Core Insights - Nasdaq, Inc. (NDAQ) reported an adjusted +11% YoY increase in Q3 net revenue and a +19% YoY net earnings per share gain, indicating strong financial performance [1] - The stock price of NDAQ is currently at $91.70, reflecting a rise of over 3% after a recent low of $86.73, but remains below its mid-$90s highs from August [1][3] - Analysts suggest that if the current earnings and cash flow trends continue, NDAQ stock could be undervalued and worth up to $100 per share [1][3] Revenue and Cash Flow Analysis - Nasdaq's revenue is primarily derived from SaaS services for capital markets, with a significant portion being recurring revenue [4] - The annualized recurring revenue (ARR) is reported at over $3 billion, which is a 10% increase from the previous year, representing 59% of the projected $5.19 billion net revenue for 2025 [4] - The gross revenue for the trailing 12 months is approximately $8.168 billion, with recurring revenue accounting for about 36.7% [4] Operating Cash Flow Insights - Nasdaq's operating cash flow (OCF) has exceeded $2 billion over the trailing 12 months, which is 38.5% of the net revenue forecasts for this year [5] - Projections indicate that if OCF reaches 39% of the anticipated $5.57 billion revenue for 2026, it could result in approximately $2.1723 billion in operating cash flow [5] - The current OCF yield for NDAQ stock, based on a market capitalization of $52.52 billion, is calculated at 3.8% [6]

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Core Insights - Zacks Premium provides various tools for investors to enhance their stock market strategies and confidence [1] Zacks Style Scores - Zacks Style Scores are indicators that help investors select stocks likely to outperform the market in the next 30 days, rated from A to F based on value, growth, and momentum [2] - The Value Score identifies undervalued stocks using ratios like P/E, PEG, and Price/Sales [3] - The Growth Score focuses on a company's financial health and future outlook, analyzing projected and historical earnings, sales, and cash flow [4] - The Momentum Score helps investors capitalize on price trends by evaluating short-term price changes and earnings estimate revisions [5] - The VGM Score combines the three Style Scores to identify stocks with attractive value, growth potential, and positive momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +23.81% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 stocks rated 1 or 2, making it essential for investors to utilize Style Scores to narrow down choices [9] Investment Strategy - For optimal returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with lower ranks but high Style Scores may still present risks due to downward earnings forecasts [11] Company Spotlight: Nasdaq Inc. - Nasdaq Inc. is a leading provider of trading and market technology services, currently rated 3 (Hold) with a VGM Score of B [12] - The company is projected to achieve year-over-year earnings growth of 19.2% for the current fiscal year, with recent upward revisions in earnings estimates [13]

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Core Insights - Nasdaq reported quarterly earnings of $0.88 per share, exceeding the Zacks Consensus Estimate of $0.84 per share, and showing an increase from $0.74 per share a year ago, resulting in an earnings surprise of +4.76% [1] - The company achieved revenues of $1.32 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.75% and up from $1.15 billion year-over-year [2] - Nasdaq shares have increased approximately 14.9% year-to-date, slightly outperforming the S&P 500's gain of 14.5% [3] Earnings Outlook - The future performance of Nasdaq's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][5] - The current consensus EPS estimate for the upcoming quarter is $0.87 on revenues of $1.34 billion, and for the current fiscal year, it is $3.36 on revenues of $5.17 billion [7] Industry Context - The Securities and Exchanges industry, to which Nasdaq belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, indicating potential challenges ahead [8] - IntercontinentalExchange (ICE), a competitor in the same industry, is expected to report quarterly earnings of $1.62 per share, reflecting a year-over-year change of +4.5% [9]

Financial Data and Key Metrics Changes - Nasdaq reported net revenue of $1.3 billion, an 11% year-over-year increase, with operating income rising 16% to $732 million and diluted EPS growing 19% [6][24] - Annualized recurring revenue (ARR) grew 9% to $3 billion, marking a significant milestone [6][25] - Operating expenses were $583 million, up 5% year-over-year, leading to an operating margin of 56% and EBITDA margin of 58%, both up 2 percentage points from the previous year [24][33] Business Line Data and Key Metrics Changes - Capital Access Platforms generated revenue of $546 million, up 8%, with ARR growth of 6% [25][31] - Financial Technology delivered revenue of $457 million, up 13%, with ARR growth of 12% [28][29] - Market Services achieved net revenue of $303 million, reflecting a 13% growth driven by elevated market volumes [32] Market Data and Key Metrics Changes - Nasdaq welcomed operating companies that raised $6 billion in proceeds during the quarter, with over $14 billion raised year-to-date [10] - The index franchise recorded $91 billion in net inflows over the last 12 months, including $17 billion in the third quarter [12][26] - Nasdaq-listed securities represented 53% of total industry volume, up from 49% a year ago, indicating strong market presence [18] Company Strategy and Development Direction - Nasdaq is focused on integrating technology and AI into its solutions, enhancing client engagement and operational efficiency [9][20] - The company aims to leverage its existing trading infrastructure to enable tokenized securities trading, reflecting a commitment to innovation in the digital asset space [20][40] - Nasdaq's strategic priorities include integrating, innovating, and accelerating growth across its diversified business segments [19][23] Management's Comments on Operating Environment and Future Outlook - The U.S. economy remains resilient, with mixed economic signals, but overall consumer spending has picked up [8] - Nasdaq anticipates a meaningful pickup in IPO activity in the coming quarters, supported by a robust IPO pipeline [10][11] - Management expressed confidence in achieving strategic objectives and delivering sustainable growth despite a dynamic operating environment [36] Other Important Information - Nasdaq's gross leverage ratio improved to 3.1 times, with a commitment to deleveraging and maintaining strong cash flow [34][36] - The company has surpassed its net expense efficiency target, achieving over $150 million in cost reductions [33] Q&A Session Summary Question: Digital assets and growth opportunities - Management highlighted Nasdaq's involvement in the digital assets ecosystem, emphasizing the relevance of financial technology solutions as institutional interest in digital assets grows [39][40] Question: Tokenization initiative details - The tokenization proposal aims to allow investors to settle shares in a tokenized form, with ongoing collaboration with DTCC to develop settlement paths [43][45] Question: Operating expenses and future spending - Management indicated that ongoing investments are embedded in the guidance for the year, with a consistent trajectory expected [52][53] Question: Financial crime management business performance - Management acknowledged variability in ARR growth due to implementation phases for new enterprise clients but expressed confidence in future growth [58][59] Question: Capital markets technology momentum - Strong demand for connectivity services and robust client engagement were noted as key drivers of growth in capital markets technology [64] Question: AI's impact on revenue and expenses - Management sees AI as an opportunity to drive efficiency and enhance client experiences, with a focus on product development and automation [66][70] Question: BioCatch partnership and Verafin's platform potential - Management views Verafin as a platform with the ability to integrate modern APIs, enhancing its capabilities in the anti-financial crime space [79]

Financial Data and Key Metrics Changes - Nasdaq reported net revenue of $1.3 billion, an 11% year-over-year increase, with operating income rising 16% to $732 million and diluted EPS growing by 19% [6][24][36] - Annualized recurring revenue (ARR) grew 9% to $3 billion, marking a significant milestone [6][25] - Operating expenses were $583 million, up 5% year-over-year, leading to an operating margin of 56% and EBITDA margin of 58%, both up 2 percentage points from the previous year [24][33] Business Line Data and Key Metrics Changes - Capital Access Platforms generated revenue of $546 million, up 8%, with ARR growth of 6% [25][31] - Financial Technology delivered revenue of $457 million, up 13%, with ARR growth of 12% [28][29] - Market Services achieved net revenue of $303 million, reflecting a 13% growth driven by elevated market volumes [32] Market Data and Key Metrics Changes - Nasdaq welcomed operating companies that raised $6 billion in proceeds during the quarter, with over $14 billion raised year-to-date [10] - The index franchise recorded $91 billion in net inflows over the last 12 months, with $17 billion in the third quarter [12][26] - Nasdaq-listed securities represented 53% of total industry volume, up from 49% a year ago, indicating strong market presence [18] Company Strategy and Development Direction - Nasdaq is focused on integrating technology and AI into its solutions, enhancing its competitive position and providing value to clients [9][20] - The company aims to leverage its existing trading infrastructure to enable tokenized securities trading, reflecting a commitment to innovation in the digital asset space [20][40] - Nasdaq's strategic priorities include Integrate, Innovate, and Accelerate, with a focus on cross-selling and enhancing client engagement [19][23] Management's Comments on Operating Environment and Future Outlook - The U.S. economy remains resilient, with mixed economic signals, but overall consumer spending has picked up [8] - Nasdaq anticipates a meaningful pickup in IPO activity in the coming quarters, supported by a robust IPO pipeline [10][11] - Management expressed confidence in achieving strategic objectives and delivering sustainable growth despite a dynamic operating environment [36] Other Important Information - Nasdaq's gross leverage ratio improved to 3.1x, with a commitment to deleveraging and maintaining strong cash flow [34][36] - The company completed the sale of Nasdaq Solovis, which was deemed not a strategic fit, allowing for a more focused portfolio [15] Q&A Session Summary Question: Digital assets and growth opportunities - Management highlighted Nasdaq's long-standing involvement in the digital assets ecosystem and the relevance of its financial technology solutions as institutional interest in digital assets grows [39][40] Question: Tokenization proposal details - The tokenization initiative aims to allow investors to settle orders in a tokenized form, with collaboration with DTCC for settlement paths [44][46] Question: Operating expenses and 2026 outlook - Management indicated a consistent trajectory in operating expenses, aligned with strong revenue growth and ongoing investments in technology [52][53] Question: Financial crime management business performance - Management acknowledged variability in ARR growth due to implementation phases for new enterprise clients but expressed confidence in future growth [58][60] Question: Capital markets technology momentum - Strong demand for connectivity services and data center growth were noted as key drivers for the Capital Markets Technology business [62][64] Question: AI's impact on revenue synergy targets - Management confirmed that AI solutions are expected to accelerate cross-sell efforts and enhance client workflows, supporting revenue synergy targets [75][76] Question: BioCatch partnership implications - The partnership with BioCatch is seen as a strategic move to enhance Verafin's platform capabilities and expand its market reach [79]

Financial Data and Key Metrics Changes - Nasdaq reported net revenue of $1.3 billion, an 11% year-over-year increase, with operating income rising 16% to $732 million and diluted EPS growing 19% to $0.88 [4][22][34] - Annualized recurring revenue (ARR) grew 9% to $3 billion, marking a significant milestone for the company [4][23] - Operating expenses were $583 million, up 5% year-over-year, leading to an operating margin of 56% and EBITDA margin of 58%, both up 2 percentage points from the previous year [22][32] Business Line Data and Key Metrics Changes - Capital Access Platforms generated revenue of $546 million, up 8%, with ARR growth of 6% [22][24] - Financial Technology revenue reached $457 million, up 13%, with ARR growth of 12% [22][26] - Market Services net revenue was $303 million, reflecting a 13% growth driven by elevated market volumes [30] Market Data and Key Metrics Changes - Nasdaq welcomed operating companies that raised $6 billion in proceeds during the quarter, with over $14 billion raised year-to-date [7] - The index franchise achieved record net inflows of $91 billion over the last 12 months, including $17 billion in the third quarter [9][24] - Nasdaq-listed securities represented 53% of total industry volume, up from 49% a year ago, indicating strong market presence [14] Company Strategy and Development Direction - Nasdaq is focused on integrating technology and data to enhance client services, particularly through AI-enabled solutions [5][6] - The company aims to deepen its competitive advantage by driving innovation across the financial industry [5][6] - Nasdaq's strategic priorities include integrating, innovating, and accelerating growth, with a focus on cross-selling and expanding its technology platform [15][20] Management's Comments on Operating Environment and Future Outlook - The U.S. economy remains resilient, with mixed economic signals, but overall consumer spending has picked up [5] - Nasdaq anticipates a meaningful pickup in IPO activity in the coming quarters, supported by a robust IPO pipeline [7][8] - Management expressed confidence in achieving strategic objectives and delivering sustainable growth despite a dynamic operating environment [34] Other Important Information - Nasdaq completed the sale of Nasdaq Solovis to Insight Partners, which was deemed not a strategic fit within its portfolio [11] - The company has surpassed its net expense efficiency target, achieving over $150 million in cost reductions [32] - Nasdaq's senior unsecured debt rating was upgraded from BBB to BBB+ by S&P, reflecting progress in deleveraging [15] Q&A Session Summary Question: Digital assets and growth opportunities - Management highlighted Nasdaq's long-standing involvement in the digital assets ecosystem and the relevance of its financial technology solutions as institutional interest in digital assets grows [36] Question: Tokenization proposal details - The tokenization initiative involves allowing investors to flag orders for tokenized securities, with two settlement paths being developed in collaboration with DTCC [39][40] Question: 2026 outlook and operating expenses - Management indicated a consistent trajectory in revenue growth, with ongoing investments embedded in the guidance for the full year [48][49] Question: Financial crime management business performance - The anti-financial crime business is experiencing variability in ARR growth due to the implementation of solutions for new enterprise clients [51][53] Question: Capital markets technology momentum - Strong demand for connectivity services and robust client engagement are driving growth in the Capital Markets Technology segment [55][59] Question: AI's impact on revenue and expenses - Management views AI as an opportunity to drive efficiency and enhance client experiences, with significant potential for revenue growth [60][62]

Financial Data and Key Metrics Changes - Nasdaq reported net revenue of $1.3 billion, an 11% year-over-year increase, with solutions revenue exceeding $1 billion for the first time, reflecting a 10% growth [6][31] - Annualized recurring revenue (ARR) grew 9% to $3 billion, with operating income increasing by 16% to $732 million and diluted EPS growing by 19% [7][32] - Operating expenses were $583 million, up 5% year-over-year, leading to an operating margin of 56% and EBITDA margin of 58%, both up two percentage points from the prior year [32][42] Business Line Data and Key Metrics Changes - Capital Access Platforms generated 8% revenue growth and 6% ARR growth, with Data and Listings revenue up 6% and Index revenue up 13% [10][33] - Financial Technology delivered 13% revenue growth and 12% ARR growth, with Financial Crime Management Technology revenue growing 22% and Regulatory Technology revenue up 9% [17][36] - Market Services achieved 13% net revenue growth, driven by elevated volumes in U.S. Options and U.S. Equities [21][40] Market Data and Key Metrics Changes - Nasdaq's listed securities represented 53% of total industry volume, up from 49% a year ago, indicating strong market position [24] - The U.S. economy remains resilient, with solid consumer spending and corporate investment in technology and AI contributing to growth [8][9] - European growth remains subdued, but expectations for recovery and renewed investments are improving the outlook [9] Company Strategy and Development Direction - Nasdaq is focused on integrating, innovating, and accelerating its technology platform, with a strong emphasis on AI and digital assets [25][29] - The company aims to enhance its competitive position through AI-enabled solutions and partnerships, particularly in financial crime management and regulatory technology [27][90] - Nasdaq's strategy includes expanding its digital asset offerings and exploring tokenization of securities to enhance market efficiency [50][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Nasdaq's ability to deliver sustainable growth and long-term shareholder value, despite mixed economic signals [8][30] - The company anticipates a meaningful pickup in IPO activity, supported by a robust IPO pipeline and favorable market conditions [12][30] - Management highlighted the importance of understanding the regulatory landscape for digital assets and the potential for growth in this area [52] Other Important Information - Nasdaq completed the sale of Nasdaq Solovus to Insight Partners, indicating a strategic focus on core business areas [17] - The company achieved a gross leverage ratio of 3.1 times at quarter end, with an upgrade in its senior unsecured debt rating from BBB to BBB+ [24][44] - Nasdaq generated free cash flow of $516 million in the third quarter, supporting dividends, deleveraging, and share repurchases [43][44] Q&A Session Summary Question: Digital assets and growth opportunities - Management discussed Nasdaq's involvement in the digital assets ecosystem and the relevance of its FinTech solutions as institutional interest in digital assets grows [48][50] Question: Tokenization proposal details - Management provided a high-level overview of the tokenization filing, explaining how investors could flag orders for tokenized settlements [54][56] Question: 2026 outlook and OpEx growth - Management indicated that ongoing investments are embedded in the guidance for the year, with a consistent trajectory expected [62][68] Question: Financial Crime Management Technology performance - Management noted robust sales in the SMB space and highlighted the potential for growth through partnerships and new AI capabilities [70][72] Question: Capital Markets Technology momentum - Management reported strong demand for connectivity services and data center growth, indicating a healthy environment for the business [78][80] Question: AI's impact on revenue synergy targets - Management confirmed that AI solutions are expected to accelerate revenue synergy targets, with a strong pipeline of cross-sell opportunities [92][94]

Adena Friedman, Nasdaq CEO and chair, joins 'Squawk Box' to discuss the company's quarterly earnings results, what's driving the boost in trading volumes, her thoughts on prediction markets, IPO pipeline, and more. ...