Stonegate Updates Coverage on NZX Limited (NZSE: NZX) 1H26

Stonegate Capital Partners has updated its coverage on NZX Limited (NZSE: NZX), offering insights into the company's 1H26 results. The analysis suggests that while the overall performance showed a modest improvement, the growth narrative is increasingly driven by the Smart and Wealth Technologies segments, which are providing the clearest medium-term visibility.

The report notes that NZX's Smart FUM rose 28.5% year-over-year to $18.0B, with operating earnings up 11%. Similarly, Wealth Technology FUA reached $21.1B, and ARR increased 15% to $13.7M. Contracted migrations imply that ARR can reach approximately $18.7M, offering investors better visibility into recurring growth. This is a key point because it underscores the potential for sustained revenue expansion beyond the current figures.

However, the company experienced a 140 basis point year-over-year decline in margin to 35.6%. Stonegate attributes this primarily to QuayStreet transition costs and investment, rather than structural deterioration. Management expects improvement in 2H26 as these costs roll off, which suggests that the current profitability understates the earnings potential of the growing Smart and Wealth businesses. This is an important distinction, as it indicates that the margin pressure is temporary and not a sign of underlying weakness.

Capital Markets remains the swing factor, with primary issuance and trading activity still subdued. Despite this, management is seeing more early-stage listing interest and several IPO candidates waiting for better conditions. NZX has maintained its FY26 EBITDA guidance of $53.0M-$58.5M and is tracking toward the midpoint. This provides near-term downside support, leaving a recovery in issuance, trading, and derivatives as incremental upside rather than a requirement to meet current earnings expectations.

Stonegate's analysis highlights that the Smart and Wealth Technologies are increasingly carrying the growth story, with the margin pressure being transitional. The guidance provides confidence in the near-term earnings cadence, and any improvement in capital markets activity could provide additional upside. For more details, you can view the full announcement here.