Nasdaq(NDAQ) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Nasdaq reported net revenues of $1.2 billion, representing a 12.5% increase year-over-year [9][42] - Solutions revenues were $947 million, reflecting an 11% growth year-over-year [9][42] - Annual Recurring Revenue (ARR) rose to $2.8 billion, up 9% year-over-year [9][42] - Operating income increased by 17%, and earnings per share (EPS) grew by 24% [10][42] - Free cash flow for the first quarter was $674 million, supporting deleveraging and share repurchases [12][66] Business Line Data and Key Metrics Changes - Capital Access Platforms generated 5% ARR growth and 11% revenue growth, driven by net inflows and product innovation [10][45] - Financial Technology delivered 10% revenue growth, with ARR growth of 12%, including 21% growth in Financial Crime Management Technology [11][52] - Market Services achieved 19% net revenue growth, driven by record U.S. cash equities and derivatives revenue [11][58] Market Data and Key Metrics Changes - Nasdaq welcomed 45 operating companies, raising approximately $5 billion in total proceeds [15] - The index business achieved 26% revenue growth, with record average ETP AUM of $662 billion [47] - U.S. cash equities markets experienced five of the six highest trading days in industry history [35][36] Company Strategy and Development Direction - Nasdaq is focused on enhancing its competitive position and executing its strategy amid market volatility [8] - The company aims to surpass $100 million in run rate revenue from cross-sells by the end of 2027 [12] - Nasdaq is expanding its efficiency program target to $140 million, building on the success of the Edenta transaction [12] Management's Comments on Operating Environment and Future Outlook - The management noted that the global economy maintained solid performance at the beginning of the year, but uncertainty increased due to changing trade policies and geopolitical tensions [7][37] - Nasdaq's diversified business model positions it for resilient growth despite market fluctuations [40] - The management expressed confidence in achieving full-year 2025 revenue growth within the medium-term outlook [56][70] Other Important Information - Nasdaq announced an enhanced partnership with AWS to modernize its market infrastructure [22][131] - The company repurchased $279 million in notional value of debt and $115 million in common stock during the first quarter [66][68] Q&A Session Summary Question: Strength in the index business and differences from the last downturn - Management highlighted that the index business grew 6% during the 2022 downturn and has since expanded its product offerings and client base, leading to 26% growth despite an 8% decline in market values [78][81] Question: Opening a regional headquarters in Texas - The decision to open a regional headquarters in Texas is driven by the need to serve a growing client base in the area, including banks and corporate clients [88][90] Question: Acquisition priorities and M&A outlook - Management stated that the focus remains on organic growth rather than pursuing acquisitions, emphasizing the importance of deleveraging and share buybacks [96][97] Question: Impact of macro headwinds on sales cycles - Management noted that while there are delays in larger decisions, the overall demand remains strong across various segments, particularly in Financial Crime Management Technology [102][110] Question: Growth from Verifen and European opportunities - Management indicated that growth is driven by SMB sales moving upmarket, with ongoing engagement in Europe, although significant contributions are expected in the following years [120][121] Question: Further details on delays and revenue impact - Management acknowledged that delays in decision-making could impact growth in Q2 but remains confident in achieving medium-term growth targets [126][128] Question: Enhanced partnership with AWS - Management explained that the partnership with AWS aims to provide scalable, resilient infrastructure solutions for market operators, enhancing overall market technology revenues [135]