NASDAQ, INC. Q1 FY2025 earnings call

Adena Friedman started by noting double-digit growth across all divisions. Capital Access Platforms had 11% revenue growth and 5% ARR growth, driven by strength in net inflows and index innovation. Financial Technology had 10% revenue growth and 12% ARR growth, including 21% growth in Financial Crime Management Technology. Market Services saw 19% net revenue growth. Operational highlights included progress on strategic priorities, efficiency program with over $100 million actioned by Q1 end, strong free cash flow, and 19 cross-sells since the Edenta acquisition. Capital Access Platforms' data, listings, and index businesses were highlighted, while Financial Technology announced an enhanced partnership with AWS. Market Services performed strongly in U.S. and European markets despite volatility.

Nasdaq reported net revenues of $1.2 billion, a 12.5% increase from the prior year. Solutions revenues were $947 million, up 11%. ARR rose to $2.8 billion, up 9% year over year.

• Capital Access Platforms: Generated $515 million in revenue, up 11%, with ARR growth of 5%. Data and listings revenue was up 4% with ARR up 6%, while index revenue was up 26% driven by record average ETP AUM and net inflows.
• Financial Technology: Revenue was $432 million, up 10%, with ARR growth of 12%. Financial Crime Management Technology saw 21% revenue and ARR growth, Regulatory Technology had 10% revenue growth and 11% ARR growth, and Capital Markets Technology had 7% revenue growth.
• Market Services: Record net revenue of $281 million, up 19%, driven by strong market-wide volumes and higher capture in U.S. and European markets.

Nasdaq expects continued growth. Capital Access Platforms is projected to have 5%-8% revenue growth within its medium-term outlook. Financial Technology maintains a medium-term outlook, and Market Services showcases strong operating leverage. The dividend was increased by 13%, and the company aims to reduce gross leverage ratio to 3.3 times in 2Q or 3Q depending on FX.

Volatility in the global economy due to changing trade policies and geopolitical tensions poses challenges. Uncertainty in the regulatory environment may impact client decision-making and sales cycles for certain segments.

Q: Simon Clinch asked about the resiliency of the index business and differences from 2022.

A: Adena Friedman responded that the index business has multiple growth vectors, including new products and international diversification, with 50% of Q1 inflows from non-Nasdaq 100 products.

Q: Craig Siegenthaler inquired about the Dallas office.

A: Adena Friedman said it's to serve the expanded clientele in Texas, providing local presence while connecting to global capital flows.

Q: Alexander Blostein asked about acquisition priorities.

A: Adena Friedman stated focus on organic growth, deleveraging, dividend expansion, and share repurchases, with no immediate plans for acquisitions.

Q: Patrick Moley asked about delays in customer decision-making.

A: Adena Friedman detailed healthy engagement across FinTech subdivisions, with some delays in larger decisions but confidence in medium-term outlook.

Q: Benjamin Budish asked about AI features and European opportunities.

A: Adena Friedman discussed AI features enhancing solution value, progress in tier one/tier two clients, and healthy European engagements with POCs.

Q: Ashish Sabadra asked about revenue impact and trajectory.

A: Adena Friedman noted challenges in Q2 due to comps and larger decision timelines but confidence in medium-term growth.

Q: Kyle Voigt asked about AWS partnership.

A: Adena Friedman explained the partnership helps market operators modernize cost-effectively with cloud benefits and data sovereignty.

Q: Dan Fannon asked about expense guide change.

A: Sarah Youngwood mentioned strong first quarter revenue and expense rigor led to adjusted guidance.

Q: Brian Bedell asked about Acxiom's global business and crypto growth.

A: Adena Friedman said Acxiom is global with thousands of regulatory changes processed, and crypto presents opportunities with regulated market growth.

Q: Alex Kramm asked about Calypso's performance.

A: Adena Friedman noted robust pipeline but some decision delays, with market tech and TMS businesses driving growth.

Q: Owen Lau asked about IPO environment and foreign listings.

A: Adena Friedman said IPOs are steady with some delays, and global companies value U.S. markets long-term, with Nordic markets also seeing good demand.