The ASX Ltd, an ASX financial stock, is experiencing a decline on Friday, following the release of its full-year financial results. Shares of Australia's largest securities exchange closed at $64.00 yesterday but are trading at $63.00 this morning, reflecting a 1.5% drop. This contrasts with a modest gain of 0.9% in the S&P/ASX 200 Index (ASX: XJO) at the same time.
ASX Reports Record Revenue but Faces Profit Decline
For the fiscal year ending June 30, 2024 (FY 2024), (ASX: ASX) reported record operating revenue of $1.03 billion, marking a 2.4% increase from the previous year. However, the company’s underlying net profit after tax (NPAT) fell by 3.4% to $474.2 million. Total expenses rose by 14.7% to $429.5 million, aligning with the company's guidance. The final fully franked dividend has been set at $1.068 per share, down 4.7% from the prior year.
Performance Breakdown
Despite achieving record revenue, ASX faced challenges in its various business segments. Growth was seen in the Markets and Technology & Data divisions, but this was offset by lower contributions from Listings and Securities & Payments. The profit decline was significantly impacted by the increase in operating expenses, although higher net interest income, driven by rising interest rates, partially mitigated this effect.
The total dividends for FY 2024 amount to $2.08 per share, an 8.9% decrease from FY 2023. This reduction is attributed to the profit decline and a lower dividend payout ratio, which decreased from 90% in FY 2023 to 85% in FY 2024. Eligible investors can expect to receive the final dividend on September 20.
Management’s Perspective
Helen Lofthouse, CEO of ASX, expressed satisfaction with the company’s performance amidst challenging market conditions and ongoing transformation. She highlighted the solid growth in the Markets and Technology & Data divisions as key contributors to the record revenue. However, Lofthouse also addressed the recent civil proceedings filed by the Australian Securities and Investment Commission (ASIC) related to statements made about the CHESS Replacement project. She acknowledged the seriousness of these proceedings and affirmed the company’s commitment to addressing the issues while continuing to support and deliver for its customers.
Looking forward, ASX anticipates a return of IPO activity, with recent listings like Guzman Y Gomez (ASX: GYG) setting a positive trend. For FY 2025, the company projects expense growth within a range of 6% to 9% and capital expenditure between $160 million and $180 million, primarily for technology modernization. ASX is focused on achieving an underlying return on equity (ROE) of between 13.0% and 14.5%.
Despite today's decline, the ASX share price remains up just over 1% from this time last year, excluding the impact of dividend payouts.