following. You should look at 2 parameters. The parameter #1 is the absolute level of volatility in the market. And the parameter #2 is what is the level of expected volatility for the next months. And these 2 drivers, I believe, explain what has happened to do the volumes. So let me try to clarify each 1 of the 2. First one, level of volatility. When -- if you are a fixed income trader if the volatility is extremely low, and you're making money pretty much with changes in the yield curve, especially on the short end you need to be the huge portfolios to gain something because as the market is stable, if you want to make a lot of money, you need to deploy a lot of money. So this is variable number one. Variable number 2 is when there is a significant expected change in volatility, you need to adjust before it happens. And if we apply this to drivers to what has happened in the last 12 months. I believe that it gives a very good view of what has happened. So at the beginning of the year, we witnessed a very similar sharp decrease in volume exactly in the moment when the expected volatility for the following months has increased quite rapidly. And the same thing has happened at the beginning of this quarter when we have seen the drop in value that we have registered. Now where are we in this moment? We are in a moment of sustained high level of volatility. Now what is reasonable to expect is that once those level -- once level of volatility is going to go back to more normal level, we will see the reverse of what has happened, which means traders building back up more significant portfolios and driving more trading activity that will drive tighter spread than all the positive cycle. Now if we look at the trend in the last 4 weeks, what we have seen is something which is positive, which is despite the fact that the market volatility has remained unusually elevated, we are start seeing some recoveries that are driven by the fact that this high level are stable. So what we have seen is volumes that have dropped to around EUR 40 billion per day. Now if I look at the volume of yesterday, they were closer to EUR 60 billion, which is still a reduction with respect to the record quarter that we have just reported and the more sustained level of activity. So going forward, what do we expect is again that when market condition will have stabilized we will keep seeing the trend of growth that has characterized MTS in the last 5 years.

SP1 The next question comes from Benjamin Goy of Deutsche Bank.

Two questions, please. Sorry, one more on MTS. Maybe similar to the commodities business. Can you talk a bit about the non-Italian volumes you're seeing in software volumes and maybe at some point, revenues for developments you're expecting? And then secondly, on the leadership transition, I know you want to stick it to operating momentum, but clearly, have an outsider coming in, and there might have been internal candidates. Just my wondering how the Board and the group think about talent retention to ensure this operating momentum.

So I'll take the transition question, and Giorgio will take your first question on MTS. The Board has decided after a long process to appoint the current CEO of [ NN ] in the Netherlands as the next year of Euronext. He will take office after the next general meeting in May '27. I mean the Board is taking steps to organize proper retention. And I can assure you that everything is being done to maintain the continuity of operation and strategy for sure to deliver a strong 2027 year and to create the platform for a new period, new development under the leadership of Mr. [indiscernible] when it comes. So I will not be concerned about any retention issue. Giorgio?.

Yes. When it comes to non-Italian revenues of MTS. A few elements on my side. The growth of the non-Italian business is as strong as the one of the Italian business, potentially at times even stronger. However, given the fact that the 2 go at the same trajectory still the bulk of the business in MTS is linked to the trading of Italian government bonds. Same is true for the growth of the dealer to client business that keeps recording double-digit growth but remains a minority share of the MTS revenue. So to make a long story short, Unfortunately, the exceptional success that we are encountering in Europe is a bit diluted by the intrinsic strength of the Italian business.

The next question comes from Russell Quelch of Morgan Stanley.

I have 3. Firstly, around the MTS expansion outside of Italy. So France is perhaps the biggest opportunity here. Any progress there in your conversations with the DMO around primary issuance. I'm just wondering if there's a matter of time given you've shown the benefits of within Italy and what that can bring to the French market? And do you think the recent volatility in French tubing spreads highlights the need for innovation there in France? Secondly, on costs, given the updated cost guidance, I wonder what the exit cost base should be for next year? Can you maybe give a bit more color on where you're looking to accelerate investments? You said that earlier based on the benefit cost performance particularly into assets, wondering what your strategy is there. It would be great to hear if there's anything going on when you think about your strategy around it? And then thirdly, just on the European CSD expansion, just to come back to that. It seems like there's an upgrade to your language, given you described this as a game changer in the press release. So I'm wondering how quickly you expect volumes to ramp there and what conversion metrics we should be or milestones that we should be tracking through 2027?

Okay. I'll take your question on MTS, France. Giorgio will take your question on the cost dynamic. I will then give the floor to Nicolas on the digital asset project because it is in charge of this project, and he will tell you broadly where we are because we don't want to create a specific and numerical expectation until the project is fully live. And then I'll give the floor to Pierre Davoust to answer your question about the definition of success in '27 for the expansion. . On MTS France, we have, as I told you, a very intimate dialogue with the debt management office, the Office of the Minister in charge of Budget public accounts and the Office of the Minister and the Minister himself in charge of the Economy and Finance. The situation on the French debt is under control, and the debt management office is successfully doing all the actions they have to do in they have close and intimate relationship with the primary dealer system. They are using more MTS friends that already exist than they do in the past. We have a continuous dialogue about at what time it would make sense for them to move more significantly to a different incentive type of program. At the moment, they have not yet made the relevant steps for all sorts of reason, I don't want to comment here, which is a combination of interest for liquidity management versus the signaling of what it would mean for -- in the current environment. But as I told you, it's not yet there. I believe that one day it will happen, when it will -- it will be the case, I don't know. It's the definition of a moonshot. It will be a game changer for MTS. It will happen. But I don't want to create specific expectations on timing because that will have significant implications for the primary dealers. We are very close to the debt management office of France for the moment. I can't be more specific, except that it's work in progress, and we are not yet where we want to be, but we are making slow progress. Giorgio on cost, Nicolas Rivard on the digital asset ambitions and Pierre Davoust on the expansions definition of success for '27.

I mean -- so the -- the best answer I can give to you is the following: that there are different elements that are present at the same time. So #1 is that we are starting to see the positive impact coming from the implementation of AI. This is already happening, and we will see that as well in the next years. The second element is we are seeing as well a strong demand to develop new solutions as a way to improve the service we provide and generate other opportunity going forward. And we need to put all these into something that makes sense for the budget of next year. So we are right in the middle of the budget process which is going to be the mean to make a synthesis in between the different pushes on the one side. Everyone has very exciting opportunities. On the other side, we need to prioritize and allocate capital in the most efficient fashion. So unfortunately, it's a little bit early to tell you exactly what is going to be the net effect of all the elements I just described. This is going to happen as every year in February next year, we will announce the cost target for the following year. But what I can tell you is that these 2 elements are equally relevant and equally true. On one side, we are still benefiting from increased efficiency. On the other side, we see a lot of opportunities that would justify for us keep investing in new solutions in '27 and '28.

On the digital asset, I want to share with you 3 points. The first one is indeed as there is -- this domain remains highly exploratory, there is increasing interest in this space with an increasing investment we see across various stakeholders. [indiscernible] could be an enabler to reach a new client and expand the usability of existing assets. The second point is that Euronext has already allocated resources in line with the cost guidance with a dedicated digital asset team. The team is currently working on the most promising products and services with the objective to identify the most relevant 1 before scaling our offering. As mentioned by Stephane, it is too early to create specific expectation or guidance about this initiative. The third point is Euronext is very well positioned as a Europe leading financial market infrastructure and is very well positioned to bridge the gap between traditional finance and digital finance. We have a pan-European footprint, stronger commercial relationship with large global investors, asset holders, intermediaries, et cetera. And we have a full functional coverage of the transaction chain and asset life cycle. So there is a strong interest from market participants to codevelop solutions with us in this distributed digital asset space.