DALLAS, TX -- August 22nd, 2025 -- NZX Limited (NZSE: NZX): Stonegate Capital Partners updates their coverage on NZX Limited (NZSE: NZX). NZX reported revenue, operating profit, and EBTIDA of $61.7M, $11.6M, and $24.1M, respectively. This compares to our estimates of $64.1M, $13.6M, and $25.0M. Differences between actuals and our estimates were primarily driven by macro uncertainty. We expect that a portion of this delta will be compensated for in 2H25, as macro uncertainty abates.
Company Updates:
Markets: Capital raised and listed in 1H25 totaled $11.9B. This represents a y/y increase of 87.8%. A significant portion of this growth was from the Fonterra Co-Op Group transfer, equal to $4.8B. The total value traded saw a robust increase in 1H25, up 31.4% y/y to $21.8B. We expect the Company to continue focusing on building out liquidity as it introduces index futures. This is following the self match preventions and NZX Dark initiatives. Information services revenue was $10.0M in the half, up from $9.3M in 1H24.
Smart: Previously “Smartshares”, Smart ended the half with FUM of $14.0B, which is up 3.8% from 2H24. FUM grew from positive net cashflows, and positive market returns despite an uncertain macro environment leading to a blip in FUM growth. This quarter, the Company continued the rebrand, with the new brand rolling out to remaining products over the coming year. Smart’s operations continue to mature, with fund structure streamlining and system upgrades.
Wealth Technology: Wealth Technologies closed 1H25 with $17.6B in FUA, a 8.6% increase from FY24 end. This growth was driven by $1.3B in new client migrations and $0.1B in market returns. The platform expanded significantly, onboarding 3 new clients, bringing the total active client count to 35. Additionally, NZX won 4 new clients in the period. Annual Recurring Revenue (ARR) from external clients grew 32.9% y/y, reaching $11.9M, with a pipeline potential ARR of $13.9M.
Financial Position: NZX maintained a solid balance sheet in 1H25, ending the half with $14.2M in cash. The Company declared a fully imputed interim dividend of $.03, flat from last year. Capital expenditures remain elevated due to continued investment in Smart and Wealth Technologies, particularly for client migration and system enhancements.
Updated Guidance: NZX has reiterated 2025 EBITDA guidance in the range of $49.0M to $54.0M, reflecting continued strong performance across core segments. Growth is underpinned by sound fundamentals and a stabilizing macro environment. We have made modest adjustments to our model.
Valuation: We use a Dividend Discount Model, DCF Model and EV/EBITDA comp analysis to guide our valuation. Our Dividend Discount uses the NZX stated range of payout ratios on 2026E Net Income to arrive at a valuation range of $1.78 to $2.20 with a mid-point of $1.99. Our DCF analysis produces a valuation range of $1.70 to $1.96 with a mid-point of $1.82. Our EV/EBITDA valuation results in a range of $1.54 to $1.89 with a mid-point of $1.72.
