ASX’s Technology Upgrade Risks Shadow Strong 1H25 Financial Results

Strong Financial Performance

ASX Limited has reported a solid start to 2025, posting record operating revenue of $541.9 million for the first half, marking a 5.9% increase compared to the prior corresponding period. Underlying net profit after tax (NPAT) rose 10.1% to $253.7 million, reflecting robust operational execution across its core business segments.

The company’s statutory NPAT also grew by 5.6% to $243.5 million, supported by a 9.9% increase in dividends per share to 111.2 cents, signaling strong shareholder returns. Underlying return on equity improved by 90 basis points to 13.5%, underscoring enhanced profitability.

Segment Highlights Drive Growth

Growth was broad-based, with the Markets segment leading the charge, delivering a 9.9% revenue increase to $168.4 million. This was driven by higher futures and cash market trading volumes amid increased market volatility and shifting interest rate expectations. Futures and OTC revenue rose 10.5%, supported by a near 20% surge in futures and options on futures contract volumes.

Technology & Data revenues climbed 6.7% to $132.9 million, fueled by rising demand for market data services, particularly derivatives market data, and growth in technical services such as the Australian Liquidity Centre. Meanwhile, the Securities & Payments segment saw a 5.2% revenue increase to $135.7 million, buoyed by higher clearing and settlement activity and increased debt market transactions.

Disciplined Expense Management Amid Investment

Despite the revenue growth, total expenses remained broadly stable at $220.3 million, reflecting ASX’s disciplined approach to cost control. Employee expenses were managed carefully with a reduction in contractor usage and recruitment spend, even as headcount increased to support operational activities and technology projects.

Capital expenditure surged to $82.5 million in 1H25, primarily driven by the ongoing technology modernisation program. ASX reiterated its FY25 capital expenditure guidance of $160-180 million annually through FY27, emphasizing the strategic priority of upgrading its technology infrastructure despite inherent delivery risks.

Outlook and Strategic Focus

CEO Helen Lofthouse highlighted early momentum in listings activity, including significant new entrants and a major $32 billion merger, alongside a supportive environment for interest rate futures volumes. The company plans to expand data services to debt market participants in the second half of 2025, aiming to capitalize on evolving market needs.

ASX reaffirmed its FY25 guidance for total expense growth of 6-9% and operating expense growth of 4-7%, with a continued focus on workforce optimization, process simplification, and strategic procurement. The medium-term target for underlying return on equity remains between 13.0% and 14.5%, reflecting confidence in sustained profitability.

Balancing Growth and Stability

With a stable balance sheet and capital management flexibility, including an 85% dividend payout ratio and undrawn corporate debt facilities, ASX is well-positioned to support future funding needs. The company’s technology roadmap remains on track, with key project releases scheduled through 2027, underscoring its commitment to delivering a sustainable, secure, and resilient market infrastructure.

Overall, ASX’s half-year results demonstrate a successful balancing act between driving growth, investing in critical technology upgrades, and maintaining operational discipline in a complex market environment.