TMX Group reported first-half organic revenue of CAD 975 million at Scotiabank's 27th Annual Financials Summit on Wednesday, saying the trajectory puts the exchange operator on track to hit its CAD 2 billion TM2X revenue target by the end of fiscal 2029 — potentially two years ahead of schedule.
CEO David Kwan told the event that the company is "literally within spitting distance" of reaccelerating growth organically, and that the current run rate makes it plausible the target could be reached by 2027 or sooner without further acquisitions.
The confidence comes as TMX advances a series of inorganic deals totaling approximately CAD 2 billion. The Cboe Australia acquisition closed roughly a month ago. Two other transactions remain pending regulatory approval: the CDS Canada deal, expected to close in 2025 after Competition Bureau review, and the proposed merger between MEMX Group and the Boston Options Exchange, which awaits SEC and other regulatory sign-off.
Kwan said the cash outlay for the MEMX/BOX combination is expected to come in below the initially estimated CAD 800 million, as more shareholders are rolling over equity rather than taking cash. At closing, TMX is projected to own roughly 55% to 60% of the combined entity.
On balance-sheet leverage, Kwan noted TMX normally operates between 1.5x and 2.5x absent acquisitions, but expects to reach about 3.4x during the current acquisition cycle before de-levering.
In capital formation, TMX reported about 300 listings year-to-date, including reverse takeovers and direct listings, with six large IPOs completed and two to three more strong deals expected before year-end. Fifteen companies graduated from TSX Venture to the Toronto Stock Exchange. The corporate solutions segment now accounts for 40% of Capital Formation revenue and targets 50% or more by 2030, growing at high single-digit to low double-digit rates. The long-term pipeline includes more than 2,000 companies, with roughly 500 in active dialogue over the next three years and 85 to 90 in discussion for the immediate term.
Kwan emphasized a disciplined approach to spending. "We do not like to spend shareholder money and shareholder capital on speculation where there is not a proven client demand," he said, calling execution of the global growth strategy the top priority.
The company also highlighted margin strength, with a gross profit margin near 93%, and returned to dividends for a 10th consecutive year with a payout ratio target of 40% to 50%. A third dividend increase was announced in the third quarter, bringing the yield to nearly 2%.
TMX plans to hold a thought-leadership forum on digitization on September 15.
