Q1 2024 Nasdaq Inc Earnings Call
Operator: Good day, and thank you for standing by. Welcome to Nasdaq's first quarter 2024 results conference call. At this time, all participants are in a listen-only mode.
Good day and thank you for standing by welcome to Nasdaq's first quarter 2024 results conference call. At this time, all participants are in a listen only mode.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising that your hand is raised.
After the Speakers' presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you didn't hear an automated message advising your hand is raised so which are your question. Please press star one again.
Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Ato Garrett, Senior Vice President, Investor Relations. Please go ahead.
Be advised that today's conference is being recorded.
Speaker Change: I would now like to hand, the conference over to your first speaker today to add to Garrett Senior Vice President Investor Relations. Please go ahead.
Ato Garrett: Good morning, everyone. And thank you for joining us today to discuss Nasdaq's first quarter 2024 financial results. On the line are Adena Friedman, our Chair and Chief Executive Officer, Sarah Youngwood, our Chief Financial Officer, John Zeka, our Chief Legal, Risk, and Regulatory Officer, and other members of the management team. After prepared remarks, we'll open the line for Q&A. The press release and earnings presentation are on our website. We intend to use the website as a means of disclosing material non-public information and complying with the disclosure obligations under Regulation FD.
Good morning, everyone and thank you for joining us today to discuss Nasdaq's first quarter 2024 financial results online our Edina Friedman, our chair and Chief Executive Officer, Sarah Young Wood, our Chief Financial Officer, John Zecca, our chief legal risk and regulatory officer and other members of the management team. After prepared remarks, we will open the line for Q&A.
Speaker Change: The press release and earnings presentation are on our website, we intend to use the website as a means of disclosing material nonpublic information and complying with disclosure obligations under regulation FD.
Ato Garrett: I would like to remind you that certain statements in this presentation and during Q&A may relate to future events and expectations and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1994. However, actual results may differ materially from these projections.
I'd like to remind you that certain statements in this presentation during Q&A may relate to future events and expectations and constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.
Speaker Change: Actual results may differ materially from these projections.
Ato Garrett: 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 SEC. Further, any references to organic growth will exclude the impact of changes in FX rates and the impact of acquisitions and divestitures, which this quarter are substantially all related to XMSL and Calypso. The financial results of these businesses are included in solutions revenue within financial technology. Also, please note that we will discuss certain financial results on a pro forma basis, which means that we are showing the results as if we've included Calypso and Axiom SL results in the first quarter of 2023 and excluded the impact of changes in FXP.
Speaker Change: 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 SEC.
Speaker Change: Further any references to organic growth, we will exclude the impact of changes in FX rates and the impact of acquisitions and divestitures was this quarter is substantially all related to <unk> and Calypso. The financial results of these businesses are included in solutions revenue within the financial Technology Division.
Speaker Change: Also please note that we will discuss certain financial results on a pro forma basis, which means that we are showing the results as if we've included calypso and <unk>.
Speaker Change: <unk> results in the first quarter of 2023 and excluded the impact of changes in FX rates.
Ato Garrett: Reconciliations of 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.nasdaq.com. I will now turn the call over to Adena.
Speaker Change: Reconciliations of U S. GAAP to non-GAAP results can be found in our press release as well as in our final located in the financials section of our Investor Relations website at IR Dot NASDAQ Dot com.
Speaker Change: I will now turn the call over to India. Thank.
Adena T. Friedman: Thank you, Ato, and good morning, everyone. Thank you for joining us. Today, my remarks will cover the following areas, our outlook on the external environment, as well as highlights from our first quarter financial and operational performance, including innovation milestones and key progress updates in our cross-sale efforts and synergies. I will then turn the call over to Sarah for a review of our financial results. I'll start with our outlook on the current economic environment. Recent data, including sustained consumer spending and labor force strength, suggest that the U.S. economy remains resilient despite heightened geopolitical risks and a higher cost of capital.
India: Thank you Rocco and good morning, everyone and thank you for joining US today My remarks will cover the following areas our outlook on the external environment as well as highlights from our first quarter financial and operational performance, including innovation milestones and key progress updates on our cross sell efforts and synergies I will then turn the call over to Sarah for IV.
Sarah: A review of our financial results I'll start with our outlook on the current economic environment.
Sarah: <unk> data, including sustained consumer spending and labor force strength suggests that the U S economy remains resilient, despite heightened geopolitical risks and a higher cost of capital.
Sarah: The U S markets are generally performing well, reflecting that economic resilience as well as the potential future productivity benefits that derive from the adoption of generative AI and other sector specific performance trends.
Adena T. Friedman: The U.S. markets are generally performing well, reflecting that economic resilience, as well as the potential future productivity benefits that derive from the adoption of generated AI and other sector-specific performance trends. This strength in the U.S. economy has U.S. growth projected to outpace other advanced economies. As such, economists continue to expect soft lending in the U.S. Although other advanced economies are seeing slower growth, recent data shows improvement in manufacturing and services, particularly in Europe. Global inflation has trended sharply lower over the last year, although it is starting to show some signs of persistence as it moderates globally.
Sarah: This strength in the U S economy has U S growth projected to outpaced other advanced economies as such economists continue to expect the soft lending in the U S.
Sarah: Other advanced economies are seeing slower growth recent data shows improvement in manufacturing and services, particularly in Europe.
Sarah: Global inflation has trended sharply lower than last year, although it is starting to show some signs of persistence as it moderates globally.
Sarah: Markets are still expecting rates to begin to decline later this year in most major markets, which will be a positive for corporates and for the real estate sector, including new homebuyers.
Sarah: With the strength in the markets, we have begun to experience an uptick in IPO activity in the first quarter. The U S market. Welcome 39 operating company Ipos. The most in two years highlighted by nine ipos with market caps in excess of $1 billion. Additionally.
Adena T. Friedman: Markets are still expecting rates to begin to decline later this year in most major markets, which will be positive for corporates and for the real estate sector, including new homebuyers. With the strength in the markets, we've begun to experience an uptick in IPO activity. In the first quarter, the U.S. markets welcomed 39 operating company IPOs, the most in two years, highlighted by nine IPOs with market caps in excess of $1 billion.
Sarah: Additionally, as we referenced in our most recent NASDAQ IPO pulse index, we're seeing five out of six leading indicators of future IPO activity continued to improve suggesting an improvement in the U S public cap public equity capital raising environment over the coming months.
Sarah: As we look towards the remainder of the year at NASDAQ, We see a healthy pipeline of exciting companies preparing to enter the public markets, but their timelines will be dependent upon continued strong economic and market performance.
Sarah: A closer look at Nasdaq's business environment, we continue to capitalize on attractive opportunities for sustainable growth through our diversified business platform that is well positioned to succeed through economic cycles as evidenced by our solid first quarter performance with double digit growth in our solutions revenues.
Adena T. Friedman: Additionally, as we referenced in our most recent Nasdaq IPO Pulse Index, we're seeing five out of six leading indicators of future IPO activity continue to improve, suggesting an improvement in the U.S. public equity capital raising environment over the coming months. As we look towards the remainder of the year at Nasdaq, we see a healthy pipeline of exciting companies preparing to enter the public markets, but their timelines will be dependent upon continued strong economic and market performance.
Sarah: We've aligned our business against key industry shaping mega trends the modernization of markets. The transformation of the investment landscape the drive towards sustainability and increasing financial services investment in resilience and risk management, where we are uniquely positioned to capitalize on strong sustained client demand.
Sarah: Which will cover throughout our call today.
Before we move on to our financial results I want to mentioned voice to devise recently completed secondary offering of NASDAQ common stock specifically.
Adena T. Friedman: Taking a closer look at Nasdaq's business environment, we continue to capitalize on attractive opportunities for sustainable growth through our diversified business platform that is well-positioned to succeed through economic cycles, as evidenced by our solid first-quarter performance with double-digit growth in our solutions revenues. We've aligned our business against key industry-shaping mega trends, such as the modernization of markets, the transformation of the investment landscape, the drive towards sustainability, and increasing financial services investment in resilience and risk management, where we are uniquely positioned to capitalize on strong, sustained client demand, which we'll cover throughout our call today.
Sarah: Specifically first the Dubai solar position of their stake representing approximately 5% of Nasdaq's total shares outstanding.
Sarah: The secondary transaction priced on March 19th and closed on March 22nd with strong investor demand, resulting in an oversubscribed transaction.
Sarah: Following the transaction first the Dubai continues to hold just over 10% of Nasdaq's total shares outstanding. Additionally, <unk> the chairman of Orsa, Dubai will continue as a valued member of Nasdaq's Board of directors.
Sarah: Our relationship with foresee device multifaceted spanning many years and NASDAQ continues to be a trusted technology provider and brand partner divorce. The Dubai, We look forward to their continued support as a shareholder of NASDAQ as their insights and contributions have and will continue to shape our path ahead.
Sarah: Turning now to our financial results I'm pleased to share Nasdaq's solid financial performance for the first quarter of 2024 with strong double digit growth in solutions revenues.
Adena T. Friedman: Before we move on to our financial results, I want to mention Borsa Dubai's recently completed secondary offering of Nasdaq Common Stock. Specifically, Forced to Divide sold a position of their stake representing approximately 5% of Nasdaq's total shares outstanding. The secondary transaction price was on March 19th and closed on March 22nd with strong investor demand resulting in an oversubscribed transaction. Following the transaction, Borsa Dubai continues to hold just over 10 percent of Nasdaq's total shares outstanding. Additionally, Issa Kazim, the chairman of Borsa Dubai, will continue as a valued member of Nasdaq's board of directors.
In the first quarter, we achieved $1 $1 billion in net revenues, an increase of 7% compared to the prior year quarter on a pro forma basis, we delivered 13% pro forma revenue growth across our solutions businesses during the quarter and.
Sarah: In addition to strong performance across our financial Technology Division, Our index business had a stellar performance in the quarter.
Sarah: Our annualized recurring revenue or <unk> increased 7% year over year on a pro forma basis to $2 6 billion.
Sarah: Across the company, we supported revenue growth and continued investments while delivering a 53% operating margin for the quarter. This represents a one percentage point of operating leverage against the prior year quarter, both on a pro forma basis and when excluding <unk>.
Sarah: Our solid performance in the first quarter of 2024 illustrates our continued ability to execute against our strategic vision delivering value and growth to our clients and shareholders amid a dynamic operating environment.
Adena T. Friedman: Our relationship with Borsig Dubai is multifaceted, spanning many years, and Nasdaq continues to be a trusted technology provider and brand partner to Borsig Dubai. We look forward to their continued support as a shareholder of Nasdaq, as their insights and contributions have and will continue to shape our path ahead. Turning now to our financial results, I'm pleased to share Nasdaq's solid financial performance for the first quarter of 2024, with strong double-digit growth in solutions revenue.
Sarah: Now, let's review the highlights of our operational accomplishments and client successes by division starting with capital access platforms.
Sarah: In the capital access platforms Division, we delivered 15% growth highlighted by outstanding performance in our index business.
Sarah: With a strong close to 2023 and subsequent market rally at the beginning of 2020 for our index business had an exceptional momentum in the first quarter. The NASDAQ100 reached record highs multiple times during the quarter.
Sarah: And we are pleased to announce that our index business overall across the $500 billion thresholds in AP in ETP AUM for the first time during the quarter, finishing the period of $519 billion.
Sarah: Over the last 12 months, we saw $46 billion of net inflows, including $21 billion. Just this quarter alone. We also worked with clients to launched 29, new products tracking NASDAQ indices, demonstrating our steadfast focus on innovation and global distribution.
Adena T. Friedman: In the first quarter, we achieved $1.1 billion in net revenues, an increase of 7% compared to the prior year quarter on a pro forma basis. We delivered 13% pro forma revenue growth across our solutions businesses during the quarter. In addition to strong performance across our financial technology division, our index business had a stellar performance in the quarter. Our annualized recurring revenue, or ARR, increased 7% year-over-year on a pro forma basis to $2.6 billion.
Sarah: Momentum contributed to our index business, delivering 53% growth, which represents 38% year over year core revenue growth in the quarter as well as a onetime item that terra will describe.
Sarah: This quarter also marked the 20 <unk> anniversary of the Invesco <unk> Etfs, representing more than two decades of providing investors with access to some of the world's most innovative companies within our NASDAQ100 index.
Sarah: In addition to this milestone we were honored to be named the index provider of the year by ETF Dot com, which further validates our efforts to improve investor outcomes through product introductions innovation performance and support.
Adena T. Friedman: Across the company, we supported revenue growth and continued investments while delivering a 53% operating margin for the quarter. This represents a one percentage point of operating leverage against the prior year quarter, both on a pro forma basis and when excluding Adenza.
Sarah: Our data and listings business was up 1% year over year as global growth in our data business was offset by headwinds from de listings and a muted IPO environment.
Sarah: In the first quarter, our U S listings business achieved a 69% win rate when considering NASDAQ eligible operating company listings.
Adena T. Friedman: Our solid performance in the first quarter of 2024 illustrates our continued ability to execute against our strategic vision, delivering value and growth to our clients and shareholders amid a dynamic operating environment. Now, we will review the highlights of our operational accomplishments and client successes by division, starting with Capital Access Platform. In the Capital Access Platforms Division, we delivered 15% growth, highlighted by outstanding performance in our indexes. With a strong close to 2023 and subsequent market rally at the beginning of 2024, our index business had exceptional momentum in the first quarter. The Nasdaq 100 reached record highs multiple times during the quarter.
Sarah: In total we welcomed 22 operating company Ipos, raising nearly $4 billion in proceeds, including Casspi, Casey sterile labs and bright springhouse.
Sarah: In addition, four companies representing $9 billion in market value switched their listings to NASDAQ during the quarter, including SAIC.
Sarah: In our data business, we continued to make progress with the signing of new customers to enterprise agreements with additional growth driven by our international expansion strategy.
Sarah: Reflecting the importance of creating a frictionless data experience with multiple delivery capabilities for our global client base.
Sarah: Turning to our workflow and insights business, which grew 4% year over year. We saw continued weakness in corporate solutions as lower sales in 2023, we'll continue to have an impact on our financial performance in 2024, while our sales cycles have been starting to improve over the last six months, they continue to be meaningfully longer than what we.
Adena T. Friedman: And we're pleased to announce that our index business overall crossed the $500 billion threshold in ETP AUM for the first time during the quarter, finishing the period at $519 billion. Moreover, over the last 12 months, we saw $46 billion of net inflows, including $21 billion just this quarter alone. We also worked with clients to launch 29 new products tracking Nasdaq indices, demonstrating our steadfast focus on innovation and global distribution. This momentum contributed to our index business delivering 53% growth, which represents 38% year-over-year core revenue growth in the quarter, as well as a one-time item that Sarah will describe. This quarter also marked the 25th anniversary of the Invesco QQQ ETF, representing more than two decades of providing investors with access to some of the world's most innovative companies within our Nasdaq 100 index.
Sarah: <unk> in 2021 in the first half of 2022.
Sarah: New sales were also impacted by a persistent lower slower IPO environment.
Sarah: Generally able to demonstrate the value of our IR and ESG solutions beyond the complementary IPO package to newly listed companies once they've had a few months to experience the rigor of the public markets.
Sarah: While we are encouraged by the early signs of an improving IPO environment.
Sarah: Apio market improvement that we may experience in the coming quarters will take time to translate into improving sales and revenue results for our corporate solutions business.
Sarah: And our analytics business, we achieved high single digit growth in the quarter and we continue to deepen our strategic alliance with Mercer one of the largest global investment consultants during.
Sarah: During the quarter Mercer incorporated our new investment ESG analytics for asset manager diligence and insights into their assessment process.
Sarah: We're excited about this expansion and see additional opportunity to deepen and expand our partnerships with the asset management community going forward.
Sarah: Across both analytics and corporate solutions, our proprietary data remains a strategic differentiator for example in analytics, we continue to develop innovative data products and our data link offerings that are attractive to traders and the investment community.
Adena T. Friedman: In addition to this milestone, we were honored to be named the Index Provider of the Year by ETF.com, which further validates our efforts to improve investor outcomes through product introductions, innovation, performance, and support. Our data and listings business was up 1% year-over-year, as global growth in our data business was offset by headwinds from delistings and a muted IPO environment. In the first quarter, our U.S. listings business achieved a 69% win rate when considering Nasdaq-eligible operating company listings.
And we have solid growth in our market lens product offered through our investment platform.
We're also focused on enhancing our products for the use of AI and.
In corporate solutions, we're advancing NASDAQ for advantage with AI powered workflow tools that and are collaborating with Microsoft iconic AI incubation lab on a series of planned AI enabled features.
Sarah: As part of this partnership we are launching a new capability that creates executive summary for board members and supports corporate secretaries and preparing and summarizing board documents.
Sarah: We're currently testing this feature with clients in a beta release.
Adena T. Friedman: In total, we welcomed 22 operating company IPOs, raising nearly $4 billion in proceeds, including Caspi KZ, Estera Labs, and BrightSpring Health. In addition, four companies representing $9 billion in market value switched their listings to Nasdaq during the quarter, including SAIC.
Turning next to the financial Technology Division, we delivered 10% growth in the quarter.
Sarah: Overall, we're encouraged with a very strong client response and engagement across the new division, which further reinforces our view that our clients are looking for strategic partners that can help them navigate the complexities across the financial system and operate more efficiently.
Adena T. Friedman: In our data business, we continue to make progress with the signing of new customers to enterprise agreements with additional growth driven by our international expansion strategy, reflecting the importance of creating a frictionless data experience with multiple delivery capabilities for our global client base. Turning to our workflow and insights business, which grew 4% year over year, we saw continued weakness in corporate solutions as lower sales in 2023 will continue to have an impact on our financial performance in 2024.
Sarah: As part of the transition of the Calypso and <unk> businesses to NASDAQ, We hosted our first ever financial Technology Conference in New York City earlier this month the.
Sarah: The event brought together more than 170 clients from over 80 accounts.
Sarah: Feedback from the clients is positive highlighting their belief that NASDAQ is the right owner and a trusted partner that will invest in the calypso and axiom offerings to fuel both the next wave of modernization and help them mitigate manage and capitalize on today's environment.
Sarah: Through the event clients were educated on the NASDAQ organization, the product roadmap strategy for the axiom, ESL and calypso offerings and on Nasdaq's comprehensive suite of solutions.
Adena T. Friedman: While our sales cycles have been starting to improve over the last six months, they continue to be meaningfully longer than what we experienced in 2021 and the first half of 2022. New sales are also impacted by a persistent lower, slower IPO environment.
Sarah: This has created new commercial conversations that the team is currently pursuing.
Sarah: Now, let's turn to our performance highlights starting with our financial crime management technology business, where we achieved 23% revenue growth and 24, 5% IRR growth over the prior year quarter.
Adena T. Friedman: We are generally able to demonstrate the value of our IR and ESG solutions beyond the complimentary IPO package to newly listed companies once they've had a few months to experience the rigor of the public market. While we're encouraged by the early signs of an improving IPO environment, any IPO market improvement that we may experience in the coming quarters will take time to translate into improving sales and revenue results for our corporate solutions business.
Sarah: We advanced our leadership position amongst small and medium sized financial institutions, signing 28, new clients during the quarter.
Sarah: As a reminder, the fourth quarter is our biggest bookings quarter each year and we have a strong pipeline of sales targets to execute on as we progress through the year.
Sarah: We also continue to fight.
Sarah: To advance our fight against financial crime with the full production launch of our first.
The first of our AI co pilot tools that we're calling entity research co pilot.
Sarah: This tool, which is offered through the bedrock of platform at AWS offers fully automates workflows with generative AI to improve investigator efficiency.
Adena T. Friedman: In our analytics business, we achieved high single-digit growth in the quarter, and we continue to deepen our strategic alliance with Mercer, one of the largest global investment consultants. During the quarter, Mercer incorporated our new investment ESG analytics for asset manager diligence and insights into their assessment process.
Sarah: By automating tasks related to research summarization and documentation <unk> offers significant efficiency gains that allow banks to scale their crime fighting efforts without increasing head count and enables them to shift resources.
Sarah: Investment to higher value activities and more complex investigations.
Adena T. Friedman: We're excited about this expansion and see additional opportunity to deepen and expand our partnerships with the asset management community going forward. Across both analytics and corporate solutions, our proprietary data remains a strategic differentiator. For example, in analytics, we continue to develop innovative data products in our data link offering that are attractive to traders and the investment community, and we have solid growth in our market lens product offered through our investment platform.
Sarah: We're encouraged by early use of results, which showed that these enhanced solutions through these enhanced solutions <unk> delivers up to a 90% reduction in alert review time for investigators compared to legacy approaches.
We rolled out this new capability in <unk> through a beta program in the second half of last year, and we announced this week that we're moving to full production and rolling out availability to all of our bank clients.
Next I'll discuss the capital markets technology, which is comprised of our trade management services market technology and Calypso businesses.
Sarah: Overall capital markets technology grew 6% year over year with 9% growth in IRR.
Adena T. Friedman: We're also focused on enhancing our products for the use of AI. In Corporate Solutions, we're advancing Nasdaq for Advantage with AI-powered workflow tools and are collaborating with Microsoft's iconic AI incubation lab on a series of planned AI-enabled features. As part of this partnership, we're launching a new capability that creates executive summaries for board members and supports corporate secretaries in preparing and summarizing board documents. We're currently testing this feature with clients in a beta release.
Sarah: <unk> had a particularly strong performance with total revenue and <unk> growth, both demonstrating strength in client demand for our solutions.
Sarah: Calypso had 25, Upsells and one new client sale during the quarter.
Sarah: While we're early in our journey of unlocking the cross sell opportunities across the division, we executed on an opportunity with a client who is looking to adopt data connector between calypso and <unk>, which highlights the synergies between these two products.
Sarah: Net market technology had a more challenging quarter largely due to a tough comparable quarter in 2023.
Adena T. Friedman: Turning next to the Financial Technology Division, we delivered 10% growth in the quarter. Overall, we're encouraged by a very strong client response and engagement across the new division, which further reinforces our view that our clients are looking for strategic partners that can help them navigate the complexities across the financial system and operate more efficiently. As part of the transition of the Calypso and Axiom SL businesses to Nasdaq, we hosted our first ever financial technology conference in New York City earlier this month. The event brought together more than 170 clients from over 80 accounts.
Sarah: We experienced solid growth in <unk>, but a decline in revenue from professional services, primarily because of a significant delivery fee that we received in the first quarter of 2023.
Sarah: Within market technology, we accelerated our strategy to modernize markets by bringing leading technologies to our customers.
Sarah: We signed agreements to upgrade three matching engine clients to our next generation platform during the quarter and we launched a large global clearing and custody provider to the NASDAQ risk platform.
Sarah: Let's turn now to our regulatory technology business, which is comprised of our <unk> surveillance businesses, where we delivered 11% growth.
Sarah: <unk> business experienced strong sales and renewals throughout the first quarter.
Adena T. Friedman: Feedback from the clients was positive, highlighting their belief that Nasdaq is the right owner and a trusted partner that will invest in Eclipse and Axiom offerings to fuel the next wave of modernization and help them mitigate, manage, and capitalize on today's environment. Through the event, clients were educated on the Nasdaq organization, the product roadmap strategy for the Axiom SL and CLPSO offerings, and on Nasda This has created new commercial conversations that the team is currently pursuing.
The product had 20 of sales during the quarter and one new client sales with the Upsells, we had three new ESG sales to G SIB clients.
Sarah: In our surveillance business, we had 26 upsells in five new client sales during the quarter across the business. We saw continued cloud adoption with 55% of total NTS clients now in the cloud at the end of the first quarter, which represents an increase from the end of last year.
Sarah: As we reflect on.
Sarah: On the financial Technology divisions first full quarter, we're very pleased with our financial and operational performance. We delivered revenue growth in line with the medium term outlook that we announced at Investor day with strength across many areas of business as well as continued innovation in our product offerings.
Adena T. Friedman: Now let's turn to our performance highlights, starting with our financial crime management technology business, where we achieved 23% revenue growth and 24.5% ARR growth over the prior year quarter. We advanced our leadership position among small and medium-sized financial institutions, adding 28 new clients during the quarter.
Sarah: Since the formation of the financial Technology Division, we've executed on six cross sells including one this quarter highlighting the strength of our one asset go to market approach. In addition, we have multiple cross sell campaigns underway and we're pleased with the growing share of cross sell opportunities within our pipeline.
Sarah: As such for showing early progress towards our 2027 $100 million plus cross sell target.
Adena T. Friedman: As a reminder, the fourth quarter is our biggest bookings quarter each year, and we have a strong pipeline of sales targets to execute on as we progress through the year. We also continue to fight our fight against financial crime with the full production launch of our first of the first of our AI co-pilot tools that we're calling Entity Research Co-Pilot. This tool, which is offered through the Bedrock platform at AWS, fully automates workflows with generative AI to improve investigator efficiency.
Sarah: Moving to market services, where we're navigating a complex market backdrop, particularly against a strong 2023 first quarter comp.
Sarah: We experienced a 9% decline in revenue.
Sarah: U S options business had a lower revenue quarter due to lower volatility compared to the prior year quarter, which included turbulence in the banking system as well as increased competition in U S options from new entrants and shifts in retail activity, resulting from the lower volatility profile.
Sarah: Despite these headwinds NASDAQ maintained its market share lead over the number two operator in U S. Multi listed equity options and our proprietary U S index options products, notably <unk> continued to gain strength with record revenues volume and share.
Adena T. Friedman: By automating tasks related to research, summarization, and documentation, Verifin offers significant efficiency gains that allow banks to scale their crime-fighting efforts without increasing headcount, and enables them to shift resources and investment to higher-value activities and more complex investigations. We're encouraged by early user results, which show that these enhanced solutions. Through these enhanced solutions, Verifin delivers up to a 90% reduction in alert review time for investigators compared to legacy approaches
Sarah: And the NASDAQ stock market. We're also pleased to confirm the launch of dynamic mellow, which commenced its rollout across symbols on April 15th with the rollout scheduled to be completed by mid may.
Sarah: As we've discussed previously dynamic mellow as the first SEC approved AI power order type designed to improve fill rates and create greater efficiency for our investors.
Sarah: In Europe, where overall market liquidity continues to be challenged we were able to maintain strong share and capture across our equities derivatives and fixed income markets as we continue to add value to our clients through our data analytics and new trading products.
Adena T. Friedman: We rolled out this new capability in VeriFIN through a beta program in the second half of last year, and we announced this week that we're moving to full production and rolling out availability to all of our bank clients. Next, I'll discuss capital markets technology, which is comprised of our trade management services, market technology, and Calypso business. Overall, capital markets technology grew 6% year over year with 9% growth in ARR. Calypso had a particularly strong performance in total revenues and ARR growth, both demonstrating strength in client demand for our solution. Clifso had 25 upsells and one new client sale during the quarter.
We also continued to advance our efforts to bring transparency to nascent markets.
Sarah: Early in the second quarter purely Dot Earth released a new report tracking the rapid expansion of global carbon removal markets over the last.
Sarah: For the past years.
Sarah: With paradox Earth as well as our carbon market technology, we experienced strong growth in volumes and revenues as the market continues to mature with greater supply coming online and we remained well positioned to capitalize on growing demand for carbon removal credits by bringing much needed transparency standardization and registry services to.
Sarah: This emerging space.
Sarah: As we move forward, we are focused on retaining our leading market position across all of our markets and continue to build on the strong growth that we've seen in our proprietary index options products and <unk>.
Adena T. Friedman: While we're early on our journey of unlocking the cross-sell opportunities across the division, we executed on an opportunity with a client who was looking to adopt a data connector between CLPSO and Axiom SL, which highlights the synergies between these two products. Now market technology had a more challenging quarter largely due to a tough comparable quarter in 2023. We experienced solid growth in ARR but a decline in revenue from professional services, primarily because of a significant delivery fee that we received in the first quarter of 2023.
Speaker Change: To wrap up.
We're pleased to deliver another quarter of solid results that were in line with the medium term outlook, we provided on Investor day.
Speaker Change: In Nasdaq's core businesses, we delivered well in what we can control within a tougher market environment, including a continued muted IPO environment and lower market volatility.
Speaker Change: Across our solutions businesses, we delivered double digit revenue growth, including strong financial technology results in exceptional index performance.
Speaker Change: Within financial Technology, our recent acquisitions of <unk>, selling calypso as well as <unk> continued to progress well and remain in line with expectations.
Adena T. Friedman: Within market technology, we accelerated our strategy to modernize markets by bringing leading technologies to our customers. We signed agreements to upgrade three matching engine clients to our next generation platform during the quarter, and we launched a large global clearing and custody provider to the Nasdaq risk class. Let's turn now to our regulatory technology business, which is comprised of our XMSL and surveillance businesses, where we delivered 11% growth. Our AXI MSL business experienced strong sales and renewals throughout the first quarter.
Speaker Change: With our top line performance combined with continued expense discipline, we maintain our exceptional margin profile for the company all told our performance underscores the durability of our business model and our ability to deliver growth across uncertain environment.
Speaker Change: With that I will now turn the call over to Sarah to review the financial details.
Thank you Dana and good morning, everyone.
Sarah: Turning to our financials.
Sarah: My commentary will focus on non-GAAP results.
Sarah: Year on year growth rate.
Sarah: And operating margin will be provided on a pro forma basis unless noted.
Sarah: You can find all of the same metrics on an organic basis 12 earnings presentation.
Turning to our first quarter results on slide 10.
Adena T. Friedman: The product had 20 upsells during the quarter and one new client sale. With the upsells, we had three new ESG sales to G-Cyp clients. In our surveillance business, we had 26 upsells and five new client sales during the quarter.
Sarah: We reported net revenue of $1 1 billion.
Sarah: <unk>, 7% with solutions revenue of $871 million.
Sarah: Up 13%.
Sarah: Operating expense was $524 million up 5%.
Adena T. Friedman: Across the business, we saw continued cloud adoption, with 55% of total NTS clients now in the cloud at the end of the first quarter, which represents an increase from the end of last year. As we reflect on the Financial Technology Division's first full quarter, we're very pleased with our financial and operational performance. We delivered revenue growth in line with the medium-term outlook that we announced at Investor Day, with strength across many areas of business, as well as continued innovation in our product offering.
Sarah: Resulting in an operating margin of 53% up one percentage point annually.
Sarah: EBITDA margin at 56%.
Sarah: Overall.
Sarah: Resulted in diluted EPS of 63.
Sarah: Turning to slide 11, with pro forma revenue growth of 7% for the quarter.
Sarah: As you can see in the last bar of the chart.
Results included a $16 million one time revenue benefit.
Sarah: Related to a legal settlement with an index.
Sarah: To the recoupment of revenue.
Sarah: Excluding this.
Sarah: Total net revenue increased 6%.
Sarah: And on a net basis.
Adena T. Friedman: Since the formation of the Financial Technology Division, we've executed on six cross-sells, including one this quarter, highlighting the strengths of our one Nasdaq go-to-market approach. In addition, we have multiple cross-bill campaigns underway, and we're pleased with the growing share of cross-bill opportunities within our pipeline. As such, we're showing early progress towards our 2027 $100 million plus crossbell target. Moving to market services, where we're navigating a complex market backdrop, particularly against a strong 2023 first quarter comp.
Sarah: 6% was all stock performance.
Overall.
Factors were neutral this quarter.
Sarah: With index market performance, primarily offset by the impact of delisting in capital access platforms.
Sarah: Lower volume in market services.
Sarah: Were 6% of all saw included 5% growth from our existing clients on a strong 3% from new clients cross sell on other product innovation.
Sarah: With churn.
Sarah: It's a little 1% level.
Sarah: On the 1% liquid on market share and capture and market services.
Sarah: Turning to slide 12.
Sarah: <unk> totaled $2 6 billion up.
Up 7%.
Sarah: As you recall.
Sarah: Our excludes most of index.
Sarah: We had 12% growth in Fintech.
Adena T. Friedman: We are experiencing a 9% decline in revenue. The U.S. options business had a lower revenue quarter due to lower volatility compared to the prior year quarter, which included turbulence in the banking system, as well as increased competition in U.S. options from new entrants and shifts in retail activity resulting from the lower volatility profile.
Sarah: Strong contributions from each of the three subdivisions.
Sarah: And one for some growth in capital access platform.
Sarah: With plant in analytics, partially offset by the impact of delisting the slower IPO environment.
We made it slower sales in corporate solutions.
Sarah: Annualized SaaS revenue totaled $932 million up 16%.
Adena T. Friedman: Despite these headwinds, Nasdaq maintained its market share lead over the number two operator in U.S. multi-listed equity options, and our proprietary U.S. indexed options products, notably NDX, continue to gain strength with record revenues, volume, and share. In the Nasdaq stock market, we're also pleased to confirm the launch of Dynamic Mellow, which commenced its rollout across symbols on April 15th, As we've discussed previously, Dynamic Mellow is the first SEC-approved AI power order type designed to improve fill rates and create greater efficiency for our investors.
Sarah: <unk> was 36% of our.
Sarah: Up three points on a pro forma basis.
Sarah: Let's review Division results for the quarter, starting on slide 13.
Sarah: In capital access platform, we delivered revenue of $479 million.
Sarah: <unk> growth of 15%.
Sarah: 12%, excluding the onetime benefit that I mentioned.
Sarah: Index revenue increased by 53%.
Sarah: With 38%, excluding the one time benefits.
Sarah: We achieved record high.
Sarah: ETP AUM.
Sarah: Averaging $492 million.
Sarah: During the quarter, which is roughly $150 billion higher than the prior year period average.
Adena T. Friedman: In Europe, where overall market liquidity continues to be challenged, we were able to maintain strong share and capture across our equities, derivatives, and fixed income markets, as we continue to add value to our clients through our data analytics and new trading products. We also continue to advance our efforts to bring transparency to nascent markets. Early in the second quarter, Puro.
Sarah: This includes strong market performance as well as higher futures trading volume and capture.
Sarah: Importantly, we also had net inflows of 46 billion in the last 12 months, including $21 billion this quarter.
Sarah: This performance is the result.
Sarah: Of our data.
Sarah: And the relevant and innovative products, we have launched over many years.
Sarah: Licensing revenue for futures and options complex links to the NASDAQ100 index.
Adena T. Friedman: Earth released a new report tracking the rapid expansion of global carbon removal markets over the past year. With Piro. Earth, as well as our carbon market technology, we experienced strong growth in volumes and revenues as the market continues to mature with greater supply coming online. And we've remained well positioned to capitalize on growing demand for carbon removal credits by bringing much needed transparency, standardization, and registry services to this emerging space.
Sarah: Also had high teens growth.
Sarah: Reflecting higher futures and options trading volumes up 5% driven by growth in micro NASDAQ100 futures contracts.
Sarah: With positive impact from higher capture rates of our partners.
Sarah: Moving to data on lifting while revenue was up 1%.
Sarah: Within this thing the benefits of 2023 Ipos on pricing.
Adena T. Friedman: As we move forward, we are focused on retaining our leading market position across all of our markets and continuing to build on the strong growth that we've seen in our proprietary NDX options products and Imperial Earth. To wrap up,
Sarah: Was offset by the $10 million impact of lost delisting and downgrades.
Sarah: The roll off of prior year's initial listings revenue did.
Adena T. Friedman: We're pleased to deliver another quarter of solid results that were in line with the medium-term outlook we provided for investors. In Nasdaq's core businesses, we delivered well on what we can control within a tougher market environment, including a continued muted IPO environment and lower market volatility. Across our solutions businesses, we delivered double-digit revenue growth, including strong financial technology results and exceptional index performance. Within financial technology, our recent acquisitions of Axiom SL and Calypso, as well as Verifn, continue to progress well and remain in line with expectations.
Sarah: Hub and material impact this quarter.
Sarah: That will increase during the year.
Sarah: Within data, we continue to see global expansion driven by international demand.
Sarah: Mostly offset by normal levels of Pi insurance.
Workflow and insights revenue increased 4%.
Sarah: Within this.
Sarah: 96 grew high single digits.
Sarah: Reflecting our continued ability to monetize the value of our data.
Sarah: The investment management and trading community.
Sarah: Our proprietary data is key to our generation two Alex Nasdaq.
Sarah: I'm living in analytics, we provide valuable client insights.
Sarah: Instruments and data link.
Sarah: The stressing the 96 was partially offset by corporate solutions, which was flat in the period.
Sarah: As we continue to elongated sales cycles.
Adena T. Friedman: With our top-line performance combined with continued extensive discipline, we maintain our exceptional margin profile for the company. All told, our performance underscores the durability of our business model and our ability to deliver growth across uncertain environments. With that, I will now turn the call over to Sarah to review the financials. Thank you, Adena, and good morning, everyone.
Sarah: Levels comparable to the fourth quarter of 2023.
Sarah: As well as fewer sales opportunities.
Sarah: Due to this challenging leasing environment.
Sarah: In total <unk> capital at this platform was $1 2 billion for the quarter up 1%.
Sarah: With all of our growth from piping Upsells and new clients.
Offset by <unk> and the continued impact of slower sales cycle, among our corporate clients.
Sarah M. Youngwood: Turning to the financials, my commentary will focus on non-GAAP results, and your annual growth rate and operating margins will be provided on a per-forma basis unless necessary. However, you can find all the same metrics on an organic basis throughout the earnings. Turning to our first quarter results, on slide 10, we reported net revenue of $1.1 billion, up 7%, with solutions revenue of $871 million, up 13%. Operating expense was $524 million, up five years, resulting in an operating margin of 53%, up one percentage, and with EBITDA margin at $0.56. Overall, this resulted in diluted EPS of 63%.
The division's operating margin was 58% for the quarter.
Sarah: Excluding the onetime benefit the margin was 57% up three percentage points.
Sarah: The increase was driven by higher revenue, partially offset by inflation and growth oriented investments.
Sarah: Looking forward to the full year 2020 for revenue.
Due to the market backdrop negatively impacting colquitt solutions we.
Sarah: We expect growth and work through an insight to be below its medium term outlook.
Sarah: Whereas the strength in our.
Sarah: Index business gives us confidence that within 2020, we can perform above our medium term outlook.
Sarah: Taken together with.
We continue to expect our 2020 for performance to be within the overall revenue outlook for the capital access platform Division.
Sarah M. Youngwood: Turning to slide 11, with performer revenue growth of 7% for the quarter. As you can see in the last part of the talk, results included a $16 million one-time revenue benefit related to a legal settlement with an index tied to the recoupment of revenue, excluding this.
Sarah: Moving to financial technology on Slide 14.
Sarah: As a reminder.
Last week, we provided 2023 quarterly information for <unk>.
And today, we provided quarterly pro forma divisional results for 2023.
Sarah M. Youngwood: Total net revenue increased 6%, and on a net basis, the 6% was an alpha performance. Overall, beta factors were neutral this quarter, with index market performance primarily offset by the impact of delisting in capital access platforms and lower volume in market service. The 6% of our staff included 5% growth from our existing clients and a strong 3% from new clients, cross-sell, and other product innovations, with churn at a low 1% level, and a 1% decrease for market share and capture in the market. No need for slide 12.
Sarah: Both of which can be found in the appendix of the presentation.
Sarah: This should help you incorporate pro forma comparison.
Sarah: In your model.
Sarah: The division delivered revenue of $392 million for the quarter up 10% in line with our medium term outlook.
Sarah: The growth reflects.
Sarah: Strong performance in financial crime management colleagues still an extra myself.
Sarah: 23%, 23% and 15% respectively.
Sarah: With strong client engagement.
Sarah: This was partially offset by a tough comp and market Tech.
Sarah: Due to a significant professional service delivery in the prior year quarter, which we noted at that time and makes the year on year comparison less meaningful.
Sarah: <unk> was $1 4 billion.
Sarah M. Youngwood: ARR totaled $2.6 billion, up 7%. As you recall, ARR excludes most of the index. We had 12% growth in Finc, with strong contributions from each of the three subdivisions, and 1% growth in capital access platform. Trends in analytics partially upset by the impact of delisting in the slower IPO environment and related slower sales in corporate solutions. Annualized SAS revenue totaled $932 million at 16%. SAS was 36% of ARR, up three points on performance.
Sarah: Up 12%.
Sarah: With all subdivisions contributing to this strong growth.
Sarah: The key contributors to the difference between total revenue growth.
Sarah: <unk> was lower year on year professional service revenue growth due to the tough comparable market tech as well as lost one project delivery across all products in the quarter.
Sarah: Partially offset by upfront revenue from on Prem annual cost.
Sarah: Sciclone applicator.
Sarah: Before we move to subdivision results.
Sarah: A few words on the strong performance of axiom are selling Charlottesville.
Sarah: Combined revenue of $151 million increased 20% versus last year with good client momentum.
Sarah: We had a high level of upfront renewal revenue. We also had higher cloud based revenue on slightly lower professional services revenue.
Sarah M. Youngwood: Let's review division results for the quarter, starting on slide 13. In Capital Access Platform, we delivered revenue of $479 million, reflecting growth of 15% or 12%, excluding the one-time benefit I mentioned. Index revenue increased by 53%, or 38% excluding the one-time benefit. We achieved record highs in EPPAUM, averaging $492 billion during the quarter, which is roughly $150 billion higher than the prior year period average.
Sarah: As we look forward.
Sarah: We continue to expect combined OXXO muscle and Kelly to revenue.
Sarah: To be in line with our full year expectations provided at Investor day.
Sarah: As we progress through the quarters, we will provide some complex to support your modeling on.
Sarah: On the back of a strong first quarter, which delivered revenue growth above also claims we expect lower revenue growth in the second quarter due in large part to the timing of renewals.
Sarah: Combined <unk> and <unk> of $473 million was up 15%.
Sarah M. Youngwood: This includes strong market performance, as well as higher futures trading volume and cap. Importantly, we also had net inflows of $46 billion in the last 12 months, including $21 billion. This performance is the result of trends in our data, brand, and the relevant and innovative products we have launched over many years. Licensing revenue for futures and options contracts linked to the Nasdaq 100 Index also had high teen scores.
Sarah: Up 16%, excluding the impact of a significant 2023 bankruptcy noted last quarter.
Sarah: This is in line with our full year expectations provided at Investor Day.
Speaker Change: Can we maintain this outlook for the year.
Speaker Change: Moving to the subdivisions results.
Speaker Change: Financial crime management technology revenue was $64 million up 23% with a.
Speaker Change: <unk> of $243 million.
Speaker Change: At 24.5%, reflecting continued penetration of the core often deep client base, adding 28, new clients in the quarter.
Sarah M. Youngwood: Reflecting how your futures and options trading volumes were up 5% driven by growth in the micro Nasdaq 100 Futures Compact, as well as the positive impact from higher capture rates of opaqueness. Moving to data and listings, where revenue was up 1%. However, within listings, the benefit of 2023 IPOs and pricing was offset by the $10 million impact of last year's delistings and downgrades.
Speaker Change: With full year 2020 for F&B client wins expected to be at that.
Speaker Change: Of 2023.
Speaker Change: While we had no new tier one was to bank signings in the quarter, we continue to have active and positive engagement.
Speaker Change: With a strong pipeline of client opportunities, which.
Speaker Change: Which we expect to sign in the coming quarters.
Sarah M. Youngwood: The roll-off of prior year's initial listings revenue didn't have a material impact this quarter, but that will increase during the year. Within data, we continue to see global expansion driven by international demand. Mostly upset by no more levels of crime.
Speaker Change: Regulatory technology revenue was $90 million.
Speaker Change: And <unk> was $328 million.
Speaker Change: Both up 11%.
Speaker Change: Excluding the impact of churn related to the liquidity events of March 2022.
Speaker Change: Revenue in <unk> were up 12% and 13% respectively.
Sarah M. Youngwood: Workflow and Insights Revenue increased 4%. Within this, analytics grew high single-digit, reflecting our continued ability to monetize the value of our data across the investment management and trading community. Our proprietary data is key to our alpha generation throughout Nasdaq. And within analytics, we provide valuable client insights to investment and trading. The strength in analytics was partially offset by corporate solutions, which was flat in the project.
Speaker Change: So <unk> grew 6% for both revenue and they are all reflecting strong sales.
Speaker Change: As well as the continuation of the cloud transformation of this business with 55% of NASDAQ place. So then customers now in the cloud.
Speaker Change: Actual micelle grew revenue, 15% NII off site.
Speaker Change: 16% with.
Speaker Change: Reflecting strong sales.
Speaker Change: In the quarter nearly 50% of new bookings were in the cloud highlighting the continued cloud journey for the business.
Sarah M. Youngwood: As we continue to see elongated self-cycles, at levels comparable to the fourth quarter of 2020, as well as fewer sales opportunities due to the challenging listing environment. In total, ARR for Capital Access Platform was $1.2 billion for the quarter of 1%, with alpha growth from pricing, upsells, and new clients, mostly offset by delisting and the continued impact of a slower sales cycle among our corporate clients. The division of pricing margin was 58% for the quarter. Excluding the one-time benefits, the margin was 57%, up three percentage points.
Speaker Change: That is ultimately beneficial for both our clients unlock that.
Speaker Change: In capital markets technology, we delivered revenue of $238 million up 6%.
Speaker Change: With <unk> of $821 million up 9%.
Speaker Change: Can you still had a strong quarter with revenue up 23%.
Speaker Change: <unk> up 14%.
Speaker Change: Revenue included a strong contribution.
Speaker Change: <unk> renewal revenue.
Speaker Change: The business had 16% of new bookings come from the cloud a lower proportion than what we expect for the year due to timing.
Speaker Change: The combined market <unk> and trade management services business, which is what we used to call marketplace Tech was slightly down in revenue, but <unk>.
Sarah M. Youngwood: The increase was driven by higher revenue, partially offset by inflation, and growth-oriented investment. Looking forward to the full year 2024 revenue, due to the market backdrop negatively impacting corporate solutions, we expect growth in workflow and insights to be below its medium term outlook.
Speaker Change: Again, driven by the significant professional service delivery in the prior year period that provided a tough call.
Speaker Change: This impact was somewhat offset by the partial quarter impact of pricing increases.
Sarah M. Youngwood: Whereas the strength of the index gives us confidence that within 2024, we can perform above our medium-term targets. Taken together, we continue to expect our 2024 performance to be within the overall revenue outlook for the Capital Access Platform Division. Moving to financial technology on slide 14. As a reminder, last week we provided 2023 quarterly information for Axiomethyl and Calypso, and today, we provided quarterly pro forma divisional results for 2023, both of which can be found in the appendix of the presentation. This should help you incorporate performance comparison in your model.
Speaker Change: Coupled with strong client activity in testing revenue within trade management services.
Speaker Change: Looking forward to the full year 2024, we expect the combined market Tech and trade management services.
Speaker Change: To be well positioned.
Speaker Change: Within the 3% to 5% range with a muted second quarter.
Speaker Change: The growth being back ended.
Speaker Change: Okay.
Speaker Change: The division's operating margin in the first quarter was 45% up two percentage points.
Speaker Change: The margin expansion reflects strong topline revenue growth and the beginning of synergy realization.
Speaker Change: Actually offset by higher compensation and benefits expense.
Speaker Change: Unexposed related to revenue and investments in growth.
Speaker Change: And walking up the division with market services.
Speaker Change: Okay.
Speaker Change: Net revenue was $237 million for the quarter down 9% versus an extremely tough comp.
Speaker Change: The short story here is one percentage points or $3 million.
Speaker Change: Relating to our share of nonrecurring industry adjustments to the plan.
Sarah M. Youngwood: The division delivered revenue of $392 million for the quarter, up 10% in line with our medium-term outlook. The growth reflects strong performance in financial crime management, Calypso and Axiom SL at 23%, 23%, and 15%, respectively, with strong client engagement. This was partially offset by a top comp in the market due to a significant professional service delivery in the prior year quarter, which we noted at that time and made the year-on-year comparison less meaningful.
Speaker Change: The rest was about hospital cost alpha.
Speaker Change: With based on drivers.
Speaker Change: Take one.
Speaker Change: One fewer trading day.
Speaker Change: And volumes in Europe.
Speaker Change: And most of the Alpha story.
Speaker Change: Slide two last year's exceptional capture.
Speaker Change: Our U S options business during the bank liquidity events in the first quarter.
Speaker Change: Listing for complex traded in 123 was an exception.
Speaker Change: Two year trend of capture at 12.
Speaker Change: Which is where we were in the first quarter.
Speaker Change: Okay.
Speaker Change: The division's operating margin of 56% in the first quarter represents a six percentage point decrease from the prior year period.
Speaker Change: As a result of lower revenue.
Sarah M. Youngwood: ARR was $1.4 billion, up 12%, with all subdivisions contributing to this strong group. The key contributors to the difference between total revenue growth and ARR growth were lower year-on-year professional service revenue growth due to the top comfort market tech, as well as less robust project delivery across our products in the quarter, partially offset by upfront revenue from on-prem renewals, particularly for Cali. Before we move to subdivision results, a few words on the strong performance of Axiom SL and Caliper.
Speaker Change: As well as ongoing investments related to both capacity and huntsman and modernizing our market.
Speaker Change: Turning to slide 16.
Speaker Change: This quarter's non-GAAP operating expense was $524 million, reflecting pro forma growth of $24 million or 5%.
Speaker Change: This was driven by inflation supporting our revenue growth and investment.
Speaker Change: This compares to pro forma revenue growth of $76 million or 7%, reflecting positive operating leverage.
Speaker Change: Now on to guidance.
Speaker Change: We are updating 2024 non-GAAP operating expense guidance.
Speaker Change: <unk> two <unk>, two 5 billion to $2 $85 billion.
Speaker Change: To reflect FX equity compensation and less uncertainty on revenue growth.
Sarah M. Youngwood: Combined revenue of $151 million increased 20% versus last year due to good client momentum. We had a high level of upfront renewal revenue. We also had higher cloud-based revenue and slightly lower professional services revenue. As we look forward, we continue to expect combined axial muscle and calisthenics revenue to be in line with the full year expectations provided at Investor Day. As we progress through the quarters, we will provide some context to support your modeling.
Speaker Change: The midpoint represents pro forma growth of just over 5%.
Speaker Change: This includes a full year of Identa FX and the benefits of net expense synergies.
Speaker Change: Excluding at Enzo.
Speaker Change: Nasdaq's expense growth would be around four 5%.
Speaker Change: In addition.
Speaker Change: The second quarter will reflect our annual merit adjustments unequivocal win and therefore, we expect expense to increased just under $20 million.
Speaker Change: The first quarter of 2024.
Speaker Change: Stable performance in exchange rates.
Speaker Change: On synergies, we have actions approximately 40% of <unk>.
Sarah M. Youngwood: On the back of a strong first quarter, which delivered revenue growth above our outlook range, we expect lower revenue growth in the second quarter, due in large part to the timing of renewal. Combined, Axiom SL and Callisto ARR of $473 million was up 15%, or up 16%, excluding the impact of a significant 2023 bankruptcy noted last quarter. This is in line with our 4-year expectations as provided at InVEST today, and we maintain the salad look for the Moving to the subdivisions results.
Speaker Change: $18 million of net expense synergies.
Speaker Change: <unk> and <unk> 24.
Speaker Change: With the P&L benefit weighted towards the second half of 2024.
Speaker Change: Turning to 2025, given some transition period.
Speaker Change: We are confident in the 70% action by the end of 2024 and.
Speaker Change: And would note that it won't be linear.
Speaker Change: Additionally.
Speaker Change: We continue to expect our full year tax rate of 24, and a half to 26, 5% on a non-GAAP basis.
Speaker Change: Turning to slide 17.
Speaker Change: Strong free cash flow continues to be the hallmark of Nasdaq.
Speaker Change: In the quarter, we had $504 million of free cash flow.
Speaker Change: Please note that cash flow generation in the first quarter is generally elevated with the rest of the year.
Sarah M. Youngwood: Financial crime management technology revenue was $64 million, up 23%, with ARR of $243 million, up 24.5%, reflecting continued penetration of the core SMB client base, adding 28 new clients in the quarter, with full year 2020 for SMB client wins expected to be at least that of 2020. While we had no UCL 1 or 2 bank signings in the quarter, we continue to have active and positive engagement, with a strong pipeline of client opportunities, which we expect to sign in the coming quarter. Regulatory Technology revenue was $90 million, and ARR was $328 million, both up 11, excluding the impact of churn related to the liquidity events of March 2020.
Speaker Change: Once again, we had a cash flow conversion ratio above 100% at 106% for the last 12 months.
Speaker Change: In terms of free cash flow utilization in the quarter, we paid a quarterly dividend of <unk> <unk> per share or $127 million.
Speaker Change: <unk>, 835% payout ratio and we did not repurchase any shares this quarter.
Speaker Change: We also repaid the remaining $340 million of our term loan.
Speaker Change: In line with our prior commitment of prioritizing deleveraging.
Speaker Change: And finally, we repaid $67 million of commercial paper.
Speaker Change: Excluding commercial paper all of our outstanding debt is now fixed.
Speaker Change: Our all in pre tax cost of debt was four zero percent.
Speaker Change: As we exit <unk> 24.
Speaker Change: Turning to leverage.
Speaker Change: Our gross leverage ratio declined from four <unk> at the end of last year.
Speaker Change: Two for one.
Sarah M. Youngwood: Revenue and ARR were up 12% and 13% respectively. Surveillance grew 6% for both revenue and ARR, reflecting strong sales, as well as the continuation of the cloud transformation of this business, with 55% of Nasdaq Trade Surveillance customers now in the cloud. Axiom SL grew revenue 15% and IRR by 16%. Reflecting a Strong Self.
Speaker Change: <unk> of <unk> 24.
Speaker Change: In addition to the stated debt repayments.
Speaker Change: Leverage ratio decreased <unk> <unk> from the impact of FX.
Speaker Change: Amortization of debt issue costs.
Speaker Change: Stronger EBITDA.
Speaker Change: We are reiterating our expectation to achieve plus leverage below four times nine to 12 months ahead of our initial goal.
Speaker Change: As I reflect on this quarter I would highlights strong client adoption and growth inclusions overall.
Speaker Change: I am, particularly in index analytics financial fund management optimize cell on Kennedy.
Sarah M. Youngwood: In the quarter, nearly 50% of new bookings were in the cloud, highlighting the continued cloud journey for the business, which is obviously beneficial for both our clients and us. In capital markets technology, we delivered revenue of $238 million, up 6%, with ARR of $821,000,000, up 9%. Calypso had a strong quarter with revenue up 23% and ARR up 14%. Revenue included a strong contribution of on-prem renewal revenue. The business had 16% of new bookings come from their cloud, a lower proportion than what we expect for the year due to timing.
Speaker Change: Strong progress on synergy actions and building a cross sell pipeline.
Speaker Change: Continued actions on deleveraging.
Speaker Change: As we look ahead I continue to be impressed by the balance and diversity of the business model.
Speaker Change: Enabling us to grow the top line with strong margins and to effectively execute our capital allocation plan.
Speaker Change: We are well positioned to deliver on our one nasdaq's strategy and achieve durable organic revenue growth.
Speaker Change: <unk> profitability.
Speaker Change: Thank you for your time and I will turn it back to the operator for Q&A.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone.
Speaker Change: To withdraw your question. Please press star one again.
Speaker Change: We ask that you. Please keep your questions to no more than one question and one follow up and if time permits we'll be more than happy to take more questions.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: Okay.
Sarah M. Youngwood: The combined market tech and trade management services business, which is what we used to call marketplace tech, was slightly down in revenue, but up in ARR. Again, this was driven by the significant professional service delivery in the prior year period that provided it. However, this impact was somewhat upset by the partial quarter impacts of pricing increases, coupled with strong client activity and testing revenue within trade management services.
Speaker Change: And I show. Our first question comes from the line of Owen Lau from Oppenheimer. Please go ahead.
Owen Lau: Good morning, and thank you for taking my questions.
Owen Lau: Could you please add more color on the cross sell campaigns to achieve the $100 million target. What is the plan for the rest of this year boosted mainly call for the cross sell with Cmos sensor or between <unk> and Ferguson or across the whole company. Thank you.
Speaker Change: Thanks sure. So we actually described the current cross sell campaigns on Investor Day, a few weeks ago and it really covers across the fin Tech division. So one of the cross sell campaigns is really focusing on bringing more of the calypso risk management collateral management capabilities into our.
Sarah M. Youngwood: Looking forward to the full year 2024, we expect the combined market tech and trade management services to be well positioned within the 3 to 5% range, with a muted second quarter and growth being back in. The division's operating margin in the first quarter was 45%, up 2 percentage points. The margin expansion reflects strong supply and revenue growth and the beginning of synergy realization, partially offset by higher compensation and benefits and expenses related to revenue and investment and wrapping up the division with market service. Net revenue was $237 million for the quarter, down 9% versus an extremely tough call.
Speaker Change: Market operator clients. Another one akshay is working with.
Speaker Change: With the calypso clients to bring more axiom SL capabilities, so bringing them axiom I fell into some of the capital markets.
Speaker Change: <unk>, where they have new regulatory obligations that they are facing and then the third is introducing some of the verifone clients to the <unk> team as well and eclipse the team, particularly actually on the Treasury management capabilities within Calypso.
Speaker Change: That we think are relevant to the tier three banks that are really a big part of the Verifone client base. So those are the three the three main campaigns, we have but I would tell you. It is actually really interesting as we talk to.
Sarah M. Youngwood: The first story here is one percentage point, or $3 million, relating to our share of the non-recurring industry adjacent to the Taste Class. The rest was about half beta, half alpha, with beta drivers across states. One fewer trading day and volumes in Europe, and most of the Alpha stories, sides to last year's exceptional capture in our U.S. options bid during the bank liquidity events in the first, $0.13 for contracts traded on 1-2-23 was an exception in a consistent two-year trend of capture at $0.12, which is where we were in the first.
Speaker Change: Our bank clients, our broker dealer clients, our exchange clients when when we have conversations today. It generally will start with one product and then move to a second I was actually talking to one client just the other day, where they are there and axiom SL client and they are really interested in anti anti fin crime. So we can kind of look holistically at the strategic.
Speaker Change: Chip in ways that we haven't been able to do in the past. So it's been a great start and we hope to be able to show some tangible progress it will take time for these.
Sarah M. Youngwood: The division's operating margin of 56 percent in the first quarter represents a six percentage point decrease from the prior year period, as a result of lower revenue, as well as ongoing investment related to both capacity and hence, and Modernizing Our Market. Turning to slide 16.
Speaker Change: Opportunities to turn into contracts as you know it takes time to contract with banks.
Speaker Change: But we are very encouraged by the early conversations we're having.
Speaker Change: Got it that's helpful. Just a quick follow up on bearish.
Speaker Change: I think you didn't sign tier one and tier two banks this quarter, but the number was still pretty strong can you. Please talk about the pipeline for the rest of this year core tier one and tier two banks and also give us an update on the international expansion opportunities. Thanks, a lot sure yes, sure. So you're right we didn't sign any new clients, but we are.
Sarah M. Youngwood: This quarter's non-GAAP operating expense was $524 million, reflecting pro forma growth of $24 million, or 5%. This is driven by inflation, supporting our revenue growth and investment. This compares to pro forma revenue growth of $76 million, or 7%, reflecting positive operating levels. Now on to guides.
Speaker Change: Working really well in implementing the clients we signed last year.
Speaker Change: And that's going quite well and we have a lot of very very good pipeline of companies either that we're in the middle of doing proof of concepts for or we're in the middle of contracting and so we do feel very good about our ability to continue to sign new clients. As we proceed through the year and it's interesting so the.
Sarah M. Youngwood: We are updating 2020 for non-GAAP operating expense guidance, to $2.125 billion to $2.185 billion, to reflect effects, equity compensation, and Less Uncertainty on Revenue Growth. The midpoint represents performance growth of just over 5%. This includes a portfolio of Adena, FX, and the in-ear benefits of NETX Transcener, while excluding Adenza.
Speaker Change: The challenges that we're really focused on that we bring to the clients.
Speaker Change: Usually the first way to get in the door at least through the fraud fraud detection and investigative capabilities, because it's just such an easy and clear return on invested investments that we can show them in terms of reducing false positives and increasing fraud found another area of focus right now for a lot of the bigger banks as check fraud, and we have a new check fraud capability that.
Sarah M. Youngwood: Nasdaq's expense board would be around $4.50. In addition, the second quarter will reflect our Annual Merit Adjustment and Equity Grants. And therefore, we expect expense to increase just under $20 million from the first quarter of 2024, assuming stable performance and, on synergies, we have actioned approximately 40% of our $18 million of net expense synergies through the end of 1Q24, with the P&L benefit weighted towards the second half of 2024 and into 2025, given some transition.
Speaker Change: We're rolling out that we think is really best in class and we're really excited on our engagement there and then with our new our entity research and our co pilot tool that really supports our anti money laundering capabilities and with a 90% reduction in investigative time, we actually think that could be a really great way for us to engage with larger banks.
Speaker Change: In addition to of course, our entire clientele in terms of the international expansion, where focus I think we've mentioned at Investor day, primarily on Canada, and the U K and some of those are progressing quite long and some of them are still very early conversations.
Speaker Change: Thanks, a lot.
Speaker Change: Thank you.
Speaker Change: And I show. Our next question comes from the line of Alexander <unk> Samsung Goldman Sachs. Please go ahead.
Sarah M. Youngwood: We are confident in the 70% action by the end of 2024 and would note that it won't be needed. Additionally, we continue to expect a four-year tax rate of 24.5% to 26.5% on a non-GAAP basis. Turning to slide 17.
Alexander: Hi, good morning, Thank you.
Alexander: So maybe starting with the dens as well really strong year over year revenue growth you pointed out about 20% and it sounds like a lot of it is coming on the Calypso side. So can you kind of help US bridge the sources of growth, particularly of Calypso and as you think forward, how you see that opportunity unfold for calypso, specifically over the course of this year and into next.
Sarah M. Youngwood: Strong free cash flow continues to be the hallmark of Nasdaq. In the quarter, we had $504 million of free cash flow. Please note that cash flow generation in the first quarter is generally elevated versus the rest of the year. Once again, we had a cash flow conversion ratio above 100%, at 106% for the last 12 months. In terms of free cash flow utilization in the quarter, we paid a quarterly dividend of $0.22 per share, or $127 million for a 35% payout ratio, and we did not repurchase any shares.
Speaker Change: Sure. Thanks, Alex actually I'll I'll go I'll cover of clips on axiom to sell together so.
Speaker Change: And each of them, but but I think did a really nice job of laying out the growth for each of the products as well as combined and what Youre seeing is some of it is timing of renewals. So we did have a really good our renewal quarter for for eclipse and <unk>, but particularly as calypso with more of the on Prem deliveries.
Speaker Change: Our on Prem renewals, which you know is a good revenue driver for us in terms of how we how we recognize the license fees, but if you look at just <unk> growth, which is really kind of takes out some of that onetime benefit in just looks overall at the strength of the platform. They are both growing in the mid teens <unk> growth and.
Sarah M. Youngwood: We also repay the remaining $340 million of our term loans, in line with our prior commitment of prioritizing D-level debt. And finally, we repaid $67 million of commercial paper. Excluding commercial paper, all of our outstanding debt is now fixed.
Alexander: And I think that Thats, just showing strong demand across the clientele for calypso its risk management <unk>.
Alexander: Treasury risk management capital risk management.
Sarah M. Youngwood: Our all-in pre-tax cost of debt was 4.0% as we exit 1-2-20. Turning to leverage, our gross average ratio declined from 4.3 at the end of last year to 4.1 at the end of 1-224.
Alexander: And I think that that's a big big focus of banks and we still are in that sweet spot of the tier two and tier three banks that we can sign across the world I think with <unk>, It's all about new regulation and so we had the ESG modules that we sold into the <unk>. It was really interesting, we're definitely making progress on signing around the <unk>.
Sarah M. Youngwood: In addition to the stated debt repayment, our leverage ratio decreased 0.1 times from the impact of FX, amortization of debt issue costs, and stronger equity. We are reiterating our expectation to achieve post-severage below 4 times, 9 to 12 months ahead of our initial goal. As I reflect on this quarter, I would highlight strong client adoption and growth in solutions overall, and particularly in index, analytics, financial plan management, Axiom SL, and Caliper. Strong progress on synergy actions and building cross-style pipelines, and continued actions on D-Leverage
Alexander: Will the Basel requirements and other other new regulations that are coming and so I would have to say, it's a pretty consistent demand cycle for both products and we it's been great. I mean, the clients are really excited to work with us as well is also talking about like that one connector that one client that they've connector between cliffs and <unk>.
Alexander: What that means is they are already close to a client they know they have new regulation instead of having to like create.
Alexander: Create a whole new data integration for <unk>, we're able to take the data from the calypso and automatically imported into axiom itself and that lowers the time to market for us to implement the accident product and obviously makes the action product more appealing so pretty excited about what we're doing across both products. This year.
Sarah M. Youngwood: As we look ahead, I continue to be impressed by the balance and diversity of the business model, enabling us to grow the top line with strong margins and to effectively execute our capital allocation plan. We are well positioned to deliver on a One Nasdaq strategy and achieve durable organic revenue growth and profitability. Thank you.
Speaker Change: Great. Thanks for that and then my second question is just around the market Tech business.
Alexander: You flagged that you signed agreement to upgrade a number of clients I think you said three to a new matching engine.
Alexander: Next Gen platform can you help us maybe contextualize what that means in terms of revenues is it stronger revenue is there any sort of installation fee upfront.
Operator: And I will turn it back to the operator for Q&A. Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. To withdraw your question, please press star 1 1 again.
Speaker Change: Profitability of those platforms, they're sending any meat around the bone would be great. Thank you, yes sure. Yes. So I think when we signed new clients to the Nexgen system, whether it's trading or clearing we do have implementation revenue and that we're now we're calling that professional services revenue that comes in as they work through the implementation.
Operator: We ask that you please keep your questions to no more than one question and one follow-up, and if time permits, we'll be more than happy to take more questions. Please stand by while we compile the Q&A box. And I assure you our first question comes from the line of Owen Lau from Oppenheimer. Please go ahead.
Speaker Change: Start to receive the license revenue upon delivery. So that's a little bit of a difference between cliffs axiom versus market tact.
Alexander: But what we're finding is when we work with them on the next Gen systems first of all it allows them to have flexibility to consider cloud.
Owen Lau: Good morning, and thank you for taking my questions. Could you please add more color on the cross-sell campaigns to achieve the $100 million target? What is the plan for the rest of this year?
Alexander: For the first time right so markets, both on trading and clearing and settlement. It allows them to start to understand that they can deliver these and start to operating cloud, which would increase our share of wallet, if that's where they choose to go but even without that we do have some opportunity to up sell them on the renewal because it's it's.
Adena T. Friedman: Does it mainly cover cross-sell within a dancer or between dancer and baritone or across the whole company? Thank you.
Adena T. Friedman: Sure. So we actually described the current Crosstail campaigns at Investor Day a few weeks ago, and they really cover across the FinTech division. So one of the Crosstail campaigns is really focusing on bringing more of the Calypso risk management and collateral management capabilities into our market operator clients. Another one is actually working with the Calypso clients to bring more Axiom SL capabilities.
Alexander: Really world Class technology, and also provide them additional services. So for an example, with one client that we're working with they also are taking risk management capabilities, which is cloud delivered as well as market operations capabilities, which are cloud delivered so we have an ability to actually continue to up sell them on other.
Alexander: Components of what it means to run a market I am enthused are all cloud delivered so they're much easier for us to implement for them and Thats. The way that we're working with these mark our market tech clients to continue to get a bigger share of their spend while also giving them more value and modernizing their business.
Adena T. Friedman: So bringing in Axiom SL into some of the capital markets firms where they have new regulatory obligations that they're facing. And then the third is introducing some of the Verifin clients to the Axiom SL team as well and the Calypso team, particularly the treasury management capabilities within Calypso that we think are relevant to the Tier 3 banks that we serve that are really a big part So those are the three main campaigns we have.
Speaker Change: Great. Thanks, so much.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: And I'm sure. Our next question comes from the line of.
Speaker Change: Dan Fannon from Jefferies. Please go ahead.
Daniel Thomas Fannon: Hi, Thanks, good morning.
Daniel Thomas Fannon: I wanted to follow up on capital access.
Daniel Thomas Fannon: You talked about some pickup in listings, but clearly still slow slower than we've seen previously in previous years.
Daniel Thomas Fannon: The revenue impacts I think you mentioned still some.
Daniel Thomas Fannon: Flow through of the de listings that occurred so wondering how we should think about the revenue progression. This year, then also applying that to workflow and insights and sounds like a rebound or a recovery in that segment is also tied to a pickup in listening. So just curious about the outlook, there and what really will get that business kind of accelerating growth.
Adena T. Friedman: But I would tell you, it is actually really interesting as we talk to our bank clients, our broker-dealer clients, our exchange clients, when we have conversations today, it generally starts with one product and then move to another. I was actually talking to one client just the other day where, you know, they're an Axiom SL client and they're really interested in anti-financial crimes. So we can kind of look holistically at the strategic relationship in ways that we haven't been able to do in the past.
Daniel Thomas Fannon: Sure.
Daniel Thomas Fannon: I'll hand, the first part of the question over to Sarah and I will talk about corporate solutions, yes.
Speaker Change: Youre looking at.
Speaker Change: Data and leasing of new things in particular it.
Speaker Change: Is that we are coming into the year and that's what we've discussed for a while at this point with some headwinds in particular that I gave you the $10 million for the day.
Speaker Change: <unk> of last year on the downgrades.
Speaker Change: And so that's impactful one quarter until you have that as.
Speaker Change: As well as I also mentioned that as you go into the year, we're going to start seeing the effect of the cost of 2021, not being as well we placed by the following classes to the amortization of the initial listing fees is also a headwind not so much for this quarter, but for the rest of the year. So you can talk to docs and of course you.
Adena T. Friedman: So it's been a great start, and we hope to be able to show some tangible progress. It will take time for these, you know, these opportunities to turn into contracts. As you know, it takes time to contract with banks. But, but we are very encouraged by the early conversations we're having.
Speaker Change: Offsetting that.
Speaker Change: <unk>.
Speaker Change: Benefits of like pricing as well as add new ipos, but this is a lot of headwinds to offset.
Adena T. Friedman: That's helpful. Just a quick follow-up on Verizon. I think you didn't sign Tier 1 and Tier 2 banks this quarter, but the number was still pretty strong. Can you please talk about the pipeline for the rest of this year for Tier 1 and Tier 2 banks, and also give us an update on the international expansion opportunities? Thanks a lot.
Speaker Change: This is the context there so the IPO environment would certainly help if it came in the second half, but it's a slow moving machine, where you would have that.
Speaker Change: Amortize.
Speaker Change: And therefore.
Speaker Change: It's hard to offset those existing fees, which are the floating box.
Speaker Change: Yes.
Speaker Change: We started to talk about that towards the end of last year, but I think it's important to recognize is here. So it's a slow moving train in terms of both the impact of the delisting environment. But then also the impact of an improving IPO environment now how that parlays into corporate services one of the things that we've talked about over the last several years and as kind of a flywheel.
Adena T. Friedman: Sure. Yeah, sure. So you're right.
Adena T. Friedman: We didn't sign any new clients, but we are working really well on implementing the clients we signed last year, and that's going quite well. And we have a lot, a very, very good pipeline of companies, either that we're in the middle of doing proofs of concepts for, or we're in the middle of contracting with. And so we do feel very good about our ability to continue to sign those clients as we proceed through the year. And it's interesting.
Speaker Change: Effect of having when we have an active IPO environment, we get more companies to come into the market. They start to understand the needs for their investor relations capabilities, they want to modernize their governance and ESG reporting for their clients and they start to look not only at the IPO package, we give them, but other upsells and capabilities, we can offer them and that's a positive.
Adena T. Friedman: So the challenges that we're really focused on that we bring to the clients, usually the first way to get in the door, at least, is through the fraud detection and investigative capabilities because it's just such an easy and clear return on investment that we can show them in terms of reducing false positives and increasing fraud found. Another area of focus right now for a lot of the bigger banks is check fraud, and we have a new check fraud capability that we're rolling out that we think is really best in class, and we're really excited about our engagement there.
Speaker Change: I will now.
Speaker Change: It's tougher environment, where we have companies you listed but also fewer new customers to sell to that's also having kind of be the flip effect on market or on the corporate solutions business. So we want to make sure. Your you guys understand those dynamics when we think about corporate solutions overall and we've had this business for a long time, we've kind of described it as is.
Speaker Change: Kind of.
Speaker Change: A business that has I would say.
Speaker Change: Low to mid single digit type of growth environment as a general matter when markets are normalized and this isn't necessarily a totally normalized environment. So we're wanting to give you those that context. If you think about that what that means for the overall workflow and insights business and Thats why is there a share with you kind of our full year view of that business as compared to outlook.
Adena T. Friedman: And then, with our new entity research co-pilot tool, that really supports our anti-money laundering capabilities. And with a 90% reduction in investigative time, we actually think that could be a really great way for us to engage with larger banks, in addition to, of course, our entire clientele. In terms of the international expansion, we're focused, as we mentioned at Investor Day, primarily on Canada and the UK, and some of those are progressing quite a long way, and some of them are still very early conversations. Thanks a lot.
Speaker Change: First is the index business of course, where we're having a very strong start to the year and we anticipate that that would be that would come in above our outlook for the year.
Speaker Change: Great. That's helpful. And then I guess just on the index business based upon.
Speaker Change: Quarter to date or year to date activity can.
Speaker Change: Can you give us a sense of when that hearing might occur with the pricing with CME.
Speaker Change: Based on working through them.
Speaker Change: I mean, not generally occurs in the second quarter I don't think that we have a precise answer to that but it generally occurs in the second quarter.
Speaker Change: Great. Thank you.
Operator: Thank you. And I assure you our next question comes from the line of Alexander Blostein from Goldman Sachs. Please go ahead.
Speaker Change: Thank you.
Speaker Change: And I show. Our next question comes from the line of Michael Cho from Jpmorgan. Please go ahead.
Alexander Blostein: Hi, good morning, thank you. So maybe starting with the Dems as well, really strong year-over-year revenue growth, you pointed out about 20%, and it sounds like a lot of it is coming from the Calypso side. So can you kind of help us bridge the sources of growth, particularly at Calypso, and as you think about the future, how do you see that opportunity unfold for Calypso specifically over the course of this year and into next? Sure. Thanks, Alex. Actually, I'll go. I'll cover CLPSO and Axiom SL together. So, I mean, each of them.
Michael Cho: Hi, Good morning, Thanks for taking my question I, just wanted to touch on <unk> and kalypso as well I mean, it looks like <unk> trends are healthy and clearly the increase in subscription revenue.
Speaker Change: This.
Michael Cho: This quarter I guess can you just help us unpack a little bit about how much price and upsell who was a driver.
Michael Cho: I'm here in terms of that revenue growth and how that mix might change in the coming years and is there a different approach to that when we think about axiom versus calypso clearly they serve different markets and different solutions.
Michael Cho: Yes, so I think that I would say first of all as we've said before we have about half the revenue increases tend to come from Upsells that have come from pricing changes and new cells sales, we don't try to break that out further than that and I think that's generally the case I don't know if that's precisely the case for this quarter, but thats the general way that we consider the revenue.
Adena T. Friedman: But, But I think Sarah did a really nice job of laying out the growth for each of the products as well as combined. And what you're seeing is some of it is timing of renewals. So we did have a really good renewal quarter for CLPSO and Axiom SL, but particularly CLPSO with more of the on-prem deliveries or on-prem renewals, which you know is a good revenue driver for us in terms of how we recognize the licensees.
Speaker Change: Growth.
Speaker Change: In terms of how that might change over time, I think that really has more to do with as we continue to rollout the cloud capabilities for our clients because that gives us a chance to do more for the client and therefore get a higher value for our solutions.
Adena T. Friedman: But, if you look at just ARR growth, which really kind of takes out some of that one-time benefit and just looks overall at the strength of the platform, you know, they're both growing in the mid-teens ARR growth. And, and I think that that's just showing strong demand across the clientele for CLPSO, its risk management, treasury risk management, capital risk management. And I think that they're really, that's a big, big focus of banks.
Speaker Change: And so that creates a pricing lever for us, but that's because we're providing more value. So as we continue to progress with the cloud new bookings in cloud as you saw with axiom, we had 50% of new bookings in cloud we are a little slower this quarter on calypso, but thats.
Speaker Change: More of a timing thing I think that we believe that that will continue to progress our ability to have that as a as a pricing lever, but also make it. So that the revenue is more stable over time, you know you have more predictable revenue streams in the years ahead, but we are in that transition period. So that transition period creates creates the ability for.
Adena T. Friedman: And we still are in that sweet spot of the tier two and tier three banks that we can sign across the world. And I think with Axiom SL, it's all about new regulation. And so we have the ESG modules that we sold to the GSIBs, which was really interesting.
Speaker Change: We want to make sure we're giving you color on this on Prem versus cloud. So you can kind of walk with us through that transition period to those those.
Speaker Change: Those benefits from cloud over time.
Speaker Change: Great. Thanks for thanks for that and then just.
Speaker Change: Just a quick follow up on marketplace.
Adena T. Friedman: We're definitely making progress on signing around the Basel, the Basel requirements, and other, you know, other new regulations that are coming. And so I would have to say it's a pretty consistent demand cycle for both products. And we, you know, it's been great. I mean, the clients are really excited to work with us, as well as also talking about like that one connector, that one client that connects between CLPSO and Axiom SL.
Speaker Change: I think I heard you say.
Speaker Change: 85% for 2024 in terms of dollars.
Speaker Change: Revenues.
Speaker Change: To make sure I caught that right and two what what's the driver there in terms of back half loaded.
Speaker Change: Kevin just Bob as you grow.
Kevin: Yes, so youre Honeywell does we will be well positioned within the 3% to 5% range there.
Speaker Change: I did say immediate second quarter and the fourth being back ended.
Speaker Change: And.
Speaker Change: I think I do not want to comment on that yes, I just want to say we have some deliveries that were delivering kind of part way through the year that obviously you've been turned on the license revenues and two that can help and then we asked we feel that we have a good pipeline of growth in new clients. So it will be able to to deliver growth as we go through the year, but we feel very good about as you said, it's within the range and I think you said strong within the.
Adena T. Friedman: What that means is they're already a CLPSO client, they know they have new regulations, and instead of having to create a whole new data integration for Axiom SL, we're able to take the data from CLPSO and automatically import it into Axiom SL.
Speaker Change: Our range and I would just add also that would put us delivery, which was a tough comp plus Korea telecom in the first quarter, but also a bit in the second quarter.
Speaker Change: Okay.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Adena T. Friedman: And that lowers the time to market for us to implement the Axiom product and obviously makes the Axiom product more appealing. So pretty excited about what we're doing across both products this year. Great, thanks for that. And then my second question is around the market tech business. You flagged that you signed an agreement to upgrade a number of clients, I think you said three, to a new matching engine, next-gen platform.
Speaker Change: And I show. Our next question comes from the line of Craig Siegenthaler from Bank of America. Please go ahead.
Speaker Change: Yeah.
Craig William Siegenthaler: Good morning, everyone.
Craig William Siegenthaler: We had a question on index options with Mdx how.
Craig William Siegenthaler: How can you tap into the growing popularity with index options just given your strong brand with the NASDAQ100 Index I think your share of index options, there's only about 1%.
Craig William Siegenthaler: The growth rates are high and the revenue capture is very attractive in this business.
Speaker Change: Yeah, Thanks, Craig Yeah Youre right.
Adena T. Friedman: Can you help us maybe contextualize what that means in terms of revenues? Is it higher revenue? Is there any sort of installation fee up front?
Speaker Change: No.
Speaker Change: We have a great opportunity there and we've been putting a lot of focus on that it's been a good collaboration between our index team and the options team. So.
Adena T. Friedman: Profitability of those platforms or sending any meat around the bone would be great. Thank you. Yeah, sure. Yeah.
Speaker Change: What's nice is we have all of that within NASDAQ. So together they are working on building a really good robust trading ecosystem for the mdx options platform as well as I'm building on.
Adena T. Friedman: So I think when we sign new clients to the next-gen system, whether it's trading or clearing, we do have implementation revenue. Now we're calling that professional services revenue that comes in as they work through the implementation. We start to receive the license revenue upon delivery. So that's a little bit of a difference between Cliff Saxion versus market tech.
Speaker Change: Institutional demand for our index products, which then drives interest in hedging and other things that would then drive.
Speaker Change: Interest in the index options. So it's definitely kind of taking hold I think we had we had a really strong uptick in volumes in the index options year over year.
Speaker Change: 80% increase and then I'd like 15% quarter over quarter increase in the volumes in the index options. So it's.
Adena T. Friedman: But what we're finding is when we work with them on the next-gen systems, first of all, it allows them to have the flexibility to consider cloud for the first time, right? So, markets both on trading and on clearing and settlement, it allows them to start to understand that they can deliver these and start to operate in the cloud, which would increase our share of wallet if that's the way they choose to go.
Speaker Change: Definitely been a really great bright spot and we agree we are just at the beginning of what we can achieve there.
Speaker Change: Thank you Dina and just for my follow up.
Speaker Change: It's on the comparison between <unk> and revenues.
Speaker Change: Given the growing focus you have on IRR as you move into more subscription and reoccurring businesses.
Speaker Change: Should we see more of a delta between these two metrics on a quarterly basis.
Speaker Change: I would actually say that as we move more towards cloud there should be less of a delta, but that's a long that's a long transition I think we have to recognize that for the Axa mezcal Calypso in market Tech businesses. Those are still it's still primarily an on prem delivered solution with transitions to <unk>.
Adena T. Friedman: But even without that, we do have some opportunity to upsell them on the renewal because it's really world-class technology and also provide them additional services. So for example, with one client that we're working with, they are also taking risk management capabilities, which is cloud delivered, as well as market operations capabilities, which are cloud delivered. So we have an ability to actually continue to upsell them on other components of what it means to run a market, and those are all delivered in the cloud.
Speaker Change: <unk>, whereas for the financial crime management business, it's entirely cloud as well as on TFS now that's a SaaS business. So the majority of those revenues, you'll see more of a blunt the Ara looking closer to total revenue so that delta I would say will persist for a while but we're trying to give you a enough transparency. So that you can understand the deferred.
Alexander Blostein: So they're much easier for us to implement for them. And that's the way that we're working with our market tech clients to continue to get a bigger share of their spend while also giving them more value and modernizing their business. Great. Thanks so much.
Speaker Change: And you understand the trends that are driving the differences, but when we look at our business. We say, what's the underlying health of our business. We are focusing on <unk> and that to US is a better reflection of the overall client demand as opposed to like individual deliveries and professional services.
Operator: Thank you. And I assure you our next question comes from the line of Dan Fannin from Jeffries. Please go ahead. Thanks, good morning.
Speaker Change: Thank you Dana thank.
Speaker Change: Thank you.
Speaker Change: Thank you and I show. Our next question comes from the line of Benjamin Butters from Barclays. Please go ahead.
Daniel Thomas Fannon: I wanted to follow up on capital access. You talked about some pickup in listings, but clearly still slow, slower than we've seen previously in previous years. But, Curious about the revenue impacts. I think you mentioned still some flow through of the delistings that occurred. So wondering how we should think about the revenue progression this year and then also tie that to workflow and insights. It sounds like any rebound or recovery in that segment is also tied to pickup and listing.
Benjamin Butters: Hi, Good morning, Thanks for taking my question just following up on that last question from Craig is there anything that you can share about sort of the upcoming pipeline.
Benjamin Butters: In 2024 in terms of on Prem versus cloud implementations, just I know youre kind of guiding in talking about the business on an IRR basis, but just as we think about our models is there anything specific we can think about quarter by quarter.
Speaker Change: Yes quarter by quarter, I think we're not we're not going to provide that level of detail I would say if we look over the last year and we kind of looked at it eclipsing axiom tell over the last year I think it was around 40% is that right or if we got new bookings.
Sarah M. Youngwood: So just curious about the outlook there and what really will get that business kind of accelerating growth. Sure, I'm going to hand the first part of the question over to Sarah, and I'll talk about corporate solutions. Yeah, so what you're looking at in data and listings, and listings in particular, is that we are coming into the year, and that's what we've discussed for a while at this point, with some headwinds. In particular, I gave you the $10 million for the delistings of last year and the downgrades, and so that's the impact for one quarter.
Benjamin Butters: Almost half, yes, so almost half of our new bookings were cloud last year I think that as we're starting this year, we saw 50% of the new bookings are for axiom, a cell where cloud this year.
Benjamin Butters: With clips are being lower around 18%, but as we've said before it's more of a timing issue. So we would hope that we would get around the same level over the course of the year, but we're not we're not able to provide you kind of quarter by quarter I think.
Benjamin Butters: Just giving you a little bit more overall color for the quarter and axiom that sell in clip. So just to help you model, but not not to that level precision.
Speaker Change: Got it understood and then for my follow up I just wanted to ask on the IPO win rate, just Q1 looks a little bit lower than what you reported in the past, but is that sort of just a function of the quarter itself and based on the pipeline for the rest of the year do you have any expectations on should that sort of trend back upwards. What are your thoughts there. Thank you yes.
Sarah M. Youngwood: And so you have that, as well as I also mentioned that as you go into the year, we're going to start seeing the effect of the class of 2021 not being replaced as well by the following classes. So, the amortization of the initial listing fees is also a headwind, not so much for this quarter but for the rest of the year. So you start with that. Of course, you have offsetting that some benefits of pricing as well as the new IPOs, but this is a lot of headwinds to contend with. So this is the context there.
Speaker Change: Yes sure yes, so I think every quarter is a little bit of a different story and based on the nature of the company that are going public, but but our overall view is that we have a great a great strong pipeline, we have a great platform, we're very confident in our ability to keep our win rate high and we're really excited about the companies that are looking to go public in the next.
Benjamin Butters: Hopefully in the next quarters.
Benjamin Butters: And and also I would also mention that over the last year. Our win rate was 80%. So we have to look at it a little bit over a longer period of time, but we have 80 companies in the pipeline to go public on NASDAQ and we're really hopeful that they feel good about being able to tap the markets in the coming quarters.
Adena T. Friedman: So the IPO environment would certainly help if it came in the second half, but it's a slow-moving machine where you would have that amortized. And therefore, it is hard to offset those listing fees, which are the following. Yeah, so I think we started to talk about that towards the end of last year, but I think it's important to recognize, as Sarah said, it's a slow moving train in terms of both the impact of the de-listing environment on companies, but then also the impact of an improving IPO environment.
Speaker Change: Got it thank you.
Speaker Change: Thank you.
Speaker Change: And I show. Our next question comes from the line of Simon <unk> from Redburn Atlantic. Please go ahead.
Simon: Hi, everyone. Thanks for taking my question.
Simon: I was wondering if you could just going back to the cross selling opportunities.
Simon: At the Investor Day, you mentioned Youre, starting to build an enterprise sales team.
Simon: It's something relatively new to the NASDAQ stores wanted to send I was wondering if you could update us on how thats progressing.
Simon: Have you already built is now fully functioning team and driving the cross sells or is that is that momentum still to come.
Adena T. Friedman: Now, how that parlays into corporate services, one of the things that we've talked about over the last several years, and it's kind of the flywheel effect of having, you know, when we have an active IPO environment, we get more companies into the market, they start to understand the needs for their investor relations capabilities, they want to modernize their governance and ESG reporting for their clients, and they start to look not only at the IPO package we give And that's a positive flywheel.
Speaker Change: Yes actually.
Speaker Change: Just had a meeting about it across the management Committee last week, where we talked about how we're going to approach enterprise sales and making sure that we have across NASDAQ. We have good connective tissue to make sure that we can deliver for.
Speaker Change: For the enterprises, and we're doing a lot in blocking and tackling. So first is making sure. We have kind of an enterprise sales organization. The second thing is we're doing a lot of that data management of our client data to make sure. We can look at our data our client data across the franchise.
Speaker Change: And we have line of sight across the franchise. So that we can actually talk to the clients on an enterprise basis, and then in terms of the sales commissions to the way that our prize sales team.
Daniel Thomas Fannon: Now, in a tougher environment where we have companies de-listed but also fewer new customers to sell to, that's also having kind of a flip effect on the corporate solutions business. So we want to make sure you guys understand those dynamics. When we think about corporate solutions overall, and we've had this business for a long time, you know, we've kind of described it as, you know, kind of a business that has, you know, I would say, you know, kind of a low to mid single-digit type of growth environment as a general matter when markets are normalized, and this isn't necessarily a totally normalized environment.
Speaker Change: Works with the product sales teams, we have to design a commission plan around that but I think really helps them drive behaviors in alignment. So that all of that is actually just seeing how that enterprise sales team is being felt within fintech, but the collaboration across the same Tech division the cap Division and market services is really really strong and we hope to be.
Speaker Change: To demonstrate really good strength there.
Speaker Change: Going forward, that's a big part of our ability to achieve the cross sell.
Speaker Change: Target, but we definitely have made a lot of progress already.
Daniel Thomas Fannon: So we're wanting to give you that context to think about that, what that means for the overall workflow and insights business. And that's why Sarah shared with you kind of our full year view of that business as compared to Outlook versus the index business, of course, where we have a very strong start to the year, and we anticipate that that would come in above our Outlook for the year.
Speaker Change: Okay. That's.
Speaker Change: Great. Thank you.
Speaker Change: And then I think just last year.
Speaker Change: If you could perhaps expand a little bit more on the.
Speaker Change: The very strong flows in.
Speaker Change: The index business and of particular interest.
Speaker Change: Upside of the NASDAQ100 franchise could you give us a little bit more detail about Boston.
Speaker Change: And just how to think about the momentum and sustained boutiques.
Speaker Change: Yeah. So so you are right we have given us that at Investor day that I think is worth mentioning so about 70% of our revenue comes from the NASDAQ100 franchise, but in another 30% comes from other indices that we have in terms of.
Daniel Thomas Fannon: Great, that's helpful. And then, based upon quarter-to-date or year-to-date activity, can you give us a sense of when the tiering might occur with the pricing with CME based on where things sit now? I mean, that generally occurs in the second quarter.
Speaker Change: <unk> innovative <unk> index is around AI cloud and cyber as well as momentum in other factor indices that we have around the world. So so it actually is a pretty diversified platform and in the terms of the inflows, it's pretty it's pretty mixed meaning that it's coming from all of our index products, we've probably.
Sarah M. Youngwood: You know, I don't think that we have a precise answer to that, but it generally occurs in the second quarter. Thank you. And actually, our next question comes from the line of Michael Cho from JPMorgan. Please go ahead. Hi, good morning, Dean and Sarah. Thanks for taking my question. I just want to touch on Axiom and Calypso as well.
Speaker Change: Strength coming in on some of the innovation index is.
Speaker Change: Now they are 100 as well and on global distribution. So we're definitely been really focused on globalizing, the distribution of our products and bringing in investment and inflows across the world. So those are probably the ones that are that are getting the most inflows, but it isn't just the NASDAQ100, and what's really interesting is it's been very consistent whether or not the <unk>.
Michael Cho: I mean, it looks like you said ARR trends are healthy, and clearly, the increase in subscription revenues is helping that growth this quarter. Can you just help us unpack a little bit about how much price and upsells were a driver here in terms of that revenue growth and how that mix might change in the coming years? And is there a different approach to that when we think about Axiom versus Calypso?
Speaker Change: Markets are up or down we are seeing inflows and so I think that's also showing that investors are kind of seeing through a quarter and reflecting on the future of the economy and they want to be a part of that so that's what we're seeing in terms of inflows.
Speaker Change: Thanks, so much.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: And I show next question comes from the line of Karl <unk> from <unk>. Please go ahead.
Adena T. Friedman: Because, clearly, they serve different markets and different solutions. Yeah, so I think that I would say, first of all, as we said before, we have about half the revenue increases tend to come from upsells, and half come from pricing changes and new sales. We don't try to break that up further than that.
Karl: Hi, Good morning, maybe just a couple of follow ups. So first as a follow up on Dan's earlier question on the workflow and insights business. It still sounds like the analytics business is posting high single digit solid growth.
Karl: In corporate solutions that likely implies kind of flattish.
Karl: And you heard at the elongated sales cycles I guess can you just talk about the average sales cycle for that business and kind of the lag time that you would expect between when the IPO environment ramps and when do you ultimately expect to see an acceleration in revenues in our corporate solutions business.
Adena T. Friedman: And I think that's generally the case. I don't know if it's precisely the case for this quarter, but that's the general way that we consider revenue growth. In terms of how that might change over time, I think that really has more to do with as we continue to roll out cloud capabilities for our clients because that gives us a chance to do more for the client and, therefore, get a higher value for our solutions.
Karl: I think the reason why we wanted to give you that level of disclosure. This quarter is just to help you understand kind of how we see the year I think that as if the IPO environment ramps up and that is in <unk>.
Adena T. Friedman: And so that creates a pricing lever for us, but that's because we're providing more value. So as we continue to progress with the cloud and new bookings in the cloud, as you saw with Axiom, we had 50% of new bookings in the cloud. We were a little slower this quarter on Calypso, but that's kind of more of a timing thing.
Karl: Obviously, it's a win it at some point, but in terms of looking at it within the year, if we see improvement there.
Karl: <unk> tend to have I would say probably on average kind of a six month sales cycle would probably be a good average around maybe maybe four to six months in terms of an average on sales cycle for clients.
Karl: So, but then of course, they also have to understand what that they need the product. So they go public base start to recognize that they really want more intelligence about their investors. They really want to make sure. They have the right ESG reporting and they start to work with us more holistically kind of as they season and then there I would say maybe like sometimes it can be very quick sales cycle, but.
Michael Cho: I think that we believe that this will continue to progress our ability to have that as a pricing lever but also make it so that revenue is more stable over time. You will have more predictable revenue streams in the years ahead, but we are in that transition period. So that transition period creates the ability for – we want to make sure we're giving you color on on-prem versus cloud so that you can kind of walk with us through that transition period to those benefits from the cloud over time. Great, thanks for that.
Karl: We will say like four to six months as a general a general view, so youre talking about more going into 2025 to start to see momentum if we have a recovery in the IPO environment.
Speaker Change: That makes sense. Thank you and then just a follow up on kind of capital priorities. It sounds like over the near term number one priority still remains deleveraging I guess with the Toro Bravo and lock coming later this quarter can you just talk about any willingness to restart buybacks are starting to deploy some capital towards buying.
Michael Cho: And then just a quick follow up on marketplace tech. I think I heard, Terry, you say 35% for 2024 in terms of revenues. One, I just want to make sure I caught that right.
Karl: Backs this quarter should we really expect that to be 100% allocated towards deleveraging near term.
Speaker Change: Thanks Kyle.
Sarah M. Youngwood: And two, you know, what's the driver there in terms of the back hats being loaded in terms of revenue growth? Yeah, so you heard me well, that we would be well positioned within the 3 to 5% range there. And I did say a muted second quarter and the growth being backhanded. And I think Adena wanted to comment on that.
Karl: In terms of the capital prioritization, our Super consistent with what we said at Investor Day, we were really glad to be able to pay down the term loan this quarter.
Karl: And two on the quarter.
Karl: For one we are totally committed to all of the timelines that we have given that investor day. So the 9% to 12 months ahead, you can consider that to be something that we will deliver and within that we're keeping some flexibility.
Adena T. Friedman: Yeah, I just want to say we have some deliveries that we're delivering kind of partway through the year that obviously turn on the licensed revenues. And so that can help. And then we feel that we have a good pipeline of growth and new clients that we'll be able to deliver growth as we go through the year. But we feel very good about it, as you said. It's within the range. And I think you said it was strong within the range.
Karl: To consider share repurchases.
Karl: If it makes sense.
Karl: That would be particularly related to.
Karl: <unk>.
Karl: Hi.
Karl: Issuance so offsetting the issuance we think is important but when we look at it on.
Karl: Comprehensively, we are very very focused on deleveraging article because when you look at the EPA.
Karl: Acquisition dilution given some of the higher debt costs that we can repay.
Sarah M. Youngwood: Yeah, and I would also add that product delivery, which was a tough comp, possibly a tough comp in the first quarter, but also a bit in the second. Great. Thank you. Thank you. And I have our next question comes from the line of Craig Siegenthaler from Bank of America. Please go ahead. Thank you. Good morning, everyone.
Karl: Even at our current stock price it's.
Speaker Change: We need to talk to you.
Speaker Change: Positioned to do that.
Speaker Change: Of course, the cash flow accretion is something that we are focused on it.
Speaker Change: Understood. Thank you very much.
Speaker Change: Thank you.
Speaker Change: And I show. Our next question comes from the line of Brian Bedell from Deutsche Bank. Please go ahead.
Brian Bertram Bedell: Alright, great. Thanks, good morning, and thanks for taking my questions.
Craig William Siegenthaler: We had a question on index options with NDX. How can you tap into the growing popularity of indexed options, just given your strong brand with the Nasdaq 100 index? I think your share of indexed options is only about 1%. Growth rates are high, and the revenue capture is very, Yeah, thanks, Craig. Yeah, you're right.
Brian Bertram Bedell: Maybe just moving over to <unk>.
Brian Bertram Bedell: Continued strong growth.
Brian Bertram Bedell: And your SaaS clients and then.
Brian Bertram Bedell: Just trying to get a sense of.
Brian Bertram Bedell: What that might mean for the cadence of revenue growth.
Brian Bertram Bedell: That segment as we move throughout the year, if you think that can.
Brian Bertram Bedell: Improve.
Brian Bertram Bedell: From the 23% level already pretty strong.
Adena T. Friedman: So we have a great opportunity there, and we've been putting a lot of focus on that. It's been a good collaboration between our index team and the options team. So, you know, we, what's nice is that we have all of that within Nasdaq. So together, they're working on building a really good, robust trading ecosystem for the NDX options platform, as well as building on institutional demand for our index products, which then drives interest in hedging and other things that would then drive interest in the index options.
Brian Bertram Bedell: And then the rollout of the GE Research co pilot is just your thoughts on how that might contribute to revenue.
Brian Bertram Bedell: Progress throughout the year in that segment.
Speaker Change: Sure, Yes, we're not going to provide you specific kind of views.
Brian Bertram Bedell: The revenue growth other than we say that it's mid Twenty's and we feel we feel good about our Aurora outlook there.
Brian Bertram Bedell: I think that as with the co pilot capability the way that we're rolling out copilot would be the same that we're rolling out any new module that we provide to our small to medium bank clients. So when a small to medium event client signs up for Verifone. They sign up for the platform and we then introduced new modules into that platform and new capabilities and adapt platform through their contract period.
Adena T. Friedman: So it's definitely, you know, kind of taking hold. I think we had a really strong uptick in volumes in the index options year over year, it was like an 80% increase, and then like 15%, quarter over quarter increase in volumes in the index options. So it's, that's definitely been a really great bright spot. And we agree that we're just at the beginning of what we can achieve there. Thank you, Adena.
Brian Bertram Bedell: And then at the end of the contract period, we walked through with them. What's the return that we've offered them through that period and therefore, what would be the price increase that we think is appropriate for the value that we're providing to them. So as we rollout the copilot capabilities, we get usage across the platform across the banks. It will help us show a really strong ROI.
Craig William Siegenthaler: And just for my follow-up question, it's on the comparison between ARR and revenue. Given the growing focus you have on ARR as you move into more subscription and recurring revenue, should we see more of a delta between these two metrics? I would actually say that as we move more towards the cloud, there should be less of a delta. But that's a long, you know, that's a long transition.
Brian Bertram Bedell: For them so that in our renewal talks it becomes a part of that conversation, but it is not a module that we're selling discretely to them, we want them to use it we want them integrated into workflows that we want them. We want this product to be as sticky as possible and as valuable as possible. So for the renewal conversations as you look upmarket into the tier one.
Adena T. Friedman: I think we have to recognize that for the ActiMestel, Calypso, and MarketTech businesses, you know, those are still, you know, still primarily an on-prem delivered solution with transitions to the cloud, whereas for the financial crime management business, it's entirely cloud, as well as NTS now; that's a SaaS business. So the majority of those revenues, you'll see more of a blunt, you know, the error looking closer to total revenue. So that delta, I would say, will persist for a while.
Brian Bertram Bedell: One and tier two banks, where it's all new sales and where we are selling modules. So as we go in and talk to them are the modules that are the most straightforward to sell across our platform or the fraud module is because it's a very clear calculus of returned to them, but as you talk about AML, it's a much more complicated problem and now.
Brian Bertram Bedell: We have this new tool that we can offer through our AML solutions that shows a clear returns.
Adena T. Friedman: But we're trying to give you enough transparency so that you can understand the difference, and you understand the trends that are driving the differences. But when we look at our business, we say what the underlying health of our business is, we are focusing on ARR. And that, to us, is a better reflection of the overall client demand rather than individual deliveries and professional services. Thank you, Tina.
Brian Bertram Bedell: In addition to doing a great job of rooting out.
Brian Bertram Bedell: Criminal behaviors and money laundering. We also can show that we're going to save them a ton of time and resources on the investigative side of it and so we do think it will help us with sales it'll help us show our value to the platform and we can we can look at that as part of the pricing that we've discussed with them when we sign them. So that's basically how we're a value or use.
Craig William Siegenthaler: Thank you. Thank you. And I show our next question comes from the line of Benjamin Budish from Barclays. Please go ahead. Hi, good morning.
Brian Bertram Bedell: <unk> this tool to kind of drive sales retention and upsells.
Speaker Change: Thank you.
Speaker Change: And I show our last question comes from the line of Michael Cyprus from Morgan Stanley. Please go ahead.
Benjamin Elliot Budish: Thanks for taking the question. Just following up on that last question from Craig, is there anything you can share about the sort of upcoming pipeline in 2024 in terms of on-prem versus cloud implementations? I know you're kind of guiding and talking about the business on an ARR basis, but just as we think about our models, is there anything specific we can think about quarter by quarter? Yeah, quarter by quarter. I think we're, we're not, we're not going to provide that level of detail. I would say, if we look over the last year, and we kind of looked at Eclipse and Axiom SL over the Is that right? 40% new bookings? Yeah, almost half.
Michael J. Cyprys: Hi, Good morning, Thanks for taking the question just wanted to ask about the tens of business out of it its been about six months or so since close just curious in conversations with clients of Calypso at axiom.
Michael J. Cyprys: Where you see the strongest mode across their business and capabilities and Where's the room for you to them.
Michael J. Cyprys: Proof the mode as you kind of look out over the next couple of years.
Speaker Change: Yeah, I'd say first of all one of the really big let's start with <unk> one of their strongest elements is that theyre completely global they connect into over 100 regulators across more than 50 countries and so when they're talking to a bank that has any business in any country. They can say not only.
Speaker Change: Can we solve it.
Adena T. Friedman: Yeah, so almost half of the new bookings were cloud last year. I think that as we're starting this year, we saw 50% of the new bookings for Axiom SL were cloud this year, with Eclipse being lower, around 18%. But as we said before, it's more of a timing issue. So we would hope that we would get around the same level over the course of the year, but we're not, we're not able to provide you kind of quarter by quarter. I think we just are giving you a little bit more overall color for the quarter in Axiom SL and Eclipse. So just to help you model, but not to that level.
Speaker Change: Solve the problems within country, but we can help you with your entire global business and all of the regulatory reporting needs. It also it's a machine like it's an amazing team of people they have deep regulatory expertise and to win soon as a new rule is even introduced or contemplated there already writing the requirements to bring that into the tool. So we're ahead.
Speaker Change: Head of the REIT rules every time, the new rule rule comes out with a new module and it's interesting also there's obviously a lot of new regulation coming but we just I think do a great job of providing a very elegant way to ingest their data deliver solutions make it really efficient.
Benjamin Elliot Budish: Got it, understood. And then for my follow-up, I just wanted to ask about the IPO win rate, just Q1 looks a little bit lower than what you've reported in the past, but is that sort of just a function of the quarter itself and based on the pipeline for the rest of the year? Do you have any expectations that that sort of trend back upwards? What are your thoughts there?
Speaker Change: And on a global basis now when it comes to <unk>.
Speaker Change: Calypso I think that what we're finding there are two.
Speaker Change: Elements of Calypso Theyre, just like World class Best in class one of them is our collateral management capability is just excellent and so we can walk in and show that we can really make them much more efficiently managing their collateral, which then gives them better ability to drive liquidity in <unk>.
Adena T. Friedman: Thank you. Yeah, sure. Yeah, so I think every quarter is a little bit of a different story based on the nature of the companies that are going public. But, but our overall view is that we have a great, strong pipeline, we have a great platform, and we're very confident in our ability to keep our win rate high. And we're really excited about the companies that are looking to go public in the next, hopefully in the next quarters. And also, I would also mention that, you know, over the last year, our win rate was 80%.
Speaker Change: Across our franchise it frees up capital. The second thing is kind of clearing risk management trading risk management. So again, they can unlock liquidity unlock capital further use in our markets and then the third is on the Treasury side, that's been a fast grower both on the brokerage businesses, but also buy side, so any active active trading buys.
Speaker Change: <unk> client the Treasury tool has been a really good growth area for us. So I think those are the areas, where we just feel like we're kind of we're best in class and that drives a lot of great conversations with the clients.
Benjamin Elliot Budish: So you know, we have to look at it a little bit over a longer period of time. But we have 80 companies in the pipeline to go public on Nasdaq, and we're really hopeful that they feel good about being able to tap the markets in the coming quarters.
Speaker Change: Great. Thanks, So just a follow up question I was hoping you maybe could elaborate a little bit on the new product roadmap strategy for axiom and Calypso as you look out.
Simon Alistair Vaughan Clinch: Thank you. Thank you. And I show our next question comes from the line of Simon Clinch from Redburn Atlantic. Please go ahead. Hi, everyone.
Speaker Change: For the rest of this year, yes.
Speaker Change: Yes, so well first of all we are in a kind of what I'll call an upgrade cycle for calypso. So we have a new version that we're rolling out and we're working to make sure we get all of our clients onto that Virgin This year, so thats driving renewal activity.
Adena T. Friedman: Thanks for taking my question. I was wondering if you could just go back to the cross selling opportunities. The investor that you mentioned, you're starting to build an enterprise sales team. That's something relatively new to the Nasdaq story, as I understand it. I was wondering if you could update us on how that's progressing? Are you already built? Transcribed by https://otter.ai Yeah, actually, we had just had a meeting about it across the management committee last week, where we talked about how we're going to approach enterprise sales and making sure that across Nasdaq, we have good connective tissue to make sure that we can deliver for the enterprises. And we're doing a lot of blocking and tackling.
Speaker Change: I think that but more generally we have also that the Basel III and Basel four end game is it is a driver of revenue growth and demand and clients are really talking about it more as a when and how big as opposed to if and so I think that class customers, who are for leaning our already.
Speaker Change: Signing with us to make sure that they are entirely ready and with this calypso axiom.
Speaker Change: Data transfer capability. We're also working with some of our action clients on some clips so capabilities that help them manage their capital more efficiently, while they're managing their regulatory needs because thats going to be a big a big element of focus for the regulators. So I have to say I do feel like those are the areas where we're seeing.
Simon Alistair Vaughan Clinch: So first, we're making sure we have kind of an enterprise sales organization. The second thing is we're doing a lot with data management of our client data to make sure we can look at our data, our client data across the franchise, and be able to have line of sight across the franchise so that we can actually talk to the clients on an enterprise basis. And then in terms of sales commissions and the way the enterprise sales team works with the product sales teams, we've designed a commission plan around that that I think really helps drive behaviors and alignment.
Speaker Change: Product roadmap in year multi year product roadmap is about making sure. We continue to modernize the cloud delivered solutions make sure that we can do that super efficiently for them. They have more data modern data management capabilities that allow us to unlock more functionality within the platforms and makes our products even more valuable to them.
Speaker Change: Great. Thanks, so much.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: This concludes our Q&A session at this time I would like to turn the conference back to Athena Friedman Chairman and CEO for closing remarks.
Adena T. Friedman: Great well. Thank you very much so as you heard throughout the meeting NASDAQ continues to make progress on our three key priorities integrate innovate and accelerate which will underpin our leadership and momentum as we move through the year United behind these strategic priorities and powered by our market leading platforms, we're firmly positioned to unlock our.
Adena T. Friedman: So that's, you know, all of that's actually just the enterprise sales team being built within FinTech, but the collaboration across the FinTech division and the CAP division of market services is really, really strong. And we hope to be able to demonstrate really good strength there, and that, you know, going forward, that's a big part of our ability to achieve the cross-sell target, but we definitely have made a lot of progress already. Okay, that's, that's great.
Speaker Change: Next phase of resilient and scalable growth, we look forward to keeping you updated on our progress throughout the year. Thank you all very much and have a great day.
Speaker Change: Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
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Simon Alistair Vaughan Clinch: And then, I think just lastly, I'd, I was wondering if you could perhaps expand a little bit more on the very strong flows we've had in the index business, and in particular interest outside of the Nasdaq 100 franchise. I mean, could you give us a little bit more detail about that and just how you think about the... Sustainability. Yeah, so you're right.
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Adena T. Friedman: So we've given us that at Investor Day, which I think is worth mentioning. So, but you know, 70% of our revenue comes from the Nasdaq 100 franchise, but another 30% comes from other indices that we have in terms of, you know, innovative indexes around AI, cloud, and cyber, as well as momentum and other factor indices that we have around the world. So, so it actually is a pretty diversified platform.
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Simon Alistair Vaughan Clinch: And in terms of inflows, it's pretty, you know, it's pretty mixed, meaning that it's coming from all of our index products, with probably strength coming in on some of the innovation indexes, the Nasdaq 100 as well, and on global distribution. So we've definitely been really focused on globalizing the distribution of our products and bringing in investment and inflows across the world. So those are probably the ones that are getting the most inflows, but it isn't just the Nasdaq 100.
Kyle Kenneth Voigt: And what's really interesting is that it's been very consistent, you know, whether or not the markets are up or down, we're seeing inflows. And so I think that that's also showing that investors are kind of seeing through a quarter and reflecting on the future of the economy, and they want to be a part of that. So that's what we're seeing in terms of inflows. Thank you so much. This is great
Adena T. Friedman: Thank you. And our next question comes from the line of Kyle Voigt from KBW. Please go ahead. Hi, good morning.
Kyle Kenneth Voigt: Maybe just a couple of follow-ups. So first, I'd like to follow up on Dan's earlier question about the workflow and insights business. It still sounds like the analytics business is posting, you know, high single-digit solid growth. But I think the corporate solutions that likely implies kind of flattish growth and, you know, elongated sales cycles. I guess, can you just talk about the average sales cycle for that business and the kind of lag time that you'd expect between when the IPO environment ramps up and when you ultimately expect to see an acceleration?
Adena T. Friedman: In revenues in that corporate solutions business? You know, I think that the reason why we wanted to give you that level of disclosure this quarter is just to help you understand kind of how we see the year. I think that as the IPO environment ramps up, and that's a if, you know, we, and obviously, it's a when at some point, but in terms of looking at it within the year, if we see improvement there, we tend to have, I would say, probably on average, kind of a six month sales cycle would probably be a good average around, you know, maybe maybe four to six months in terms of an But I so but then, of course, they also have to understand what they need the product for.
Kyle Kenneth Voigt: So if they go public, they start to recognize that they really want more intelligence about their investors, they really want to make sure they have the right ESG reporting, and they start to work with us more holistically kind of as the season progresses, and then there, I would say maybe, like sometimes it can be a very quick sales cycle, but we'll say like four to six months is a general view. So you're talking about more going into 2025 to start to see momentum if we have a recovery in the IPO environment. That makes sense.
Sarah M. Youngwood: And then just to follow up on capital priorities, it sounds like over the near term, the number one priority still remains deleveraging. I guess with the two of Bravo and Locke coming later this quarter, can you just talk about any willingness to restart buybacks or start to deploy some capital towards buybacks this quarter? Should we really expect that to be 100% allocated towards deleveraging near? Thanks, Kyle. So, in terms of the capital prioritization, we're super consistent with what we said at Investor Day. We were really glad to be able to pay down the term loan this quarter and end the quarter at 4.1.
Kyle Kenneth Voigt: We are totally committed to all of the timelines that we have given at Investor Day. So, for the 9 to 12 months ahead, you can consider that to be something that we will deliver. And within that, we're keeping some flexibility to consider share repurchases, if it makes sense, and that would be in particular related to the employee benefit, so offsetting the issuance we think is important. But when we look at it comprehensively, we are very, very focused on the deleveraging, in particular because when you look at the EPS acquisition dilution, given some of the higher debt costs that we can repay, even at our current stock And, of course, the cash flow equation is something that we are focused on. Thank you very much.
Operator: Thank you. And I show our next question comes from the line of Brian Bedell from Deutsche Bank. Please go ahead.
Brian Bertram Bedell: All right, great. Thanks. Good morning.
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Adena T. Friedman: Thanks for taking my questions. Maybe just moving over to Verifin, you know, continued strong growth in new SaaS clients, and then just trying to get a sense of what that might mean for the cadence of revenue growth in that segment as we move throughout the year, if you think that can improve from the 23% level, already pretty strong. And then the rollout of the entity research copilot is just your thoughts on how that might contribute to revenue progress throughout the year in that segment. Sure.
Brian Bertram Bedell: Yeah, we're not going to provide you with specific views of revenue growth other than we say that it's, you know, mid 20s, and we feel good about the overall outlook there. I think that as with the co-pilot capability, the way that we're rolling out co-pilot would be the same way that we're rolling out any new module that we provide to our small to medium bank clients.
Brian Bertram Bedell: So when a small to medium bank client signs up for Verifint, they sign up for the platform, and we then introduce new modules into that platform or new capabilities into that platform during their contract period. And then at the end of the contract period, we walk through with them what the return that we've offered them through that period, and therefore, what the price increase that we think is appropriate for the value that we're providing to them.
Adena T. Friedman: So as we roll out the co-pilot capabilities and get usage across the platform across the banks, it will help us show a really strong ROI for them so that in our renewal talks, it becomes a part of that conversation. But it's not a module that we're selling discreetly to them; we want them to use it, we want them to integrate it into workflows that we want them to use; we want this product to be as sticky as possible and as valuable as possible.
Adena T. Friedman: So for the renewal conversations, as we look up market into the tier one and tier two banks where it's all new sales, and where we're selling modules, so as we go in and talk to them, you know, the modules that are the most straightforward to sell across our platform are the fraud modules because it's a very clear calculus of return to them. But as you talk about AML, it's a much more complicated problem.
Brian Bertram Bedell: And now we have this new tool that we can offer through our AML solution that shows a clear return. So, in addition to doing a great job of rooting out criminal behavior and money laundering, we can also show them we're going to save them a ton of time and resources on the investigative side of it. And so we do think it'll help us with sales; it'll help us show value for the platform.
Brian Bertram Bedell: And we can look at that as part of the pricing that we discussed with them when we sign them. So that's basically how we're evaluating how we're using this tool to kind of drive sales retention and upsell. Thank you. And I have our last question comes from the line of Michael Cyprys from Morgan Stanley. Please go ahead. Hi, good morning.
Michael J. Cyprys: Thanks for taking the question. I just wanted to ask about the Adenza business now that it's been about six months or so since it closed. Just curious, in conversations with clients of Calypso and Axiom, where do you see the strongest moat across their business and capabilities? And where's the room for you to improve the moat as you kind of look out over the, Yeah, I'd say first of all, one of the really big ones, let's start with Axiom SL.
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Michael J. Cyprys: You know, one of their strongest elements is that they're completely global. They connect to over 100 regulators across more than 50 countries. And so when they're talking to a bank that has any business in any country, they can say, look, not only can we solve the problems within that country, but we can help you with your entire global business and all the regulatory reporting needs. It also, it's a machine, like it's an amazing team of people.
Adena T. Friedman: They have deep regulatory expertise. And so as soon as a new rule is even introduced or contemplated, they're already writing the requirements to bring that into the tool. So we're ahead of the rules every time a new rule comes out with a new module. And, you know, it's interesting also, there's obviously a lot of new regulations coming, but we just, I think, do a great job of providing a very elegant way to ingest their data, deliver solutions, make it really efficient, and on a global basis.
Adena T. Friedman: Now, when it comes to Calypso, I think that what we're finding is that there are two elements of Calypso that are just world-class, best in class. You know, one of them is our collateral management capability. It's just excellent.
Adena T. Friedman: And so we can walk in and show that we can really make them much more efficient in managing their collateral, which then gives them a better ability to drive liquidity, you know, across their franchise. It frees up capital. The second thing is, you know, kind of clearing risk management, trading risk management, so that, again, they can unlock liquidity and unlock capital for use in the markets. And then the third thing is on the treasury side.
Adena T. Friedman: That's been a fast grower, both in the brokerage businesses but also on the buy side. So any active trading buy side client, the treasury tool has been a really good growth area for us. So I think those are the areas where we just feel like we're kind of the best in class and that drives a lot of great conversations with the client. Great, thanks. And just a follow-up question.
Michael J. Cyprys: I was hoping you maybe could elaborate a little bit on the new product roadmap strategy for Axiom and Calypso as you look out for the rest. Yeah, so, so, well, first of all, we are in a kind of what I'll call an upgrade cycle for Calypso. So we have a new version that we're rolling out, and we're working to make sure we get all of our clients onto that version this year.
Michael J. Cyprys: So that's driving renewal activity. I think that, but, more generally, we have the Basel III and Basel IV endgame as a driver of revenue growth and demand. And clients are really talking about it more as a when and how big, as opposed to if. And so I think that customers who are for leaning are already signing with us to make sure that they're entirely ready.
Adena T. Friedman: And with this Calypso Axiom data transfer capability, we're also working with some of our Axiom clients on some Calypso capabilities that help them manage their capital more efficiently while they're managing their regulatory needs, because that's going to be a big, a big element of focus for the regulators. So I have to say, I do feel like those are the areas where we're seeing, you You know, our multi-year product roadmap is about making sure we continue to modernize cloud-delivered solutions and make sure that we can do that super efficiently for them. We have more data, and modern data management capabilities that allow us to unlock more functionality within the platforms and make the products even more valuable to them.
Michael J. Cyprys: Great, thanks so much. Thank you. This concludes our Q&A session. At this time, I'd like to turn the conference back to Adena Friedman, Chair and CEO, for closing remarks. Great, well, thank you very much. As you heard throughout the meeting, Nasdaq continues to make progress on our three key priorities, integrate, innovate, and accelerate, which will underpin our leadership and momentum as we move through the year. United behind these strategic priorities and powered by our market-leading platforms, we're firmly positioned to unlock our next phase of resilient and scalable growth.
Adena T. Friedman: We look forward to keeping you updated on our progress throughout the year. Thank you all very much. Have a great day. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??