Nasdaq(US:NDAQ)2025-12-02 18:57Summary of Nasdaq Conference Call Company Overview - Company: Nasdaq - Industry: Financial Technology and Market Services - CFO: Sarah Youngwood Key Points Company Transition and Vision - Nasdaq is transitioning from being perceived solely as an equities exchange to a technology platform company, with approximately 80% of revenue now coming from solutions revenue [3][4] - The company has achieved a Rule of 60-plus business model, with revenue growth from $2.2 billion in 2017 to higher EBITDA levels today, indicating strong financial performance [3][4] Financial Performance - Nasdaq reported double-digit revenue growth for three consecutive quarters, with a 9% Annual Recurring Revenue (ARR) growth in each quarter [3][11] - The company has successfully deleveraged its financials to 3.2 times ahead of schedule, aiming for 3.0 by year-end [8] Strategic Pillars 1. Architecting Modern Markets: Operating 135 markets, with 19 owned by Nasdaq, and providing software solutions for market operations [4] 2. Powering Innovation: Managing $800 billion in Assets Under Management (AUM) through various indexes, significantly up from $100 billion in 2017 [5] 3. Building Trust: Investing in regulatory and compliance software to enhance trust in financial systems [5] Fintech Segment - The fintech segment, including acquisitions like Adenza and Verafin, has been a focus area, with strong performance in cross-selling initiatives [7][9] - Nasdaq aims for $100 million in cross-sells by year-end 2027, with 15% of the current pipeline attributed to cross-sell opportunities [9][10] Regulatory Environment - AxiomSL, a key regulatory software, is used by major banks for compliance, and the company is optimistic about regulatory simplifications rather than deregulation [15][16] - The Basel III Endgame is anticipated to impact the regulatory landscape positively for banks, which in turn benefits Nasdaq [16] Capital Markets and Trading - Nasdaq is positioned to benefit from trends in tokenization and blockchain, providing necessary infrastructure for these changes [21][22] - The trading business remains a significant revenue contributor, with a focus on maintaining high volumes despite fluctuations in market volatility [34][36] Listings and IPO Market - The IPO market is showing signs of improvement, with $6 billion in executed deals last quarter and a strong pipeline for future listings [24][26] - Nasdaq expects a gradual revenue impact from IPOs, as these typically amortize over three years [27] Workflow and Insights Business - The workflow and insights segment has been slower in growth, but investments are being made to enhance performance [28][30] Index Business - Nasdaq's index business has seen double-digit growth, with a significant portion attributed to new products developed in the last five years [31][32] Expense Management and Capital Allocation - Nasdaq maintains a balance between top-line growth and expense management, leveraging free cash flow for organic investments and shareholder returns [38][40] - The company has a history of M&A but is currently focused on organic growth, with $2 billion in free cash flow available for strategic initiatives [41][42] Conclusion - Nasdaq is well-positioned for future growth through its technology platform strategy, strong financial performance, and proactive engagement in regulatory and market trends. The company is focused on leveraging its strengths in fintech, capital markets, and listings to drive long-term value for shareholders [3][4][5][41]