Deconstructing the LSEG growth strategy: risks and realities

London Stock Exchange Group (LSEG) has become a juggernaut in the financial data industry as revenues and profits have continued to grow after the massive Refinitiv acquisition that closed in 2021. Operating profit surged past GBP 3 billion for the first time in 2024 as the company added a key partnership with Microsoft and continued to develop its own new products, all while global equity markets have continued on an upward trajectory in the last three years.

LSEG appears to be one of the most recommended stocks on the street, with 19 of the 20 analysts tracked by Bloomberg rating the shares a buy (there is one hold rating). Organic growth of 7.8% in the first half of 2025 was above guidance and expectations. With all of the major European, US, and World equity indices up by double-digit percentages this year, strong sell-side support, and revenues and profits on track for new records in 2025, one might expect that shares in LSEG would be performing well. Instead, through 4 December, LSEG shares are down 23% this year.

At Third Bridge, we have gone deep into our network of experts in search of answers, looking at the full perspective of issues facing LSEG. In addition, we have interviewed experts from the competition to see where LSEG stacks up.

Data & Analytics

LSEG’s Data & Analytics segment is the most important of its four business units by revenue. However, given its size, its organic growth is slower. While a lot was made of the late 2022 agreement that saw Microsoft take a stake in LSEG, the expert and former Portfolio Director that we spoke with in January this year did not believe that the deal would lead to much in the way of revenue. Partnering with Microsoft would allow LSEG to offer clients more functionality, AI tools, and enhanced features, and there is better operability between LSEG’s Workspace platform and Microsoft applications as a result.  However, as far as impacting the top line, this would be difficult to see, according to our experts, despite the hype around AI. 

Speaking of AI, this has been–at times–viewed as a threat to LSEG and others, as new firms could potentially threaten the market share and pricing of the incumbents in the industry. Third Bridge experts see this as potentially less of a threat for LSEG for two reasons. First, the EU Digital Operational Resilience Act (DORA) regulations require a greater demonstration of resilience, which increases the barriers to entry. Second, pricing power can also be protected with more plug-ins from the Microsoft partnership.

In October, a former head of strategic accounts that we spoke to noted that they had seen slower progress with Microsoft, given the complex engineering requirements, leading to slower customer adoption. Bloomberg still holds an advantage when it comes to data quality and critical mass, according to the expert we spoke to in August. That said, Bloomberg is still priced at a premium compared to other competing products, generating opportunities for the likes of LSEG. Bloomberg remains firmly entrenched in its market share–the Instant Bloomberg (IB) app is key, and the prestige of having a premium product makes it difficult to compete. LSEG Workspace is able to address the IB issue with Microsoft Teams as an integrated messaging platform, but the LSEG opportunity now is for more cost-conscious firms as they close the gap on functionality. One of the areas with early traction in share gains was in foreign exchange (FX), where LSEG’s matching engine–the result of the Refinitiv acquisition–as part of the Workspace application has been achieving results.

Markets

With the exception of the aftermath from President Trump’s “Liberation Day” tariff announcements, financial markets have been strong across the board–equitities and credit, public and private, not to mention FX. Companies have been able to raise capital, M&A has been strong, and despite some concerns, the economy has withstood some headwinds.

LSEG’s Markets division is the consolidation of several businesses over the years, most recently moving Post Trade and Capital Markets divisions into one unit. While important, the most significant path to profit growth in the LSEG Markets division over the next two years, is likely to be from cost-cutting, according to our experts. Consolidation creates opportunities for efficiency. Revenue growth will take a little longer. Multiple Third Bridge experts have pointed out that the actual stock exchange in London owned by LSEG is a minor contributor to the company’s revenue and profit. The lack of listings and new IPO’s in the UK, while concerning, is not impacting the company’s financial performance. The London Stock Exchange is more of a mindshare issue with negative media coverage, but in reality, it is not impacting the company’s bottom line.

Private markets, whether they are related to credit opportunities or private equity investments, have been a hot area for investors, but, as far as impacting LSEG’s business, they are years away. The company is building out infrastructure for digital markets, but this too is more likely to impact in 2027 and beyond.

FTSE Russell

The third segment of LSEG that we have spent time analyzing with our experts is FTSE Russell, the company’s third biggest business unit. The 7.6% organic revenue growth in the first half of 2025 was solid, although towards the top of the range that our experts envision for the unit. The company is able to benefit from the trend towards index customization, although the process is still time consuming. Efficiencies have improved, and ultimately, this is an area where our experts see the Microsoft relationship benefitting the top line as LSEG content is provided to a broader audience.  

However, the former director for index investments at FTSE Russell that we interviewed believed that MSCI was ultimately in a better position in this business. Not only has MSCI had a dominant share of assets tracking their indices, but the company has also been investing both organically and inorganically.  The Foxberry acquisition in April 2024 was an example of an acquisition that several industry players wanted to make, but that MSCI ultimately won, giving the company a leg up in technology for index customization.

Putting it all together

While this has been a good year for equity markets in general, LSEG investors have found 2025 to be frustrating.  On the whole, Third Bridge experts see more opportunities for LSEG in self-help, driving efficiencies from consolidating businesses and investing in the future. However, the top line is a different story. The strong organic growth is unlikely to be sustained in 2026, given the more difficult comparisons, the competition in each of their key segments, and the timing of when today’s investments are likely to yield something material to the overall performance of LSEG.

Profit growth at LSEG is expected to continue; however, it is likely to be achieved through operating cost improvements rather than a dynamic product portfolio that is upending the competitive landscape.  

As we look forward to 2026, Third Bridge plans to leverage our network of experts to better understand how and when LSEG’s Microsoft relationship will reignite organic growth, how FTSE Russell plans to compete in private markets, the opportunity for additional efficiencies, and the landscape for M&A across the industry. It is a dynamic market place for LSEG, and we expect to use our global reach to stay ahead of the curve.

^{Transcript references:} 

^{1. LSEG – Delivering Microsoft Roadmap & Monetisation Opportunities}

^{2. LSEG Data & Analytics – Partnering for Productivity & Profitability}

^{3. LSEG Markets – Merged Unit Synergies, Stability & Strategic Launches}

^{4. LSEG FTSE Russell – Indexing Opportunity, Not Just a Benchmark}

^{5. LSEG – Evolving the Data Proposition Through Microsoft Partnership}

^{6. LSEG – Growth Opportunities & Innovation Outlook}

^{7. LSEG – Igniting Growth Through Data & Analytics}

^{8. London Stock Exchange Group – Workspace Growth Outlook & Opportunities to Leverage AI}

^{9. Financial Data & Technology Industry – FactSet, Bloomberg & LSEG – Former Senior Executive, Data & Feeds at London Stock Exchange Group plc (LSEG)}