LSEG delivers 50% EBITDA margin and 15.7% earnings growth as Refinitiv transformation reaches full stride

London Stock Exchange Group plc (LSE: LSEG) reported full-year 2025 results on 26 February 2026, posting organic revenue growth of 7.1%, an adjusted EBITDA margin of 50.3%, and adjusted earnings per share of 420.6 pence, up 15.7% year-on-year. The results confirm that the group’s multi-year transformation from a traditional exchange operator into a global financial data and infrastructure platform is generating compounding financial returns, with earnings growth materially outpacing revenue expansion and free cash flow running at record levels.

How is London Stock Exchange Group turning AI-driven data demand into sustainable earnings growth and margin expansion?

The central financial story in LSEG’s 2025 results is operating leverage in action. Total income excluding recoveries grew 7.1% organically to £8,986 million, while adjusted EBITDA grew 11.8% organically to £4,523 million, adjusted operating profit rose 14.3%, and adjusted earnings per share climbed 15.7%. That cascade of accelerating growth rates from revenue to earnings is the textbook outcome of a high-fixed-cost business gaining scale, and LSEG is executing it with discipline across every major division.

The adjusted EBITDA margin reached 50.3%, an improvement of 210 basis points on a constant currency basis over 2024. Stripping out the 100-basis-point tailwind from a renegotiated SwapClear revenue surplus agreement, the underlying margin improvement was still 110 basis points, reflecting genuine cost efficiency gains rather than accounting adjustments. Labour costs as a percentage of total income fell by 140 basis points to 29.4%, driven by a sustained workforce insourcing programme that shifted the internal-to-external staffing ratio from 71/29 to 75/25 on a headcount base that declined slightly to 37,495.

Engineering transformation is a central pillar of this cost story. LSEG reduced its engineering headcount from around 15,100 to 14,200 while growing the in-house share from 49% to 60%. Code output increased by approximately 11% over the period, with 90% of engineers now using GitHub Copilot as a productivity tool. Over 95% of the group’s code is now consolidated onto a single platform, a structural consolidation that reduces maintenance overhead and accelerates product development cycles.

What does the LSEG Everywhere AI data partnership strategy mean for long-term revenue growth and competitive positioning?

The strategic headline from LSEG’s 2025 results is the emergence of LSEG Everywhere as a viable commercial framework. The strategy is conceptually straightforward: rather than requiring financial institutions to come to LSEG’s own Workspace platform to access data, LSEG is embedding its licensed, proprietary data into the AI tools those institutions already use. Partnerships with Anthropic, Databricks, Microsoft CoPilot Studio, OpenAI, Rogo and Snowflake provide the distribution infrastructure, with the Model Context Protocol serving as the technical standard connecting LSEG’s datasets to these external platforms.

Initial uptake, by the group’s own account, has been stronger than expected. By late February 2026, over 60 institutional customers were live or in onboarding across LSEG’s MCP connector, with customer numbers rising sharply from single digits in December 2025 to 67 by 20 February 2026. Approximately 40% of these connections come through direct institutional access, 30% via Claude, and 30% via ChatGPT. More commercially significant is what LSEG terms a lead generation effect: prospective customers attempting to access data through third-party AI platforms are being identified and converted into direct sales opportunities.

The financial materiality of LSEG Everywhere is not yet reflected in reported numbers. The partnerships are generating engagement and pipeline, not yet scaled revenue. The commercial test will come as LSEG attempts to convert MCP-driven data consumption into contracted, multi-year relationships. The group’s track record in structuring such arrangements improved markedly in the fourth quarter of 2025, when major financial institutions signed long-term data access agreements worth £1.9 billion in a single quarter, covering up to seven years of subscription access. By December 2025, multi-year long-term data access agreements accounted for 16% of Data and Analytics subscription revenues on a run-rate basis, up from 9% a year earlier. That trajectory validates the demand for locked-in, AI-ready data access from institutions seeking to train and deploy models on reliable, structured financial datasets.

Why did LSEG’s Markets division outperform expectations in 2025, and what does that signal for post-trade infrastructure growth?

Markets grew 8.9% organically to £3,467 million in 2025, driven by a combination of favourable market conditions and sustained product investment across clearing, foreign exchange, and fixed income. The standout performer within the division was Tradeweb, where average daily volume across all asset classes rose 16.9% to $2.6 trillion. Fixed income, derivatives and other revenues grew 13.7% organically, supported by innovative electronic trading protocols that continue to capture share from voice-brokered volumes.

In OTC Derivatives, SwapClear cleared a record $1,941 trillion of interest rate swap notional, up 21.2%, while LSEG’s share of global interest rate swap trading on the Tradeweb platform increased by 180 basis points. CDSClear revenues surged 37% and ForexClear grew 16%, with the latter expanding into new forward clearing capabilities. The breadth of growth across clearing asset classes is relevant because it diversifies execution risk and reinforces the structural case for mandatory clearing as regulatory frameworks globally continue to push bilateral OTC activity through central counterparties.

The more strategically significant development within Markets is the Post Trade Solutions transaction announced in October 2025. Eleven leading global banks acquired a 20% stake in Post Trade Solutions for £170 million, replicating the cooperative ownership model that has underpinned LCH’s dominance in cleared interest rate derivatives. The investment from key customers creates alignment of interest, reduces the risk of competitive infrastructure emerging to challenge LSEG’s clearing monopoly, and provides a template for monetising the adjacent market in uncleared OTC derivatives. LSEG estimates the total value of uncleared contracts outstanding at $11.7 trillion, compared to $10.3 trillion in cleared products, suggesting the addressable market for post-trade expansion is roughly equal in size to the business already generating approximately £900 million in annual revenue.

Digital infrastructure investment adds a longer-dated growth option. The Digital Markets Infrastructure platform, powered by Microsoft Azure and enabling primary issuance and settlement of tokenised assets, went live in September 2025. The Digital Settlement House, providing instantaneous 24-hour on-chain and off-chain settlement of commercial bank deposits, is targeted for first half of 2026. The Digital Securities Depository, designed for fully interoperable on-chain settlement across traditional and digital asset classes, is scheduled for second half of 2026. These platforms are not material revenue contributors today, but they position LSEG to capture infrastructure fees as tokenised financial markets develop scale.

How disciplined is LSEG’s capital allocation, and what does the £3 billion buyback plan signal to institutional investors?

LSEG generated equity free cash flow of £2,445 million in 2025, a 12% increase over 2024 and equivalent to 111% conversion of profits attributable to shareholders. Capital expenditure fell to £919 million, reducing capex intensity to 10.2% of total income from 11.3% in 2024, consistent with the group’s commitment to declining capital requirements as major platform investments including the Workspace migration mature. Guidance for 2026 projects equity free cash flow of at least £2.7 billion, with capex intensity falling further to approximately 9.5%.

The group deployed £2.1 billion in share buybacks during 2025 at an average price of approximately £93.44, and announced a further £3 billion programme to be completed by February 2027. Combined with £718 million in dividends paid during the year and a final dividend of 103.0 pence per share proposed for 2025, total shareholder returns in the twelve-month period approach £2.8 billion. The buyback acceleration reflects management confidence in the earnings trajectory and the group’s leverage position, which ended 2025 at 1.8 times operating net debt to adjusted EBITDA, well within the target range of 1.5 to 2.5 times.

The SwapClear revenue surplus renegotiation is worth examining separately as a capital allocation decision. LSEG paid £921 million in 2025 (with a further £250 million due in 2026) to acquire an increased share of the SwapClear revenue surplus while extending the sharing arrangement with founding member banks through to 2045. The transaction immediately added 100 basis points to the group’s adjusted EBITDA margin and was described as 2-3% accretive to adjusted earnings per share in 2025. The long-term extension of the agreement reduces the risk of renegotiation, providing greater revenue certainty from one of the group’s highest-margin businesses.

What are the risks to LSEG’s subscription acceleration thesis, and how are retention and new sales data tracking against management guidance?

LSEG’s 2025 results introduced three new commercial KPIs for subscription businesses that are worth examining carefully, partly because they reveal some nuance beneath the headline organic growth rates. Gross sales in the second half of 2025 reached £481 million, up from £435 million in the first half and representing a 10.6% sequential improvement. Revenue retention was 92.4% at end-2025, marginally below the 92.6% recorded at the half-year. The new product vitality index, measuring the proportion of revenue from products launched or enhanced in the last five years, rose to 24% in the second half from 19% in the first, partly reflecting the substantial investment made into the Workspace migration.

Annualised subscription value growth finished 2025 at 5.9%, slightly ahead of the 5.8% guidance provided earlier in the year. That rate compares to 6.3% in 2024 and masks a sequential deceleration from 6.4% in the first quarter to 5.6% in the third before recovering to 5.9% in the fourth. Management has signalled that it will retire ASV as a KPI at the end of 2026, replacing it with the new commercial indicators. The strategic intent behind this transition is to direct investor attention toward gross sales momentum, retention durability, and product innovation velocity, which together provide a more comprehensive picture of subscription health than the point-in-time ASV metric.

Execution risk in the subscription segment centres on whether LSEG can sustain Workspace engagement momentum post-migration and convert the long-term data access agreement pipeline into contracted revenue. Workspace key users were approximately 25% more engaged in December 2025 than in December 2024, as measured by app interactions per user per month, suggesting the platform transition has not disrupted the core user relationship. Open Directory, giving institutional customers a single view of their LSEG entitlements, had over 50 live or onboarding customers by year-end. These are meaningful data points but do not yet constitute evidence of a structural step change in subscription growth.

What is LSEG’s medium-term financial framework for 2027 to 2029, and how credible is the earnings growth trajectory?

Having met or exceeded its 2023-2025 medium-term guidance framework, LSEG has published a new set of targets for 2027 to 2029. The group is targeting mid to high single-digit organic constant currency revenue growth annually, with acceleration in subscription businesses. Underlying EBITDA margin is expected to increase by a cumulative approximately 150 basis points over the three-year period. Capex intensity is projected to decline to approximately 8% of total income by 2029 from the current 10.2%, and equity free cash flow per share is expected to grow at a double-digit compound annual rate.

The framework is anchored in several structural assumptions. First, that AI adoption in financial services will increase demand for licensed, structured, and continuously updated data, rather than substituting for it. The argument that real-time data operates on physics rather than probability, and that LSEG’s global private network with nearly twice the physical venue connectivity of its nearest competitor represents a durable advantage, is analytically coherent, though it presupposes that AI-generated financial insight remains tethered to verified market data rather than synthetic alternatives. Second, that the Microsoft partnership continues to generate product development acceleration without driving commensurate cost increases. Third, that the post-trade digital infrastructure investments deliver revenue contribution within the framework period.

Against those assumptions sit execution risks. The Refinitiv integration, while largely complete, still generated £133 million in integration costs in 2025, down from £226 million in 2024 but not yet zero. IT control deficiencies highlighted in the group’s audit report for subscription revenue recognition remain a flagged risk item, requiring extended substantive testing rather than reliance on automated controls. And the competitive environment in financial data infrastructure is not static, with Bloomberg, S&P Global Market Intelligence, and Intercontinental Exchange all investing materially in AI-enabled data products targeting the same institutional client base.

Key takeaways: What LSEG’s 2025 results mean for the company, competitors, and the financial data infrastructure sector

• LSEG’s 7.1% organic revenue growth in 2025, combined with 11.8% adjusted EBITDA growth and 15.7% adjusted earnings per share growth, demonstrates compounding operating leverage that is structurally superior to most financial data peers.
• The adjusted EBITDA margin of 50.3% now exceeds Bloomberg’s estimated margin profile and is approaching the premium levels historically associated with pure index and rating businesses, a significant positioning shift for what was previously a lower-margin exchange group.
• The LSEG Everywhere strategy transforms the group’s addressable market from customers willing to use Workspace to the broader population of financial professionals using any AI platform, with the caveat that monetisation at scale is unproven and will require sustained commercial execution.
• The £1.9 billion in long-term data access agreements signed in the fourth quarter of 2025 alone validates institutional demand for contracted, AI-ready data access, and provides multi-year revenue visibility that the ASV metric historically did not fully capture.
• The Post Trade Solutions bank consortium, mirroring the LCH cooperative model, is a structurally clever move that aligns major customers as economic stakeholders, reducing competitive disruption risk in clearing and accelerating network expansion into uncleared OTC derivatives.
• The £3 billion buyback programme announced alongside 2025 results, combined with dividend growth of 15.4%, signals management conviction in the free cash flow trajectory and indicates the balance sheet remains under-levered relative to the 1.5-2.5 times target range.
• Engineering insourcing, with internal engineers now representing 60% of the base and productivity rising approximately 11%, is delivering structural cost improvement that competitors relying on third-party technology vendors cannot easily replicate.
• FTSE Russell’s 7.3% organic growth and 66.6% adjusted EBITDA margin, driven by record ETF launches and private markets expansion, positions the index and benchmarks business as an increasingly material contributor to group earnings with an attractive standalone valuation multiple.
• The 2026 guidance of 6.5-7.5% organic revenue growth with 80-100 basis points of margin improvement and at least £2.7 billion of equity free cash flow, if delivered, would represent another year of earnings significantly outpacing revenue and sustaining the investment case for long-only institutional holders.
• Remaining risks include persistent IT audit control deficiencies, subscription ASV deceleration in a competitive data market, and the unproven revenue monetisation of LSEG Everywhere, any of which could moderate the premium valuation the market is likely to assign to the 2027-2029 framework.