Stonegate Capital Partners has updated its coverage on NZX Limited (NZSE: NZX), noting that the company's 1H26 results modestly improve the setup for the remainder of the fiscal year. The report highlights that Smart and Wealth Technologies are increasingly driving growth, while Capital Markets awaits a normalization in issuance and trading activity.
Smart and Wealth Technologies have become the primary growth engines for NZX. Smart FUM rose 28.5% year-over-year to $18.0 billion, with operating earnings up 11%. Wealth Technology FUA reached $21.1 billion, and ARR increased 15% to $13.7 million. Contracted migrations imply ARR can reach approximately $18.7 million, providing investors with clearer visibility into medium-term recurring growth.
The 140 basis point year-over-year margin decline to 35.6% appears to reflect QuayStreet transition costs and investment rather than underlying deterioration. Management expects improvement in 2H26 as these costs roll off, suggesting that current profitability understates the earnings potential of the growing Smart and Wealth businesses.
Capital Markets remains the swing factor for NZX. Primary issuance and trading activity remain subdued, although management is seeing more early-stage listing interest and several IPO candidates waiting for better conditions. Despite this softness, NZX maintained its FY26 EBITDA guidance of $53.0 million to $58.5 million and is tracking toward the midpoint. This leaves a recovery in issuance, trading, and derivatives as incremental upside rather than a requirement to meet current earnings expectations.
For more details, please view the full announcement at Stonegate Inc..
