Key facts
- LSEG is attempting to demonstrate AI's potential as a key revenue generator to shareholders.
- An analyst note suggests LSEG may beat its revenue and margin guidance.
- The company's subscription business is expected to achieve 6.5% organic constant currency revenue growth by 2026.
- LSEG's Markets division is outperforming and driving upgrades to consensus forecasts.
- The Markets division is projected to grow 8.1% organically in 2026.
- LSEG is expected to raise revenue guidance at its third-quarter results.
London Stock Exchange Group PLC (LSEG) is navigating investor concerns about artificial intelligence potentially disrupting its data subscriptions. However, a recent analyst report argues that the company's growth is primarily being driven by its Markets division, which is outperforming expectations. The report suggests that LSEG can exceed its own revenue and margin guidance for the year.
While the subscription business, a focal point of AI-related anxiety, is performing in line with management's projections, with expected organic constant currency revenue growth of 6.5% in 2026, the Markets division is showing stronger momentum. Within the subscription segment, Data and feeds revenue growth has accelerated to 7.5%, though Workflows growth has seen a slight deceleration to 2.8%.
The Markets division, which includes significant stakes in Tradeweb and post-trade operations, is projected to achieve 8.1% organic growth in 2026, surpassing both the company's guidance of 7% to 7.5% and the prior consensus estimate of 7.8%. Furthermore, the analysis anticipates a 50 basis point tailwind to LSEG's earnings before interest, tax, depreciation, and amortization (EBITDA) margins. This could enable LSEG to surpass its 51.5% EBITDA margin target for the current year. The broker expects LSEG to raise its revenue guidance during its third-quarter results announcement.