LSEG meets targets after Refinitiv acquisition

London Stock Exchange Group (LSE: LSEG) has achieved all the goals it set for its acquisition of Refinitiv and is on track to launch its first artificial intelligence-based products developed in collaboration with Microsoft.

Despite positive financial results, LSEG shares saw a slight dip in early trading on Thursday, down 2.4% by 10:00 GMT.

LSEG reported a pre-tax profit of £1.20 billion for 2023, a slight decrease from £1.24 billion in 2022. However, total income, including recoveries, climbed 8.2% to £8.38 billion compared to the previous year’s £7.74 billion, exceeding market expectations. This growth was widespread, with all three business segments – Data & Analytics, Capital Markets, and Post Trade – witnessing growth.

Looking beyond the financial performance, LSEG’s partnership with Microsoft holds significant promise for the future. The two companies signed a 10-year cooperation agreement in December 2022, with Microsoft acquiring a 4.2% stake in LSEG and committing to purchasing the company’s products. More importantly, the collaboration aims to co-develop innovative market data and financial markets infrastructure products.

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“In Data & Analytics, customers will shortly be using the first products from our partnership with Microsoft,” announced CEO David Schwimmer. “Together, we will transform how financial markets participants communicate, research, analyse data and trade.” These groundbreaking AI products are expected to launch within the first half of 2024.

While acknowledging LSEG’s solid performance in a challenging environment, analysts remain cautious. Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, commented, “These are solid results, but it is simply too early for LSE to declare victory.” He highlighted the complexity and expense of integrating Refinitiv, emphasising that accelerating revenue growth while improving profitability will be the true test of the merger’s success.