| Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the third quarter of 2024. |
| • Third quarter 2024 net revenue1 was $1.1 billion, or $1.2 billion on a |
| non-GAAP basis2, an increase of 22% over the third quarter of 2023, up 10% on a pro forma3 basis. This included Solutions4 revenue increasing 26%, or 10% on a pro forma basis. |
| • Annualized Recurring Revenue (ARR)5 of $2.7 billion increased 31% |
| over the third quarter of 2023, up 8% on a pro forma basis. |
| • Financial Technology revenue of $371 million increased 56% over the third quarter of 2023, up 10% on a pro forma basis. |
| • Index revenue of $182 million increased 26%, with $62 billion of net inflows over the trailing twelve months and $14 billion in the third quarter. |
| • GAAP diluted earnings per share decreased 11% in the third quarter of 2024. Non-GAAP diluted earnings per share increased 5% in the third quarter of 2024 and increased 20% organically. |
| • In the third quarter of 2024, the company returned $138 million to shareholders through dividends and $88 million through repurchases of common stock. The company also repaid a net $50 million of commercial paper in the third quarter of 2024. |
| Adena Friedman, Chair and CEO said, “Nasdaq delivered its fourth consecutive quarter of double-digit Solutions growth with strong overall quarterly performance. |
| As we approach the first anniversary of the Adenza acquisition, I am proud of our progress to date and excited about driving even greater value for our clients and shareholders. |
| The integration continues seamlessly. Through our One Nasdaq strategy, we are deepening our partnerships with clients across the financial system and unlocking opportunities for sustained and scalable growth." |
| FINANCIAL REVIEW |
| • Third quarter 2024 net revenue was $1.1 billion, reflecting 22% growth versus the prior year period while non-GAAP net revenue was $1.2 billion. Revenue growth included a $146 million benefit related to the acquisition of Adenza. Net revenue grew 10% on a pro forma basis. |
| • Solutions revenue was $872 million in the third quarter of 2024, up 26% versus the prior year period, or 10% growth on a pro forma basis, reflecting strong growth from Index and Financial Technology. |
| • ARR grew 31% year over year, or 8% on a pro forma basis, in the third quarter of 2024 with 14% pro forma ARR growth for Financial Technology and 2% ARR growth for Capital Access Platforms. |
| • Market Services net revenue was $266 million in the third quarter of 2024, up 13% versus the prior year period. The increase was primarily driven by a $15 million increase in U.S. equity derivatives and an $11 million increase in U.S. cash equities. |
| • Third quarter 2024 GAAP operating expenses were $698 million, an increase of 37% versus the prior year period. The increase for the third quarter was primarily due to the acquisition of Adenza, which resulted in an additional $87 million in amortization expense of acquired intangible assets, and $61 million of other AxiomSL and Calypso operating expenses, as well as organic growth driven by increased investments in technology and our people to drive innovation and long-term growth. |
| • Third quarter 2024 non-GAAP operating expenses were $543 million, reflecting 21% growth versus the prior year period, or 5% growth on a pro forma basis. The increase for the third quarter was primarily due to the inclusion of $61 million of AxiomSL and Calypso operating expenses. The pro forma increase reflects growth driven by increased investments in technology and our people to drive innovation and long-term growth, partially offset by the benefit of synergies. |
| • Third quarter 2024 cash flow from operations was $244 million, enabling the company to continue to make meaningful progress on its deleveraging plan. In the third quarter, the company returned $138 million to shareholders through dividends and $88 million through repurchases of our common stock. The company also repaid a net $50 million of commercial paper in the third quarter of 2024. As of September 30, 2024, there was $1.7 billion remaining under the board-authorized share repurchase program. |
| 2024 EXPENSE AND TAX GUIDANCE UPDATE |
| • The company is updating its 2024 non-GAAP operating expense guidance to a range of |
| $2,150 million to $2,180 million, and is updating its 2024 non-GAAP tax rate guidance to be in the range of 23.5% to 24.5%. |
| STRATEGIC AND BUSINESS UPDATES |
| • Financial Technology delivered healthy revenue growth in the third quarter. Division revenue increased 10% on a pro forma basis, reflective of the mission-critical nature of the division’s solutions suite. Financial Technology pro forma ARR growth was 14% in the third quarter, with 39 new customers, 110 upsells, and 2 cross-sells. Third-quarter highlights include: |
| ◦ Nasdaq leapt to 5th place in Chartis’ annual RiskTech100® global ranking. This ranking is widely regarded as the most comprehensive independent study of the world’s major players in risk and compliance technology. The significant jump in ranking reflects the combined power of Nasdaq and Adenza’s technology offerings with Nasdaq and Adenza previously ranking #18 and #10, respectively. Nasdaq Verafin and AxiomSL won Chartis industry awards recognizing Nasdaq’s leadership in financial crime management and regulatory reporting. The study also highlighted the value of Nasdaq’s governance and sustainability solutions. |
| ◦ Financial Crime Management Technology had ARR growth of 24% with 114% net revenue retention and launched new AI product innovations. Financial Crime Management Technology signed 28 new SMB clients, in addition to the previously announced Tier 1 win in July. Nasdaq Verafin extended its track record of product innovation success with its AI Entity Research Copilot now deployed to more than 2,000 U.S. institutions. In the third quarter, Nasdaq Verafin announced new enhancements to its Targeted Typology Analytics, an artificial intelligence (AI) based suite of detection capabilities targeting terrorist financing and drug trafficking activity. |
| ◦ AxiomSL and Calypso achieved 15% combined pro forma ARR growth. AxiomSL and Calypso delivered a combined 47 upsells and 4 new clients, with 17% of new bookings in the quarter cloud-based. Combined gross revenue retention7 was 97% and net revenue retention8 was 111%. Excluding the impact of a significant bankruptcy first noted in the fourth quarter of 2023, pro forma ARR growth was 16%, gross revenue retention was 98%, and net revenue retention was 112%. |
| ◦ Market Technology delivered 14% ARR growth as it continues to capture opportunities associated with the market modernization megatrend. Market Technology was driven by 13 upsells, 1 new client, and 1 cross-sell in the third quarter. ARR growth also benefited from the conversion of a previously mentioned large client delivery. |
| • U.S. equity derivatives achieved record quarterly net revenue. In the third quarter of 2024, Nasdaq achieved a record quarter of U.S. equity derivatives net revenue of $107 million, with multi-listed U.S. options market share once again surpassing 30% in the quarter and 19% growth in U.S. index options volume. |
| • Index delivered another quarter of outstanding performance and advanced its growth strategy across product innovation, globalization, and institutional client expansion. The Index business had $62 billion in net inflows over the trailing 12 months, with $14 billion in the third quarter. The business achieved another record in Index ETP AUM, averaging $575 billion in the third quarter and reaching $600 billion at quarter-end. Index derivatives trading volumes grew 24% year-over-year, also contributing to revenue growth. Nasdaq launched 35 new products with our partners in the quarter, 20 of which were international. The launches included 8 options overlays and 7 institutional insurance annuity products. Additionally, Nasdaq recently received the 2024 Best Index Provider from Structured Retail Products, a global market intelligence provider, highlighting the business’ innovation and success as a strategic partner to our clients. |
| • Nasdaq strengthened its listings leadership in the U.S. in the third quarter. Nasdaq listed 33 U.S. operating company IPOs that raised more than $6 billion in proceeds, reflecting an 85% win rate among eligible operating companies in the quarter. These listings contributed to a 75% win rate year-to-date through the third quarter for eligible operating companies comprising 5 of the top 10 IPOs, including Lineage, the largest offering so far this year. Nasdaq also celebrated its 500th switch to our U.S. exchange in the quarter. |
| • Nasdaq celebrated 25 Years of MarketSite in Times Square. MarketSite has stood as a physical embodiment of the Nasdaq brand since its debut and reflects Nasdaq’s culture of driving innovation and delivering valuable client solutions. MarketSite is a hub for Nasdaq’s clients and partners and an integral part of the global finance landscape. |
| • Nasdaq continued its progress on its 2024 strategic priorities – Integrate, Innovate, Accelerate – positioning the company to capitalize on opportunities for sustainable, scalable, and resilient growth. |
| ◦ Integrate – Since the acquisition of Adenza nearly a year ago, Nasdaq has actioned more than 80% of its net expense synergy target and continues to deliver ahead of plan. |
| ◦ Innovate – Nasdaq reached new milestones in deploying AI tools and products including the launch of an internal Generative AI platform with custom-built efficiency tools and completed the rollout of AI copilot tools to all of its developers. Calypso also announced an AI-based solution for X-Value Adjustments (XVA) with up to 100 times faster processing speeds that improve the efficiency of risk calculations for banks, insurers, and other financial institutions. Beyond Nasdaq’s AI innovations, Market Services migrated Nasdaq International Securities Exchange to its next-generation derivatives platform, Fusion. Four of Nasdaq’s U.S. markets and one European equity derivatives market are operating on this platform which provides enhanced performance, including lower latency, higher throughput, and increased productivity. |
| ◦ Accelerate – We continue to make progress on our One Nasdaq strategy driving two cross-sells across the Financial Technology division in the quarter. The percentage of cross-sell opportunities in the division’s pipeline is over 10% and Nasdaq remains on track to exceed $100 million in cross-sells by the end of 2027. |
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| Nasdaq, Inc. |
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