NZX Limited Reports Strong First Half 2025 Performance with Robust Growth Across Key Segments

Stonegate Capital Partners has updated its coverage on NZX Limited following the company's first half 2025 financial results, revealing a mixed performance against expectations but showing strong underlying growth across key business segments. NZX reported revenue of $61.7 million, operating profit of $11.6 million, and EBITDA of $24.1 million for the period, slightly below Stonegate's estimates of $64.1 million, $13.6 million, and $25.0 million respectively. The variance was primarily attributed to macroeconomic uncertainty, though analysts expect partial recovery in the second half as conditions stabilize.

The capital markets segment showed exceptional performance with capital raised and listed totaling $11.9 billion, representing an 87.8% year-over-year increase. A significant portion of this growth came from the Fonterra Co-Op Group transfer valued at $4.8 billion. Total value traded increased 31.4% year-over-year to $21.8 billion, indicating robust market activity. The company continues focusing on liquidity building through initiatives like index futures introduction, following self-match preventions and NZX Dark initiatives. Information services revenue reached $10.0 million, up from $9.3 million in the first half of 2024.

Smartshares, now rebranded as Smart, ended the half with Funds Under Management of $14.0 billion, a 3.8% increase from the second half of 2024. Growth was driven by positive net cash flows and market returns despite macroeconomic challenges that temporarily affected FUM growth. The rebranding initiative continues with remaining products transitioning over the coming year, while operations mature through fund structure streamlining and system upgrades.

Wealth Technology demonstrated strong expansion, closing the half with $17.6 billion in Funds Under Administration, an 8.6% increase from fiscal year 2024 end. This growth was fueled by $1.3 billion in new client migrations and $0.1 billion in market returns. The platform significantly expanded by onboarding three new clients, bringing the total active client count to 35, while NZX won four additional new clients during the period. Annual Recurring Revenue from external clients grew 32.9% year-over-year to $11.9 million, with pipeline potential ARR reaching $13.9 million.

NZX maintained a solid financial position with $14.2 million in cash and declared a fully imputed interim dividend of $0.03, unchanged from the previous year. Capital expenditures remain elevated due to continued investment in Smart and Wealth Technologies, particularly for client migration and system enhancements. The company reiterated its 2025 EBITDA guidance range of $49.0 million to $54.0 million, reflecting confidence in continued strong performance across core segments supported by sound fundamentals and a stabilizing macro environment.

Stonegate's valuation analysis using Dividend Discount, DCF, and EV/EBITDA comparative models produced valuation ranges of $1.78-$2.20, $1.70-$1.96, and $1.54-$1.89 respectively, with mid-points of $1.99, $1.82, and $1.72. These valuations underscore the company's growth potential and financial stability despite current macroeconomic headwinds, positioning NZX for continued success in the evolving financial markets landscape.