Welcome, ladies and gentlemen, and thank you for joining us today to go through our third quarter 2023 results. With me are Theodor Weimer, CEO, and Gregor Pottmeyer, CFO.

Theodor and Gregor will take you through the presentation today. And afterwards, we will be happy to take your questions.

The link to the presentation materials for this call has been sent out via email and they can also be downloaded from the IR section of our website. As usual, this conference call will be recorded and will be available for replay.

Let me now hand over to you, Theodor.

Thank you, Jan. Welcome, ladies and gentlemen.

Let me first comment on the financial performance in the first nine months of the year. Afterwards, I will give you an update on the strong progress we have made with the SimCorp acquisition and the creation of the new Investment Management Solutions segment at Deutsche Börse.

The second, net revenue growth this year of around 6% is in line with our expectation and the consistent delivery is proof how well our diversified business model is working. With regards to the cyclical influence, we saw two different trends over the course of the year.

On the one hand side, lower and rangebound market volatility, except for the spike in March, resulted in cyclical headwinds for some of our trading and clearing businesses. On the other hand, further increasing interest rates resulted in much stronger net interest income compared to our original expectations.

This by far compensated the volatility effects. Very noteworthy is also the development of our commodities business.

After almost 40% net revenue growth last year, we achieved another 19% net revenue growth in the first nine months of this year. This is mainly because of the normalization of trading activity and a significant step up of our market share against OTC in power derivatives due to the benefits of clearing for our clients.

Overall, this development resulted in 15% net revenue growth in the first nine months. As expected, the operating cost growth decelerated in the third quarter, and therefore, the organic cost growth year to date amounted to 8%.

As a result, EBITDA excluding exceptionals in relation to our new Investment Management Solutions segment, increased by 17%. Because of the strong development in 2023 so far, the outlook for the rest of the year and the initial consolidation of SimCorp in the fourth quarter, we again increase our guidance for the full year.

We now expect net revenues of around €5 billion and the reported EBITDA of around €2.9 billion. This brings me to the SimCorp acquisition and the creation of the new Investment Management Solutions segment on page 2.

With SimCorp, we now take another leap forward. SimCorp offers an industry-leading front-to-back staff, investment management platform and ecosystem.

The acquisition will contribute significantly to our secular growth by helping us to address trends in the asset management industry. In addition, it will help us to further diversify our business mix, grow our [indiscernible] exposure and last, but not least, increase our recurring revenues.

Therefore, there is an extremely strong fit with our strategy. Together with the combined ISS and Qontigo business, a leading ESG data and index provider, will transform our current Data & Analytics segment into the much broader Investment Management Solutions segment.

This is expected to result in significant value creation from cross selling opportunities and efficiency gains. In total, we expect run rate EBITDA synergies of around €90 million.

Since the announcement of the transaction at the end of April, we've made excellent progress and closed the SimCorp acquisition in line with our plans on September 29. Tender offer for SimCorp shareholders under Danish law has achieved an exceptionally good result of 94% acceptance rate.

This allows us to complete the squeeze out process already in October, which should result in slightly accelerated synergy ramp up. On September 22, we successfully issued €3 billion of senior bonds with tenors of 3 to 10 years to finance the SimCorp acquisition.

The effective yield on the bonds amounted to 3.5% to 3.9%, which includes the effect of hedges we entered into in May this year. The bonds have been issued by Clearstream’s new digital post-trade infrastructure, D7.

During our Investor Day on November 7, we will dive deeper into the two parts of our new Investment Management Solutions segment and the excellent growth opportunities. Christian Kromann, CEO of SimCorp, and Gary Retelny, CEO of ISS, will present their respective business in detail.

In addition, my colleagues on the executive board and myself will present further growth opportunities under our new strategy, Horizon 2026 framework, and provide you with our midterm guidance. The event will take place at our headquarters here in Eschborn and we are looking forward to welcoming many of you here.

With that. let me hand over to you, Gregor.

Thank you, Theodor. On page 3, we show the details of the results for the first nine months.

The financial performance throughout the first nine months was very positive. Besides the consistent secular growth, the cyclical drivers for the strong performance shifted somewhat during the period.

In the first quarter, the development was partly driven by elevated market volatility. While in the second and third quarter, we saw the full benefit from higher interest rates in our net interest income.

The operating costs overall increased by 11% in the period. Adjusted for exceptional cost items in relation to the creation of the new Investment Management Solutions segment, operating cost growth amounted to 8%.

The organic cost growth was driven by a couple of effects. Slightly less than half of the cost growth is driven by inflationary effects from building operations [indiscernible] purchasing and higher staff costs.

The rest is a function of higher investment into growth and infrastructure, as well as an increase in FTE to support the growth ambition of our organization. The cash EPS growth in the first nine months excluding exceptional items amounted to 20%.

This brings me to the details of the third quarter results on page 4 of the presentation. The secular growth developed in line with our expectation.

The cyclical growth from higher net interest income was partly offset by a decline of activity in financial derivatives and cash equities because of lower market volatility. The operating costs in the third quarter included around €37 million exceptional effects related to the SimCorp acquisition and the creation of the new Investment Management Solutions segment.

Around half of that were SimCorp transaction costs and, the other half, costs to achieve the synergies. The operating cost growth excluding those items amounted to 5%.

In addition, depreciation and amortization included an impairment of €25 million in Crypto Finance. Due to the ongoing weakness of crypto markets, we decided to fully impair the intangibles relating to that asset.

The cash EPS growth in the third quarter, excluding those exceptional items, amounted to 18%. I'm now turning to the results of the segment, starting with the former Data & Analytics segment on page 5.

The weaker US dollar turned into a substantial net revenue headwind in the third quarter. Adjusted for FX, the net revenue growth of the segment amounted to 11%, which is very much in line with our expectation.

The currency adjusted growth of the ESG business is below this level we have seen last year. It’s still ranging from high-single digit to small double-digit year-to-date depending on the product line.

We are firmly convinced that investor demand and regulation as well as rising complexity in performance and reporting requirements will continue to drive the need for trusted and comprehensive ESG data solutions. Analytics benefited from another seasonal renewal of contracts of existing clients, which is encouraging and resulted in some point-in-time net revenue.

The EBITDA in the segment was affected by the exceptional cost items and the small negative impact from the return from financial investments. Adjusted for those effects, the EBITDA increased in line with net revenue.

Let me turn to slide 6, the Trading & Clearing segment. After the spikes of volatility in the first quarter, we saw some normalization of activity in the second and third quarter, with the VSTOXX in a range of around 15 to 20.

In financial derivatives at Eurex, the improving equity market conditions resulted in reduced demand for equity and index derivatives [indiscernible] we have seen already in the second quarter. As expected, this also resulted in a decline of the collateral requirements for clearing and thus as a decline of marginal revenues to €19 million.

This compared to around €35 million in Q3 and Q4 last year when this line item peaked. In commodities, markets continued to recover from the energy crisis.

Volatility has significantly declined and prices across our markets have seen a healthy development. This translated into a strong upward trend in power products, which suffered under uncertainty last year, with net revenue increasing 41%.

Matching revenues from the commodities clearinghouse came down compared to the peak last year, but still amounted to around €30 million. In the Fund Services segment on page 7, the continued onboarding of new clients and funds helped us to offset the ongoing cyclical headwinds and develop better than the market.

Cyclical headwinds continued to mainly arise from the trend away from active equity funds into passive funds and fixed income. The carve-out of Fund Services from the core business of Clearstream is now largely completed, but the third quarter still included some one-off effects in the operating costs.

Our Securities Services segment on slide 8 saw a continued strong performance in the third quarter. Main driver was the net interest income, which amounted to €169 million.

This excludes the €15 million net interest income that are now reported in the Fund Services segment. Total cash balances on average amounted to €15 billion in the quarter, which is somewhat less compared to last quarter.

This is partly driven by a seasonal effect we see every year, but we also assume that clients are now managing their balances somewhat tighter because of higher interest rates. This does not really change our view for the full year, and we continue to expect a level of around €700 million net interest income in Securities and Fund Services together.

This brings me to the outlook on page 9. Theodor already outlined our revised guidance for the full year.

We are now expecting net revenue of around €5 billion and EBITDA of around €2.9 billion. This guidance includes our assumptions for the development in the final two months of the year and the SimCorp consolidation effect, including the expected exceptional cost items.

In Q4, SimCorp is expected to contribute around €185 million of net revenue and around €85 million euros of EBITDA before exceptional cost items. For 2023, we are expecting around €50 million of total cost to achieve synergies, of which around €21 million have already been booked so far.

We have also booked all the transaction costs already in the first nine months, which amounted to around €21 million. As a result of SimCorp acquisition, depreciation and amortization is expected to increase to a quarterly level of around €125 million in the fourth quarter.

Because of the financing of the SimCorp acquisition, we expect our financial result to increase to around €50 million in Q4 and around €40 million per quarter on average next year. This concludes our presentation.

We are now looking forward to your questions.

Just one question then. I was wondering if you could talk a bit more about the cash balances of Clearstream.

You mentioned that there was seasonality. Is September a good level on which we – is September representative of a more normalized level of cash balances, I suppose?

And I'm just wondering how much visibility we can get into how cash balances have been able – historically, you said it's been a function of settlement activity. Is there something changing there?

Because the reason I'm asking is interest rates have been up for some time. Now, if there had been any optimization, you would have expected this to have happened already.

So is there anything really changing with clients?

Yes, indeed. Cash balances decrease compared to the second quarter from €17 billion to now €15 billion.

I think if you compare it with last year, then indeed Q3 is – specifically, with the summer months as of July and August, very much weaker months with lower volumes. And what we have also seen, lower volatility obviously in Q3.

So that's the main reason for the decline of the cash balances. And so, so far, we expect that this will disappear in Q4.

But nevertheless, you also see that some clients have now higher sensitivity because if the US dollar is above 5% and euro raise above 4%, obviously, there is some pressure into the institutions to allocate cash in a reasonable way. But the development in Q3 is mainly driven by seasonality.

If I can just follow-up, you mentioned volatility as a key input. Should we think about rate volatility or settlement activity or assets in the custody as a driver of cash balances?

No, both of that, right? So it's on the one hand side, the settlement activity, but also the lower volatility in the bond credits and also in the equity.

I just wanted to come to the depreciation/amortization guidance of 1 to 5 in Q4 and the financial results 50. Is it fair to annualize that as an outlook for 2024?

Or are there any other key drivers we should be aware of?

The key challenge for you was so far that, with regard to the depreciation, you do not know the purchase price allocation, basically. And to be very honest, still not finalized with the auditor.

But we wanted to give you at least some guidance with regard to the Q4 number, what we currently expect. And that's why we guided €125 million out of the depreciation, what we have here.

We roughly included €20 million PPA. But again, it's preliminary and it's not finally agreed.

And with regard to 2024, so we expect also a normal increase in the depreciation as we still continue to increase our CapEx and, therefore, you will also see some higher depreciation in 2024 compared to the Q4 guidance.

If I could just follow-up on the PPA, is there a pull to par timetable on that?

Sorry, could you repeat that, Andrew, please?

On the PPA, is there a pull to par timeframe envisaged on that?

Timeframe, in what sense? Until we know the final numbers or…?

I'm assuming it's the fair value of assets and what you see as the pull to par effect as those assets are held effectively. So I'm just trying to work out kind of if there's an adjustment that will close over time?

No, there's no – that's a regular depreciation which will be with us for the foreseeable future. So this is not changing next year, the year after next year.

This is the same [Multiple Speakers].

The €20 million permanent addition is part of the fair value calculation. Okay, no, that's correct.

And on the financial result, if you could just call out, because I think you've previously said that you had €2 billion of that that you pre-financed at 3%. Obviously, you then would lose some yield on the cash.

But it does still seem quite a big step up in the financial results. So is there anything else there that we should be thinking about?

No, there's nothing specific. So again, here, we wanted to give you some guidance what the €3 billion bond refinancing, what is the impact out of that, right?

And therefore, you can basically calculate the €30 million per quarter additional funding cost. And that’s why we guided the number as it is.

In Q4, there's still the commercial paper as a short term funding element. Therefore, you see a little bit higher level of financial result, but this roughly close to €10 million will very fast disappear in 2024 because we expect those commercial paper programs are already reduced to zero in Q1, right?

So it's very fast that we’re able and that's why we did the short term funding because we already knew at that point of time that we will be able to reduce it to zero within six months. So that's why we said, overall, the existing bond portfolio leads roughly to a €10 million quarterly interest expenses.

And then, for the next year, another €30 million out of this bond. So that's the composition of the €40 million for next year.

One was on the guidance for SimCorp. This year, you're guiding for the fourth quarter for €185 million revenues and €85 million in EBITDA.

But the guidance has not really changed for 2024. So just wanted to ask, with respect to the EBITDA, clearly, that would imply a step down compared to Q4, if I think about for next year.

Can you just give us some color on why actually this is going to happen? And related to that, can you already provide any commentary in terms of what sort of seasonality in terms of revenues we should expect from SimCorp going forward?

And then, a second question just related to those impairments on Crypto Finance. Can you just remind us, are there any other intangibles related to that asset that potentially might be impaired going forward?

Starting with your third question, very easy. There are no other intangibles anymore.

So, we fully wrote it down. So no further risk in the future any more.

With regard to the SimCorp numbers, yes, there's a strong seasonality. Q4 is by far the strongest quarter compared to the other three quarters.

And it's 35% plus roughly in Q4, what you can expect from a revenue perspective. Therefore, this €184 million is including that kind of seasonality, what we expect and, therefore, this €85 million EBITDA is also above the EBITDA margin what we usually have.

So, overall, for the full year, as we confirm our guidance for 2024, we expect some 33% EBITDA margin, so the €200 million EBITDA and the €600 million net revenue, and these are numbers purely on a standalone basis without synergies. Obviously, synergies will help us to increase that margin.

And obviously, it's also the intention to show some scalability over the next year, the standalone case. So, overall, EBITDA margin, as already said to you, will increase over time to a level of 40% plus, right?

So that’s our expectation and our clear commitment.

Also a question on SimCorp. So you mentioned the 7% net revenue growth in the first nine months.

I was just wondering if you can compare it to H1 because I believe there are only [indiscernible] revenue, how did this in fact develop, and if you could add a bit more color on the different revenue streams [indiscernible] professional service, that will be helpful.

So far, we do not want to go in all the details for the first nine months because it's obviously not the responsibility of Deutsche Börse anymore. So we took over basically beginning October 1.

And that's why we really focus on Q4 and also we've confirmed the outlook with regard to 2024. But we just wanted to highlight that the business is growing, right, and the business is growing by 7% for the first nine months.

And it doesn't make so many sense to follow on a quarterly basis because it really depends what kind of contracts you made in a single quarter. So, overall, they are exactly in line with the guidance – you have a full year guidance from SimCorp.

And just in our internal discussion, they just confirmed that they will achieve their guidance and, therefore, they're fully in line with what’s planned.

I believe you recently launched 0DTE options on the STOXX index. I know it's still early days, but just wondering if you could comment on the demand you're seeing so far since launch.

And then, of the early volume you're seeing in those zero day expirations, just wondering if you could provide any more color on where the flow is coming from and particularly interested to hear if more of that is coming from the US or retail specifically.

I think we've briefly touched upon this already on the last earnings call, Kyle. There's certainly some demand for those products.

That's why we've launched them. But as you know, the R&D cost to launch an additional sort of derivatives contract, they're pretty small.

So there's no huge effort really because the system is in place. So we see some demand with engaged market makers.

But the difference compared to the US is that this is a professional product, right? So there's no real retail participation on derivatives markets in Europe compared to the US.

And therefore, I think the overall size of the opportunity is also much smaller. So we see this as one of the elements to grow the business structurally.

There are many different other products. And in total, we are able to achieve also nice secular growth rates at Eurex, but it's just one piece of the puzzle.

So another one on SimCorp. And just going back to Andrew’s point, to the extent you can check because I know you will be talking more about this at the Investor Day.

So, it seems like versus the initial guidance for mid-single digit accretion, what we're seeing is slightly higher cost of funding, and then possibly slightly higher D&A. And so, although you make a positive comment about getting the synergies off to a faster start, it sounds like you've got to sweat the asset harder to hit that mid-single digit accretion?

Is that the correct read?

No, I don't think so that’s a correct read. So, from our perspective, everything works according to plan.

So no reason to deviate from that. Though the cost of funding, just when you take the rate and we hedged some months ago and we have a very strong mid-double digit million in saving out of that.

So therefore, no, the cost of funding are according to plan. The D&A, we will finally see, what is the final outcome when we discuss with the auditor.

And again, the business development will appear as it’s planned. So, for next year, with €600 million net revenue, I think that’s a strong increase, right?

On a like-for-like, it's double digit, right? So that is obviously very positive here.

And the ARR is also double-digit [indiscernible]. So, it's already guided by SimCorp.

And we can confirm that this also currently happens. So there are very positive elements what we see here.

With regard to the synergies realization, the more we go into the details, the more fun we see with joining forces between Deutsche Börse and SimCorp. And so far, that looks quite promising.

And we are quite confident that we achieved everything what we guided so far, and we will deliver the details on our Investor Day on November 7.

I've just got one question again on SimCorp. I think you've reiterated your target of €90 million of EBITDA synergies for SimCorp.

Do you see any upside to that just given that you can now squeeze out on minorities and maybe at that point, at the time when you gave original guidance, you weren't sure if that’s going to happen. So possibly, could it there upside to that synergy target today?

I think it's too early to talk about that. So it's our clear commitment that we are delivering the €90 million synergies, EBITDA synergy, so €55 million cost synergies, €35 million revenue synergies in the middle of implementing and realization of the plans.

And therefore, we are very optimistic to deliver these additional synergies. And again, we will give the update on November 7.

Just wanted to ask about the collateral management business within Securities Services. I believe we've seen improving or increasing balances as we've gone through this year.

But it seems like the revenues have been for the most part flattish. I'm just wondering if you can help us understand what's going on there and what the outlook looks like for the next couple of quarters.

This is a business that has many, many different components, you're right. We have sort of stood at around €26 million to €27 million of net revenue per quarter.

That's part of the custody revenue line item, but there are higher yielding and lower yielding parts. So for instance, if you have securities lending, then it's typically market dependent, a higher share we are taking in relation to the value.

If you have a simple sort of report a transaction, then it's typically a lower share. So it also depends on the product mix.

So therefore, the volumes are a lead indicator, but the product mix also matters. What's good to see is that it's up significantly year-to-date compared to last year.

So there's definitely more demand in the market.

I just wondered on Data & Analytics, can you call out first, please, the extent of the point in time revenue contribution in analytics in the quarter? And then, sort of by extension, the 11% constant currency net revenue growth that you've highlighted for Data & Analytics on slide 5, what would that number have been on a sort of a true like-for-like basis, I guess?

There's the transfer now of €2 million to €3 million a quarter in the index business that was booked sort of entirely in 4Q last year. So there's sort of a bit of growth from that as a point in time difference in analytics as well.

So if we kind of smooth those things out, what would be the sort of true constant currency growth rate in that business, please?

With regard to your two questions around the currency, FX impact and the point in time revenue impact – so with regard to the FX, again, for the Data & Analytics segment in total, it's plus 5%. So it's 6%.

So it's overall 11% on a constant currency basis, specifically on US dollar, and that was a little bit higher in Q3 compared to the first half year. So, it's a very big impact in Q3 here.

And I don't think that it will be the same number in Q4. But it's now really a specific situation in Q3.

With regard to the point in time revenue, so overall, point in time revenues are roughly 25% to 30% of the Axioma business. And therefore, it really depends now on a quarterly basis when are the contract renewals, et cetera?

And indeed, there's some positive element here in Q3. And it was also the majority of the increase comes from point in time revenue.

But we can also say that the analytics business on a run rate perspective is growing double digits that we can confirm.

First of all, on your cash balances, you said somewhat sensitive. It is only in terms of managing the balance levels?

Or do you already get requests for revenue sharing? And secondly, on the cost achieved, are transaction related costs on top of it or included the current year guidance?

Obviously, with regard to cost to achieve, so there’s transaction costs on top of it. So the cost to achieve the guide basically two times €50 million or €50 million for this year, €50 million for next year, and €21 million transaction cost on top of it.

So it's then it's €121 million all including. With regard to the cash balances, the first questions of Clearstream, no, we continue not to share revenues on the NII with the client.

So, the reduction purely comes from the reduced cash balances.

All right. There are no further questions in the pipeline.

So, we would like to conclude today’s call. Thank you very much for your participation.

If there’s anything else, then please do feel free to reach out anytime. Thank you.