DALLAS, TX -- August 20, 2026 -- NZX Limited (NZSE: NZX): Stonegate Capital Partners Updates Coverage on NZX Limited (NZSE: NZX). We believe NZX’s 1H26 results modestly improve the setup, with Smart and Wealth Technologies providing growth while Capital Markets awaits normalization in issuance/trading. The 140 bps y/y margin decline to 35.6% appears to reflect QuayStreet transition costs and investment rather than underlying deterioration, with 2H26 improvement expected despite higher Smart marketing ahead of the Q4 KiwiSaver relaunch. Wealth Technologies provides the clearest medium-term visibility; contracted migrations support ARR toward $18.7M, though elevated CapEx and migration timing remain important through 2027. Management is tracking toward the midpoint of FY26 guidance, supporting confidence in the near-term earnings cadence.
Markets: Operating revenue increased 6.4% y/y to $32.0M. Capital listed/raised totaled $6.0B, up 25.2% excluding Fonterra’s prior-year transfer; value traded/cleared was $21.2B, down 2.7% y/y, while primary equity issuance remained subdued in 2Q. Information Services recurring revenue rose 7.4%, supplemented by $0.97M of timing-related audit and back-dated licence revenue absent in 1H25. Management sees more early-stage listing interest; several IPO candidates await calmer conditions. S&P/NZX 20 futures remain in development; dairy derivatives improved in July and into August, with management comfortable with 2026 volume targets.
Smart: FUM increased 28.5% y/y and 13.5% YTD to $18.0B, supported by $1.2B net cash flows and $1.0B market returns. Operating earnings rose 11% to $15.2M despite higher fund expenses from FUM growth and QuayStreet externalisation. Management expects 2H26 headline margin improvement as transitional arrangements roll off, while marketing should rise ahead of the Q4 KiwiSaver rebrand and digital refresh. The 5% KiwiSaver share ambition remains a three-to-five-year objective.
Wealth Technology: FUA reached $21.1B, up 20.1% y/y, while ARR rose 15.0% to $13.7M. Contracted migrations lift full-migration ARR to $18.7M, with a $1.0M late-2026 contract cessation largely offsetting $0.95M of H2 migration related ARR before larger migrations dated 2027/2028. Smart KiwiSaver remains scheduled for Q4, while the large SaaS client is expected to go live in 2027.
Financial Position: FCF improved to $1.4M from $(1.3)M; NZX repaid $7.5M of acquisition debt. NZX ended 1H26 with $35.1M cash, partly restricted/required for Clearing House and Smart regulatory purposes, and declared a 3.2 cps fully imputed interim dividend. CapEx should remain elevated in Wealth Technologies through 2027 and Smart through 2H26.
Updated Guidance: NZX maintained 2026 EBITDA guidance of $53.0M $58.5M. The 2H26 cadence should reflect continued Smart and Wealth Technologies growth, easing QuayStreet transition effects and higher Smart marketing spend, while Capital Markets remains dependent on issuance, trading and derivatives activity.
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 2027E Net Income to arrive at a valuation range of $1.50 to $1.68 with a mid-point of $1.67. Our DCF analysis produces a valuation range of $1.84 to $2.13 with a mid-point of $1.97. Our EV/EBITDA valuation results in a range of $1.47 to $1.88 with a mid-point of $1.67.
