Q3 2020 Nasdaq Inc Earnings Call

[music].

Ladies and gentlemen, thank you for standing by and welcome to the NASDAQ third quarter 2020 results at this.

At this time all participants lines are in listen only mode. After the speakers presentation there'll be a question and answer session.

Ask a question during the session don't need to press star one on your telephone please.

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I would now like to hand, the conference over to your Speaker today, Mr., Ed Ditmire, Vice President of Investor Relations. Please go ahead Sir.

Good morning, everyone and thank you for joining us today to discuss Nasdaq's third quarter 2020 financial results on the line are the Ana Freedman, our CEO, Michael Mike Our CFO John's ACA, our chief legal and regulatory officer and other members of the management team at.

After prepared remarks, we'll open up to cumin access the press release and presentation are on our website, we intend to use the website as a means of disclosing material non public information and complying with disclosure obligations under SEC regulation FD.

I would like to remind you that certain statements in this presentation and during Q1, <unk> may relate to future events and expectations and as such constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 995 actual results may differ materially from these projections information concerning factors that could cause actual result.

Sales to differ from forward looking statements is contained in our press release and periodic reports filed with the SEC. All forward looking statements speak only as of today October 20 for 2020, and NASDAQ assumes no obligation to update or revise any forward looking statements.

Lastly, a quick programming mentioned, we're excited to be hosting our investor day on November 10th our senior leadership team will get presentations about our operations opportunities and strategy and will be available for your questions. I know many of you on the line today are planning to participate if you have not registered please do so today at our IR website I will now turn the call.

Overdue Dana Thank you Matt.

Good morning, everyone. Thank you for joining us I'm pleased to report NASDAQ financial results for the third quarter 2020, with our strategic ambitions as our guide we have been consistently focused on delivering results for our clients, while creating sustainable value for our stakeholders.

Our global workforce has demonstrated their nimbleness and ability to remain highly productive and available to our clients. Throughout this period that focus is reflected in todays strong results, where we are seeing significant contributions from across our franchise.

My remarks today will focus on specific highlights and strategic initiatives from the third quarter. I will then touch on today's announcement about Michael's decision to retire and then Michael will cover the financials.

Africa delivered another quarter of strong performance driven by great efforts by our team coupled with favorable favorable market conditions here are some of the highlights we.

We welcome to 105 Ipos NASDAQ during the period, which represents the highest number of ipos per quarter on a U.S. exchange in the past decade.

Conviction by investors to increase exposure to NASDAQ. So good dramatic indexes, coupled with robust market performance continues to support our expanding index business. As a result, we saw the U.S. and our index products achieved another quarter of record highs alongside high trading activity and not like because index derivatives.

Mark infrastructure performed exceptionally well during the peaks of volatility we observed earlier this year, particularly in March and April we continue to experience strong volumes across our equities and options businesses in the third quarter and we've continued to invest to enable us to have capacity for future volatility as markets reacted continually changing dynamics in the U.S. and globally.

Our data and analytics business within information services as well as our market technology business continued to demonstrate their resilience with healthy growth in annualized recurring revenue or a our our architect and targeted sales and new capabilities and product across our product suite we.

We are pleased to announce the launch of several new products during the period, including the cloud deployed knapik automated investigator for anti money laundering or email this past dilution for investigating financial crime for retail and commercial bank and other financial institutions and.

And in our life Index Futures business, we announced together with DMD group to innovative index products and new features contract on the NASDAQ 100 volatility index known as both you and the first ever water water index futures based on the NASDAQ BLS, California Water Index Earl.

Early in October we also announced an expansion of our partnership with Invesco for another 100 product suite, including a new NASDAQ next Gen 100 Index Cts.

Our results for the third quarter highlight the strength of NASDAQ diversified product offerings and business model, while operating in a unique capital markets environment in 2020, our ability.

Our ability to execute against the significant demand and logistical challenges of COVID-19 enabled us to continue on our strategic journey and bring these new and innovative technology and index solutions to our clients.

Now I will turn to our strong results for the third quarter of 2020 now.

And that's like delivered net revenues of $715 million, an increase of $83 million or 13% from the prior year period, driven almost entirely by in organic growth.

Net revenues and our marketing services business grew 15% while revenues in our non trading segments rose, 12% from the prior year period.

Operating leverage was particularly strong with non-GAAP operating margin, expanding nearly 200 basis points to 52% and contributing to the non-GAAP EPS growth of 20%.

Turning now to the specific highlights from the third quarter, starting with our foundational marketplace businesses are mark.

Our merchant services segment on net revenues of $259 million, a 15% increase from the prior year period led by 35% increase in cash equity net revenues as well as strong growth in both the equity derivatives and trade management services businesses.

Well of course industry volumes were a main contributor to this performance I do want to bring attention to the strong competitive positioning that marketing services has established in which continued in the third quarter. In particular, we've enjoyed relatively stable market sharing with expertise in areas, where we featured the single largest liquidity pool with the NASDAQ stock market the largest of our three equities exchanges.

Additionally, our Nordic equity franchise with a 77% share on exchange trading was up nearly 500 basis points year over year, and then are you with options trading complex, we continue to lead the industry with a 37% share mostly listed options.

The elevated volumes, we've experienced as a result of both in that high investor engagement in a multitude of macro and geopolitical.

Uncertainties, while the activity levels can change quickly we believe that the us presidential election remains a big focus for investors and we anticipate that our marketplaces are likely to continue to contribute at a high level as we progress through the final quarter of the year.

Our corporate services segment delivered revenues of $132 million, a 6% increase boosted by new leasing activity and continued demand for our governance and Investor Relations intelligence solution.

And our listings business and our listing services business NASDAQ led us exchanges for Ipos during the period welcoming 105, ipos for a 79% win rate for operating company listing and an overall win rate of 65% when including spot. We are proud to welcome good Rx Lee auto jump holding company.

And Encino as just a few highlights listings from the quarter.

Our quarterly win rate in fact has also been rising from 30% in the second quarter to 51% in the third quarter. In addition, we were honored to welcome six company to switch their listings from the New York Stock Exchange NASDAQ during the period with an aggregate global market capitalization of $187 billion, including Astra Zeneca and cure.

Dr. Pepper. This brings our cumulative exchanges with smart switch market caps over 1.8 trillion dollars since 2005 with over one trillion dollars of that value switching and just the last five years.

When it came to their decision to switch exchanges. These issues issuers identified strongly with the innovative spirit of NASDAQ listing platform with the expanding community. It listed issuers, recognizing the opportunity to leverage our IR and governance solutions to improve how they engage with critical stakeholders and lastly for the larger switches to potentially increase there.

Presentation in the NASDAQ family of indexes by fall I think qualifying for the math 100.

In the third quarter corporate services revenue grew 6% with a balanced contribution from both governance and IR solutions.

We are pleased that pricing secular demand for insights that help companies better understand and engage the shareholders is more than offsetting the impact of spending reductions by companies and sectors more negatively impacted I Cook at 19.

We believe that our successes during the quarter underscore how NASDAQ continues to be the destination exchange and partner of choice for companies worldwide with unparalleled expertise across equity market Investor relations and governance.

Now, let me turn to our information services and technology businesses.

In our information services segment, we delivered net revenues of $238 million up $40 million or 20% from the prior year period.

Indexed AUM rose to $313 billion versus $270 million in the prior year period up 51% while contract volumes in the NASDAQ Index Thats license index futures that trade on the CMC rose by more than 90% Egypt.

Each of these contributed meaningfully to the index revenue rising $30 million or 54% year over year while.

While the NASDAQ 100 family of indexes has had market appreciation materially above the broader market averages, 30%, 35% of the increase in AUM year over year came from positive organic investor inflows and we're working with our partners to meet rising investor interest in NASDAQ domestic indexes in several ways for example.

For example, as I stated earlier in my remarks, just last week and VESCO introduced the Q2, two innovation suite in partnership with NASDAQ, giving up.

Giving a wider population of investors access to the NASDAQ 100 index for a variety of investment structures and providing exposure to the NASDAQ next Gen 100 index through new Yep I'd.

Additionally, we launched evolve Q, a new futures contract on the NASDAQ 100 volatility index and announced plans to launch a futures contract based on the NASDAQ Bell as California water index.

Our investment data and analytics revenues increased 13% from the prior year period, driven both by the incorporation of slow a bit in the organic growth in our leading institutional asset allocation solution.

Market data rose, 5% with contributions from across our North American and European proprietary products as well as the pipeline revenues gross.

Gross during the period was driven by new sales and increased investor retail investor usage worldwide, particularly in new geographies like Asia Pacific and Latin America.

In addition, this area of the business saw new customer expansion and new product launches driven by the launch of the NASDAQ cloud data service.

Service that we believe provides significant technical cost reductions and quicken the time to market for clients seeking real time data solutions.

Lastly, our market technology segments delivered $86 million in revenues and science $84 million in new order intake.

Hey, our AR in the quarter with $278 million, a 9% increase year over year. However.

However, total revenue rose only nominally in the third quarter compared to the prior year as the growth in a more stable fast subscription and recurring licensing fees that comprise our air our was offset by lower nonrecurring revenues associated with new service implementations and change requests.

As we stated earlier in 2020 service implementation change request project, New order intake levels and funding for new markets and new marketing initiatives have been adversely impacted by the pandemic related factors. We continue to expect to see in the short term, mostly logistical gross headwinds that underpinned the risk of market technology.

Being below the bottom of our medium term growth objectives for the current year we have.

We have taken actions that we hope will mitigate pressures on our nonrecurring market technology revenues in the coming period. For example, we've developed new ways of improving execution were important project phases in a completely virtual environment and we've increased hiring of technology staff as part of an effort to quicken the pace of our full fleet of existing implementations to their production phase.

Yes.

The increased technology fast match, the large project delivery project has had an impact on short term margins and we are managing this expense increased carefully as we continue to be focused on driving margin expansion as the can business continues to grow.

Taking a step back from the near term impact of the pandemic. Our convection has not changed about the medium to long term opportunity for market technology.

A major component of this strategy is our commitment to operating and providing best in class SAP solutions across the transaction lifecycle.

Our marketplace services platform, which launched in June gives clients. The complete transaction lifecycle functionality on a single platform and we've seen positive response and growth in demand for the platform over the quarter and.

Endpoint 20 year to date, we've increased the count of sales to entirely new client the vast majority of which have chosen to implement our next generation SaaS enabled services.

Typically we signed eight new market infrastructure, operator clients or ask offerings, and we signed 12, new traits balanced client. So far this year. We've also had solid success in expanding our existing client relationships and our trade surveillance.

We look forward to updating you both in addressing the near term challenges, we are navigating as well as our progress in ramping adoption of our next generation products and services in the coming period.

Now, let me take a moment to address todays announcement that Mike will be retiring in early 2021. After a very distinguished 30 year financial services career.

Michael Joint assets in 2016, as CFO to lead a dynamic team responsible for finance Treasury strategy Investor relations facilities and risk management has it.

His extensive operational expertise and industry reputation for strategic thinking creative resource management, and managing through competitive and evolving landscape beat him a perfect fit for us during what has been an especially important phase in our growth of the company.

Now I'd like has been an invaluable member of the executive leadership team. During this time at Astec. He played a particularly important role in our management team's strategic review of our business in 2017, after which we realigned our vision mission and corporate strategy to embrace our core strengths in data analytics and technology, our strategic pivot as we refer to it.

Michael offense played an instrumental role in the execution of our strategic pivot. For example, he worked closely with me to establish a clear consistent capital deployment can return framework, including an annual review of our business portfolio and effectively manage the balance sheet to improve liquidity and lowering bar and lower borrowing costs.

Michael it's been a wonderful partner to our business unit leaders, bringing creative ideas as well as a structured approach to cross business unit initiatives. He is worth.

He has worked extensively with our business units to evaluate and execute on organic and inorganic opportunities and he oversaw the launch and development of our venture investment group.

Michael it's been an outstanding CFO, bringing focus drive creativity and determination to his role every day and on behalf of the entire team at NASDAQ and the board of directors I want to thank you Michael for his leadership and dedication to our company into our value.

When Michael retires at the end of February next year, I'm very pleased to announce that and Venison, who currently serves as senior Vice President controller, and Chief Accounting Officer will become executive Vice President and Chief Financial Officer.

And joined NASDAQ in 2015, and since 2017, she's been leading an extensive multiyear modernization of the company's financial operated operations infrastructure. These efforts include nasdaq's migration from our financial consolidation and reporting system, leveraging workday financials. The introduction of a new enterprise resource planning.

Warm and surrounding systems and the development of a corporate data strategy and intelligent automation program that are delivering interesting insights and powerful efficiencies at.

Additionally, and added for her responsibilities in 2017, when she took on leadership of the financial planning and analysis team, which partners with the business units and expertise to develop to maintain our detailed forecast and budget.

And at the dedicated leader with a deep understanding of our business and our long term vision. She has made significant contributions to NASDAQ financial soundness. Her five years with the company and her diligence and expertise will be important factors in our growth strategy.

With a combination of experience and leadership skills as those folks are a knowledge of NASDAQ business and financial operations and is the obvious and best choice to become Nasdaq's next CFO I'm excited for our analysts and investors to meet and in the coming months as Michael and and work together to transition the role between now and the end of February.

As I wrap up I will summarize by saying that we are very pleased with the strong results. We delivered in the third quarter and we remain focused on advancing our strategic mission.

Our results highlight the strength of nasdaq's diversified product offering and business model capitalizing both on opportunities presented by this year's unique capital market backdrop, including elevated trading volumes rising index valuations and strong IPO issuance, we believed that our ability to execute against the significant demand in the logistical challenges.

19 has enabled us to continue on our journey, while prudently advancing as a technology and analytics provider and with that I will turn it over to Michael to review the financial details.

Thank you Dana, let's kind remarks, and good morning, everyone. I will first provide comments on the quarter and then a few remarks from my decision to retire.

A commentary on the quarter, we're primarily focused on our non-GAAP results and all comparisons will be to the prior year period, unless otherwise noted reconciliations of U.S. GAAP to non-GAAP results can be found in our press release as well as on a farm located in the financial section of our Investor Relations website at IR Dot NASDAQ Dot com.

I'll start by reviewing third quarter revenue performance as shown on page three of the presentation and organic revenue growth on pages, four and 14 the 80.

The $83 million increase in reported net revenue of 715 million is the net result of organic growth of $70 million, including 13% organic increase in market services and 10% organic growth in the non trading segments, a $4 million positive impact from acquisitions, and a $9 million favorable impact from changes in foreign exchange.

Rich.

I will now review quarterly highlights within each of our reporting segments I will stay.

Art with information services, which as reflected on pages, five and 14 saw a $40 million or 20% increase in revenue.

Moving a positive $3 million impact from the acquisition of slow this under $1 million positive impact from unfavorable changes in foreign exchange rates organic revenue growth. During this period was 18% primarily reflecting very strong growth in our index business had positive contributions from each of the investment data analytics and market data businesses.

Operating margin of 65% increase to 100 basis points compared to the prior year period.

Market technology revenues as shown on pages, six and 14 increased $2 million or 2%, primarily reflecting a positive 3 million dollar impact from favorable changes in foreign exchange rates.

On an organic basis revenue decreased by $1 million or 1% increase in software as a service. The service surveillance revenues were more than offset by lower software delivery and support revenues and lower change your question advisory revenues.

Annualized recurring revenue or a R.R. rose, 9% compared to the prior year period.

Operating margin of 10% in the period was down eight percentage points from 18% in the prior year, putting margin into a 12 month contracts, which eliminates quarter to quarter volatility from seasonality and other factors. The trailing 12 month margin is 16% in line. It was full year 2090 level.

As it being a noted per progress has been impacted by the pandemic induced neutral growth headwinds. However, we continue to expect margin improvement as the business expands over time.

Turning to corporate services on pages, seven to 14 revenues increased $8 million or 6% organic revenue growth was $6 million or 5%, reflecting an increase in U.S. listings revenues and increases in both governance solutions at IR intelligence revenues.

The operating margin of 39% for the segment was up 300 basis points from the prior year period.

Market services net revenues on pages, eight and 14, sorry, $33 million or 15% increase excluding the positive 4 million dollar impact from favorable changes in foreign exchange rates. The organic revenue increase was 29 million or 13%.

The organic increase during the period, primarily reflects increases in cash equities and equity derivatives net revenues due to higher industry trading volumes.

Operating margin is 59% for the segment increased two percentage points year over year.

Turning to pages nine and 14 to review expenses now.

Non-GAAP operating expenses increased $29 million to $346 million, the increase reflects a $17 million or 5% organic increase.

$7 million increase from the impact of acquisitions, and a $5 million increase from an unfavorable impact of changes in foreign exchange rates.

Organic growth in expenses, primarily reflects higher compensation expense professional fees and infrastructure costs, partially offset by lower travel and event spending.

Turning to slide 10, we are adjusting our 2020 non-GAAP operating expense guidance to a range of 1.36 billion to 1.37 billion up for $1.33 billion to 1.36 billion previously.

The revised range is driven by two factors first changes in foreign exchange rates, particularly the weakening of the US dollar has manifested in a 10 million dollar increase in the top end of our guidance rich.

Second as we've continued to deliver especially strong organic growth in both of our trading and non trading segments higher expenses, including accruals of performance based compensation make us increasingly likely to end up at the high end of our expense guidance range.

That's a full year context, the 1.37 billion at high end of our revised expense guidance range implies a 4% organic increase expenses, while the first nine months of 2020, the company delivered organic revenue growth of 12%.

Now moving to operating profit and margins non-GAAP operating income increased $54 million in the third quarter of 2020, and the non-GAAP operating margin was 52% compared to 50% in the prior year period.

Net interest expense was 24 million in the third quarter of 2020, a decrease of $2 million versus the prior year.

The non-GAAP effective tax rate was 26% for the third quarter of 2020.

Full year 2020, we continue to expect the non-GAAP tax rate to be 20 between 26% and 27%.

Non-GAAP net income attributable to NASDAQ for the third quarter of 2020 was $256 million or $1.53 cents per diluted share compared to $212 million or $1.27 per diluted share in the prior year period.

Turning to slide 11 debt increased by $89 million versus June Thirtyth, primarily due to an increase in the euro bonds book value caused by a stronger euro.

Our total debt to EBITDA ratio ended the period at 2.4 times unchanged from 2.4 times at the end of Q2.

During the third quarter of 2020, the company paid a dividend in the aggregate of $81 million and repurchase common stock in the amount of $34 million the company.

The company has repurchased $186 million year to date through September thirtyth, largely completing our objective to use share repurchases to offset dilution of equity compensation and other sources of gross issuance.

Now before I turn it back for the Q and a session a few comments about my decision to retire.

Well. This is a decision I have contemplated for a while now it certainly comes with mixed emotions. It has been such an honor and a privilege to work for Dana The board and this incredible company and I am extremely excited about the vision and strategy and the great opportunities that we have ahead of us to continue to grow and expand as a technology company, serving the capital markets and.

Beyond.

Most importantly, I'm fortunate to work with colleagues who are enormously intelligent innovative driven and are just good people that consistently exemplify nasdaq's values of integrity and teamwork.

However, I've been in the exchange industry now for a long time going back to the Ninetys when exchanges for mutual broker own not for profits and while I.

And while I can't say for certain I do believe I hold the record for the most consecutive quarterly conference calls as CFO of an exchange group with this call being my 72nd in a row.

And that's why the decision was so difficult for those of you who like me or Canadian I'm sure. You'll recall the ubiquitous early retirements inducing freedom 55 commercials Olin definitely understand the indelible target that left on my psyche.

And finally, we forecast macroeconomics revenues and earnings but the one thing that no. One can forecast and covert has certainly been a great reminder of this is the time of capability will be given to enjoy the fruits of our labors.

Thankfully I have no current health concerns, but the point is you just never know.

So despite the temptation to stay and partake in the exciting initiatives and growth we have in front of us here at NASDAQ I have decided to stick with the five year plan five your timeframe that I shared with the Dina and importantly, my family My first except for this position.

It does make buy decision easier is that my knowledge of the strength of the team I am leaving behind and I could not be more pleased that and data center will be taking on the CFO role.

That has been a key member of my management team for technical expertise proven ability to drive change through innovation at or collaborative approach to problem solving makes him. The ideal candidate for this position. She is an app also an absolute pleasure to work with and as always focused on doing what's best for the organization I am confident that she is the right person to help drive Nasdaq.

So every plenty of time next quarter to say proper. Thank yous to the board into a Dina to all my colleagues past and present it to you the investors analysts at this point ill just say it has been an honor and privilege to work for and with all of you.

So now I'd like to just drop it Mike and walk away, but I think we have to turn into Q and a session. So I'll turn it back to the operator.

Thank you as a reminder to ask a question you'll need to press star one on your telephone to withdraw your question press. The pound key we ask that you limit yourself to one question. Then please re queue. So that we can get to as many questions as possible.

Our first question comes from Rich Repetto with Piper Sandler Your line is open.

Yes, good morning at Dana Good morning, Michael.

Michael.

Michael despite that elegant explanation yes.

Yes, still too young to retire we think [laughter]. Thank you Alex.

No Im kidding, congrats and you've done a great job.

Anyway. So my question is first on the information services on the index revenue.

You know some nice upside surprise I guess edina on Michael can you give us a better feel for how the breakout.

Sees it the revenue grew by more than 50%, but the the the futures and options volumes grew almost double so can you just give some more color on how we can model this a little bit better given your agreements with the CMV and also the license.

Yes that grew by over 50% as well so how do you sort of.

Model is a little bit better than what we have.

Sure. So thanks Rich I think that's the first thing to note is we've kind of giving you a little bit of a guy in the past to say that that the index futures revenue kind of ranges from 10% to 20% of the overall revenues for the index business and it obviously ebbs and flows based on volume. So it's not we can't give you kind of evercore.

Kind of every quarter. This quarter 21. It was just just at the top end of that or just above the top end of that range and I think that that shows you that the strength of the fact that we have a great relationship with me and I think that we have a long term partnership with them and and the indexes that we have.

Moving out of 100 to see me is a particularly strong index this year and one where we see a lot of investor appetite both to invest in the yeah, the product as well as to use the futures market the health hedge and manage their portfolios.

Okay. That's my I'll get back in the queue. Thank you.

Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.

Hi, Thanks, good morning.

I was hoping you could expand upon your comments on the market Tech side, obviously, the short term dynamics around some of the headwinds with revenue, but we think about the fourq you sequential build that typically happens in that segment, how we should think about in the context of this year.

Sure I think that if you kind of break down what what we are trying to convey the first is that they are they are our growth, which is really the recurring revenue streams that come from our newer offerings that are south oriented as well as our tree balanced bathroom instead.

Sorry to beat those continue to see you're seeing continued growth at 9%.

And we can continue to see that Apple will be a strong part of our franchise and and I think that we should recognize also that that those types of implementations are more simple you know they are just they don't take as long to to put a bring a company into into the market whether it's.

Barclays services platform or to bring them onto our trade spends remarks sounds platform. It's the it's the bigger project, where we still do you know significant on Frac deliveries, whereas this year, we've definitely seen more of an impact that and if the if you think about it there's a lot of collaboration that needs to go on.

I mean, I kind of client on phone that particularly in the post trade deliveries and we have several penetrate deliveries that were working on at the moment.

And the pandemic made it harder have not collaboration and it kind of created some you know some challenges in terms of keeping up hate that.

The original delivery schedule and we've gotten we've gotten better as we've gone through the year and the clients also have got more used to it as well, but that I think definitely created challenges and then also making sure that in order for us to make sure. We're managing the pace of those we happen I'm, taking some increases in attacking to make sure that we can we can deliver.

Against that and that's kind of constrained environment and then are those are short term issues and there isn't the tax revenues are nonrecurring because their delivery revenues, but they are you know they continue to be an important part of the business.

And then on change request, it's really a matter of our ability we actually have the capacity to implement senior class when the clients are looking for them, but when they are not we obviously apply those people to the implementation.

Implementation project, but we are finding that clients are making change requests for sure, but just have a lower demand. There's this year because they are managing through other issues in their own organization. So I think you should assume that are shorter term trends that are really driven by the current environment against the nice long term trend in terms of us increasing the.

And then just sales that were getting three staff as well.

As well as continuing to move more of our product into a more flexible delivery mode with so I think I'm, hoping that gives you enough enough backdrop.

Great. Thank you.

Thank you. Our next question comes from Jeremy Campbell with Barclays. Your line is open.

Hey, thanks.

And Michael just one to say congratulations I know, we sold a few months left but the pleasure working with you and best of luck.

Quick question on asset manager consolidation.

It seems up a bit over the past year and reportedly there the pipeline is pretty active right now I know asset managers are kind of a major client based on NASDAQ in different parts of the ecosystem, but how should we think about the pluses and minuses of asset manager consolidation as it relates to your nonrecurring revenue stream, but NASDAQ and could like some of this post deal.

Degrees can be another potential near term headwind for marketed.

Well I mean, I think manager side, we don't actually have a lot of asset manager clients and our taxes.

It'd be tented to really focus in on market infrastructure operators as well as broker dealer and we do have a small business that weve been growing in the surveillance business for us I client I think market Tech won't asset manager validation won't be a significant issue. There and then if you look over in the information services business, we have out.

About anchor client and so you are seeing you know an occasional combination and that's where we also work with them to figure out if there lets say both of the client that client then we'll work with them to figure out what is the overall enterprise value going forward that they should they should that we should be able to charge.

Great investment on a combined basis versus a single basis, it's really a matter of us working with clients.

Certainly if a client one client the investment client the other ones. Not then we have a chance of actually increasing our penetration in that client as they combine no I think that's the way to look at it for the investment business and same with you know anything Pondel. Another worked with resale very small and growing there's just a huge sea as you know of asset managers out there.

Right to appeal to on the trading side of the business I don't anticipate that we'll have a real impact because they're basically just managing more AUM with their trading organization and that shouldn't have significant impact on how much they are trading and how they're managing their portfolio. So I don't see an impact on the tree.

Great. Thank you.

Thank you. Our next question comes from Alex Kramm with Qbs. Your line is open.

Hey, good morning, everyone.

This does maybe better for the for the Investor day, but I do want to ask about M&A you.

You have clearly established a pretty strong track record here over the last few years.

Partially helped by Michael and you, obviously as well, but you know if I look into next year.

You know rates are low 2021 is going to face a really tough comp on the trading side and on the on the index side and your multiple has expanded substantially. So I'm. Just wondering is this are you thinking differently about maybe the bigger deals in the space and if so to what degree with Jeff.

You look at something that has a little bit more transactional revenues with it and where there could be more of a cost driven value proposition. So maybe a broad update on M&A will be great. Yeah. Thanks sure.

Sure when we will spend a little bit more time and not an investor day, Alex So I I think that it is an area that you know will at least give you a sense of our country, but I'll give you a little bit of a previously I think what we've said all along is that we we look at acquisitions as part of fitting into our strategy that we don't just look at every acquisition out there.

Her opportunistically, we have really developed a strategic next is around where we want to grow and how we want to grow and where we think that we can do everything organically and where we might benefit from from acquisitions that could catalyze growth and or expand our clientele and I think that the areas that we have been primarily focused on I mean, we've said.

Anytime isn't it spending our architect business and expanding our information services business I'm in terms of growth year part of the of the sector in the industry and then on that on the marketplace in the marketplaces I think that we would make targeted acquisitions. If it really makes sense in terms of.

The synergies on the cost side, instead, there or the ability to generate scale, but also that it furthers our strategy in the in the asset classes were really strong and I and all I can say is that we look at a lot of things, we do always put them within the strategic framework. So there will be also stop looking at thing I'm pretty quickly if it doesn't.

But then and and and you know we will certainly not shy away from doing the right. The right transactions that further our strategy, but ours, but that hasn't changed I mean are you know we're not shifting our strategy you know from what we've been saying over the last two years, they will well spend a little more time on that at Investor day.

Thank you and our next question comes from buying Bedell with Deutsche Bank. Your line is open.

Great. Thanks, Good morning, folks and congrats Mike also.

We'll talk to you for another quarter, but just once the congrats.

So just on the just on the sustainability of that information services revenue you know extremely strong this quarter looks like it's it's easy for you to now exceed the you know the top of the of the 5% to 7% range, even with the softness in a in market Tech, but honestly if you look at that info services moving into the fourth.

Quarter and into next year.

Obviously, depending on on a unit volumes at Sea me in your contracts and any T.F. U.M. levels, but it seems like there would still be an upward trajectory.

In that line, so just maybe some commentary about that.

And you know to what extent any audit fees positively impacted market data and then just thoughts about market data revenue coming into 21 with consolidation say in the online brokerage industry. For example, with his firm up in a merger and your ability to recoup that cost okay.

Okay great.

Okay, so doing an upgrade.

Then of course the services I think you know one of the things that I am, particularly pleased about the quarter is to show that there is really solid growth across all three segments within information services. So you have no growth within the data analytics franchise with investments low bit Congo, and others other on their behalf vibrant growth in market data and.

I'll cover that in a minute and then we also have a very strong growth in our index franchise, and and and while there are data elements to the index business I think that we have to recognize that even when we saw some like back in the fourth quarter of 2018, where are we oh the markets really go throughout smoked with period, we continue to see investor in.

Flows into and that's 100 other nothing indexes, which really made it said that it is buffer that buffer the downward trend in the overall market cap. There. So we do think that there just a strong secular interest and appetite among investors to invest in and I think 100, the biotech index semiconductor up.

They're not conduct as an addition to our eight a franchise and then we've seen that through both the kind of awkward mark on wing, but also even in in March that largest inflow beat that we had was what is the toughest markedly as markets. We're finding the most that's when we saw something like four or $5 billion of inflows.

No 100, so we just think that the indexes that we have her more aligned with long term aim.

But I also would say you know there is obviously I'm being a component there and on the trading we are making sure that we continue to generate growth there by launching new products and making sure. We gathering and you went into their products as well and that will be you know a testament to our ability to do that over the next several years to continue to expand.

Franchise.

With regard to the market data business. We are continuing I think one thing that this year shown is it's a very resilient business.

And we have done a nice job diversifying the clientele, which earlier in the year, we mentioned could create some talented just in terms of the clients who are you know some of the newer clients in other parts of the world, but actually we found that we continue to see really strong demand from the client to continue to provide and expand.

Data that they're providing to investors around the world. So that's showing up in the numbers and in fact, our audit revenue this quarter and significantly down from last year third quarter in our audio right <unk> revenue for the year is down from last year. So we're actually not collecting as much on the on the Backfilling, we're really driving the growth that we're seeing this quarter is really.

Just from your Newport, new customers.

And on the expansion of our current line and.

In terms of the consolidation and the impact from the online broker there will be some impact from that and we've been you know we've we've known that for a long time. The nice thing is that it takes a long time to close this deal. We've had a lot of time to work with its clients and continue to make sure that they're taking all the products that they can take from us as they become a combined.

Connotation Oh, we do also see continued strong demand coming from new Fintech clients and so I think that there's a nice balance there, but we've always said that that is a a low to medium term I mean, a low to mid single digit grower because it's a more mature part of our business. So hopefully that gives you more contact.

And Brian the audit number was $2 million in the quarter compared to as an unusually high quarter of nine in Q3 at night it.

Great. Thank you so much for all the color really for sure.

Thank you. Our next question comes from Mike Carrier with Bank of America. Your line is open.

Good morning, and thanks for taking the question.

Good quarter, just wanted to get enough the bomb on regulation given that the new year's day working with the guns on days like market data.

I wanted to get your take on particularly from a process standpoint on how this is actually different from the typical it.

Anyway.

[laughter].

Sure well to be honest, we're reading about that the same way.

The same way you are so I hope that no I understand that there's nothing that you know that we're reading and at the same time, you're reading it. So I think that that's the thing.

The one thing I would like to say and secondly, I think that we've been able to demonstrate multiple times over a decade that we have a highly competitive market model that our products are subject to competition and the data state and that we provide great value for investors and participants alike.

Right in the market data that we provide and I think we do it in a very responsible way and I think we've proven that both to our customers and we do have very good relationships with our customers on a market data from buying it like some of the things that you see in the paper, but I have to say you know what I'm, saying, we continue to have very strong relationships.

Across our clientele as well as the fact that in addition to that we pass it on ourselves several times now boats and import like situation and I think we've done we've been able to prove ourselves over and over again. This is a competitive space and we price our product competitively and that we create great value for four people those people who use the.

The data I think that you know we remain very confident Mike and the way that we manage the business as well as how we deliver product and we're you know we're happy to engage with whoever wants to talk about that.

Okay makes sense, thanks, a lot.

Thank you. Our next question comes from Oh allow with Oppenheimer. Your line is open.

Okay. Good morning. Thank you for taking my questions. So first of all best of luck in the future selfless Mike.

Thank you very much a question.

Yes.

So for my question could you please give us an update on the NASDAQ private market, that's and we'll spec impact deposit market and change the way you look at the space. Thank you.

I [laughter].

So oh patent private market continues to have solid activity. This year. It has been lower this year in terms of the overall level of tenders that have been issued and the private markets. This year, but generally speaking you know we continue to have a good clientele in a strong strong service we offer.

The frac companies and and there are still taking advantage of a managing their liquidity in the private paid but it's been a little bit I did it decelerated a little bit. This year, just based on I think really the volatility and an understanding and the way that people are managing their businesses, but if you're asking I think as a broader question is because of all of the different now.

Heard in ways that companies can now have into the public market are they going to continue to stay private longer and I think that's you know that's a good longer term question, knowing that we're going to see play out. So our company is going to tap into the public markets earlier in their lifecycle, which may make it so that they have less of a demand you tender.

I don't think we can know the answer to that right now I think that we are obviously seeing a lot of <unk> you know a lot of growth companies, but still quite sure quite quite a full on in terms of their overall ability to tap the public markets. I mean, we're still seeing high high valuations and and strong performance.

Companies coming into the public market, both respect and through a traditional IPO and it's been a very active year, but I also think that there are as you know thousands of private companies that will continue to mature and the private space before they tap the public market and so I I personally think that the private market will continue to have a huge opportunity.

You know were really frankly barely scratching the surface of private private company liquidity right now and so we have a lot more we can do there, but <unk>. It's a good question as to whether more companies will come out to the public market sooner and I know the answer yet.

That's very helpful. Thank you have you know.

Thank you. Our next question comes from Alex.

Alex Blostein with Goldman Sachs. Your line is open.

Thanks, Hey, guys good morning.

A question for you around market Tech again, so understanding the near term margin dynamics could could sort of fluctuate, but I was hoping you could spend a minute on just kind of walking us through the framework for margin improvement opportunity here over time, and what I'm really kind of trying to get at is kind of what's the incremental margin on the rps and sort of the revenue growth that youre seeing there.

What's the incremental margin on some of the on Prem initiatives you guys have.

And really just kind of incremental margin on the order intake.

Sure. If those are the best three kind of buckets to tackle it, but but something along those lines would be helpful. Thanks.

Sure I don't know if I'll give it to answer that in detail today on something but we'll take it back and try to figure out how we can help with that we've got into Investor day, I think that in terms of.

The margin dynamics I think what we've been saying all along continues to be very much heat, which is the more that we can move our clients into a SaaS offering so whether it's mark <unk> our market surveillance offering as we've launched as a SaaS offering this year, we've seen strong pick up there and that and our trade around offering is always at that and.

So those offerings definitely allow us to have a higher overall margins just because the implementation time is shorter and is that recurring revenue stream and so it's a different composition of revenue that delivers a stronger margin from where.

Whereas with the on Prem implementation. We obviously you know managed to give to the margin that we think is the right way to go but we do often do fixed price contract there sometime in the implementation ends up being longer and more complex. It can make it like it can make it to that we end up having to put more resources to it and that and.

Second half margin impact in the short term on implementation and that's happening this year, but over time I think the more we can show that we are the new sales for generating AR and AP, which is much more flexible platform and that's driven and or because some of the NFL deliveries are still on from some or in our style as well as our.

The balance on the NOL.

The more we can drive to that higher margin and that would show you.

To show you that shift in the in that order intake in the in the the type of order intake that we're taking in and that's something that we want to make sure that we provide more context around it investor day in a few weeks.

Thank you. Our next question comes from Chris Harris with Wells Fargo. Your line is open.

Great. Thanks.

Do you think the paradigm has changed for trading and U.S. equities and options and rich.

And really I guess, what I'm wondering is whether you think the volumes that we're seeing in these markets are going to be sustainable and why it's so.

I think yeah, I think that error there to keep factors that are that an art opinion are on taking mines to different level. This year. One is just overall volatility and uncertainty and that always makes it so that you've got investors that more different opinion right. So when their investors have different views on what happens next and how the economy.

He's going to progress you have you have more volatility because because there's opinions all get expressed the market and that drives more fine.

But at the same time, we also have a lot more younger retail investors coming into the markets as well and so I think that has to do with with that we do have more engagement around with from retail investors and those retail investors coming into the market also driveline stuff now if the question is are those retail investors.

The seasonal trend and I think that as we've been listening to the online brokers speak about it and we've been talking to our own.

Talking to our own clients got it I think that there is a view that there is a new wave of investors have come in on the back of your admissions, which takes down the friction in the market and therefore increases overall access as well as the fact that the macro environment has created some really strong investment opportunities or retail investors and I think.

That is a longer term friend and a healthy one and an exciting one but I don't think every one of his retail investors will be here over the long term, but I think I think we are seeing a secular shift in getting more younger investors engaged in the market and I think that could create a more sustainably higher trading environment than what we saw in 2000.

17, 18, 19 timeframe, but I I think that you know time will tell but that is our I think that's our overall view just speaking with a industry professionals, who really understand the nature of the industry's coming in.

Got it thank you.

Thank you. Our next question comes from a cowboy with KBW. Your line is open.

Hi, good morning interest on the listings business I know you cited the strong IPO market and some switches as well in the quarter, because I guess I'm still a little bit surprising that revenues grew by 5 million sequentially. Given those initial listing fees are amortized over several several years. So first part of the question is there anything else to note that drove.

The increase there that's more onetime in nature or should this be sustainable and the second part of the question you know you're still price below then why is he for certain tiers within that listings business given the strength and momentum you're seeing the business and I know you probably say its not necessarily because of low feed is because the value proposition just wondering if you see potential for price.

Some tweaks as you as you look.

Look out over the next year or so thats sure well one thing to note is that the amortization of the initial listing fees is really to get the fees that get amortized that amortization schedule did change a bit few years, a couple of years ago. So it's a little shorter than it used to be but but you're right that the initial listing fees do get amortized.

I think Michael it's rice noted fill over over two years or two does it yeah. It depends it's two to four years since the time frame, yes, but we also did we also did have or there were some the pricing that was taken at the beginning of the year on the sustaining fees as well and that's flowing through which to flourish.

All of the quarter so far this year.

Yeah, So and so I would just say that first of all there no kind of one time fees that are that are creating that that increase in the quarter. It is really.

It's just the nature of the strength of the newest market coupled with the strength in our corporate solutions business.

And those are recurring revenue stream I'm, sorry, I did I think that's important thing to say, but but I think that because of the fact that new issuances have been high throughout the year, you're starting to see that compounding effect of that as we as we get more and where she was the issuers in the market and then they then start to generate annual listing fees, which will then create a lift going into 20.

Anyone so that's the good news is it is kind of really just comment on the trends with new issuances I just want to make sure you know that the amortization, it's got it's a little different than it was here.

Fair enough and then just on the potential for pricing tweaks Oh.

Oh right I'm, sorry about that yes, we are we're very prudent in the way that we manage our fees. We're very proud of the fact that we deliver a really strong value to our clients and we never want to give our top clients any reason, even consider an alternative and fees do play a role and I I wouldn't say that it's you know you're right. It's not reason they switched.

Not that I can be a door opener on it for them to consider paying $500000 to lift on your and they're paying $160000 to live here and they're getting frankly in our opinion our superior service. Here then it allows us to open the door to a conversation and then.

Work with them on all the other aspects of our value propositions have move over so I would have to say that the differential is a tablets to conversations on switches and frankly, we think that we offer a structure that is a strong reflection of the value that we give to our clients and I think that you know so we feel good.

Not how we hear our fees and the Max that we charge and you will continue to make pricing changes periodically to reflect the increased investments, we're making in the business, but we don't see.

A reason frankly to make a big change in our views at the top.

Thank you.

Thank you we have a follow up from Alex Kramm with Qbs. Your line is open.

Oh, Hey.

Well it was actually just answered on the listings, but very quickly then maybe on index. Another numbers question. You gave the bag is a trading contribution can you also give the contribution the exact number for this quarter.

Sure I know its a.

Michael you might have been more readily available, but I know in any given quarter, it's like 60% to 65%.

No.

Yeah, that's what I guess this is five in <unk> do you have the exact number for this quarter, but the thing.

It's in that range I think it's in that range not but towards the lower end of the and the futures on the high end right.

Fair enough. Thank you sure.

And just to make up the difference is the data that we see the index data index that you and the future is buying the three components of the index.

Yep. Thanks.

Thank you we have a follow up from rich Repetto with Piper Sandler Your line is open.

Yes, Hi, Hi, Quinn.

Unless the call go by without asking about financial transaction tax Oh, Yeah, [laughter]. So I guess the question is what are you doing to prepare right are you having discussions with legislators I know certainly there's been a lot in the press about potentially moving is that right.

Possible. So what are your thoughts on <unk>.

On all this debate on the financial transaction or a financial transaction.

Sure. So I think the first thing to say is we're heavily engaged with the the New Jersey legislature and the Governor. We also have been receiving inbound calls from Governor mothers babies, who certainly would welcome not and as data center, operator, or or a you know a company that uses data centers and there.

Well, that's the nice thing about the way that we manage our infrastructure is that we don't actually own any of our data center, we work with economics as our partner today and so we do have flexibility we've moved our data centers and the path that we you know we operate on a couple of Connecticut, Lehman's harder at several years ago.

And also what used to be in Ashburn, Virginia for our backbone or now in Chicago. So we do have experience moving data centers. We've also moved or getting center in Sweden. So we we are familiar with what I see and I think that you know obviously in this particular context, it's not just that we have to work very very closely with our client because our clients are all.

Embedded in our data centers as well and they build infrastructure to support connections between Chicago and New Jersey. So so there is that investment that would need to be made in order for us as an ecosystem to choose to go to a different state, but it is absolutely feasible to do it I think that we you know what we've made clear is that we certainly.

Me.

Operate well in New Jersey, and we have a well is that what he said I'm here and if we.

And if we don't think there is a risk of attack then that's something that would obviously be our first choice, but if we believe that the state could impose attack just because our data center will be located in the state and that tax rate purchase in the market that then lessons participation from investors, particularly retail investors, then widen spreads and lower liquid.

City, we have to do the responsible thing and find it an environment that doesn't introduce [laughter] and in every other cases, you know rich that transaction taxes have been implemented in other countries. They they've seen really negative effect on liquidity and spread and so we have a lot of proof points to say friction manner.

Hi, creative friction and it will be that will have a negative impact right at a time when given the volatility we really need to maximize liquidity in the market. So we are quite serious about it and we are heavily engaged with the with New Jersey and other states I understand the best long term not for.

Thank you and just.

I think there is a coalition of London exchanges to sorta represent your position and I think NASDAQ as part, but I haven't heard as much.

Outside you know about it or just the.

From other <unk> I would just say that there are you know there's a wide range of participants Margaret husbands and exchanges involved in understanding that you know and and and involved in speaking with the legislature on this issue.

Just quickly to get back out Graham's question that specific percentage revenue kind from a win in the quarter on within our Nexsan was 63% and.

And then just to add to that in a it was a 24% on the index licensing side on the futures licensing side.

24, and 21 I don't think it.

Okay. So accurate.

Thank you.

Sure Doug Thank you.

Thank you. Our next question comes from Ken Hill with Loop capital. Your line is open.

Hey, Good morning, first I, just wanted to say congrats to Michael and Anna transition there.

Hi, my questions on the queues innovation suite you guys launch I know I was just curious from an economic perspective to NASDAQ or there are the new products being rolled out.

Do you have any different pricing.

Or any different economics for an asset given maybe like a lower cost product I know you are rolling out with the queues.

For an alternative that type of product there.

And then I guess just thinking forward are there any other additional products you might be lucky to slice and dice a little bit differently here within the index we sure.

Sure so going to first point, we don't like to talk specifically about how he got hurt either with each individual partner, but I would say that we're very comfortable with how we've we've built its partnership with invesco and and to make sure that that we are getting you know properly compensated for the guy at the indexes and so I think we feel.

First of all that if the clients to the new products are they choosing the current products were very happy with a fee rate that we're getting in terms about in terms of other new product that actually on part of the next team, they're always considering new strategies and new ways that we can look at our benchmark like going out.

Hundred and biotech as well as more of a Mac indexes to a great creativity to investor and so a we are constantly working with our partners to find new ways to slice and dice. It. So for instance, I think it was victory, where we also have implemented or non acute 50, which is that.

[laughter] thoughtful and that's 100 that we have different ways that people can choose to participate in and the broader announced that franchise I'm pretty different partners.

Okay. Thanks for the color there.

Thank you and we have a question from Brian Bedell with Deutsche Bank. Your line is open.

Right right. Okay, great. Thanks for the follow up just on on the U.S. equities market in terms of pricing in revenue capture some sort of moving into the end of the year two dynamics going on there. Obviously, one we're seeing more volume getting executed off exchange rate I suspect, it's a part of the.

Retail dynamic in market maker dynamic maybe if you could just talk about that and whether there's any I'm interested in in pricing initiatives to capture more of that share.

And then and any sort of thoughts on members exchange and that was it seems like that was delayed a little bit but in terms of pricing whether you would be you know doing any preemptive pricing <unk>.

What's that exchange coming into the fourth quarter.

Okay. So Patrick Rephrasing. The first thing I'd say is as you all know it it's something that we work on very dynamically and we make small changes right and I'm you know almost monthly actually within within their cash equities business and and so I would say that we're you know, we're always watching that and working with our clients understand.

How big can bring attract low into the NASDAQ exchanges.

And in terms of the the retail trying to get more of the retail to come onto the exchange from off exchange you are correct that the retail trend has driven a higher level of off exchange volumes and so those those orders are not getting up into the right I agree that we have on market we loved.

After more of that but we also reflecting the fact that the the intermediaries importantly scheme that different than our machine to be scheme. So we have to we have to work within the exchange fee structure that be that were allowed to operate in and that will limit our ability to kind of bring in a lot of a lot of that new retail off of it.

No change, but we are always talking to them about on the margin how can we get more of the retail flow to come straight to the exchange I think that in terms of Mac and the way that we're managing that we are highly engaged with our clients, we have and now ever since they announced they were forming them Act and we take every competitor seriously and.

To the extent that we see changes in behaviors among our clients we will on to make sure that we are maximizing that you know and optimizing our Akbar and we you know we are having a dialogue and in all the time, so I wouldn't say that you're going to see dramatic things that more ongoing effort for us on pricing perspective today.

Managed to that to that competitor to the extent they have Uh huh.

Great. That's very helpful. Thank you.

Thank you and there are no other questions in the queue I'd like to turn the call back to Dana Friedman for any closing remarks right. Thank you very much well I just want to thank you all and I do want to again, thank thank Michael or just an amazing time together and we've had we've we've really you really are great partners and Uh huh.

He's also done a spectacular job preparing and for the role I you know he's he's sponsor her and that's where I had a chance to work very closely with and over the years and so I can't be more excited to say that despite the fact that were very sad. The Mike believe we're excited for him and his neck that and.

We are just thrilled that we have a strong internal candidate to come in and take his role as if though and of course, you got to see Michael lot going back in [laughter], including at our Investor Day, which is on November 10, and we hope that you all join us either virtually or spin and we look forward to that and thank you all very much and have a great day.

<unk>.

Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

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Ladies and gentlemen, thank you for standing by and welcome to the Mastechs third quarter 2021.

This time, all participants lines are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question during the session they'll need to press star one on your telephone.

Please be advised that todays conference is being recorded if your car any further assistance. Please press star zero and now.

I would now like to have the conference over to your speaker today, Mr., Ed Ditmire, Vice President of Investor Relations. Please go ahead Sir.

Good morning, everyone and thank you for joining us today discuss nasdaq's third quarter 2020 financial results on the line are the inner Freedman, our CEO, Mike <unk>, Mike Our CFO, John <unk>, our chief legal and regulatory officer and other members of the management team.

After prepared remarks, well open up to <unk>.

The press release and presentation on our website, we intend to use the website as a means of disclosing material non public information and complying with disclosure obligations under FCC regulation FD.

I would like to remind you that certain statements or this presentation during Q right, they relate to future events and expectations and as such constitute forward looking statements within the meaning of the private Securities Litigation Reform Act.

90, 95 actual results may differ materially from these projections information concerning factors that could cause actual results to differ from forward. Looking statements is contained in our press release and periodic reports filed with the RPC. All forward looking statements speak only as of today October 24, 2020, and NASDAQ a fan.

No obligation to update or revise any forward looking statement.

Lastly, a quick programming match and we are excited to be hosting our investor day in November tap, our senior leadership team will get presentation better operations opportunities, that's tragic and will be available for your questions and.

I know many of you on the line for their planning to participate if you have not registered please do so today at our IR website I will now turn the call over there the Ana. Thank you Ed and good morning, everyone. Thank you for joining us.

I'm pleased to report NASDAQ financial results for the third quarter 2020, with our strategic investments in our guide we have been consistently focused on delivering results for our clients, while creating sustainable value for our stakeholders.

Our global workforce has demonstrated their nimbleness and ability to remain highly productive and available to our clients throughout the period that focus is reflected in todays Robert <unk>, where we are seeing significant contributions from across our franchise Mike.

My remarks today will focus on business unit highlights and strategic initiatives from the third quarter. I will then conclude todays announcement about Michael's decision to retire and then Michael will cover the financials.

Nothing delivered another quarter of strong performance driven by great efforts by our team coupled with favorable favorable market conditions here are some of the highlights.

We welcomed 105 Ipos NASDAQ during the period, which represents the highest number of ipos per quarter on a U.S. exchange in the past decade.

Conviction by Investor to increase exposure to NASDAQ. So good symptomatic indexes, coupled with robust marketing performance continues to support our expanding index business. As a result, we saw that you have in our index products achieved another quarter of record highs alongside high trading activity and not like because index derivative.

Mark infrastructure performed exceptionally well during the peaks of volatility we observed earlier this year, particularly in March and April we continued to experience strong volumes across our equity options business isn't a third quarter and we've continued to invest to enable us to have capacity for future volatility as markets reacted continually changing dynamics in the U.S. and globally.

Our data and analytics business within information services as well as our market technology business continued to demonstrate their resilience with healthy growth in annualized recurring revenue or a our our architect and targeted sales in new capabilities and product across our product suite we.

We are pleased to announce the launch of several new products during the period, including the cloud deployed knapik automated investigator for anti money laundering or A.M.L., the absolute trend for investigating financial crime for retail commercial banks and other financial institutions and in our life Index Futures business, we announced together with the M. eager to innovative.

Index product, a new futures contracts on the NASDAQ 100 volatility index known as bulk you and the first ever water water index futures based on the NASDAQ BLS, California water index earlier.

Early in October we also announced an expansion of our partnership with Invesco right now could 100 product suite, including a new NASDAQ next Gen 100 and execute yet.

Our results for the first quarter highlights the strength of NASDAQ diversified product offerings and business model, while operating in a unique capital markets environment in 2020.

Our ability to execute against the significant demand and logistical challenges of COVID-19 enabled us to continue on our strategic journey and bring these new and innovative technology and index solutions to our clients.

Now I will turn to our strong results for the third quarter of 2020.

That's like delivered net revenues of $715 million, an increase of $83 million or 13% from the prior year period, driven almost entirely by an organic grower.

Net revenues and our merchant services business grew 15% while revenues are non creating segment rose 12% from the prior year period.

Operating leverage with a particularly strong with non-GAAP operating margin expanding nearly 200 basis points to 52% and contributing to the non-GAAP EPS growth of 20%.

Turning now to the specific highlights from the third quarter, starting with our foundational marketplace businesses.

Our merchant services segment on net revenues of $259 million, a 15% increase from the prior year period led by 35% increase in cash equity net revenues as well as strong growth in both the equity derivatives and freight management services businesses.

Well of course industry volumes were a main contributor to this performance I do want to bring attention to the strong competitive positioning that marketing services has established and which continued in the third quarter. In particular, we've enjoyed relatively stable market sharing with equities an area, where we featured the single largest liquidity pool with the NASDAQ stock market the largest grocery equities exchanges.

Additionally, our Nordic equity franchise with a 77% share on exchange trading was up nearly 500 basis points year over year, and then are you with options trading complex, we continue to lead the industry with a 37% share mostly listed options.

The elevated volumes, we've experienced on the results of both in the high investor engagement and a multitude of macro and Jim geopolitical.

Uncertainties, while the activity levels can change quickly we believe that the U.S. presidential election remains a big focus for investors and we anticipate that our marketplaces are likely to continue to contribute at a high level as we progressed through the final quarter of the year.

Our corporate services segment delivered revenues of $132 million, a 6% increase boosted by new with bidding activity and continued demand for our governance and Investor Relations intelligence solution.

And our listings business.

The services business, NASDAQ led us exchanges for Ipos during the period welcoming 105, ipos for a 79% win rate for operating company with.

And an overall win rate of 65% when including spot. We are proud to welcome good Iraq, Lee Auto, Jeff holding company and Encino. Its just a few highlights listings in the quarter.

Our quarterly win rate of ACS has also been rising from 30% in the second quarter to 51% in the third quarter. In addition, we were honored to welcome six companies because their listings from the New York Stock Exchange NASDAQ during the period with an aggregate global market capitalization of $187 billion, including after that thank you.

Dr Pepper.

That brings our cumulative exchange Swiss Mark switch market cap over $1.8 billion in 2005 with over $1 billion of Doctor switching in just the last five years.

When it came to their decision to switch exchanges. These issues issue were identified strongly with the innovative spirit of NASDAQ listing platform with the expanded community with issuers, recognizing the opportunity to leverage our IR and governance solutions to improve how they engage with critical stakeholder and lastly for the larger switches to potentially increase.

Representation in the NASDAQ family of indexes by qualified qualifying for the math 100.

In the third quarter corporate services revenue grew 6% with the balance contribution from both governance and IR solutions.

We are pleased that rising secular demand for insights that help companies better understand and engage the shareholders is more than offsetting the impact of the spending reductions by companies in the sector is more negatively impacted I Cook at 19.

We believe that our investments during the quarter underscore how NASDAQ continues to be the destination exchange and partner of choice for companies worldwide with unparalleled expertise across equity market Investor relations and governance.

Now, let me turn to our information services and technology businesses.

And our information services segment, we delivered net revenues of $238 million up $40 million or 20% from the prior year period.

Index.

Both to $313 billion versus $270 million in the prior year period up 51% while contract volumes in the NASDAQ index like NASDAQ licensed index futures a trade on the CMC rose by more than 90% each.

Each of these contributed meaningfully to the index revenue rising $30 million or 54% year over year.

While the NASDAQ 100 family of indexes have had market appreciation materially above broader market averages, 30%, 37% of the increase in year over year came from positive organic investor inflows and we're working with our partners to meet rising investor interest in NASDAQ domestic indexes in several ways for example.

For example, as I stated earlier in my remarks, just last week and VESCO introduced the Q2, two innovation suite in partnership with NASDAQ, giving a wider population of investor access to the NASDAQ 100 index for a variety of investment structures and providing exposure to the NASDAQ next Gen 100 index for annuities.

Additionally, we launched bulk you a new futures contract agnostic 100 volatility index and announced plans to launch a futures contract based on the NASDAQ Bell as California water index.

Our investment data and analytics revenues increased 13% from the prior year period, driven both by the incorporation of spillover and the organic growth in our leading institutional asset allocation solution.

Market data rose, 5% with contributions from across our North American and European proprietary products as well as the pipeline revenues grow.

Growth during the period was driven by new sales and increased investment retail investor usage worldwide, particularly in new geographies like Asia Pacific and Latin America.

In addition, this area of the business saw new customer expansion and new product launches driven by the launch of the NASDAQ cloud data service.

Service that we believe provide significant technical cost reductions and quick and the time to market for clients seeking real time data solutions.

Lastly, our market technology segment delivered $86 million in revenue and $84 million in new order intake.

They are in the quarter with $278 million, a 9% increase year over year. However.

However, total revenue rose only nominally in the third quarter compared to prior year as the growth in the more stable sop subscription and recurring licensing fees that comprise our AMR was offset by lower nonrecurring revenues associated with new service implementations and change request.

As we stated earlier in 2020.

Implementation change request project, new order intake level and funding for new markets and new marketing initiatives have been adversely impacted by the pandemic related factor. We continue to expect to see in the short term, mostly logistical growth headwind that underpinned the risk of market technology being below the bottom of our medium term growth.

For the current year, we have.

We have taken actions that we hope will mitigate pressure is on our nonrecurring market technology revenues in the coming period. For example, weve develop new ways of improving execution for important project phases in a completely virtual environments and leave.

And Weve increased hiring of technology staff as part of an effort to quicken the pace of our full slate of existing implementations to their production phases to it.

The increase technology Stockman's large project delivery project has had an impact on short term margins and we are managing this expense increased carefully as we continue to be focused on driving margin expansion as the business continues to grow.

Taking a step back from the near term impact of the pandemic. Our convection has not changed about the medium to long term opportunity for market technology.

Major component of this strategy is our commitment to operating and providing best in class solutions across the transaction lifecycle, our marketplace services platform, which launched in June gives clients. The complete transaction lifecycle functionality on a single platform and we've seen positive response and growth in demand for the platform for the quarter.

In 2020 year to date, we've increased the counting sales to entirely new client the vast majority of which have chosen to implement our next generation SaaS enabled services.

Specifically, we signed eight new market infrastructure, operator clients source path offerings, and we've signed 12, new trade surveillance clients. So far this year. We've also had solid success and expanding our existing client relationships and our trade surveillance business.

We look forward to updating you both in addressing the near term challenges, we are navigating as well as our progress in ramping adoption of our next generation products and services in the coming period.

Now, let me take a moment to address todays announcement that Mike will be retiring in early 2021. After a very distinguished 30 year financial services career Mike.

Michael joined NASDAQ in 2016, as CFO to lead a dynamic team responsible for finance Treasury strategy Investor relations facilities and risk management.

His extensive operational expertise and industry reputation for strategic thinking creative resource management, and managing for competitive and evolving landscape beat him a perfect fit for us during what has been an especially important phase in our growth at the company.

Now I'd like what has been an invaluable member of the executive leadership team. During his time at Astec. He played a particularly important role in our management team's strategic review of our business in 2017 after.

After which we realigned our vision mission and corporate strategy to embrace our core strength in data analytics and technology, our strategic pivot as we refer to it Mike.

Michael It's been played an instrumental role in the execution of our strategic pivot. For example, if you work closely with mean to establish a clear consistent capital deployment and return framework, including an annual review of our business portfolio and effectively manage the balance sheet to improve liquidity and lowering bar and lower borrowing costs.

Michael it's been a wonderful partner to our business unit leaders, bringing creative ideas as well as the structured approach to cross business unit initiatives. He is.

He has worked extensively with our business units to evaluate and execute on organic and inorganic opportunities and he oversaw the launch and development of our venture investment group.

Michael it's been an outstanding CFO, bringing focus drive creativity and determination to his role every day and on behalf of the entire team at NASDAQ and the board of directors I want to thank you Michael for his leadership and dedication to our company into our value.

When Mike will retire at the end of February next year, I'm very pleased to announce that and Venison, who currently serves as senior Vice President controller, and Chief Accounting Officer will become executive Vice President and Chief Financial Officer.

And joined NASDAQ in 2015, and 2017, she's been leading an extensive multiyear modernization of the company's financial operating operations infrastructure. These efforts include nasdaq's migration from our financial consolidation and reporting system, leveraging workday financials. The introduction of a new enterprise resource planning process.

Warm and surrounding systems and the development of a corporate data strategy and intelligent automation program that are delivering interesting insights and powerful efficiencies.

Additionally, and added for her responsibilities in 2017, when he took on leadership, but the financial planning and analysis team, which partners with the business units and expertise to develop to maintain our detailed forecast and budget.

And at the dedicated leader with a deep understanding of our business and our long term vision. She has made significant contributions NASDAQ financial soundness. Her five years with the company and our diligence and expertise will be important factors in our growth strategy.

The combination of experience and leadership skills and knowledge of NASDAQ business and financial operations and is the obvious and best choice to become Nasdaq's next CFO Im excited for our analysts and investors to meet and in the coming months as Michael and and work together to transition the role between now and the end of February.

As I wrap up I will summarize by saying that we are very pleased with the strong results. We delivered in the third quarter and we remain focused on advancing our strategic mission.

Results highlight the strength of NASDAQ diversified product offering and business model capitalizing both on opportunities presented by this year unique capital market backdrop, including elevated trading volumes rising index valuations and strong IPO issuance.

We believe that our ability to execute against the significant demand in the logistical challenges of the COVID-19 has enabled us to continue on our journey, while prudently advancing technology and analytics provider and with that I will turn it over to Michael to review the financial detail.

Thank you Dana I was kind remarks, and good morning, everyone. I will first provide comments on the quarter and then a few remarks from our decision to retire.

Commentary on the quarter will primarily focus on our non-GAAP results and all comparisons will be to the prior year period, unless otherwise noted reconciliations are U.S. GAAP to non-GAAP results can be found in our press release as well as in a file located in the financial section of our Investor Relations website at IR Dot NASDAQ Dot com.

Start by reviewing third quarter revenue performance as shown on page three of the presentation and organic revenue growth on page four and 14.

The $83 million increase in reported net revenue of $715 million is the net result of organic growth of $70 million, including 13% organic increase in market services and 10% organic growth in the non trading segments.

Our million dollar positive impact from acquisitions, and a $9 million favorable impact from changes in foreign exchange rates I would now.

I will now review quarterly highlights within each of our reporting segments I'll start with information services, which as reflected on page five in 14.

$40 million or 20% increase in revenue.

Including a positive 3 million dollar impact from the acquisition of slow this under $1 million positive impact from unfavorable changes in foreign exchange rates organic revenue growth. During this period was 18% primarily reflecting very strong growth in our index business had positive contributions from each of the investment data and analytics and market data businesses.

Operating margin of 65% increase to 100 basis points compared to the prior year period.

Market technology revenues as shown on pages, six and 14 increased $2 million or 2%, primarily reflecting a positive 3 million dollar impact from favorable changes in foreign exchange rates.

On an organic basis revenue decreased by $1 million or 1% increase in software as a service to service surveillance revenues were more than offset by lower software delivery and support revenues and lower change your question advisory revenues.

Annualized recurring revenue or a R.R. rose, 5% compared to the prior year period.

Operating margin of 10% in the period was down eight percentage points from 18% in the prior year, putting margin into a 12 month contracts, which eliminates quarter to quarter volatility from seasonality and other factors. The trailing 12 month margin is 16% inline with full year 2019 level.

As I noted per progress has been impacted by the pandemic induced near term growth headwinds. However, we continue to expect margin improvement as the business expands over time.

Turning to corporate services on pages, seven to 14 revenues increased $8 million or 6% organic revenue growth was $6 million or 5%, reflecting an increase in us listings revenues and increases in both governance solutions and IR intelligence revenues.

The operating margin of 39% for the segment was up 300 basis points from the prior year period.

Market services net revenues on pages, eight and 14, sorry, $33 million or 15% increase excluding the positive 4 million dollar impact from favorable changes in foreign exchange rates. The organic revenue increase was 29 million or 13%.

Organic increase during the period, primarily reflects increases in cash equities and equity derivatives that revenues due to higher industry trading volumes.

The operating margin of 59% for the segment increased two percentage points year over year.

Turning to pages nine and 14 to review expenses.

Non-GAAP operating expenses increased $29 million to $346 million, the increase reflects a $17 million or 5% organic increase a $7 million increase from the impact of acquisitions and a $5 million increase from an unfavorable impact of changes in foreign exchange rates.

Sure organic growth in expenses, primarily reflects higher compensation expense professional fees and infrastructure costs.

Actually offset by lower travel and event spending.

Turning to slide 10, we are adjusting our 2020 non-GAAP operating expense guidance to a range of $1.36 billion to 1.37 billion.

For $1.33 billion to $1.36 billion previously.

The revised range is driven by two factors first changes in foreign exchange rates, particularly the weakening of the US dollar has manifested in a $10 million increase and the top end of our guidance rich SEC.

Second as we've continued to deliver especially strong organic growth in both of our trading and non trading segments higher expenses, including accruals of performance based compensation make us increasingly likely to end up at the high end of our expense guidance range.

Thats a full year context, the 1.37 billion at high end of our revised expense guidance range implies a 4% organic increase in expenses while in the first nine months of 2020, the company delivered organic revenue growth of 12%.

Now moving to operating profit and margins non-GAAP operating income increased $54 million in the third quarter of 2020, and the non-GAAP operating margin was 52% compared to 50% in the prior year period.

Net interest expense was $24 million in the third quarter of 2020, a decrease of $2 million versus the prior year.

The non-GAAP effective tax rate was 26% from the third quarter of 2020.

The full year 2020, we continue to expect the non-GAAP tax rate to be 20 between 26% and 27%.

Non-GAAP net income attributable to NASDAQ for the third quarter of 2020 was $256 million or $1.53 cents per diluted share compared to $212 million or $1.27 per diluted share in the prior year period.

Turning to slide 11.

Increased by $89 million versus June Thirtyth, primarily due to an increase in the euro bonds book value caused by a stronger euro.

Our total debt to EBITDA ratio ended the period at 2.4 times unchanged from 2.4 times at the end of Q2.

During the third quarter of 2020, the company paid a dividend in the aggregate of $81 million and repurchased common stock the amount of $34 million. The company has repurchased $186 million year to date through September thirtyth, largely completing our objective to use share repurchases to offset dilution of equity compensation and other sources of growth.

So.

Now before I turn it back to the Q and a session a few comments about my decision to retire.

Why was the decision I have contemplated for a while now it certainly comes with mixed emotions. It has been such an honor and a privilege to work for Dana The board and this incredible company and I am extremely excited about the vision and strategy and the great opportunities that we have ahead of us to continue to grow and expand as a technology company, serving the capital markets.

And beyond.

Most importantly fortunate to work with colleagues who are normally intelligent innovative driven and are just good people consistently exemplify nasdaq's values of integrity and teamwork.

However, I've been in the exchange industry now for a long time going back to the Ninetys when exchanges for mutual broker own not for profits and while.

And while I can't say for certain I do believe I hold the record for the most consecutive quarterly conference calls as CFO for an exchange group with this call being my 72nd in a row.

And that's why the decision was so difficult for those of you.

For those of you, who like me or Canadian Im sure Youll recall, the ubiquitous early retirements inducing freedom 55 commercials will undoubtedly understand the indelible target that left on my psyche.

And finally, we forecast of macroeconomics revenues and earnings but the one thing that no. One can forecast uncovered has certainly been a great reminder of this is the time of capability will be given to enjoy the fruits of our labors.

Thankfully I have no current health concerns, but the point is you just never know.

So despite the temptation to stay and partake in the exciting initiatives and growth we have in front of a certain aspect I have decided to stick with the five year plan five year timeframe that I shared with the Dina and importantly, my family My first accepted this position.

It does make line decision easier is that my knowledge of the strength of the team I am leaving behind and I could not be more pleased to add data center will be taking on the CFO role.

And has been a key member of my management team for technical expertise proven ability to drive change through innovation at or collaborative approach to problem solving makes him. The ideal candidate for this position. She is also an absolute pleasure to work with and as always focused on doing what's best for the organization.

Confident that she is the right person to help drive Nasdaq.

So every plenty of time next quarter to say proper. Thank you to the board into a Dina to all my colleagues past and present to you. The investors analysts at this point ill just say it has been an honor and privilege to work for and with all of you.

So now I'd like to just drop that Mike and walk away, but I think we have to turn into Q and a session now so I'll turn it back to the operator.

Thank you as a reminder to ask a question you'll need to press star one on your telephone to withdraw your question press. The pound key we ask that you limit yourself to one question. Then please re queue. So that we can get to as many questions as possible.

Our first question comes from Rich Repetto with Piper Sandler Your line is open.

Yes, good morning at Dana Good morning, Michael and Michael.

Michael despite that elegant explanation.

Still too young to retire we think.

Thanks, Alex.

Im Ken Congrats and you've done a great job.

Anyway. So my question is first on the information services on the index revenue.

So nice upside surprise I guess edina on Michael can you give us a better feel for how the breakout we see that the revenue grew by more than 50%, but the.

The futures and options volumes grew almost double so can you just give us some more color on how we can model this a little bit better given your agreements with the CMV and also the license.

Yes that grew by over 50% as well so how do you sort of March.

Model this a little bit better than what we have.

Sure. So thanks, Rich I think Thats. The first thing to note is we've we've kind of giving you a little bit of a guy in the past with bay that that'd be index futures revenue will kind of ranges from 10% to 20% of the overall revenues for the index business and it obviously as can slow based on volumes. So it's not we can't give you a percentage every quarter.

This quarter was 21% so as Jeff just at the top end of that or just above the top end of that range.

And I think that that shows you that the strength of the fact that we have a great relationship with Sammy and and I think that we have a long term partnership with Amgen and the indexes that we have to do the math 100, Sammy is particularly strong index. This year and one where we see a lot of investor appetite both to invest in.

Yes in the product as well as to use the futures markets to help hedge and manage their portfolios.

Okay, Thats my I'll get back in the queue. Thanks rich.

Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.

Thanks, Good morning.

This open again, you could expand upon your comments on the market Tech side, obviously, the short term dynamics around some of the headwinds with revenue, but if we think about the fourq you sequential build that typically happens in that segment, how we should think about in the context of this year.

Sure I think that if we've kind of great.

What we are trying to convey the first is that they are our growth, which is really the recurring revenue streams that come from our newer offerings that are soft oriented as well as our trade balance business. The catherines hit those continue to see Youre seeing continued growth at 9% growth and we can continue to see that that will will.

Via a strong hurting our franchise and I think that we should recognize also that that those types of implementations are more simple theyre just they don't take as long to to put a spring.

Bring a company into into the market, whether it's the marketplace services platform or if you bring them onto our trade sounds firmer sales platform. It.

It's a bigger project, where we still do.

Significant on from deliveries, whereas this year, we've definitely seen more of an impact of that and if you think about it. If there is a lot of collaboration that needs to go on between us and the client on particularly the post trade deliveries and we have several puts re deliveries that were working on at the moment and the pandemic meeting.

Harder have that collaboration and kind of created.

Challenges in terms of keeping up with that.

The original delivery schedule and we've gotten we've gotten better as we've gone through the year and the clients also have gotten more used to it as well, but that I think definitely created some challenges and then also just making sure that in order for us to make sure. We're managing the pace of those we have been making some increases in the tech team to make sure that we can we can deliver against that.

And that's kind of constrained environment and those are those are short term issues and owner due to the tax revenues are nonrecurring because their delivery revenues, but there. They continue to be an important part of the business and then on change request, it's really a matter of arguably we actually have the capacity to implement change request when the clients.

Looking for them, but when they are not we obviously apply those people to there.

Implantation project, but we are finding that clients are making change request for sure, but just have a lower demand for those this year because they are managing through other issues in their own organization. So I think you should assume that are shorter term trends that are really driven by the current environment against the nice long term trend in terms of us increasing the pace.

Enter the sales that were getting through staff.

As well as continuing to move more of our products into a more flexible delivery mode with NFV. So I think I'm, hoping that gives you enough backdrop.

Great. Thank you.

Thank you. Our next question comes from Jeremy Campbell with Barclays. Your line is open.

Hi, Thanks.

And Michael just wanted to say congratulations I know, we still have a few months left but it's been a pleasure working with you and best of luck.

Quick question on asset manager consolidation.

We ended up a bit over the past year and reportedly the the pipeline is pretty active right. Now I know ask lenders are kind of a major client base of NASDAQ and different parts of the ecosystem, but how should we think about the pluses and minuses of asset manager consolidation as it relates to your nonrecurring revenue stream and NASDAQ and could like some of this post deal.

Great can be another potential near term headwinds from market tuck.

Well on the asset manager side, we don't actually have a lot of asset managers with clients and the Mark Hexis.

If we tended to really focused in on market infrastructure operators as well as review.

Dealer and we do have a small business that weve been growing in the surveillance business Forum I client I think market Tech won't asset manager validation won't be a significant issue. There and then if you look over in the information services business, we have thousands of asset manager clients and so you are seeing you an occasional.

Compensation and Thats, where we also work with them to figure out if there lets say both the decline for investment clients. Then we'll work with them to figure out what is the overall enterprise value going forward that they should that we should be able to charge for investment on a combined basis versus a single basis, it's really a matter of us working with the client.

And certainly if a client one client the mats compliance and the other was not that we have a chance of actually increasing our penetration and our clients as they combine no I think thats the way to look at it for Veeva.

And same with.

Anything blondo and others, which are still very small and growing this is a huge sea as you know a cost of energy is out there for us to field sales on the trading side of the business I don't anticipate that that will have a real impact because.

They are basically good managing more AUM.

With their trading organization and that shouldn't have a significant impact on how much they are trading and how you're managing a portfolio. So I don't see an impact on the trading side.

Great. Thank you.

Thank you. Our next question comes from Alex Kramm with Qbs. Your line is open.

Hey, good morning, everyone.

Just maybe better for the for the Investor day, but I do want to ask about M&A.

You have clearly established a pretty strong track record over the last few years.

Partially helped by Michael and you, obviously as well, but the.

If I look into next year.

Rates, although until 2021 is going to face a really tough comp on the trading side and on the on the index side and your multiple has expanded substantially. So im just wondering is this are you thinking differently about maybe bigger deals in the space and if so to what degree which actually.

Look at something that has a little bit more transactional revenues with it and where that could be more of a cost driven value proposition. So maybe a broader update on M&A will be great. Thanks.

Sure well, we will spend a little bit more time on that at the Investor day, Alex. So I think that it is not an area that we will give you a sense of our areas, but I'll give you a little bit of a previously I think what we've said all along is that we look at acquisitions as part of bidding into our strategy that we don't just look at every acquisition out there.

Opportunistically, we have really developed a strategic next is around where we want to grow in how we want to grow.

And where we think that we can do everything organically and where we might benefit from from acquisitions that could catalyze growth and or expand our clientele and I think that the areas that we have been primarily focused on we have said this many times isn't expanding our architect business and expanding our information services business.

In terms of growth you're part of the of the sector in the industry and then on it on the marketplace and the marketplaces I think that we would make targeted acquisitions. If it really makes sense in terms of.

The synergies on the cost side, instead, there or the ability to generate scale, but also that further our strategy in any asset classes are really strong.

And all I can say is that we looked at a lot of things, we do always put them within the strategic framework. So that we also stopped looking at things on pretty quickly if it doesn't really fit in.

And and and we will certainly not shy away from doing the right. The right transactions that further our strategy, but ours, but that hasn't changed I mean are we are not shifting our strategy.

From what we've been saying over the last two years. So we'll we'll spend a little more time on that at Investor day.

Thank you and our next question comes from Brian Bedell with Deutsche Bank. Your line is open.

Great. Thanks, good morning, folks and congrats Michael so.

We'll talk to you for another quarter, but I just want to say congrats.

So just on the just on the sustainability of that information services revenue is extremely strong this quarter.

Slide gets it's easy for you to now exceed the top of.

The top of the of the 5% to 7% range, even with the softness in.

In market Tech, but honestly, if you look at that info services moving into the fourth quarter and into next year.

Obviously, depending on on.

Mines at CMG in your contracts and F.

U.M. levels, but it seems like there would still be an upward trajectory.

In that line, so just maybe some commentary about that.

And to what extent.

Any audit fees positive.

Positively impacted market data and then just thoughts about market data revenue coming into 21.

With consolidation say in the online brokerage industry for example, with moves from up in a merger and your ability to recoup that cost okay.

Okay great.

Okay. So.

Within information services, I think one of the things that I.

Equally pleased about the quarter is to show that there is really solid growth across all three sub segments within information services. So you have growth within the data analytics franchise with the investments Logans candle and other other assets. There. We have five has been growth in market data and I'll cover that in a minute and then we also have very strong growth in our index franchise.

And while there are beta elements to the index business I think that we have to recognize that even when we saw some.

Like back in the fourth quarter 2018, where we saw the markets really go throughout most of the period, we continue to see investor inflows into and Thats 100, other announcing indexes, which really made.

Made it to that it buffer that buffer the downward trend in the overall market cap. There. So we do think that there exists a strong secular interest and appetite among investors to invest in and asking 100, the biotech index semiconductor other maddock indexes. In addition to our beta franchise and event we've seen that.

Through both the kind of upward market swing, but also even in March that largest inflow week that we had was was the toughest market as markets refining the mode.

We saw something like four or $5 billion of inflows into and out of the 100.

We just think that the indexes that we have are more along.

Align with long term theme.

But but I also would say there is obviously some beta component there and on the trading.

We are making sure that we continue to generate growth there by launching new products and making sure we gathering AUM into their products as well and that will be a testament to our ability to do that over the next the next several years to continue to expand that franchise.

With regard to the market data business.

We are continuing I think one thing that this year showed that the very resilient business.

And we have done a nice job diversifying the clientele, which earlier in the year, we mentioned could create some challenges in terms of clients who are some of the newer clients and other parts of the world, but actually we found that we continue to see really strong demand from those clients to continue to provide and expand.

Data that they're providing to investors around the world. So that's showing up in the numbers and in fact, our audit revenues for the quarter and significantly down from last year third quarter.

In our revenue for the year is down from last year. So we're actually not collecting as much on the on the Backfilling, we're really driving the growth that we're seeing with the quarter. It's really just from pure new new customers.

And on the expansion of our current clients and to.

In terms of the consolidation and the impact from the online brokers there will be some impact from that and we've been we've known that for a long time. The nice thing is that it takes long time to close this deal. We've had a lot of time to work with good clients and continue to make sure that they are taking all the products that they can take from us as they become a combined.

Innovation.

We do also see continued strong demand coming from new.

Fintech clients and so I think that there's a nice balance there, but we've always said that is a low to medium term low to mid single digit grower that the more mature part of our business. So hopefully that gives you more context.

Yeah.

And Brian the audit number was $2 million in the quarter compared to as an unusually high quarter of nine in Q3 of 19.

Great. Thank you so much for all the color really for sure.

Thank you. Our next question comes from Mike Carrier with Bank of America. Your line is open.

Hi, good morning, and thanks for taking the question.

Hi, good quarter, but just wanted to get enough be Bob on regulation given that you have today working with yet again something that is a good market data just wanted to get your take on particularly from a process standpoint on how this is potentially different from the typical.

Maybe what to expect.

Sure well to be honest, we're reading about that the same.

The same way you are so I hope that I understand that there's nothing that.

We're reading and at the same time, you're reading it so I think that the bank.

The one thing I would like to say and secondly, I think that we've been able to demonstrate multiple times over a decade that we have a highly competitive market model that our products are subject to competition and the data base.

That we provide great value for investors and participants alike in the market data that we provide and I think we do it in a very responsible way and I think we've proven that both to our customers.

For our customers and we do have very good relations with our customers on market data from some of the things.

Some of the things that you see.

In the paper, but I have to say behind the scenes. We continue to have very strong relationships across our clientele as well as the fact that in addition to that we pass it on ourselves several times now.

And and import like situation and I think we've done we've been able to prove ourselves over and over again. This is a competitive space.

Price, our product competitively and that we create great value for four people those people who use.

The data so I think that we remain very confident Mike and the way that we manage the business as well as how we deliver product and we're we're happy to engage with whoever wants to talk about that.

Okay makes sense, thanks, a lot.

Thank you. Our next question comes from Owen Lal with Oppenheimer. Your line is open.

Okay. Good morning. Thank you for taking my questions. So first of all best of luck in the future selfless Mike.

Thank you very much a question yes.

Yes.

So for my question could you please give us some update on the NASDAQ private market.

Yes, and Wales back impact the private market and change the way you look at the space. Thank you.

The person to ask the question.

So.

I'll now turn private market continues to have solid activity. This year. It has been lower this year in terms of the overall level of tenders that have been issued in a private markets. This year.

But generally speaking we continue to have good clientele in a strong strong service we offer.

The company's them and they are still taking advantage of mass.

Managing their liquidity in the private space, but it's been a little bit.

Decelerated a little bit this year, just based on I think really the volatility and understanding and the way that people are managing their businesses, but if you're asking I think thats a broader question is because of all of the different alternative ways that companies can now have ended the public market are are they going to continue to stay private longer and I think that that's good.

Good longer term question, knowing that we're going to have see play out. So our company is going to tap into the public markets earlier in their lifecycle, which may make it to that they have less of a demand to tenders.

I don't think we can know the answer to that right now I think that we are obviously seeing a lot of.

Lot of growth companies, but still quite mature quite quite.

Full on in terms of their overall ability to tap the public markets. I mean, we're still seeing high high valuations and and strong performance companies coming into the public markets, both respect and through a traditional IPO than it's been a very active year, but I also think that there aren't good.

Thousands of private companies that will continue to mature in the private space before they tap the public market and so I personally think that the private market will continue to have a huge opportunity. We're really frankly barely scratching the surface of private private company liquidity right now.

We have a lot more we can do there but.

But it's a good question as to whether more companies will come out to the public market sooner and I know the answer yet.

Thats very helpful. Thank you.

Thank you. Our next question comes from Alex.

Alex Blostein with Goldman Sachs. Your line is open.

Thanks, Hey, guys good morning.

Question for you around market Tech again, so understanding the near term margin dynamics could could sort of fluctuate, but I was hoping you could spend a minute on just kind of walking us through the framework for margin improvement opportunity here over time, and what I'm really kind of trying to get it that's kind of what's the incremental margin on the rps in sort of the revenue growth that youre seeing there.

What's the incremental margin on some of the on Prem initiatives you guys have.

And really just kind of incremental margin on the order intake.

Sure. If those are the best three kind of buckets to tackle it, but but something along those lines would be helpful. Thanks.

Sure I'll give it to answer that on detailed today, something but we'll take it back and try to figure out how we can help with that as we get into Investor day.

I think that in terms of.

The margin dynamics I think what we've been saying all along can you be very much the case, which is the more that we can move our clients into a snack offerings. So whether its markets our market surveillance offering as we've launched as a SaaS offering this year, we've seen strong pick up there and.

And that and our trade surveillance offering is always an SAP and those those so.

Those offerings definitely allow us to have a higher overall margins just because of the implementation time is shorter and.

And is that recurring revenue stream and so it's a different composition of revenue that deliver that content.

On the margin front, whereas.

Whereas with the on Prem implementation.

We obviously manage to to the margin that we think is the right way to go but we do often do fixed price contract there there's some.

If the implementation ends up being longer more complex. It can make it like that can make it to that we end up having to put more resources to it and that and that can have some margin impact in the short term on implementation and that's what's happening this year, but over time I think the more we can show that we are the new sales for generating our NFS.

Which is not much more flexible platform and fast driven and or because some of the NSF deliveries are still on from summer on our staff as well as our surveillance business.

The Gulf.

The more we can drive to that higher margin and so it's up to us to show you that shift in the in that order intake.

The type of order intake that we're taking in and Thats something that we want to make sure that we provide more context around at Investor day viewing.

Thank you. Our next question comes from Chris Harris with Wells Fargo. Your line is open.

Great. Thanks.

Do you think the paradigm has changed for trading in us equities and options.

Really I guess, what I'm wondering is.

Whether you think the volumes that we're seeing in these markets are going to be sustainable and why it's so.

I think yes.

I think that there there are two key factors that are in our opinion are taking bind to different level. This year. One is overall volatility and uncertainty and that always makes it so that you've got investors that more different opinions right. So when there are not that different views on what can happen next and how the economy is going to progress you have you have.

More volatility because because there had been in target express the market and on driving more volume.

At the same time, we also have a lot more younger retail investors coming into the markets as well and so I think that has to do with with.

With the fact that we do have more engagement around with from retail investors and those retail investors coming into the market also driveline stop now. The question is are those retail investors seasonable trends and I think that as we've been listening to the online brokers speak about it and we've been talk.

Talking to our own clients about it I think that there is a view that there is a new wave of investors have come in on the back of Derek missions, which takes Donna friction.

The market and therefore increases overall access as well as the fact that the macro environment has created some really strong investment opportunities.

For retail investors and I think that is a longer term trend and a healthy one and an exciting one but I don't think every one of his retail investors will be here over the long term, but I think I think we are seeing a secular shift in getting more younger investors engaged in the market and I think that could create a more sustainably higher grade.

The environment than what we saw in 2017 18 19 timeframe.

But I think that time will tell but that is our I think that our overall view speaking with industry professionals, who really understand the nature of the industry is coming in.

Got it thank you.

Thank you. Our next question comes from Karl Voice with KBW. Your line is open.

Hi, good morning.

Just on the listings business I know you cited the strong IPO market and some switches as well in the quarter.

Good I guess, it's still a little bit surprising that revenues grew by 5 million sequentially. Given those initial listing fees are amortized over several several years. So first part of the question is there anything else to note that drove the increase there that's more onetime in nature or should this be sustainable and the second part of the question.

Youre still price below the NYSE for certain tiers and can that liftings business, given the strength of the momentum you're seeing the business.

I know you probably say its not necessarily because of low fees because the value proposition. Just wondering do you see potential for pricing tweaks as you look out over the.

Look out over the next year. So thanks sure well one thing just to note is that the amortization of the initial listing fees is really to get the fees that get amortized that amortization schedule did change a bit few years, a couple years ago. So that's a little shorter than it used to be but it but you're right that the initial listing fees do get amortized.

I think Michael it's David.

Phil over over two years or two to it yes it depends.

Depends its two to four years since the time frame, yes, but we also did we also did have.

There was some pricing that was taken at the beginning of the year on the sustaining fees as well.

Thats flowing through what's been flowing through all the quarters. So far this year.

So until I would just say that first of all there no kind of one time fees that are that are creating that that increase in the quarter. It is really.

This is the nature of the strength of new issuance market, coupled with the strength in our corporate solutions business.

And those are recurring revenue stream.

I did I think thats important insight, but but I think that because of the fact that new issuances have been high throughout the year, you're starting to see that compounding effect of that as we as we get more and more issuance.

Market, and then Dave and start to generate annual listing fees, which will then create a lift going into 2021. So.

The good news is it is kind of really just comment on the strength of new issuances I just want to make sure you know that the amortization schedule is a little different than it was last year.

Fair enough and then just on the potential for pricing tweaks.

Right.

Yes, we are we're very prudent in the way that we manage our fees. We're very proud of the fact that we deliver a really strong value to our clients and we never want to give our clients any reason, even consider an alternative and Steve do play a role in that I wouldn't say that.

Right its not the reason they switched to NASDAQ.

It can be a door opener.

Good for them to consider paying $500000 to lift on your and they're paying $160000 lift here.

And they are getting frankly in our opinion our superior service here then it allows us to open the door to a conversation and then work with them on all the other aspects of our value proposition to have them move over so I would have to say that the differential is a catalyst to conversations on switches.

And for US we think.

We think that we offer Easter.

The structure that is a strong reflection of the value that we give to our clients and I think it.

So we feel good about how we tier our fees and the Max that we charge and we will continue to make pricing changes.

Periodically to reflect the increased investments, we're making in the business, but we don't see.

Reason frankly to make a big change in our views of the top.

Thank you.

Thank you we have a follow up from Alex Kramm with Qbs. Your line is open.

Okay. My follow up was actually just answered on the listings, but very quickly that maybe on index. Another numbers question.

You gave the bag as a trading contribution can you also give the contribution to exact number for this quarter.

Sure I know it's.

Michael you might have been more readily available, but I know in any given quarter to 60% to 65%.

Yes, I guess this is Ed do you have the exact number for this quarter.

It's in that range I think it's in that range Alex.

But probably towards the lower end since the announcement of the features on the high end right.

Fair enough. Thank you.

Sure.

And just to make up the difference is the data that we see the index data index.

And the futures volumes of the three components of the index.

Yep. Thanks.

Thank you we have a follow up from rich Repetto with Piper Sandler Your line is open.

Yes, hi.

Couldn't let the call go by without asking about financial transaction tax.

Yeah.

So I guess the question is what are you doing to prepare you haven't discussions with legislators I know certainly there's been a lot in the press about potentially moving is that really possible. So what are your thoughts on.

On all this.

Debate on the financial transaction.

Transaction.

Sure. So I think the first thing to say is we're heavily engaged with the New Jersey legislature and the Governor. We also have been receiving inbound calls from governor from other state to certainly would welcome that.

The data center, operator, or or a company that uses data centers and their needs as well.

Think about the way that we manage our infrastructure is that we don't actually own any of our data centers. We work with FX is our partner today.

And so we do have flexibility we've moved our data centers and the path that we we used to operate on a couple of Connecticut, We moved higher Ed.

Several years ago, and then also what used to be in Ashburn, Virginia for our backup or now much higher. So we do have experience moving data centers. We've also moved or getting center in Sweden. So we are familiar with what that Dave and I think that obviously in this particular context, it's not just that we have to work very very closely with our clients because our.

These are all embedded in our data centers as well and they've built infrastructure to support connections between Chicago and New Jersey. So there is an investment that would need to be made in order for us as an ecosystem to choose to go to a different state, but it is absolutely feasible to do it I think that we what we've made clear is that.

We certainly.

Operate well in New Jersey, and we have well, it's now he could come here and it.

And if we don't think there is a risk of attack then that's something that would obviously be our first choice, but if we believe that they could impose attack just because our datacenter relocating their state and that tax rate first in the market that then less participation from investors, particularly retail investors, then widen spreads and lower liquid.

City, we have to do the responsible thing and find it an environment that doesn't introduced.

And every other cases, you know rich that transaction taxes have been implemented in other countries. They they've seen really negative effect on liquidity and sprint and so we have a lot of proof points to say friction manner.

Great Depression, and it will be next year will have a negative impact right at a time when given the volatility we really need to maximize liquidity in the market.

We are serious about it and we are heavily engaged with with New Jersey and other states I understand the best long term upward.

Thank you I just.

I think there is a coalition of London exchanges to sort to represent your position I think NASDAQ is part, but I haven't heard as much.

Outside the <unk>.

About it I guess.

Your mother.

I would just say that there is a wide range of participants.

Market participants and exchanges involved in understanding that and and involved in speaking with the legislature on this issue.

Just quickly to get back out cramp question the specific percentage.

Revenue.

In the quarter within our indexes as was 63%.

And then just to add to that the data it was about 24% on the index licensing side.

On the.

Interest licensing side.

24 to 21, okay. Thank you.

Okay. So thank you Rick.

Thank you.

Sure Doug Thank you.

Thank you. Our next question comes from Ken Hill with Loop capital. Your line is open.

Hey, Good morning, first just wanted to say congrats to Michael and on that transition there.

Good questions on the queues innovation suite you guys launch I know I was just curious from an economic perspective to NASDAQ or there are the new products being rolled out.

Does this have any different pricing.

Or any different economics for NASDAQ and then maybe like a lower cost product I know you are rolling out with the queues.

For an alternative type of product there.

And then I guess just thinking forward are there any other additional products you might be looking to slice and dice a little bit differently here within that the index suite sure.

Sure. So I want to first point, we don't tend to talk specifically about how we structure with each individual partner, but I would say that we're very comfortable with how we've we've built this partnership with invesco and and to make sure that that we are getting properly compensated for the night at the indexes and so I think we feel.

First of all that.

Thanks to the new products that they choose to current products were very happy with.

Regarding.

In terms of.

In terms of other new products that actually on part of index team, they're always considering new strategies and new ways that we can look at what our benchmark like the NASDAQ 100, and biotech as well as more thematic indexes to run creativity to investors and so we are on.

Currently working with our index partners to find new ways like nice it. So for instance, I think with victory, where we also have implemented.

Now to 50, which is the next 50 stock will open US 100 that we have different ways that people can choose to participate in and the broader an aspect franchise.

And partners.

Hey, thanks for the color there.

Thank you and we have a question from Brian Bedell with Deutsche Bank. Your line is open right.

All right all right great. Thanks for the follow up.

Just on on the equities market in terms of pricing.

In revenue capture as we sort of moving into the end of the year to date.

Two dynamics going on there obviously, one we're seeing more volume getting executed off exchange I suspect thats, a part of the retail dynamic in market maker dynamic maybe if you could just talk about that and whether there's any.

Interest in pricing initiatives to capture more of that share.

And then.

And any sort of thoughts on members exchange and that was it seems like that was delayed a little bit.

But in terms of pricing, whether you would be.

You know doing any preemptive pricing.

I guess that exchange coming into the fourth quarter.

Okay. So.

Equities pricing the first thing I would say is as you. All know is it something that we work on very dynamically and we make small changes pricing on it.

Monthly actually within within their cash equities business.

And so I would say that we're always watching that and working with our clients understand how we can bring attract flow into the Nasdaq exchanges.

And in terms of.

The retail trying to get more of the retail to come onto exchange from off exchange you are correct that the retail trend has driven a higher level off exchange volumes and so those those orders are not getting back to the right number that we have on market, we'd love to get after more of that but we also.

Reflecting the fact that the intermediaries PMR foreclose scheme, that's different than our fee scheme. So we have we have to work within the exchange fee structure that we are allowed to operate in and that will limit our ability to kind of bring in a lot of a lot of that new retail off its going up exchange, but we are always.

Talking to them about on the margins how can we get more of the retail flow to come straight to the exchange.

I think that in terms of Mack.

And the way that we're managing that we are highly engaged with our clients we have been out ever since they announced that they were forming them back and we take every competitor seriously and to the extent that we see changes in behaviors. Among our clients. We will on to make sure that we are maximizing and optimizing our platform.

And we we are having that dialogue and it all the time, so I wouldnt say that you're going to see dramatic things that more ongoing efforts across our pricing perspective to manage to that to that competitor to the extent they have early.

Great Thats very helpful. Thank you.

Yes.

Thank you and there are no other questions in the queue I'd like to turn the call back to Friedman for any closing remarks, great. Thank you very much well I just want to thank you all and I do want to again, thank thank Michael for.

For just an amazing time together and we've had we've we've really you really are great partners and he's also Donna spectacular job preparing for the role.