London Stock Exchange Group PLC's (LSE:LSEG) post-results call with analysts revealed extra details on the outlook for 2023 and its partnership with Microsoft Corporation.
Annual results from LSEG showed pre-tax profit jumped 39% and contained plans to buy back more of its shares.
The exchange operator and financial data provider confirmed a 7.2% annual subscription value (ASG) as of the start of the year, which analysts at Jefferies said "leaves the top end of its 6-8% upgraded guidance range easily within reach".
Looking further out, the analysts said it was "clear that there is more" profit margin expansion to be delivered beyond the 50% exit rate for this year and the partnership with Microsoft "should drive accelerated pricing power" from the second half of 2024 and into 2025.
Following the call, Jefferies analyst Tom Mills said customer benefits from the Microsoft partnership are "expected to flow through from 2H24-2025, with undefined revenue benefits accruing alongside."
The company "sees this as allowing them to capture both incremental market share and to close down the pricing gap with their largest, premium priced competitor".
By unbundling its offering into subscription bands this "should increase potential of Teams-enabled workspace penetration".
Focusing on pricing, management suggested they think "care needs to be applied" when looking at LSEG's circa-3% repricing versus peers.
For instance, they were keen to highlight that Bloomberg puts through price increases only once every two years and therefore the well-reported +9% increase it put through in 2H22 is only half that level annualised, and also argued that headline re-pricing rates are rarely achieved for various idiosyncratic contractual reasons.
Jefferies reiterated its 'buy' rating and has a £100 share price target, compared to shares that closed yesterday at 7,424p and were up 2.5% by Friday lunchtime.