In a wide-ranging product briefing to analysts in London earlier this month, Reuters identified enterprise data as its fastest-growing product segment in 2003. The segment, which falls under its new enterprise client group, includes Reuters’ DataScope pricing and reference data businesses.
According to Reuters chief financial officer David Grigson, the enterprise information products group grew by more than 50% in 2003 and “is still growing strongly in 2004.” While the product group is the smallest in the overall enterprise segment – which also includes Reuters’ data feeds, trading room platforms and risk solutions businesses – it outgrew all the other product lines, with a 51% rise in actual revenues, translated into a 61% increase when currency fluctuations are taken into account.
Peter Moss, head of the enterprise client segment, told analysts that the reference data and pricing group of products accounted for £24 million of revenues in 2003. At a 50% growth rate, that indicates a 2002 base of around £16 million.
In his presentation, Moss described the enterprise information segment as a “highly profitable, growing market with favourable industry dynamics.” He said “continued strong growth (is) expected,” citing key competitive wins at a large global insurance company against FT Interactive Data and at State Street Bank for Reuters’ U.S. fixed income data.
In pitching the DataScope offering, Moss said, Reuters’ strategy is to stress its low-cost offering combined with high-quality data. He said he expects “over time,” to see “greater revenue recognition for enterprise-wide data.” He concluded that the reference and pricing business was one of “two exciting businesses” – along with risk management – “with strong growth opportunities.”
Analysts present at the meeting appeared to concur. In its client briefing issued shortly after the Reuters presentation, Goldman Sachs acknowledged enterprise data as a potential growth business, albeit a small one, with only 4% of total enterprise segment revenues of £560 million. The firm did appear to worry about competition, though.
“The big competitor here is IDC (Interactive Data Corp., parent of FT Interactive Data) with over $300 million of end-of-day pricing revenues, or seven times larger than Reuters,” Goldman Sachs said in its briefing. Reuters “believes there is no structural reason why it should not be able to achieve an equivalent level of profitability (in 2003, IDC had 34% EBITDA margins).”
Aside from offering an analysis of its newly reorganized product lineup, Reuters used the presentation to introduce the heads of its new client segments. Like his peers, Moss reports to Devin Wenig, president of client segments and head of the new sales and trading segment. The new research and asset management segment is headed by Julie Holland, the media segment is headed by Chris Ahearn. Jane Platt is now chief operating officer for client segments, also reporting to Wenig.
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