[NDAQ] Nasdaq: Q3 2026 Earnings Preview as Index AUM Tops $1 Trillion and Expenses Rise

Nasdaq (NDAQ) runs The Nasdaq Stock Market in the United States and the Nasdaq Nordic and Nasdaq Baltic exchanges, and it sells software to banks, brokers, exchanges and regulators, reporting through three segments: Capital Access Platforms, Financial Technology and Market Services[1]. The company has scheduled its earnings call for 2026-10-20 to report results for the third quarter of 2026, ending September 30, 2026[2]. In the latest disclosed period, the second quarter of 2026, net revenue was $1,500 million, up 15% year over year, Solutions revenue was $1,160 million, up 17%, annualized recurring revenue (ARR) was $3,258 million, up 11%, non-GAAP operating income was $859 million at a 57% margin, and non-GAAP diluted earnings per share were $1.07, up 25%, the first quarter in company history above $1[3]. Exchange-traded product (ETP) assets tracking Nasdaq indexes crossed $1 trillion for the first time to end the quarter at $1.114 trillion, with record net inflows of $51 billion[4], and Market Services posted record quarterly net revenue of $340 million[5]. Nasdaq does not guide on revenue; on July 23 it raised its 2026 non-GAAP operating expense guidance from $2.485-2.545 billion to $2.530-2.570 billion, kept its non-GAAP tax rate guidance at 22.5% to 24.5%, and attributed the increase to higher employee compensation tied to revenue performance and higher marketing costs from a stronger IPO market[6]. Management also gave two directional pointers for the third quarter on the call: Capital Markets Technology faces tougher year-over-year comparisons for the next two quarters because large upfront Calypso license revenue was booked in the third and fourth quarters of 2025, and the enterprise clients Verafin signed in the second half of 2025 start contributing revenue in the second half of 2026 after a roughly one-year implementation[7]. Chief financial officer Sarah Youngwood added that a $5 million regulatory fine collected in the third quarter of 2025 was recorded as a contra expense, so third-quarter expense comparisons will look tougher, and that a $200 million to $250 million variable accelerated share repurchase launched in July will be completed within the third quarter[8]. On the analyst side, the Drillr earnings calendar (updated September 22, 2026) carries third-quarter estimates of $1.021 in non-GAAP earnings per share and $1,482 million in net revenue, against a second-quarter setup of $0.985 and $1,483 million expected versus $1.07 and $1,500 million delivered[9]; the Drillr analyst estimates table (updated the same day) averages $1.024 per share (10 analysts, range $1.014 to $1.064) and $1,472 million of net revenue (8 analysts, range $1,462 million to $1,502 million)[10]. Both sets of estimates imply a slight sequential decline in net revenue from the second quarter, which included a $6 million one-time index benefit and the cash equities spike around the Russell reconstitution[11].

Three things in the third-quarter report deserve close attention. First, whether Index revenue keeps pace with assets: second-quarter Index revenue was $271 million, or $265 million after the $6 million one-time benefit, on average assets of $1.014 trillion, while period-end assets of $1.114 trillion sit about 10% above the average, so a flat Index line in a sideways market would indicate that the futures shift from E-mini to micro E-mini contracts and fee resets are absorbing asset growth[12][13][14]. Second, the net result of two opposing lines inside Financial Technology: Verafin revenue was $98 million, up 22%, with ARR of $359 million, 11 enterprise signings year to date already exceed all of 2025, and enterprise clients start going live in the second half; at the same time Capital Markets Technology at $321 million must lap the high base created by Calypso upfront licenses in the third quarter of 2025, so whether segment organic growth stays above 10% and the segment margin holds at 46% is the most direct test in the report[15][16]. Third, expenses and margin: non-GAAP operating expenses were $641 million in the second quarter, up 10%, $1,249 million was spent in the first half, and the new guidance implies roughly $640 million to $660 million per quarter in the second half, so whether third-quarter expenses land within $655 million and the non-GAAP margin holds at 57% decides whether the raise is spending that follows revenue or the start of narrowing operating leverage; linked to that is options net revenue, where industry average daily volume of 66.5 million contracts rose 27% with a 29.1% share, yet options net revenue of $123 million rose only 8.2% and the 10-Q attributed the gap to lower capture, so whether that figure holds at $125 million with industry volume of at least 60 million contracts will show whether the order-flow change from new consolidators is one-off or structural[17][18].

Company Background and Business Structure

Nasdaq, Inc. is headquartered in New York, was formerly NASDAQ OMX Group, took its current name in September 2015 and describes itself as a technology platform that powers the world's economies; it operates The Nasdaq Stock Market in the United States and the Nasdaq Nordic and Nasdaq Baltic exchanges and sells software to banks, brokers, exchanges and regulators[1]. It bought the anti-financial-crime software company Verafin for $2.75 billion in 2021 and Adenza (the Calypso trading and risk platform and the AxiomSL regulatory reporting platform) in November 2023, and has reported three segments since; Adena Friedman is chair and chief executive officer and Sarah Youngwood is chief financial officer[19]. Management allocates resources and assesses performance across the three segments separately, with segment operating income as the primary measure, and the chief operating decision maker does not review total assets or income below operating income by segment[16].

The company reports its segments on a net revenue basis (revenues less transaction-based expenses, meaning revenue after transaction rebates and brokerage, clearance and exchange fees), and second-quarter 2026 net revenue was $1,500 million[20]. Capital Access Platforms at $621 million (41%) has three parts: Data & Listing Services at $217 million sells real-time and historical market data subscriptions and annual listing fees; Index at $271 million charges asset-based license fees on ETPs tracking the Nasdaq-100 and other indexes and volume-based fees on futures and options, with ETP assets tracking Nasdaq indexes at $1.114 trillion at quarter end and $1.014 trillion on average; and Workflow & Insights at $133 million covers institutional analytics such as eVestment and board and investor-relations software[20][13]. Financial Technology at $539 million (36%) also has three parts: Financial Crime Management Technology (Verafin) at $98 million provides an anti-money-laundering and anti-fraud platform by SaaS subscription to more than 2,800 financial institutions; Regulatory Technology (AxiomSL regulatory reporting and market surveillance) at $120 million; and Capital Markets Technology at $321 million, which includes the Calypso trading and risk platform, market technology sold to other exchanges and the Trade Management Services that connect clients to Nasdaq markets (hosting, connectivity and data centers)[20][15]. Market Services net revenue of $340 million (23%) consists of $123 million from U.S. equity options, $160 million from cash equity trading, $33 million from U.S. tape plans and $24 million from other lines[17].

Segment operating income in the second quarter was $394 million, $250 million and $218 million respectively, with a further $150 million of unallocated corporate expense[16]. Financial Technology and Capital Access Platforms together form Solutions revenue, $1,160 million in the quarter against ARR of $3,258 million[3]. ARR counts only the annualized value of active subscription contracts and excludes one-time or metric-based contracts; for Calypso and AxiomSL step-up contracts it includes only the components active on the calculation date, not future committed increases, and the company states that ARR is not a forecast[21]. In October 2025 the company sold its Solovis business, previously part of Capital Access Platforms, and reclassified its revenue and ARR to Other[21].

Financial History and Current Position

Over the past three years Nasdaq's scale and profit were lifted by both the Adenza acquisition and market activity. On an annual basis, net revenue rose from $3,895 million in 2023 to $4,649 million in 2024 and $5,249 million in 2025, a 12.9% increase in 2025; operating expenses grew only 2.3% to $2,918 million, so operating income grew 29.7% to $2,331 million, net income attributable to Nasdaq grew 60.1% to $1,788 million, diluted earnings per share were $3.09 and dividends declared were $1.05 per share[19]. Segment net revenue in 2025 was $2,137 million for Capital Access Platforms, $1,850 million for Financial Technology and $1,201 million for Market Services; year-end ARR was $1,340 million for Capital Access Platforms and $975 million for the Markets Technology business[22]. In 2025 the company increased repurchases by $471 million, paid $60 million more in dividends and repaid $14 million more debt, which management described as continued commitment to deleveraging[23].

Growth did not slow in the first half of 2026 on a quarterly basis. First-quarter net revenue was $1,407 million, up 14% (13% organic), Financial Technology revenue was $517 million, up 20%, Index revenue was $220 million, up 14%, non-GAAP earnings per share were $0.96, up 22%, and the company repurchased $548 million of stock and paid $153 million in dividends[24]. Second-quarter net revenue was $1,500 million, up 15%, Solutions revenue was $1,160 million, up 17%, ARR was $3,258 million, up 11% (12% organic), GAAP operating income was $712 million, up 25%, non-GAAP operating income was $859 million, up 19%, non-GAAP earnings per share were $1.07, up 25%, and GAAP earnings per share were $0.89[3]. On the 10-Q three-month basis, second-quarter operating expenses were $788 million, up 6.9%, and net income attributable to Nasdaq was $507 million, up 12.2%; for the first half, net revenue was $2,908 million, up 14.4%, operating income was $1,369 million, up 22.7%, net income attributable to Nasdaq was $1,026 million and diluted earnings per share were $1.80[25]. On the cost side, second-quarter non-GAAP operating expenses were $641 million, up 10%, driven mainly by compensation tied to revenue performance, marketing spend from a strengthening IPO environment and technology investment[5].

On cash, first-half operating cash flow was $1,400 million, capital expenditure was $137 million, repurchases were $903 million, dividends were $327 million, the company repaid $431 million of debt and issued $269 million of commercial paper net, and cash at June 30 was $520 million[26]. Total debt fell from $9,004 million at the start of the year to $8,761 million at June 30, of which short-term debt was only the $269 million of commercial paper and long-term senior unsecured notes were $8,492 million with maturities running from 2028 to 2063[27]. Second-quarter operating cash flow was $711 million, with $174 million of dividends, $356 million of repurchases and $162 million of net debt repayment in the quarter, and $2.5 billion remained under the repurchase authorization at June 30[5]; the chief financial officer put gross leverage at 2.6x at quarter end and said a $200 million to $250 million accelerated repurchase was launched in July[8].

Operating Model

Net revenue is the sum of the three segments' net revenue plus other revenue; in the second quarter of 2026 that was $621 million plus $539 million plus $340 million plus zero, or $1,500 million[20]. Index revenue ($271 million) is average ETP assets multiplied by the asset-based license rate, plus Nasdaq-100 futures and options contract volume multiplied by a per-contract fee, plus one-time items, which this quarter meant a $6 million contract-modification benefit; the 10-Q attributed the quarter's growth to higher average assets, higher volume-based revenue and that one-time benefit[11]. Assets depend on both net inflows and market moves: second-quarter net inflows were $51 billion, trailing-twelve-month net inflows were $109 billion and trailing-twelve-month net appreciation was $260 billion, so market gains contributed far more than new money[13]; the futures shift from E-mini to micro E-mini contracts lowers the per-contract fee, an offset management raised on both the first-quarter and second-quarter calls[14][8]. Data & Listing Services ($217 million) is mainly data subscriptions and annual listing fees, so IPO counts affect initial listing fees and the future annual-fee base; operating company IPOs fell to 26 in the second quarter from 38 a year earlier, yet revenue still grew 9%[13][12].

Financial Technology revenue ($539 million) is the periodic recognition of ARR ($1,870 million) plus Calypso upfront license fees, professional services and the connectivity and data center fees of Trade Management Services[13]. Verafin ($98 million, up 22%) is almost entirely subscription, with growth from subscription revenue from new and existing clients and higher professional services fees, and net revenue retention of 110%[28][7]; Capital Markets Technology ($321 million, up 14% organically) was driven by data center expansion and a change in pricing structure, Calypso upfront licenses and subscription growth across the businesses, partly offset by lower professional services revenue[29]. The lags are explicit: an enterprise signing takes about a year of implementation before revenue recognition, so signing counts are execution milestones rather than current-quarter revenue, while a Calypso upfront license is recognized in the signing quarter and the base it creates becomes a year-over-year drag one year later[7].

Market Services net revenue ($340 million) is industry volume multiplied by Nasdaq's matched share multiplied by net capture. U.S. options industry average daily volume was 66.5 million contracts with a 29.1% share, options net revenue was $123 million, up 8.2%, and the 10-Q stated that the increase came from higher industry volumes partly offset by lower capture[13][18]; cash equity net revenue was $160 million, up 18.7%, on higher U.S. industry volumes, higher U.S. and European matched share and higher European volumes[30]. This line's costs are almost fixed, so changes in net revenue pass nearly one for one into segment operating income, and the segment margin was 64% in the quarter[16].

Operating income is net revenue minus operating expenses, and the company manages costs on a non-GAAP basis: second-quarter non-GAAP operating expenses were $641 million, up 10%, non-GAAP operating income was $859 million at a 57% margin with a 60% EBITDA margin; GAAP operating expenses of $788 million include acquired intangible amortization and integration costs, leaving GAAP operating income of $712 million[12][7]. Compensation and benefits are the bulk of expenses, and performance-linked variable compensation was the first reason for the full-year guidance raise, with marketing spend from the stronger IPO environment the second[6]. Segment margins differ widely: Capital Access Platforms earned $394 million (63% margin), Market Services $218 million (64%) and Financial Technology $250 million (46%, flat year over year), with $150 million of unallocated corporate expense[16]. Incremental net revenue carries a margin above the average because the direct costs of trading and index revenue barely rise with revenue, so the third-quarter margin depends on whether net revenue growth outpaces expense growth of roughly 10%; the non-GAAP tax rate guidance is 22.5% to 24.5%[6].

Free cash flow is operating cash flow minus capital expenditure. First-half operating cash flow was $1,400 million, of which a $313 million increase in Section 31 fees payable was a timing item, and capital expenditure was $137 million[26]; second-quarter operating cash flow was $711 million, and the company cited free cash flow of $477 million with 97% trailing-twelve-month conversion[5][7]. Capital allocation runs dividends, then deleveraging, then buybacks: the quarterly dividend is $0.31 per share, first-half net debt repayment took total debt from $9,004 million to $8,761 million with gross leverage at 2.6x (2.9x at the end of 2025), first-half repurchases were $903 million, and a $200 million to $250 million accelerated repurchase launched in July will be completed in the third quarter[25][27][8]. Default fund and margin deposit flows in the clearing business are customer funds and do not affect the company's own cash[31].

Industry and Competitive Position

Nasdaq faces different competitors in four markets, and its 10-K lists industry competition as the leading risk, covering both product and price competition, with new offerings such as tokenized securities trading and extended trading hours that may not succeed[32]. In listings it competes with the New York Stock Exchange for U.S. IPOs, winning 71% of eligible U.S. operating company IPOs in the first quarter of 2026[33] and 74% in the second quarter, including the $86 billion SpaceX IPO, the largest in exchange history[4]; the chief executive said the first half's $111 billion of operating company proceeds was the strongest first half in U.S. exchange history[8], and The Nasdaq Stock Market had 4,659 listed companies at quarter end[13].

In indexes, the competitors the company itself names in its 10-K are S&P Dow Jones Indices, MSCI and FTSE Russell, and it acknowledges that a number of indexes aim to track the technology sector and compete with the Nasdaq-100 and Nasdaq Composite[34]. The Nasdaq-100's moat is its product ecosystem: in the first quarter the company extended Nasdaq-100 licensing beyond Invesco QQQ to new ETFs from BlackRock and State Street on pricing terms consistent with QQQ, and products launched over the past five years accounted for 46% of trailing-twelve-month net inflows[35]; in the second quarter it launched 34 more index products, including 17 international products and 11 in the institutional annuity space[4].

In trading, U.S. equity options industry average daily volume was 66.5 million contracts and Nasdaq's six options exchanges matched a combined 29.1%, with PHLX rising from 9.6% to 11.2% while the other venues moved in both directions[13]; U.S. cash equity matched share was 15.1% in the first quarter and Nordic cash equity share was 74.3%[36]. The competitors are Cboe, the NYSE and newly entered consolidators, and the 10-Q explicitly cited lower options capture in the second quarter, which the call explained as a change in order-flow composition after new consolidators entered[18][8]. In financial technology, Verafin leads anti-fraud for small and medium U.S. banks, signed 47 small and medium bank clients and 6 enterprise deals in the quarter, and is expanding to large banks and abroad, where the company admits sales cycles are longer than expected; Calypso and AxiomSL compete with bank core-system vendors, and Calypso is now available in more than 70 countries[15][7]. The comparison has limits: the company does not disclose Index asset-based fee rates or per-contract futures fees, and its second-quarter key-driver table omits U.S. cash equity industry volume and share, so volume-and-price comparisons between competitors stop at the share level.

Core Debates

Index assets just crossed $1 trillion. Does licensing revenue follow in the third quarter?

Index is Nasdaq's highest-margin and fastest-growing line: second-quarter revenue of $271 million rose 38% year over year and was the main source of the 19% growth in Capital Access Platforms[12]. Its revenue is charged mainly on the average assets of ETPs tracking Nasdaq indexes, which averaged $1.014 trillion in the second quarter and ended at $1.114 trillion, about 10% above the average, which means license fees should rise in the third quarter even with a flat market and no new money; conversely, a flat Index line would indicate that fee tiers, futures contract mix or license terms are absorbing asset growth, which would change the market's growth assumption for this line[13].

The current evidence is that $6 million of the $271 million was a one-time benefit from a contract modification, leaving $265 million, up 35%[12]; net inflows of $51 billion in the quarter were a record, trailing-twelve-month net inflows were $109 billion with net appreciation of $260 billion, and the company launched 34 new index products in the quarter[4][13], having already extended Nasdaq-100 licensing to new BlackRock and State Street ETFs in the first quarter[35]. The optimistic reading is that assets are recognized with a lag, so the high starting point at the end of the second quarter lifts third-quarter license fees naturally and the new licensing partners bring incremental inflows. The cautious reading is that the first-quarter call already flagged the futures shift from E-mini to micro E-mini contracts and fee resets as pressures on volume-based revenue[14], that the $260 billion of net appreciation came mostly from market gains, and that a sideways market in the third quarter could let the decline in volume-based revenue offset the rise in asset-based revenue.

The financial transmission is that net inflows plus market moves set average ETP assets, multiplied by the asset-based license rate, plus volume-based license fees set by Nasdaq-100 futures and options volume and contract mix, which together form Index revenue and fall almost entirely into Capital Access Platforms operating income because the line's direct costs are minimal. What to watch is whether third-quarter Index revenue rises from the adjusted $265 million to above $285 million, whether average ETP assets reach $1.10 trillion with positive net inflows in the quarter, and whether the company again mentions the effect of futures contract mix or fee resets. The falsifiers run in two directions: a market pullback that takes third-quarter average assets back below $1.0 trillion would mean the revenue decline cannot be attributed to the company, while rising assets with flat Index revenue would mean fee rates or contract mix are suppressing conversion.

Can Verafin's enterprise clients carry Financial Technology growth through the quarters where Calypso faces a tough comparison?

Financial Technology is the evidence for Nasdaq's shift from exchange to software company: it is 36% of net revenue, and its ARR of $1,870 million grew 16% year over year[13]. But two lines inside the segment are moving in opposite directions: Capital Markets Technology ($321 million) booked large upfront Calypso licenses in the third and fourth quarters of 2025 and management has warned of tougher comparisons for the next two quarters, while the enterprise clients Verafin ($98 million, up 22%) signed in the second half of 2025 go live from the second half of 2026 after a roughly one-year implementation[7], and 11 enterprise signings year to date already exceed all of 2025[15]. The third quarter is the first time these two forces meet head-on, and the outcome decides whether Financial Technology sustains double-digit organic growth.

The current evidence is that second-quarter Financial Technology revenue of $539 million rose 16% (15% organic) with all three lines in double digits: Verafin up 22%, Regulatory Technology up 15% (13% organic) and Capital Markets Technology up 15% (14% organic)[12]; Verafin ARR grew 17% with net revenue retention of 110%, it signed 47 small and medium banks and 6 enterprise clients, 750 clients use its agentic AI tools, Regulatory Technology signed 9 new clients and 63 upsells, Calypso signed 3 new clients and 31 upsells, and Trade Management Services benefited from data center demand and pricing[15][8], while professional services revenue declined[29] and the segment operating margin was 46%, flat year over year[16]. The optimistic reading is that ARR steps up as enterprise implementations complete, Verafin's quarterly revenue soon crosses $100 million, and subscription growth in Regulatory Technology and data centers covers the gap left by Calypso upfront licenses. The cautious reading is that upfront licenses are one-time revenue, the high base from the second half of 2025 could pull Capital Markets Technology's year-over-year growth from 15% to single digits, and Verafin can only add a few million dollars in a quarter, so segment organic growth may fall back toward 10%; the company also admits that Verafin's international sales cycles are longer than expected[7].

The financial transmission is that enterprise signings become subscription ARR after about a year of implementation and flow into Verafin revenue; Calypso new signings and renewals bring one-time upfront license fees plus subscription ARR into Capital Markets Technology revenue; the two plus Regulatory Technology form Financial Technology revenue, which flows into segment operating income at a 46% margin, with implementation staff costs incurred before revenue. What to watch is whether third-quarter Verafin revenue rises above $104 million and ARR above $375 million, whether Capital Markets Technology revenue holds $315 million and how the company describes the year-over-year gap from Calypso upfront licenses, and whether segment organic growth stays above 10% with the margin holding at 46%. The falsifiers are enterprise implementations taking longer than a year with Verafin ARR growing less than 2% sequentially, or the Calypso upfront gap exceeding subscription gains with Capital Markets Technology revenue falling below $300 million.

Volumes are at records, so why did Nasdaq's options revenue grow only a third as fast, and does it get worse in the third quarter?

Market Services is Nasdaq's highest-margin segment (64%) and the only one that moves directly with market activity[16]. In the second quarter, U.S. options industry average daily volume was 66.5 million contracts, up 27% year over year, and Nasdaq's 29.1% share was roughly flat[13], yet options net revenue rose only 8.2% to $123 million, a gap the 10-Q attributed to lower capture[17][18] and the call explained as a change in order-flow composition after new consolidators entered[8]. Whether this is structural or a one-quarter mix effect decides whether Market Services can still convert industry volume growth into revenue, and whether the 23/5 trading launch on December 6, 2026 and the fourth-quarter event options are incremental or fill a hole.

The current evidence is that second-quarter Market Services net revenue of $340 million was a record, up 11.2%: options were $123 million, up 8.2%, cash equities were $160 million, up 18.7%, and U.S. tape plans were $33 million, down 10.7%[17]; cash equity growth came from U.S. volume, U.S. and European share and European volume rising together[30], Nordic lit share rose 3 percentage points to 74% and index options revenue more than doubled for the fourth consecutive quarter[7], the June Russell reconstitution Closing Cross executed a record $334 billion, and event options have SEC approval with a fourth-quarter launch expected[37]. The optimistic reading is that lower capture is a one-time reshuffle of order flow, that PHLX's share rising from 9.6% to 11.2% shows the company winning higher-value flow[13], that options net revenue stabilizes above $120 million as long as volume stays above 60 million contracts, and that event options and 23/5 trading add volume on top. The cautious reading is that new consolidators bring a structurally higher share of low-capture order flow, that record volume no longer equals record revenue, and that with no Russell-scale cash equities event in the third quarter, Market Services net revenue could fall back toward $320 million.

The financial transmission is that industry volume multiplied by Nasdaq's matched share multiplied by net capture per contract gives U.S. options net revenue, U.S. matched share volume plus European traded value multiplied by share gives cash equity net revenue, and the two plus tape plan revenue form Market Services net revenue, which passes nearly one for one into segment operating income at a 64% margin. What to watch is whether third-quarter U.S. options net revenue holds $125 million with industry volume of at least 60 million contracts, whether Nasdaq's options matched share stays above 29% and PHLX's gain continues, and whether Market Services net revenue holds $345 million and whether the 10-Q again cites lower capture. The falsifiers are industry volume staying high while options net revenue falls below $115 million, which would show the capture decline is structural, and conversely a drop in volatility that takes industry volume below 55 million contracts, in which case the revenue decline cannot be attributed to the company.

After raising its expense guidance, can Nasdaq hold a 57% operating margin?

Nasdaq's profit has grown faster than revenue for two years: in 2025 net revenue rose 12.9%, operating expenses rose only 2.3% and operating income rose 29.7%[19]; in the second quarter of 2026 the non-GAAP margin was 57%, up 2 percentage points year over year[7]. In July the company raised its full-year non-GAAP expense guidance to $2.530-2.570 billion, citing higher compensation from strong revenue and higher marketing spend from a strong IPO environment[6]. Whether this is a benign raise where spending follows revenue or a sign that operating leverage is starting to narrow will get its first answer from third-quarter expenses and margin, which also directly decides whether earnings per share can keep rising from the second quarter's $1.07.

The current evidence is that second-quarter non-GAAP operating expenses of $641 million rose 10% while net revenue rose 15%, and non-GAAP operating income of $859 million rose 19%[12]; GAAP operating expenses of $788 million rose only 6.9% because merger and integration costs fell[25]. First-half expenses were $1,249 million, so the new guidance implies $1,281 million to $1,321 million in the second half, roughly $640 million to $660 million per quarter, and this is the second raise of 2026 after April's move from $2.455-2.535 billion to $2.485-2.545 billion[24][6]; the chief financial officer warned that a $5 million fine collected in the third quarter of 2025 offset expenses then, so the third-quarter comparison will look tougher[8]. On the IPO side, operating company IPOs were 26 in the second quarter versus 38 a year earlier, the win rate was 74%, and Data & Listing Services revenue of $217 million rose 9%[13][12]. The optimistic reading is that the raise is driven entirely by variable compensation and marketing, both tied to real revenue, so the margin holds at 57% as long as third-quarter net revenue growth stays above 12%. The cautious reading is that expense growth has already climbed from 8% organic in the first quarter to 10% in the second[38], and if Market Services and Index growth slow in the third quarter while spending follows the guided pace, the margin returns toward 55%.

The financial transmission is that net revenue growth drives performance-linked variable compensation, the IPO environment drives marketing spend and the operating company IPO count and through it Data & Listing Services revenue, non-GAAP operating expenses set non-GAAP operating income and margin, and after acquisition amortization that becomes GAAP operating income and earnings per share. What to watch is whether third-quarter non-GAAP operating expenses land within $655 million and whether the company adjusts full-year guidance a third time, whether the non-GAAP operating margin holds at 57% and GAAP operating income exceeds $720 million, and whether Data & Listing Services revenue rises above $220 million with at least 26 operating company IPOs. The falsifiers are expenses above $665 million or another guidance raise, and a margin below 55%, which would mean operating leverage has disappeared.

Risks and Falsifiers

The first risk is competition. The 10-K lists industry competition as the leading risk: exchanges compete for trading share and listings, the index business faces S&P Dow Jones Indices, MSCI and FTSE Russell, and new products such as tokenized securities and extended trading hours may not succeed[32][34]; 24/7 or 23/5 trading also requires major architectural investment from both the company and its clients, with uncertain adoption timing[7]. The exposed lines are Market Services net revenue of $340 million and Index revenue of $271 million, together 41% of second-quarter net revenue and the two most sensitive to share and fee competition; 23/5 trading is scheduled to launch on December 6, 2026 and will not contribute revenue in the third quarter[8]. The falsifier is a third quarter in which Nasdaq's options matched share is at least 29%, Index revenue is at least $265 million and the 10-Q adds no new language about share or license losses.

The second risk is capital return running ahead of free cash flow. First-half repurchases of $903 million plus dividends of $327 million were supplemented by $269 million of net commercial paper issuance, and cash at June 30 was only $520 million[26][31], with total debt of $8,761 million[27], gross leverage of 2.6x and a further $200 million to $250 million accelerated repurchase launched in July[8]; the company itself lists revenue deterioration and rising expenses as factors that could affect internally generated funds, and credit rating downgrades and credit market volatility as factors that could affect external funding[39]. The exposed line is second-quarter operating cash flow of $711 million: if the accelerated repurchase completes in the third quarter, quarterly shareholder returns would exceed roughly $400 million and deleveraging would slow; each 1 percentage point change in interest rates equals roughly $88 million of annual interest on $8,761 million of debt, although most of it is fixed-rate notes, so actual sensitivity is lower. The falsifier is total debt at quarter end no higher than $8,761 million, gross leverage no higher than 2.6x and the accelerated repurchase completed as planned.

The third risk is that Index revenue is highly sensitive to market moves. The $260 billion of trailing-twelve-month net appreciation came from the Nasdaq-100 rising, and a market pullback would directly lower average assets and license fees[13]. At the second-quarter ratio of adjusted revenue of $265 million to average assets of $1.014 trillion[12], every $100 billion decline in average assets removes roughly $26 million of quarterly Index revenue, almost all of it from operating income. The falsifier is third-quarter average ETP assets of at least $1.10 trillion with positive net inflows in the quarter.

The fourth risk is that Calypso and AxiomSL upfront licenses and step-up contracts make Capital Markets Technology revenue lumpy by quarter, and the upfront revenue booked in the third and fourth quarters of 2025 forms a high base[8][29]. Capital Markets Technology was $321 million in the second quarter, 60% of Financial Technology revenue[12]; if it turns flat year over year in the third quarter, segment organic growth would fall from 15% to below 10%. The falsifier is third-quarter Capital Markets Technology revenue of at least $315 million with segment organic growth of at least 12%.

The fifth risk is that new consolidators entering the U.S. options market change order-flow composition, lowering Nasdaq's net capture per contract so that industry volume growth no longer converts proportionally into net revenue[18][8]. In the second quarter, a 27% rise in industry volume bought only an 8.2% rise in options net revenue[17]; a further 10% drop in capture would equal roughly $12 million of quarterly net revenue on the $123 million base, almost all of it falling to operating income. The falsifier is third-quarter U.S. options net revenue of at least $125 million with share of at least 29%.

The sixth risk is the asymmetry between expenses and revenue. Revenue-linked variable compensation and IPO marketing spend make expenses rise with revenue, but once revenue growth slows, expenses do not fall in step and the margin declines before revenue does[6][12]. Every $10 million by which third-quarter expenses exceed the roughly $650 million quarterly average implied by guidance lowers the non-GAAP margin by about 0.7 percentage points and earnings per share by about $0.01. The falsifier is third-quarter non-GAAP operating expenses no higher than $655 million with a margin of at least 57%.

What to Watch Next

• Index licensing: Index revenue was $271 million in the second quarter ($265 million adjusted); watch whether it rises above $285 million. Rising assets with flat revenue would mean fee rates or contract mix are suppressing conversion.
• Index licensing: average ETP assets were $1.014 trillion with $51 billion of net inflows; watch whether the average reaches $1.10 trillion with positive inflows. Average assets falling back below $1.0 trillion would mean any decline is not attributable to the company.
• Financial Technology growth: Verafin revenue was $98 million with ARR of $359 million; watch whether revenue exceeds $104 million and ARR exceeds $375 million. Sequential ARR growth below 2% would mean enterprise implementations are taking longer than a year.
• Financial Technology growth: Capital Markets Technology revenue was $321 million; watch whether it holds $315 million and how the company describes the Calypso year-over-year gap. A fall below $300 million would mean the upfront gap exceeds subscription gains.
• Financial Technology growth: segment organic growth was 15% with a 46% margin; watch whether organic growth stays above 10% and the margin holds at 46%. Organic growth below 10% is the falsifier.
• Trading conversion: U.S. options net revenue was $123 million on industry volume of 66.5 million contracts a day; watch whether it holds $125 million with volume of at least 60 million. High volume with revenue below $115 million would mean the capture decline is structural.
• Trading conversion: options matched share was 29.1% and Market Services net revenue was $340 million; watch whether share stays above 29% and net revenue holds $345 million. Industry volume below 55 million contracts would mean any decline is not attributable to the company.
• Operating leverage: non-GAAP operating expenses were $641 million against full-year guidance of $2.530-2.570 billion; watch whether they land within $655 million and whether guidance changes a third time. Expenses above $665 million or another raise is the falsifier.
• Operating leverage: the non-GAAP margin was 57% and GAAP operating income was $712 million; watch whether the margin holds at 57% and GAAP operating income exceeds $720 million. A margin below 55% would mean operating leverage has disappeared.
• Operating leverage: Data & Listing Services revenue was $217 million with 26 operating company IPOs; watch whether revenue exceeds $220 million with at least 26 IPOs. Both falling together is the falsifier.
• Capital return: total debt was $8,761 million with gross leverage of 2.6x; watch whether both stay at or below the baseline after the accelerated repurchase completes. Rising debt or leverage is the falsifier.

Conclusion

Nasdaq's business is driven by three revenue streams of different character: Capital Access Platforms depends on index assets and data and listing subscriptions, Financial Technology on periodic ARR recognition plus one-time Calypso upfront licenses, and Market Services on industry volume multiplied by share multiplied by capture, and in the second quarter they contributed $621 million, $539 million and $340 million of net revenue respectively[20]. Financially the company is at a point where growth and shareholder returns are accelerating together: second-quarter net revenue rose 15%, the non-GAAP margin was 57% and earnings per share were $1.07[3], first-half operating cash flow was $1,400 million, repurchases plus dividends were $1,230 million and total debt fell to $8,761 million[26][27]. The central unresolved relationship is whether record assets, volumes and signings convert into proportional revenue and profit in the third quarter: Index period-end assets are 10% above the average but volume-based revenue is being squeezed by contract mix, Verafin enterprise go-lives must offset the Calypso high base, a 27% rise in options volume bought only an 8.2% rise in net revenue, and expense guidance has been raised for the second time this year[13][17][6].

Outside interpretations after the results cluster on the day of the release. Investing.com characterized the second quarter as a beat in which profit topped $1 a share for the first time, with earnings per share of $1.07 above the $0.97 it had on record and revenue of $1.5 billion above the $1.43 billion expected, and the stock rose 1.98% in premarket trading to $92.70; the two risks it listed were that the raised full-year expense guidance could pressure future margin expansion and that management itself said turning AI features into meaningful revenue is still in the early innings[40]. GuruFocus split the call into positives and negatives, listing on the positive side index assets crossing $1 trillion, net revenue up 15%, Verafin covering more than 2,800 institutions with $13 trillion in assets and the SpaceX listing, and on the negative side operating expenses up 10%, Verafin's international expansion slowed by slow sales cycles in new jurisdictions, a tougher third-quarter expense comparison because of last year's $5 million fine, and the mix shift in index futures from E-mini to micro E-mini contracts[41]. The two agree in reading the expense raise as a margin risk rather than benign investment, which matches the cautious side of the operating leverage debate above; GuruFocus's negative list also maps one to one onto the index and Financial Technology debates, but both pieces mainly relay the results and the call and offer no independent forecast. Reports from August and September appeared only as summaries in searches, their full text could not be verified and they were not included, so there is no verifiable third-party interpretation after August.

The combination of later observations that would materially strengthen the current understanding is third-quarter Index revenue above $285 million with average assets reaching $1.10 trillion, Verafin revenue above $104 million with Capital Markets Technology holding $315 million, options net revenue holding $125 million with industry volume of at least 60 million contracts, non-GAAP expenses within $655 million with the margin holding at 57%, and total debt still no higher than $8,761 million after the accelerated repurchase completes. Conversely, any two of the following appearing together, rising assets with flat Index revenue, Capital Markets Technology below $300 million, options net revenue below $115 million, expenses above $665 million or a margin below 55%, would show that record operating metrics are losing their conversion into profit and the current understanding would need to be revised down.

Sources

[1] NDAQ 10-K filed 2026-02-12 · business overview and segments · 2026-02-12 · 10-K · https://www.sec.gov/Archives/edgar/data/1120193/000162828026007703/

[2] Drillr earnings calendar · NDAQ earnings call scheduled 2026-10-20 (calendar last updated 2026-09-22) · 2026-09-22 · Drillr earnings calendar

[3] NDAQ 8-K filed 2026-07-23 · 2Q26 highlights and CFO statement · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[4] NDAQ 8-K filed 2026-07-23 · 2Q26 listings and index business updates · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[5] NDAQ 8-K filed 2026-07-23 · 2Q26 financial review · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[6] NDAQ 8-K filed 2026-07-23 · 2026 expense and tax guidance update · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[7] NDAQ 2Q26 earnings call 2026-07-23 · Drillr structured summary · 2026-07-23 · earnings-call · https://gateway.drillr.ai/mcp/private

[8] NDAQ 2Q26 earnings call 2026-07-23 · Motley Fool transcript · 2026-07-23 · earnings-call · The Motley Fool · https://www.fool.com/earnings/call-transcripts/2026/07/23/nasdaq-ndaq-q2-2026-earnings-call-transcript/

[9] Drillr earnings calendar (updated 2026-09-22) · NDAQ 2026-10-20 call and 3Q26 estimates · 2026-09-22 · Drillr earnings calendar · https://gateway.drillr.ai/mcp/private

[10] Drillr analyst_financial_estimates (updated 2026-09-22) · NDAQ 3Q26 consensus · 2026-09-22 · Drillr analyst_financial_estimates · https://gateway.drillr.ai/mcp/private

[11] NDAQ 10-Q filed 2026-07-23 · 2Q26 Index revenue drivers · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[12] NDAQ 8-K filed 2026-07-23 · 2Q26 organic and adjusted reconciliation · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[13] NDAQ 8-K filed 2026-07-23 · 2Q26 key drivers · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[14] NDAQ 1Q26 earnings call 2026-04-23 · Drillr structured summary · 2026-04-23 · earnings-call · https://gateway.drillr.ai/mcp/private

[15] NDAQ 8-K filed 2026-07-23 · 2Q26 Financial Technology business updates · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[16] NDAQ 10-Q filed 2026-07-23 · 2Q26 segment operating income · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[17] NDAQ 10-Q filed 2026-07-23 · 2Q26 Market Services revenue lines · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[18] NDAQ 10-Q filed 2026-07-23 · 2Q26 U.S. equity derivative trading drivers · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[19] NDAQ 10-K filed 2026-02-12 · FY2025 results of operations · 2026-02-12 · 10-K · https://www.sec.gov/Archives/edgar/data/1120193/000162828026007703/

[20] NDAQ 8-K filed 2026-07-23 · 2Q26 revenue detail · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[21] NDAQ 10-K filed 2026-02-12 · ARR definition and Solovis reclassification · 2026-02-12 · 10-K · https://www.sec.gov/Archives/edgar/data/1120193/000162828026007703/

[22] NDAQ 10-K filed 2026-02-12 · FY2025 segment net revenues and ARR facts · 2026-02-12 · 10-K · https://www.sec.gov/Archives/edgar/data/1120193/000162828026007703/

[23] NDAQ 10-K filed 2026-02-12 · 2025 financing activities · 2026-02-12 · 10-K · https://www.sec.gov/Archives/edgar/data/1120193/000162828026007703/

[24] NDAQ 8-K filed 2026-04-23 · 1Q26 results highlights and expense guidance · 2026-04-23 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001120193&type=8-K&dateb=20260423&owner=include&count=10

[25] NDAQ 10-Q filed 2026-07-23 · 2Q26 results of operations · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[26] NDAQ 10-Q filed 2026-07-23 · 1H26 cash flow statement · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[27] NDAQ 10-Q filed 2026-07-23 · debt obligations · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[28] NDAQ 10-Q filed 2026-07-23 · 2Q26 Financial Crime Management Technology revenue drivers · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[29] NDAQ 10-Q filed 2026-07-23 · 2Q26 Capital Markets Technology revenue drivers · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[30] NDAQ 10-Q filed 2026-07-23 · 2Q26 cash equity trading drivers · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[31] NDAQ 10-Q filed 2026-07-23 · 1H26 financing activities commentary · 2026-07-23 · 10-Q · https://www.sec.gov/Archives/edgar/data/1120193/000112019326000013/

[32] NDAQ 10-K filed 2026-02-12 · competition risk factor · 2026-02-12 · 10-K · https://www.sec.gov/Archives/edgar/data/1120193/000162828026007703/

[33] NDAQ 10-Q filed 2026-04-24 · 1Q26 highlights · 2026-04-24 · 10-Q · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001120193&type=10-Q&dateb=20260424&owner=include&count=10

[34] NDAQ 10-K filed 2026-02-12 · index, listings and analytics competition · 2026-02-12 · 10-K · https://www.sec.gov/Archives/edgar/data/1120193/000162828026007703/

[35] NDAQ 8-K filed 2026-04-23 · 1Q26 strategic and business updates · 2026-04-23 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001120193&type=8-K&dateb=20260423&owner=include&count=10

[36] NDAQ 8-K filed 2026-04-23 · 1Q26 key drivers · 2026-04-23 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001120193&type=8-K&dateb=20260423&owner=include&count=10

[37] NDAQ 8-K filed 2026-07-23 · 2Q26 Market Services and market modernization updates · 2026-07-23 · 8-K · https://www.sec.gov/Archives/edgar/data/0001120193/000112019326000011/earningsrelease2q26ex-991.htm

[38] NDAQ 8-K filed 2026-04-23 · 1Q26 revenue detail and organic reconciliation · 2026-04-23 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001120193&type=8-K&dateb=20260423&owner=include&count=10

[39] NDAQ 10-K filed 2026-02-12 · liquidity and capital deployment · 2026-02-12 · 10-K · https://www.sec.gov/Archives/edgar/data/1120193/000162828026007703/

[40] Investing.com 2026-07-23 · Earnings call transcript: Nasdaq beats Q2 2026 forecasts as profit tops $1 a share · 2026-07-23 · Investing.com · https://www.investing.com/news/transcripts/earnings-call-transcript-nasdaq-beats-q2-2026-forecasts-as-profit-tops-1-a-share-93CH-4809098

[41] GuruFocus 2026-07-23 · Nasdaq Inc (NDAQ) Q2 2026 Earnings Call Highlights: Record Revenue and Strategic Growth Initiatives · 2026-07-23 · GuruFocus News · https://finance.yahoo.com/markets/stocks/articles/nasdaq-inc-ndaq-q2-2026-190137428.html