Oct 29, 2019
Operator
Good afternoon, ladies and gentlemen, and welcome to the Deutsche Börse AG Analyst and Investor Conference Call regarding Q3 2019 Results. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for questions following the presentation.
Let me now turn the floor over to Mr. Jan Strecker.
Jan Strecker
Welcome, ladies and gentlemen, and thank you for joining us today to go through our third quarter 2019 results. With me are Theodor Weimer, Chief Executive Officer; and Gregor Pottmeyer, Chief Financial Officer.
Theodor and Gregor will take you through the presentation today. And after the presentation, we will be happy to take your questions.
The presentation materials for this call has been sent out via e-mail and can also be downloaded from the Investor Relations section of our website. As usual, this conference call will be recorded and is available for replay.
Let me now hand over to you, Theodor.
Theodor Weimer
Thank you, Jan. Also from my side, ladies and gentlemen, a warm welcome.
Let me start with a short summary of the highlights of the reporting period. Afterwards, as always, Gregor will present the results in full detail.
In addition to the continued secular growth in line with our strategic plan, we saw additional support in the third quarter from an improvement of the current equity market volatility. Our financial derivatives business, Eurex, and our commodities platform, EEX, continue to be the main drivers of our secular growth.
Eurex saw further growth from product innovation, higher OTC clearing revenues and positive pricing effects. At EEX, we benefited from yet again further increases of market share levels, both in Europe and the U.S.
The cyclical tailwind in the third quarter was a combination of increased net interest income and temporarily higher equity market volatility in the month of August and September. Because of double-digit net revenue growth in the third quarter, the growth of the adjusted operating cost increased somewhat compared to the first and second quarter.
This is fully in line, I repeat, this is fully in line with our expectation and was driven by a number of factors, Gregor will outline in a movement. Because of this development, we saw a strong increase in our adjusted net profit in Q3 by 18%.
As planned, we closed Axioma acquisition mid-September and have created Qontigo as the new umbrella for index and analytics businesses. Qontigo equips our clients to address trends reshaping the industry – the investment industry, including the rise of passive investing and smart beta, new technology infrastructure for scale and the shift towards customization of services.
Considering the positive development over the course of 2019, we confirm here by our guidance of around 10% adjusted net profit growth for the full-year 2019. This strong set of quarterly results confirms again that we are well on track with the guidance to our organic growth ambitions.
But beyond organic growth, we continue to actively pursue M&A opportunities, only the combination of organic and inorganic growth fully unlocks the growth potential of this great company. Our M&A strategy is unchanged.
We are aiming to increase the scale of selected still smaller asset classes in our group. With the Axioma transaction, we have strengthened our pre-trading offering significantly and improved access to the buy-side for the entire Deutsche Börse Group.
Qontigo now serves as a platform to also further grow inorganically in the analytics business. In the Trading & Clearing area, we are generally offering well-established platforms, but size and scale of less mature businesses, like commodities and FX can still be further improved.
In investment funds services, we are considering our product services and geographies that add value to our already leading fund offering. With this, we are confident that we can create additional value through inorganic growth.
Let me now hand over to Gregor to present the details of our Q3 results.
Gregor Pottmeyer
Yes. Thank you, Theodor, and welcome, ladies and gentlemen.
Let me start with the group financials on Page 2. In the third quarter, Deutsche Börse saw significant improvement of net revenue and earnings growth rate compared to the first and second quarter 2019.
Total net revenue increased by 13%, which was a combination of continued secular growth in line with our expectation and the strong cyclical backdrop. As we mentioned during the last two quarterly calls, the implementation of IFRS 16 resulted in some shifts from operating expenses to depreciation.
We adjusted last year’s numbers in the presentation to ensure a like-for-like comparability. Operating costs amounted to €274 million.
They were adjusted for around €46 million, mainly relating to the closing of the Axioma acquisition. Operating cost was mainly driven by higher investments, higher costs for share-based compensation and consolidation effect.
Furthermore, the operating cost base in the third quarter 2018 was comparatively low. Some of the operating costs growth was offset by the efficiencies from the Structural Performance Improvement Programme.
Due to the scalability of our business model, the adjusted net profit showed a disproportionate increase by 18% and reached €283 million. Let us now turn to the quarterly result of the segment beginning with Eurex on Page 3.
The development of Eurex in the third quarter was driven by around 7% secular growth in net revenue from OTC clearing, new products and pricing. In addition, cyclical net revenue increased by around 12%, mainly driven by the spikes of volatility of some of the trading days in August and September.
Consequently, net revenue increased 19% and the adjusted EBITDA 25%. Our commodities business, EEX, continue to perform very well in the third quarter.
Net revenue increased by 14% and adjusted EBITDA by 32%. Net revenue growth continues to be mainly driven by power derivatives in Europe and the U.S.
In both regions, we expanded our market share further. In Europe, we now see levels consistently about 40%, compared to OTC in the main market Germany.
Levels in the smaller markets like France, Italy and Spain are even higher. In the U.S., we continue to increase our market share versus the other exchanges to record level of 44% in September.
To continue this success, Nodal has expanded its cash offering in the third quarter. About 35% of the power generated in the United States is from natural gas and it does have a significant impact on the price of power.
When using Nodal for both products, participants benefit from significant capital efficiency through gross margins. Let me now turn to Page 5 and the FX business.
360T’s net revenue saw an increase by 17% to €24 million. This is now for the first time since the consolidation of the GTX ECN last year, a like-for-like number.
While the cyclical environment in FX markets continues to be difficult, as you can see from the development of some of our peers, 360T attracted further clients, in particular, in the U.S. As a result, September was the best month ever for 360T.
Adjusted EBITDA increased 30% and amounted to €12 million. While equity trading volumes on the cash market declined slightly in the third quarter, Xetra further strengthened its position as a reference market for trading German blue chips and increased its market share to 72%.
Also, on a positive note, trading volumes in exchange traded funds increased 15% year-on-year. As a result, Xetra net revenue stood at €55 million and adjusted EBITDA at €31 million.
Our Post-Trading segment, Clearstream, continued to be mainly driven by growth of net interest income. Despite the recent rate reductions in the U.S., slightly high year-over-year rates and increased cash balances we’re contributing to this development.
Furthermore, we saw solid growth in core settlement and custody activities, which more than offset the decline in net revenue from managed services as part of third-party services. In total, net revenue in the Clearstream segment was up by 8% and reached €189 million.
Adjusted EBITDA stood at €119 million. The Investment Fund Services segment that you’ll find on Page 8, showed a strong increase of net revenue by 29% to €48 million.
Approximately half of the growth is attributed to the consolidation of Swisscanto Funds Centre in the fourth quarter last year and the acquisition of Ausmaq, which we completed at the end of July. The organic growth of the funds business was fueled by the onboarding of new clients and high level of activity among existing clients in more volatile markets.
The adjusted EBITDA grew by 35% and reached €24 million. In GSF, average outstandings in the collateral management business increased by 7%, mainly driven by new client wins and growing volumes in initial-margin segregation products.
In contrast, market conditions in the securities lending business continued to be challenging because of negative interest rates and the ECB’s monetary policy, putting added pressure on fees. However, volumes in securities lending recovered somewhat in the third quarter when compared to the first-half of the year, supported by new client acquisition.
Overall, the GSF segment’s net revenue declined by 10%. Therefore, adjusted EBITDA declined to €10 million.
Slide 10 shows the new Qontigo segment, which consists of the newly acquired analytics business, Axioma, and the index businesses of Deutsche Börse. As part of the creation of the new segment, we also transferred around €3 million index-related net revenue from the Data segment to the Qontigo segment.
Historic figures are adjusted accordingly. The €6 million net revenue we are showing for the analytics business refers to the period since closing of the transaction on September 13.
However, due to the revenue recognition under IFRS 15, this number cannot be analyzed. For the full-year 2019, we expect Axioma on a standalone basis to generate around €65 million to €70 million of IFRS net revenue.
Year-over-year, the adjusted EBITDA of the Qontigo segment stood at €29 million, an increase of 15%. Please do keep in mind that around 22% of the net profit will be distributed to the minority shareholders of Qontigo going forward.
Net revenue in the Data segment was down by 8% on the previous year’s figure. The decrease was mainly due to lower audit-related net revenue as they were unusually high in the third quarter of 2018.
As a result, the adjusted EBITDA stood at €28 million. On Page 12, I would like to put the Q3 results into the context of the first nine months of 2019.
The much stronger net revenue growth rate in the third quarter has helped to achieve net revenue growth of 7% during the first nine months of the year, which was mainly driven by secular factors. At the same time, the adjusted operating costs increased by 6% and reached €782 million.
In total, the adjusted net profit increased by 12% to €863 million. Considering this development, we are confirming our guidance for the full-year of around 10% adjusted net profit costs.
On Slide 13, we provide you with an overview of the three components of net revenue growth for the first nine months of 2019. Compared to the previous year, secular growth being the key component of our strategy to increase net revenue has developed very well.
The increase of 5%, respectively, €105 million was mainly driven by Eurex and EEX, but Qontigo, IFRS and 360T contributed as well. On the cyclical side, the increased net interest income due to higher U.S.
interest rate was partly offset by lower market volatility. This is despite the pickup of volatility we saw in the third quarter.
Consolidation effects resulted in further net revenue growth by altogether €24 million. But the discontinuation of the managed services at Clearstream had a negative effect on net revenue, which amounted to roughly $7 million.
Adjusted operating costs, shown on Page 14, increased in the first nine months of 2019 by around 6% and reached €782 million. This includes inflationary pressure in staff and other operating expenses, which was largely offset by lower provisions for variable compensation.
Savings from the Structural Performance Improvement Program made an important contribution to fund investments in growth initiatives, new technologies and regulations. Net investments grew by €16 million.
Furthermore, consolidation effects from M&A activities resulted in an increase of operating costs, which was offset by the discontinuation of managed services at Clearstream. This concludes our presentation.
Thank you for your attention. We are now looking forward to your questions.
Operator
Thank you. [Operator Instructions] The first question for today comes from Kyle Voigt, calling from KBW.
Please go ahead.
Kyle Voigt
Hi, thank you for taking my question. If I could just one on M&A, I guess, now that FX is off the table.
Could you just give us an update on the M&A environment? And specifically, I’m wondering if you could help us understand where you’re seeing the most opportunities for further consolidation in those five key areas of focus for M&A?
It doesn’t seem like there’s many sizable assets left in FX or index or fixed income. So should investors be more thinking about commodities and IFS as a focus near-term?
And are there still plenty of opportunities left there? Thank you.
Theodor Weimer
I’ll take this one, Kyle. Theodor speaking.
On the M&A side, we constantly screen opportunities alongside our value chain, and trust me, we are not getting tired of it. We understand the mechanics of scalability, growth is important and growth is stemming on the organic side and also – and we need an add-on on the inorganic side, on the M&A side.
And we stick to the areas we have communicated, which is data, FX, IFRS, commodities and fixed income. You were asking whether there are certain areas, which are – which have maybe a little bit higher priority.
Indeed, data has high priority, FX continues to be one, but the available targets are limited, as you correctly said, on the post-trade side, we are looking into it and also on the commodity side. So this is – to your question, we will not fall into the trap to feel pressed to do any kind of transactions with all prices.
You all have seen what’s happened with Hong Kong on a fee and this kind of stuff. So we want to get it done.
We are fully aware that the multiples in the market are very high. In some areas, they’re extremely high.
And we are very conscious not to overpay and create structures and situations, where we can get it done and where we pay a reasonable price, we will stick to what I call financial discipline.
Kyle Voigt
Okay. Thank you.
Operator
Thank you. The next question comes from Johannes Thormann calling from HSBC.
Please go ahead.
Theodor Weimer
Good afternoon.
Johannes Thormann
Yes, good afternoon. Johannes Thormann from HSBC.
Two questions, if I may. First of all thanks for the update on Qontigo.
Could you give us also a feeling for the costs associated with this business and the impact on minorities? And secondly, Peter Reitz of EEX gave an interview saying, you enter the Japanese power market next year.
Can you talk a bit about that how far we are? Is it still the situation and so on?
Thank you.
Gregor Pottmeyer
Yes. Johannes, thanks for the question.
Yes, with regard to Qontigo in my speech here, you have here that we guide for some €65 million to €70 million net revenues of the IFRS. So that is the net revenue number we guide for the full-year.
And the cost base is roughly €5 million below in the range of €60 million to €65 million. And with regard to the minorities, yes, as you are aware, that we own now 78% of Qontigo, 19% with GA and 3% with the management basically.
So we own 78%, and that’s the number in the range of 20%. And the minority in – level is in the range of €20 million.
Johannes Thormann
Okay. Thank you.
Gregor Pottmeyer
With regard – to do the – and the Japanese market, yes, Theodor, go ahead.
Theodor Weimer
Yes. I think this confirms how important the European Energy Exchange is on a global scale.
So it’s the largest global power market. And therefore, we have the ability here to enter into new markets, although, this is going to be a small contribution in the beginning.
So financially, I don’t really think you have to start modeling it already, but it really confirms EEX position on a global scale. If it’s about power, power trading or derivatives trading, then we are usually approached to also assist other markets.
Johannes Thormann
Okay. Thank you.
Operator
Thank you. The next question comes from Chris Turner.
She is calling from Berenberg. Over to you.
Chris Turner
Yes, thank you, and good afternoon. It’s Chris Turner from Berenberg.
One question and maybe one clarification, if I can. Firstly, the question, last week, a number of banks and asset managers published a whitepaper, looking at clearinghouses and suggesting they should hold more capital.
I was wondering what your views on those proposals were? And more generally, do you think clearinghouses need to hold more capital?
And then just a follow-up your question on M&A earlier. Can you maybe share some thoughts about how the combined LSE-Refinitiv business may change the competitive landscape for Deutsche Börse in Europe?
Thank you.
Gregor Pottmeyer
I can start with the whitepaper for the clearinghouses. I think that that’s a constant discussion in the market around the role of a CCP and clearinghouse.
So our view is very clear. So the clearinghouse does not go for its own risk, right?
It’s mitigating risks. And therefore, we don’t see that there should be a higher capital level, what is currently available.
And so that’s a dialogue again. And – but we have a very, very clear view that a CCP is an instrument to mitigate within the market and that’s not basically keep all the risk here.
As regard to M&A, you can do.
Theodor Weimer
Yes, Chris, Theodor speaking,. On the M&A, you asked a question whether LSE and Refinitiv together may change or will change the European and maybe even global landscape.
On the M&A side, my clear answer is, it changes the chessboard for all the players, right, because LSE is now busy with Refinitiv for the next couple of years. That is for me pretty clear, right?
SCV [ph] is busy with next, as you know, right? Everybody is looking what’s going to happen with Brexit as such that comes on top of it.
I do not see a fundamental change or that all the – or other major exchanges are coming into play, I do not see this actually. It’s still the case that a major and large stock exchanges are being perceived as a National Domestic DNA.
And therefore, it will also – will almost be a kind of an exception. This does not mean that one or the other cash market exchange may trade, right, or may came up to play.
But I think our approach that the competition on M&As will continue and continue to be very fierce on the assets side, right? On the asset class of side, this will continue.
So quite frankly, it’s pretty clear, we have not achieved to get FX – all FX matching down, right? But there are other deers out, right, which we call, which we can go after, right?
So that is our situation. But I don’t see a massive fundamental change what happened with Hong Kong and LSE, you have seen the stalled initiative and it pulled back quite early on.
Chris Turner
That’s fascinating. Thank you.
Operator
Thank you. The next question comes from Bruce Hamilton calling from Morgan Stanley.
Over to you.
Bruce Hamilton
Hi, yes. Thanks, and good afternoon.
Maybe a quick one on Clearstream. Just looking at Q3, obviously, you’ve grown EBITDA a fair bit less than revenue, so negative operating leverage.
Is that something that we should – why is that happening? Should we expect that going forward firstly?
And then clearly, Clearstream offers good stability in cash flow generation to the group, but equally constrained to on strategic optionality. So, particularly in the light of the LSE Refinitiv moves, have you in anyway sort of rethought how cool Clearstream is to the future of the business in the shape of Deutsche Börse Group?
Thank you.
Gregor Pottmeyer
Yes. So starting with the first question of the development Clearstream in Q3.
So overall, the performance in Q3 was quite positive with basically 7% and 8% revenue increase. You see now here also some decrease in the NII, obviously, as we have a year now the rate cuts from the Fed and what immediately is impacted our NII.
And that’s basically the main reason for that kind of development that the profitability level is a little bit lower. The business is out, NII is right on track so far.
Second question with regard to Clearstream strategic elements and you will refer to the right thing, obviously. So from our perspective, Clearstream is a core business.
We like that business. And if you see what happens with regard to our waiting number, so as we constantly produce additional cash as we constantly increase our earnings, obviously, our cash on hand and our debt level capacity increases here.
When I told you last time, I said, it’s roughly €1.5 billion available firepower for M&A transaction. We are now in the level of roughly €2 billion, we have now a little bit more cash on hand and that opportunities has also increased.
And so that’s €2 billion, I think, you’re – you can do something with this – with that and as a reasonable number. And when we got to this €2 billion, as Theodor already mentioned, we are reacting really via to do an M&A transaction to increase the capability of our companies to increase the scalability of certain business.
So far, no need to change here something.
Theodor Weimer
And in addition, Bruce, from my side, right? If you look back over the last 10 years and even if you look for what, on average every year, Christmas produce a 3% to 5% fee revenue increase, right?
So even without a nice solid business, it’s a very robust business. We’re sitting on 14,000 – yes, 14,000 – €40 trillion of assets under custody and servicing.
It creates lots of opportunities to complete the market in the backyard of our business, right? We are very nicely positioned in the duopoly game in Europe with one competitors out there.
Even despite the fact that we may have a disadvantage shareholder structure, if I may so, we are more dynamic, we are very competitive, and our guys are very commercial, right? It’s a very robust business at the end of the day, and therefore, right unless somebody comes to me and tells me, “Listen, you can get X with a super duper video multiple and a huge growth rate, right, that I – then I can theoretically consider a very shallow – shallow sell a or continue to sell a hugely profitable business, which is growing nicely with a strong EBITDA margin.
Bruce Hamilton
Thanks. Very clear.
Operator
Thank you. The next question comes from Philip Middleton.
He’s calling from Merrill Lynch. Over to you.
Philip Middleton
Hey, good afternoon. I wonder could you say a little bit more please about pricing within Eurex.
You cite that as one of your structural growth initiatives. But could you – anything more you can say about that?
Gregor Pottmeyer
Yes. Philip, thanks for the question.
As you’re aware, so two or three years ago, we changed our philosophy. So over the last 10 years, so we didn’t use pricing as an instrument to increase our secular growth.
And this changed since the last two to three years. And we even guided for 2017 and 2018.
So that overall, we said pricing impact was roughly 1% of our net revenue number. And even in this year, maybe it’s not exactly the same number, a little bit below, but there is a double-digit million euro pricing impact also on Eurex side, where you see that revenue per contract increases.
So, again, we use it on a constantly periodical basis, and these – there are opportunities for us what we are using.
Philip Middleton
Okay. Thank you.
Operator
The next question comes from Ian White. He’s calling from Autonomous Research.
Please go ahead.
Ian White
Hi, afternoon. Thanks for taking my question.
So just a couple of clarifications on cost, please. First of all on guidance for the rest of 2019.
Should we expect to see the usual seasonality that’s on display in the cost base in 4Q, as we’ve seen in prior years? And relatedly, can you provide any updates of guidance on cost outlook for 2020 at this stage?
Just lastly, on the exceptional use of standing by, your guidance for €120 million for this year, please? Thank you.
Gregor Pottmeyer
Okay. Ian, so starting with the first question seasonality in 2000 – for Q4, yes, there will be a comparable seasonality effect in Q4 2019 comparable to the level you have seen in 2018.
On top, you should not forget in Q4 that we see the consolidation effect as you – I gave you some guidance with regard to the – including of Axioma in the Qontigo segment for the full-year. And you should also not forget that another consolidation effect out of the Ausmaq on cost for investment fund services here.
So that’s the consolidation effect what you will see in Q4 and also for 2020, obviously, then we have the fully consolidation of these two business. And therefore, we gave you exactly the guidance on revenue on costs for these two business.
So that you are able to model that a little bit better. With regard to the exceptionals in 2019, we have seen now in Q3, that’s a €46 million, a bigger increase compared to what we guided at the beginning of the year.
But obviously, good us as we were able to conclude our M&A transaction on Axioma. So that was more than half of the €46 million.
Obviously, that will not happen in Q4. But nevertheless, I would expect that the – as we size, we will come some up higher than the €120 million we guided last time.
With regard to the cost outlook for 2020, I think that that’s a little bit early. So in general, we will give you guidance for 2020 starting when we publish our our full-year results 2019.
So roughly middle of February and we’ll give you some guidance for the 2020 development. But again, in the past, you will not specifically guide on costs.
We will give you guidance on our secular growth. We will give you guidance around our earnings.
And then you can see as a result what is basically then the cost impact out of that. But maybe Theodor, if you want to add add anything?
Theodor Weimer
Yes. in addition, Ian, and – I listen now to the call and here you’ve raised some – some of you raised question on the cost side, because we have seen every report now pro forma to increase on the cost of the famous 10% for Q3, right?
But I want to ensure – assure you, we don’t have any type and any kind of a cost issue here, right, Deutsche Börse to be very precise, right? What happened was, we have the usual 5% to 6% cost increase.
We have a higher – significantly higher increase on the revenue side. So the scalability of our model perfectly works.
What happened was, we had a conversation, right, effect for the first time of Qontigo. And secondly, right, the share price increased and therefore, the negative effects of the compensation is positive for the guys working for us, right?
They were counting for way over 60% of the increase, right?
Gregor Pottmeyer
Yes. So those are concrete number for Q3 is, if you see the 10% operating expense increase, so roughly half of it, 5% relates to consolidation and to share price payment increase.
So then you see the other 5% what is basically the normal development, what we really expect. So here, this consolidation topic and in this specific quarter also the share-based payment, specific development and we will consider how we will better communicate that in the future, so that you get a better understanding that another wrong impression that the cost management is not a high priority for the new management just the opposite is the case.
Ian White
Got it. It’s really helpful.
Thank you.
Operator
Thank you. The next question comes from Mike Werner.
He’s calling from UBS. Please go ahead.
Michael Werner
Thank you very much, and good afternoon. I have three questions, please.
One, I guess, as we look out to 2020, the focus continues to be on M&A. I guess, is that – does that leave any room for the potential for share buybacks?
And I believe, if I recall, the beginning of this year, was indicated that M&A was not – you didn’t see any M&A this year, that would be something that we could potentially see next year? And I was just wondering your thoughts on that?
Second, if you could just provide a little bit more granularity. I apologize if I missed this earlier.
In terms of the Ausmaq consolidation, how much of that contributed to both revenues, as well as expenses within IFS during the Q3? And then finally, just want to hear a quick update in terms of your steps taken towards migrating to the cloud with regards to your regulatory – with your data and workflow?
Is that still on track for 2020? Thank you.
Gregor Pottmeyer
Mike, thanks for the question. So with regard to potential share buyback, as I mentioned earlier, so roughly €1 billion cash on hand, obviously, we have to do something with that.
Our preferred solution is again to do an M&A transaction. And if you have heard, from data, we are very keen to do something here on a disciplined approach.
And so that’s our basic understanding that we will invest that in M&A over the next months. If we see that this is not possible, let’s say, over the next months, then obviously, we have to consider also share buyback.
As you’ve seen in the past, when we did roughly two times €200 million, one or two years ago. So this shows our principal commitment to do share buyback if we have excess cash.
But again, basic assumption the base case is that you invest that in inorganic initiatives. With regard to Ausmaq, so on a quarterly basis, roughly we have €2 million net revenues and €2 million costs roughly on a quarterly basis.
With regard to the migration into the cloud, yes, we make good progress here. You have seen our announcement that we find – found now good cooperations with Microsoft and with Google about – even we are also in discussion with Amazon Web Services.
But the first two, we have an agreement, how to do business, how to migrate into the cloud. And we are currently detailing our implementation plans.
It will take three to four years. So it’s not done within 12 months to migrate certain elements of our IT infrastructure into the cloud, and in parallel to do the migration of our data center.
So therefore, we see also good chances to increase quality and increase efficiency with that kind of cloud strategy.
Michael Werner
Thank you.
Operator
The last question for today comes from Benjamin Goy. He’s calling from Deutsche Bank.
Over to you.
Benjamin Goy
Yes. Hi, good afternoon.
One follow-up on Clearstream. So whatever political Brexit will be, do you feel that your clients are increasingly Brexit-ready and open for new projects, of course, with the – with a particular link towards your targeted securities initiatives?
Can we see more out of that in 2020, or should we expect post-trading to be driven by IFS going forward, again? Thank you.
Gregor Pottmeyer
Yes. So, Benjamin, thanks for the question.
So in this year, in 2019, there was a lot of focus of our customers on Brexit. And even today, we do not know what will finally happen out of that.
But our view is that now all our customers are prepared for any Brexit scenarios. Therefore, we see a good chance that privatization in 2020 goes more into our favor.
We specifically expect that in the investment fund services business, where we have now really a very strong customer pipeline with this high commitment and even with this some signed contracts. So here we have a very high comfort level.
But on investment fund services, we get the right prioritization from a customer perspective. And also with regards to target to securities, we see better trends in 2020 to get additional revenues out of that, but our view is unchanged.
That should be a secular close element for Clearstream, but again, it will take a little bit longer than originally planned.
Benjamin Goy
Okay. Thank you.
Operator
With this, we would like to conclude today’s call. Thank you very much for your participation, and have a good day.
Operator
The conference is no longer being recorded.