NASDAQ, INC. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Capital Access Platforms: Strong momentum in listings switch program, 38 new IPOs in Q2, $88B net inflows in index franchise, 33 new products launched, partnership with CME Group extended.
• Financial Technology: Sustained demand for mission-critical technologies, 57 new clients, 130 upsells, 7 cross-sells. Verafin's Agentic AI launch, AxiomSL revenue growth, Calypso performance.
• Market Services: Record net revenue, strong operating leverage.
• Strategic Priorities: Integrate with $140M expense efficiency program, Innovate with AI and digital assets, Accelerate with One Nasdaq strategy.

Segment Performance

• Capital Access Platforms: Generated 9% revenue growth and 6% ARR growth. Data and Listing: Year-to-date, $271 billion in market capitalization switched to Nasdaq, 38 new IPOs in Q2 raising $3.6 billion, $88 billion net inflows in index franchise over 12 months, $20 billion in Q2, ETP AUM at $745 billion. Workflow and Insights: Corporate Solutions had modest growth, Analytics saw strong demand for Data Link and eVestment, focus on private market solutions.
• Financial Technology: 10% revenue growth and 11% ARR growth. Financial Crime Management Technology: 20% revenue growth, 19% ARR growth, 46 new SMB clients, 3 new enterprise deals. Regulatory Technology: 11% revenue growth, 10% ARR growth. Capital Markets Technology: 8% revenue growth, 9% ARR growth.
• Market Services: Record net revenue of $306 million, 21% growth, driven by higher volumes in U.S. cash equities, U.S. options, index options, etc.

Guidance

• Revenue: Expect 2025 revenue growth for divisions and subdivisions generally consistent with April earnings call.
• Expense: Non-GAAP expense guidance updated to $2.295B to $2.335B due to FX impact.
• Free Cash Flow: $467M in Q2, focus on deleveraging, dividends, and share repurchases.

Risks

• Macroeconomic Uncertainty: Persistent uncertainty in economic and market environment.
• Regulatory Uncertainty: Impact on sales cycles and client commitments in fintech divisions.
• Market Volatility: Impact on index inflows and product adoption.

Question and Answer

• Q: Elaborate on Agentic AI opportunity set **A: AI used in product development and business efficiency, including in financial crime management, governance, and sustainable lens.
• Q: Pipeline momentum in fintech **A: Healthy pipeline, maturity of deals, expected revenue from Tier 1/2 banks in Q4/26.
• Q: Sales cycle trends in fintech **A: Pauses in Q2 due to client uncertainty, normalization in Q3/4, regulatory clarity aiding progress.
• Q: Digital ecosystem and crypto impact **A: Crypto maturation and regulation create opportunities for fintech division, supporting institutional adoption.
• Q: Index business dynamics **A: 33 new products, $88B net inflows, focus on institutional and international expansion.
• Q: Capital Markets Technology ARR growth **A: Contribution from connectivity services, Calypso, and market tech deals.
• Q: Data and listings business mix **A: Data driving growth, listings improving with new issuances, lag in listing fee amortization.
• Q: Rule 611 implications **A: Engaging with SEC, successful operation in markets without Order Protection Rule.
• Q: Verafin international expansion **A: Mid-term growth includes international expansion, first European bank signed.
• Q: Index business in annuities **A: Early expansion, 7 new products in insurance annuity space, exposure to Nasdaq 100.
• Q: Capital Markets Technology guidance **A: Maintaining prior guidance, crypto ecosystem maturation aiding Adenza business.
• Q: Price increases in segments **A: In line with growth formula, contractual and tied to value of engagements.
• Q: M&A pipeline **A: Focus on organic growth, free cash flow supports opportunistic deleveraging and buyback.