Q2 2024 Nasdaq Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to Nasdaq's second quarter 2024 results conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day and thank you for standing by. Welcome to Nasdaq's second quarter 2024 results conference call.

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 one on your telephone; you will then hear an automated message advising your hand is right. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Ato Garrett, Senior Vice President, Investor Relations. Please go ahead.

Speaker Change: At this time, all participants are in a listen-only mode. 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question, please press star 11 again.

Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Ato Garrett, Senior Vice President, Investor Relations. Please go ahead. Thank you.

Ato Garrett: Good morning, everyone, and thank you for joining us today to discuss Nasdaq's second quarter 2024 financial results. On the line are Adena Friedman, our Chair and Chief Executive Officer, Sarah Youngwood, our Chief Financial Officer, and other members of the management team. After prepared remarks, we will open the line for Q&A. The press release and earnings presentation accompanying this call can be found on our investor relations website.

Ato Garrett: Good morning, everyone, and thank you for joining us today to discuss Nasdaq's second quarter 2024 financial results.

Speaker Change: On the line are Adena Friedman, our Chair and Chief Executive Officer, Sarah Youngwood, our Chief Financial Officer, and other members of the management team.

Speaker Change: After prepared remarks, we will open the line for Q&A. The press release and earnings presentation accompanying this call can be found on our investor relations website. I would like to remind you that we will be making forward-looking statements on this call that involve risks.

Ato Garrett: I would like to remind you that on this call, we will be making forward-looking statements that involve risks. A summary of these risks is contained in our press release and a more complete description in our annual report on Form 10-K. Also, please note that we will discuss our financial results on a pro forma basis and with year-on-year growth rates, which means that we are showing results versus the prior year period as if we owned Calypso and Axiom SL for all of 2023 and excluding the impact of FX. References to organic growth exclude the impact of FX, acquisitions, and investments.

Speaker Change: A summary of these risks is contained in our press release and a more complete description in our annual report on Form 10-K .

Speaker Change: Also, please note that we will discuss our financial results on a pro-forma basis and with year-on-year growth rates, which means that we are showing results versus the prior year period as if we owned Calypso and Axiom SL for all of 2023 and excluding the impact of FX.

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. Thank you, Ato. And good morning, everyone.

Speaker Change: References to organic growth exclude the impact of FX, acquisitions, and divestitures.

Speaker Change: 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 sections of our investor relations website at ir.nasdaq.com. I will now turn the call over to Adena.

Adena T. Friedman: Thank you for joining us. On the call this morning, I'll provide some perspective on the external environment, discuss our strong quarterly performance highlights, as well as our progress against our strategic priorities. And then I'll hand the call to Sarah to walk through the financial results in more detail. Turning to the economy in the U.S., we're continuing to see solid but slowing GDP growth, along with cooling inflation and slightly rising unemployment. These data points support the potential for easing monetary policy in the coming months as the Fed continues to strive for an economic soft landing.

Adena T. Friedman: Thank you, Ato, and good morning, everyone. Thank you for joining us. On the call this morning, I'll provide some perspective on the external environment, discuss our strong quarterly performance highlights, as well as our progress against our strategic priorities, and then I'll hand the call to Sarah to walk through the financial results in more detail.

Adena T. Friedman: Turning to the economy in the U.S., we continue to see solid but slowing GDP growth, along with cooling inflation and slightly rising unemployment. These data points support the potential for easing monetary policy in the coming months as the Fed continues to strive for an economic soft landing.

Adena T. Friedman: The general stability in the U.S. economy and the potential for a lower cost of capital going forward are resulting in modest improvements in the IPO landscape as we progress through 2024, including solid activity this week. However, investors continue to contend with external uncertainties and the timing of monetary policy shifts, as well as a dynamic macropolitical environment.

Adena T. Friedman: The general stability in the U.S. economy and the potential for a lower cost of capital going forward is resulting in modest improvements in the IPO landscape as we progress through 2024, including solid activity this week.

Adena T. Friedman: However, investors continue to contend with external uncertainties and the timing of monetary policy shifts.

Adena T. Friedman: As a result, we continue to expect modestly improving IPO activity for the remainder of 2024, and our current US IPO pipeline indicates that stronger momentum is likely to manifest starting in the first half of 2025. We're also seeing stronger economic underpinnings in Europe, aided by the ECB's easing monetary policy, including Improving Economic Prospects in the Nordics. The improvement is not yet translating into a material increase in new public issuances, but our European IPO pipeline is healthy and growing, particularly for 2025.

Adena T. Friedman: as well as that dynamic macro-political environment.

Adena T. Friedman: As a result, we continue to expect modestly improving IPO activity for the remainder of 2024, and our current US IPO pipeline indicates that stronger momentum is likely to manifest starting in the first half of 2025.

Adena T. Friedman: We're also seeing stronger economic underpinnings in Europe , aided by the ECB's easing monetary policy, including improving economic prospects in the Nordics.

Adena T. Friedman: The improvement is not yet translating into a material increase in new public issuances, but our European IPO pipeline is healthy and growing, particularly for 2025.

Adena T. Friedman: As investors and industry participants navigate the dynamic market environment, we continue to see sustained robust trading activity in the markets, as well as strong demand for mission-critical technology solutions from financial institutions globally. As a result, our markets continue to experience strong volumes, and client demand for our FinTech solutions remains consistent with trends we have seen through the cycle, which provides a healthy backdrop for continued revenue growth across our solution suite.

Adena T. Friedman: As investors and industry participants navigate the dynamic market environment, we continue to see sustained, robust trading activity in the markets, as well as strong demand for mission-critical technology solutions from financial institutions globally.

Adena T. Friedman: As a result, our markets continue to experience strong volumes and client demand for our FinTech solutions remains consistent with trends we have seen through the cycle, which provides a healthy backdrop for continued revenue growth across our solution suite.

Adena T. Friedman: Now let me turn to our financial results, which demonstrate the power and resilience of our diversified business model and our ability to succeed through economic cycles. We delivered a strong quarter with $1.2 billion in net revenues, an increase of 10% year over year, with solutions revenues at 13% growth. Our overall annualized recurring revenue, or ARR, grew 7% to $2.7 billion.

Adena T. Friedman: Now let me turn to our financial results, which demonstrate the power and resilience of our diversified business model and our ability to succeed through economic cycles.

Adena T. Friedman: We delivered a strong quarter with $1.2 billion in net revenues, an increase of 10% year-over-year, with solutions revenues at 13% growth. Our overall annualized recurring revenue, or ARR, grew 7% to $2.7 billion.

Adena T. Friedman: I'm particularly pleased with the strength of the performance across our business, which is a testament to the power of our platform.

Adena T. Friedman: I'm particularly pleased with the strength of the performance across our business, which is a testament to the power of our platform. We're integrating the Adenza acquisition ahead of schedule and are realizing the investment thesis that underpinned the transaction as we demonstrate its value for clients, shareholders, and employees. Our expenses for the quarter increased 7% year over year within our guidance.

Adena T. Friedman: We're integrating the Adenza acquisition ahead of schedule and are realizing the investment thesis that underpinned the transaction as we demonstrate its value for clients, shareholders, and employees.

Adena T. Friedman: Our operating income grew approximately 14%. And importantly, our operating margin increased to 53%, representing over one percentage point of operating leverage while we continue to invest in support to support growth in our business and deliver on synergy. Turning now to a discussion of the business highlights, starting with Capital Access Platform. While ARR growth in the division remained at 1%, our index revenue grew 29%, resulting in overall revenue growth for capital access platforms of 10%. In listings, we welcomed 31 operating company RTOs, maintaining our strong win rate of 72% based on Nasdaq eligible listings.

Adena T. Friedman: Our expenses for the quarter increased 7% year-over-year within our guidance.

Adena T. Friedman: Our operating income grew approximately 14%, and importantly, our operating margin increased to 53%, representing over 1 percentage point of operating leverage, while we continue to invest to support growth in our business and deliver on synergies.

Adena T. Friedman: Turning now to a discussion of the business highlights, starting with capital access platforms.

Adena T. Friedman: While ARR growth in the division remained at 1%, our index revenue grew 29%, resulting in overall revenue growth for capital access platforms of 10%.

Adena T. Friedman: In listings we welcomed 31 operating company IPOs, maintaining our strong win rate of 72% based on Nasdaq eligible listings.

Adena T. Friedman: While the slower IPO environment remains a headwind, we're encouraged by signs of improvement, as supported by our most recent IPO pulse index, which is at near a three-year high. Overall growth in data and listings continues to experience challenges as modest growth in market data and the slowly improving IPO environment will be offset by the impact of prior ERD listings. Growth in our analytics business benefited from continued demand across the investment community for actionable intelligence and increased efficiency. However, that growth was partially offset by continued headwinds in corporate solutions, resulting in more muted growth for workflow and insights.

Adena T. Friedman: While the slower IPO environment remains a headwind, we're encouraged by signs of improvement, as supported by our most recent IPO Pulse Index, which is near a three-year high.

Adena T. Friedman: Overall growth in data and listings continue to experience challenges as modest growth in market data and the slowly improving IPO environment will offset by the impact of prior ERD listings.

Adena T. Friedman: Growth in our analytics business benefited from continued demand across the investment community for actionable intelligence.

Adena T. Friedman: and Increased Efficiency. However, that growth was partially offset by continued headwinds in corporate solutions, resulting in more muted growth for workflow and insights.

Adena T. Friedman: Our index business delivered another exceptional quarter with $17 billion of net inflows during the quarter, totaling $53 billion over the last 12 months. We also achieved another record in indexed ETP AUM, exiting the quarter at $569 billion. Turning next to financial technology, ARR growth across the division was 13%, including 25% in financial crime management technology, 14% in the combined Axiom SL and Calypso solutions, and 9% in a combined market technology and trade management service.

Speaker Change: Our index business delivered another exceptional quarter with $17 billion of net inflows during the quarter, totaling $53 billion over the last 12 months. We also achieved another record in index ETP AUM exiting the quarter at $569 billion.

Speaker Change: Turning next to financial technology. ARR growth across the division was 13%, including 25% in financial crime management technology, 14% in the combined Axiom SL and Calypso solutions, and 9% in a combined market technology and trade management services.

Adena T. Friedman: The division had 69 new client signings, 96 upsells, and four cross-sells. We also saw continued cloud adoption, as 68% of Axiomacel and Calypso's combined bookings in the quarter were cloud-based, with a strong pipeline for future quarters. Turning to the specific subdivisions, financial crime management technology continued its strong momentum.

Speaker Change: The division had 69 new client signings, 96 upsells, and 4 cross-sells. We also saw continued cloud adoption as 68% of Axiomacel and Calypso's combined bookings in the quarter were cloud-based, with a strong pipeline for future quarters.

Speaker Change: Turning to the specific subdivisions, financial crime management technology continued its strong momentum. We signed over 50 new clients in the S&B space and we continue to make progress in the upmarket segment focused on tier one and tier two banks.

Adena T. Friedman: We signed over 50 new clients in the S&B space, and we continue to make progress in the upmarket segment focused on Tier 1 and Tier 2 banks. In July, we signed a new international Tier One bank, which is also an exciting cross sell. Going forward, we continue to maintain a strong sales pipeline within the core S&B segment, and we have a growing pipeline of new clients and upsells among Tier 1 and Tier 2 banks. Across regulatory technology, we see sustained demand across both existing and new clients, as financial institutions face increasingly dynamic regulatory environments, including changes in regulation globally related to asset thresholds.

Speaker Change: In July , we signed a new international Tier 1 bank, which is also an exciting cross-sell. Going forward, we continue to maintain a strong sales pipeline within the core S&B segment, and we have a growing pipeline of new clients and upsells among Tier 1 and Tier 2 banks.

Speaker Change: Across regulatory technology, we see sustained demand across both existing and new clients, as financial institutions face increasingly dynamic regulatory environments, including changes in regulation globally related to asset thresholds.

Adena T. Friedman: Among the many regulatory trends that are driving sales demand, we're pleased with our progress in signing clients around the world as they focus on implementing Basel IV and preparing to implement Basel III. In capital markets technology, we continue to see strong demand for mission-critical technology as many of our clients focus on modernizing their infrastructure to enhance resilience and performance. For Calypso, we see robust new demand, especially in the treasury segment, in addition to the cloud transformation of large-scale clients. In our market services division, we delivered revenue growth of 3%.

Speaker Change: Among the many regulatory trends that are driving sales demand, we're pleased with our progress in signing clients around the world as they focus on implementing Basel IV and preparing to implement Basel III Endgame.

Speaker Change: In capital markets technology, we continue to see strong demand for mission-critical technology as many of our clients focus on modernizing their infrastructure to enhance resilience and performance.

Speaker Change: For Calypso, we see robust new demand, especially in the treasury segment, in addition to cloud transformation of large-scale clients.

Adena T. Friedman: We experienced healthy volumes across North America and Europe, and we achieved a sequential increase in North American options market share, as well as growth in Nasdaq U.S. equities on exchange market share and capture. Our US index options achieved record revenues, more than doubling versus last year due to higher capture and volume. In our U.S. cash equities business, we executed successful Russell, MSCI, and S&P rebalances during the quarter, which showcased the strength and resiliency of our market.

Speaker Change: In our market services division, we delivered revenue growth of 3%, we experienced healthy volumes across North America and Europe , and we achieved a sequential increase in North American options market share, as well as growth in Nasdaq U.S. equities on exchange market share and capture.

Speaker Change: Our U.S. index options achieved record revenues more than doubling versus last year due to higher capture and volumes.

Adena T. Friedman: During the Russell event, for instance, nearly 2.9 billion shares representing a record notional value of over $95 billion were executed in the closing cross, representing the largest liquidity event on the Nasdaq Stock Exchange for the Russell reconstitution.

Speaker Change: In our U.S. cash equities business, we executed successful Russell, MSCI, and S&P rebalances during the quarter, which showcased the strength and resiliency of our markets.

Speaker Change: During the Russell event, for instance, nearly 2.9 billion shares representing a record notional value of over $95 billion were executed in the closing process, representing the largest liquidity event on the Nasdaq Stock Exchange for the Russell reconstitution.

Adena T. Friedman: In our European markets, the strength of our market ecosystem, as evidenced by the depth of the book, breadth of participants, and product innovation, continues to drive market share gains. Overall, we're pleased to report a solid quarter of market services and remain focused on retaining our leading position across all of our markets. I now want to spend a few minutes updating you on how we're executing against our 2024 strategic priorities of integrate, innovate, and accelerate.

Speaker Change: In our European markets, the strength of our market ecosystem, as evidenced by the depth of book, breadth of participants, and product innovation, continues to drive market share gains.

Speaker Change: Overall, we're pleased to report a solid quarter of market services and remain focused on retaining our leading position across all of our markets.

Speaker Change: I now want to spend a few minutes updating you on how we're executing against our 2024 strategic priorities of Integrate, Innovate, and Accelerate.

Adena T. Friedman: Starting with Integrate, we have actioned over 70% of the $80 million of net expense synergies, and our leverage ratio reached 3.9 times at quarter end, both ahead of plan. Both Axiomacel and Calypso are fully integrated into the financial technology division, and we've established strong leadership, a well-structured operating model, and a one Nasdaq go-to-market approach to ensure we're delivering for our clients with the highest level of efficiency and effective, Our CRM's integration for the Calypso and Axiom solutions is now completed ahead of schedule and this supports divisional sales coordination as well as the sales incentive program established at the beginning of the year.

Speaker Change: Starting with Integrate, we have actioned over 70% of the $80 million of net expense synergies, and our leverage ratio reached 3.9 times at quarter end, both ahead of plan.

Speaker Change: Both Axiomacel and Calypso are fully integrated into the financial technology division, and we've established strong leadership, a well-structured operating model, and a one Nasdaq go-to-market approach to ensure we're delivering for our clients with the highest level of efficiency and effectiveness.

Speaker Change: Our CRM's integration for the Calypso and Axiom solutions is now completed ahead of schedule, and this supports divisional sales coordination as well as the sales incentive program established at the beginning of the year.

Adena T. Friedman: Importantly, across Axiom SL, Calypso, and Verifin, we've been highly focused on cultural integration into the broader Nasdaq enterprise, and internal surveys continue to show that our employees are highly engaged and energized to deliver for our clients. We're also making strong progress advancing our innovation priority. We currently have approximately 50% of our employee base working with AI tools focused on enhancing productivity, as well as driving our product roadmap. By the end of Q3, 100% of our developers will have access to AI co-pilot tools, and we recently had over 650 employees participate in several AI hackathons across Nasdaq.

Speaker Change: Importantly, across Axiom SL, Calypso, and Verifin, we've been highly focused on cultural integration into the broader Nasdaq enterprise, and internal surveys continue to show that our employees are highly engaged and energized to deliver for our clients.

Speaker Change: We're also making strong progress advancing our Innovate priority.

Speaker Change: We currently have approximately 50% of our employee base working with AI tools focused on enhancing productivity as well as driving our product roadmap.

Speaker Change: By the end of Q3, 100% of our developers will have access to AI co-pilot tools, and we recently had over 650 employees participate in several AI hackathons across Nasdaq.

Adena T. Friedman: During the quarter, we continued to introduce new AI capabilities within our client-facing solution. Consistent with other Gen-AI capabilities recently launched in our Verifin and Board Vantage solutions, with an investment, we have deployed a new AI power feature for the Market Lens module called Pension Meeting Minute Summarization. The feature provides asset managers with key insights on current and future pension fund strategies to help inform their business development and engagement priorities with top pension decision makers.

Speaker Change: During the quarter, we continued to introduce new AI capabilities within our client-facing solutions.

Speaker Change: Consistent with other Gen-AI capabilities recently launched in our Verifin and Board Vantage solutions, with an investment, we have deployed a new AI power feature for the Market Lens module called Pension Meeting Minute Summarization.

Speaker Change: The feature provides asset managers with key insights on current and future pension fund strategies to help inform their business development and engagement priorities with top pension decision makers.

Adena T. Friedman: We also have a strong pipeline of AI features scheduled to launch in the coming quarters, including in Market Surveillance and IR Insight, and we're seeing strong early traction in client adoption and effectiveness related to the capabilities that are already in market. Specifically, Dynamic Mellow, the first FCC-approved AI order type which we launched in April, is driving a 20% increase in both volumes for this order type and improvement in fill rates compared to the prior static version. Verifin's integrated Gen AI feature, Entity Research Co-Pilot, is now deployed at more than 250 clients, and we expect to complete our rollout in the third quarter.

Speaker Change: We also have a strong pipeline of AI features scheduled to launch in the coming quarters, including in Market Surveillance and IR Insight.

Speaker Change: And we're seeing strong early traction in client adoption and effectiveness related to the capabilities that are already in market. Specifically, Dynamic Mellow, the first FCC-approved AI order type, which we launched in April ,

Speaker Change: is driving a 20% increase in both volumes for the sorter type and improvement in fill rates compared to the prior static version.

Speaker Change: Verifin's integrated Gen-AI feature, Entity Research Copilot, is now deployed at more than 250 clients, and we expect to complete our rollout in the third quarter.

Adena T. Friedman: Client feedback has been positive, demonstrating that the integrated co-pilot functionality integrated with the integrated co-pilot functionality, Verifin solutions can reduce alert research time by up to 90% compared to banks that do not use Verifin. Beyond AI, we continue to drive innovation towards key growth priorities. For example, in our index business, innovation is at the heart of our growth strategy as we extend the franchise to new markets globally, drive institutional adoption, and introduce new products beyond the Nasdaq 100.

Speaker Change: Client feedback has been positive, demonstrating that with the integrated copilot functionality, Verifin solutions can reduce alert research time by up to 90% compared to banks that do not use Verifin.

Speaker Change: Beyond AI, we continue to drive innovation towards key growth priorities. For example, in our index business, innovation is at the heart of our growth strategy as we extend the franchise to new markets globally, drive institutional adoption, and introduce new products beyond the Nasda Q1 00.

Adena T. Friedman: During the quarter, 50% of index product launches were outside of the United States, and we're quickly gaining traction with investor adoption. In total, we launched 18 new products with our partners, including 12 ETPs and three insurance annuity vehicles geared towards our institutional clients.

Speaker Change: During the quarter, 50% of index product launches were outside of the United States and were quickly gaining traction in investor adoption.

Speaker Change: In total, we launched 18 new products with our partners, including 12 ETPs and 3 insurance annuity vehicles geared towards our institutional clients.

Adena T. Friedman: Additionally, we're pleased that our AI-themed ETPs saw more than $1 billion of inflows over the last 12 months. Wrapping up with our Accelerate priorities, the addition of Axiomacel and Calypso has significantly elevated the dialogue we have with our clients as a strategic partner.

Speaker Change: Additionally, we're pleased that our AI-themed EPPs saw more than $1 billion of inflows over the last 12 months.

Speaker Change: Wrapping up with our Accelerate priority, the addition of Axiomacel and Calypso has significantly elevated the dialogue we have with our clients as a strategic partner. There's no better evidence of that than the early traction we're seeing in our cross-sell efforts.

Adena T. Friedman: There's no better evidence of that than the early traction we're seeing in our cross-sell efforts. Since closing the transaction, we have executed on 11 FinTech cross-sells. We had four this quarter, including two cross-sells of our Axioma Cell Solution to Calypso clients.

Speaker Change: Since closing the transaction, we have executed on 11 FinTech cross-sells. We had four this quarter, including two cross-sells of our Axioma Cell Solution to Calypso clients.

Adena T. Friedman: This is a great start, but it's only the beginning on our journey to exceed $100 million in crossbills by the end of 2027. Just eight months since the acquisition closed, 10% of the opportunities in our pipeline are cross-sells, and we expect this to grow sequentially. The division has several strategic cross-sale campaigns underway, which are generating strong top-of-funnel interest and underpin our continued confidence in our ability to grow cross-sale bookings over the coming years.

Speaker Change: This is a great start, but it's only the beginning on our journey to exceed $100 million in crossbells by the end of 2027.

Speaker Change: Just 8 months since the acquisition closed, 10% of the opportunities in our pipeline are cross-sells and we expect this to grow sequentially.

Speaker Change: The division has several strategic cross-sell campaigns underway, which are generating strong top-of-funnel interest and underpins our continued confidence in our ability to grow cross-sell bookings over the coming years.

Adena T. Friedman: To wrap up, we're pleased to deliver a quarter of strong results driven by continued momentum and solutions and the power of our diversified platform to drive scalable, profitable, and durable growth. Importantly, we're delivering on the Adenza acquisition thesis as our clients increasingly see Nasdaq as a strategic partner that can help solve their largest, most complex challenges. We look forward to leveraging this momentum to unlock our next phase of growth. And with that, I'll now turn the call over to Sarah to review the financial details. Thank you and good morning, everyone.

Speaker Change: To wrap up, we're pleased to deliver a quarter of strong results driven by continued momentum and solutions, and the power of our diversified platform to drive scalable, profitable, and durable growth.

Speaker Change: Importantly, we're delivering on the Adenza acquisition thesis as our clients increasingly see Nasdaq as a strategic partner that can help solve their largest, most complex challenges.

Speaker Change: We look forward to leveraging this momentum to unlock our next phase of growth. And with that, I'll now turn the call over to Sarah to review the financial details.

Sarah M. Youngwood: In the second quarter, we made excellent progress in both the integration of Adenza and the accelerated pay down of debt. We achieved over 70% of net expense synergies six months ahead of schedule. We have also come in ahead of our accelerated deleveraging plans, ending the quarter at 3.9 leverage. Turning to our second quarter results, slide 10. We reported net revenue of $1.2 billion, up 10%, with solutions revenue up 13%. Operating expense was $539 million, up 7% within our guidance, with an operating margin of 53% and an EBITDA margin of 56%. Overall, this resulted in net income of $397 million and diluted EPS of $69.

Sarah M. Youngwood: Thank you and good morning everyone. In the second quarter, we made excellent progress in both the integration of Adenza and the accelerated pay down of debt.

Sarah M. Youngwood: We actioned over 70% of net expense synergies six months ahead of schedule. We have also come in ahead of our accelerated deleveraging plans, ending the quarter of 3.9 leverage.

Sarah M. Youngwood: Slide 11 shows the drivers of our 10% pro forma revenue growth for the quarter. We generated 8% outside growth on a net basis, driven by new and existing clients, as well as our focus on product innovation. Overall, beta factors were 2% this quarter, driven by higher valuations in Nasdaq indexes, as well as higher overall volumes in market services. On slide 12, we had 7% ARR growth, and as part of that, we had 17% SAS revenue growth, resulting in SAS as a percent of ARR, now at 37% of 4% ARR.

Sarah M. Youngwood: Turning to our second quarter results on slide 10.

Sarah M. Youngwood: We reported net revenue of $1.2 billion up 10%, with solutions revenue up 13%.

Sarah M. Youngwood: Operating expense was $539 million, up 7% within our guidance, with an operating margin of 53% and an EBITDA margin of 56%.

Sarah M. Youngwood: Overall, this resulted in net income of $397 million and diluted EPS of $0.69.

Sarah M. Youngwood: Slide 11 shows the drivers of our 10% pro forma revenue growth for the quarter. We generated 8% outside growth on a net basis.

Sarah M. Youngwood: driven by new and existing clients as well as our focus on product innovation.

Sarah M. Youngwood: Overall, beta factors were 2% this quarter, driven by higher valuations in Nasdaq indexes as well as higher overall volumes in market services.

Sarah M. Youngwood: On slide 12, we had 7% ARR growth, and as part of that, we had 17% SAS revenue growth, resulting in SAS as percent of ARR, now at 37% of 4 percentage points.

Sarah M. Youngwood: Let's review division results for the quarter, starting on slide three. In Capital Access Platform, we delivered revenue of $481 million, reflecting growth of 10%. We had another exceptional quarter for our index business, with revenue of $29 billion. Driven by $53 billion of organic inflows in the last 12 months, including $17 billion this quarter, and Market Performance, both resulting in average eTPA UN of $531 billion. In addition, future volumes were up 25%, data, and listings revenue was up 1%, while ARR was down 1%.

Sarah M. Youngwood: Let's review division results for the quarter starting on slide 13.

Sarah M. Youngwood: In capital access platforms, we delivered revenue of $481 million, reflecting growth of 10%.

Sarah M. Youngwood: We had another exceptional quarter for our index business, with revenue up 29%.

Sarah M. Youngwood: Driven by $53 billion of organic inflows in the last 12 months, including $17 billion this quarter.

Sarah M. Youngwood: and Market Performance.

Sarah M. Youngwood: Both resulting in average ETPAUM of $531 billion. In addition, future volumes were up 25%.

Sarah M. Youngwood: Data and listings revenue was up 1% while ARR was down 1%.

Sarah M. Youngwood: The difference was driven by small one-time revenue benefits, primarily related to... Revenue from higher data sales and usage, new listings, and prices offset the impact of delisting, downgrades, and lower amortization of prior period initial listing fees. We expect the quarterly headwind from lower amortization of prior period listing fees to increase from an immaterial impact in 1Q24 and approximately $1 million in 2Q24 to about $3 million in each of the next four quarters.

Sarah M. Youngwood: The difference was driven by small one-time revenue benefits primarily related to listing.

Sarah M. Youngwood: Revenue from higher data sales and usage, new listings, and pricing offset the impact of delisting, downgrades, and lower amortization of prior-period initial listing fees.

Sarah M. Youngwood: We expect the quarterly headwind from lower amortization of prior period listing fees to increase from an immaterial impact in 1Q24 and approximately $1 million in 2Q24.

Sarah M. Youngwood: to about $3 million in each of the next four quarters.

Sarah M. Youngwood: However, we have seen roughly 25% fewer de-listings in the first half of the year versus the prior year period, suggesting that de-listings should be less of a revenue headwind in 2025. Lastly, Workflow and Insights revenue was up 4% in line with ARR growth of 4%. This was driven by continued growth in innovative analytics products, mainly data link and event. However, this was partially offset by continued headwinds in corporate solutions. Analytics had a strong quarter with both revenue and ARR in the high single digits. Operating margin was 56%, up one percentage.

Sarah M. Youngwood: However, we have seen roughly 25% fewer delistings in the first half of the year versus the prior year period, suggesting that delistings should be less of a revenue headwind in 2025.

Sarah M. Youngwood: Lastly, Workflow and Insights revenue was up 4% in line with ARR growth of 4%.

Sarah M. Youngwood: This was driven by continued growth in innovative analytics products, mainly DataLink and eVetement.

Sarah M. Youngwood: This was partially offset by continued headwinds in corporate solutions.

Sarah M. Youngwood: Analytics had a strong quarter with both revenue and ARR in high single digits.

Sarah M. Youngwood: Operating margin was 56% up one percentage point.

Sarah M. Youngwood: Moving to financial technology on slide 14. Together, trade management services and market tech grew revenues by 2%. We experienced strong subscription revenue and AR growth, up 9% for both businesses and up three percentage points. As we mentioned last quarter,

Sarah M. Youngwood: Financial crime management technology delivered 24% revenue growth and 25% ADR growth with 53, new clients in the quarter.

Sarah M. Youngwood: Capital markets technology had revenue growth of 14% and our growth of 11% on the back of seven new clients and 38 upsells in the quarter.

Sarah M. Youngwood: The difference between revenue and <unk> growth is driven by the timing of on Prem renewals and professional services team.

Sarah M. Youngwood: Together.

Sarah M. Youngwood: Trade management services and market Tech grew revenues, 2%.

Sarah M. Youngwood: We experienced.

Sarah M. Youngwood: Strong subscription revenue and <unk> growth.

Sarah M. Youngwood: 9% for both businesses and up three percentage points sequentially.

Sarah M. Youngwood: The lower growth in revenue was due to year over year decline in professional services revenue.

Sarah M. Youngwood: As we mentioned last quarter.

Sarah M. Youngwood: In market tech, we had a very large implementation in 2023, which created a $27 million revenue benefit in the full year of 2023. We expect this year-over-year headwind to persist in Q3 and abate in Q4. Calypso had revenue growth of 34% and AR growth of 13%.

Sarah M. Youngwood: In market Tech, we had a very large implementation in 2023.

Sarah M. Youngwood: Which created a $27 million revenue benefit in the full year of 2023.

Sarah M. Youngwood: This is resulted in subscription revenue or <unk> of <unk>.

Speaker Change: $11 million.

Speaker Change: We expect this year over year headwind to persist in Q3 and abate in Q4.

Kelly, So had revenue growth of 34% and a growth of 13%.

Kelly: Revenue was higher than the expectation we provided in the first quarter call due to broad strength in sales activity, including a strategic early renewal 29 up sales and five new clients.

Sarah M. Youngwood: Prodigic Early Renewal, 29 upsells, and 5 new clients. Regulatory technology had revenue growth of 16%, and A.R. Gworth of Kent, with seven new clients and 58 up sales in the quarter.

Kelly: As we look forward, we continue to see solid momentum in the business and expect capital markets technology revenue growth for 2024 to remain in line with our medium term outlook.

Kelly: Overall for the second half of 2022, we expect more normalized growth across the products within the division versus the first half of the year with consistent growth across quarters.

Kelly: Regulatory technology had revenue growth of 16% and a growth of 10%.

Kelly: With seven new clients and 58 up sales in the quarter.

Speaker Change: The difference between revenue and <unk> growth is driven by axial Michelle which had 23% revenue growth and 14% al Woods.

Sarah M. Youngwood: The 23% revenue growth was primarily due to strong subscription revenue, including a large on-prem renewal due to the timing of client delivery. The FinTech operating margin was 47% in the second quarter of three percentage points, including the benefit of synergy realization. This is due to the frequency of critical mandatory regulatory updates that we implement and embed in the Axiom SL software throughout the contract term. However, if an adjustment is made, it would not have a material impact on Nasdaq overall, and 2Q would remain a strong quarter with FinTech revenue growth near the top of its medium-term outdoor climb. Solutions revenue growth at the high end of its medium-term outlook, and Axiomacelle and Calypso combined revenue growth above 20%. Importantly, combined A.R. growth of 14% and net revenue retention of 111% would be unshakable.

The 23% revenue growth was primarily due to strong subscription revenue.

Speaker Change: Including a large on prem renewal.

Speaker Change: <unk> thousand nine Upsells and one new clients in the quarter.

Speaker Change: Partially offset by a decline in professional services fees.

Speaker Change: Due to the timing of client delivery.

Speaker Change: The Fintech operating margin was 47% in the second quarter up three percentage points, including the benefit of synergy realization.

Speaker Change: As we finalize the business combination accounting for <unk> joined the measurement period, Let me update you on a change we are evaluating an axiom itself.

Speaker Change: As part of this potential accounting change, we would recognize on Prem subscription based revenue on a ratable basis over the contract term.

Speaker Change: Whereas we currently with approximately 50% of pump.

Speaker Change: This is due to the frequency of critical mandatory regulatory updates that we implement in embedded in the <unk> software throughout the contract term.

Speaker Change: This change would enhance our financial reporting and would not change the advent that medium term outlook, we have provided nor our ability to achieve it this year.

Speaker Change: If an adjustment is made it would not have a material impact on NASDAQ overall and.

Speaker Change: <unk> will remain a strong quarter with Fintech revenue.

Speaker Change: Near the top of its medium term outlook range solutions revenue growth at the high end of it.

Jim: Jim toward molecule, quench, and <unk> and <unk> combined revenue growth.

Speaker Change: About 20%.

Speaker Change: Importantly, combined growth of 14% and net revenue retention of 111% would be unchanged.

Sarah M. Youngwood: Specifically, at the actual metal level, we expect subscription revenue growth to be more consistent going forward and remain in line with our medium-term outlook. AccuMet.2Q24 subscription revenue growth would have been generally in line with AR. However, the timing-related decline in professional services fees I mentioned earlier would have driven total AXIOM SR revenue growth for the quarter to the low to mid-single digits.

Speaker Change: Specifically at the <unk> level, we expect subscription revenue growth to be more consistent going forward and remain in line with our medium term outlook.

Speaker Change: <unk> 2000 and for subscription revenue growth would have been generally in line with a R.

Speaker Change: However, this timing related decline in professional services fees I mentioned earlier would have driven total axiom hotel revenue growth for the quarter to the low to mid single digit.

Sarah M. Youngwood: We expect to receive additional information to finalize our analysis in 3Q, and if we make the change, we will provide updated historical information by quarter for 2023 and the first half of 2024, during 3Q and ahead of reporting our 3Q earnings. Now wrapping up the divisions with market services. Net revenue was $250 million for the quarter of 3%. This was partially offset by lower share in U.S. options and equities.

Speaker Change: We expect to receive additional information to finalize our analysis and <unk> and if we make the change we will provide updated historical information by quarter for 2023, and the first half of 2020 for doing <unk> and ahead of reporting <unk> earnings.

Speaker Change: Now wrapping up the divisions with market services.

Speaker Change: Net revenue was $250 million for the quarter up 3%.

Speaker Change: Growth was driven by higher volumes in cash equities in both North America, and Europe as well as in U S options increased capture in North America Equities U S index options high growth share gains in European equities from a very strong base and one additional trading day.

Speaker Change: This was partially offset by lower share in U S options and equities.

Speaker Change: Those shares for options was stronger sequentially and increased over the course of the quarter.

Speaker Change: We also had lower usa's revenue.

Speaker Change: Market services second quarter operating margin was 58% of <unk>.

Speaker Change: One percentage point decline from the prior year, primarily due to continued investments in market monetization and regulatory obligations.

Speaker Change: Moving on to non-GAAP operating expense on slide 16.

Sarah M. Youngwood: This quarter was $539 million, reflecting pro forma growth of 7% or $15 million sequentially. This is within the guidance we provided on our first quarter earnings goal. And as a reminder, second quarters include the impact of annual merit adjustments and equity. All in, we generated positive operating leverage with an increase in both operating and EBITDA margin of over 1%. As of Q2, we have already actioned over 70% of that amount, six months ahead of schedule.

Speaker Change: This quarter was $539 million.

Speaker Change: Reflecting pro forma growth of 7%.

Speaker Change: Our $15 million sequentially.

Speaker Change: This is within the guidance, we provided on our first quarter earnings call and as a reminder, second quarters include the impact of annual merit adjustments and equity Gwen.

Speaker Change: All in we generated positive operating leverage with an increase in both operating and EBITDA margin of over one percentage point.

Speaker Change: This included the benefit of synergies this quarter and the funding of additional revenue related expense.

Speaker Change: We originally targeted $80 million of net expense synergies through the end of 2025.

Speaker Change: As of Q2, we have already action over 70% of that amount six months ahead of schedule.

Speaker Change: The P&L benefit of the actions already taken represents approximately one percentage point reduction in expense growth in the first half of this year.

Sarah M. Youngwood: Please note that the actions of 2Q and 3Q have a longer timeline to expense recognition. For the full year, we expect non-GAAP operating expenses of $2.145 billion to $2.185 billion, reflecting an increase to the bottom end of the range to account for strong revenue generation. Additionally, we continue to expect a full-year tax rate of 24.5% to 26.5% on a non-GAAP basis, representing a conversion ratio of approximately 100% over the trading 12 months. This takes into consideration specific one-time costs associated with the Adena acquisition and integration. We paid down net $174 million of commercial paper.

Speaker Change: Please note that the actions of <unk> and <unk> have a longer timeline to expense recognition.

Speaker Change: And as such we expect the full impact of synergies to moderate expense growth by approximately one five percentage points for 2024.

Speaker Change: For the full year, we expect non-GAAP operating expense.

Speaker Change: Two 145 billion to $2 185 billion.

Speaker Change: Reflecting an increase to the bottom end of the range to account for strong revenue generation.

Speaker Change: Which increases variable compensation and a bit and enables us to invest in growth initiatives. While also accounting for the synergy benefits realized in the year.

Speaker Change: Additionally, we continue to expect a full year tax rate of $24 five to 26, 5% on a non-GAAP basis.

Speaker Change: Turning to our capital allocation on slide 17.

Speaker Change: NASDAQ continued its track record of strong free cash flow generation with $328 million in the second quarter.

Speaker Change: Representing a conversion ratio of approximately 100% over the trailing 12 months.

Speaker Change: This takes into consideration specific onetime costs associated with the <unk> acquisition and integration.

Speaker Change: This quarter, we continued to prioritize debt reduction and ahead of our accelerated deleveraging plan.

Speaker Change: We paid down net $174 million of commercial paper.

Speaker Change: And ended the quarter at three.

Speaker Change: Three nine times gross leverage versus four one times last quarter.

Sarah M. Youngwood: This was achieved while also increasing our quarterly dividend 9% to $0.24 per share, or $138 million, reflecting a 37% annualized payout ratio. And we're purchasing approximately $60 million of our shares to opportunistically take advantage of the attractiveness of our stock and start to offset 2024 employee dilution, including We are thrilled with the pace at which we are delivering and the results of our integration. Thank you. Please stand by while we compile the Q&A. Great, thank you.

Speaker Change: This was achieved while also increasing our quarterly dividend, 9% to <unk> 24 per share or $138 million, reflecting a 37% annualized payout ratio.

Speaker Change: And we purchasing approximately $60 million of our shares to Opportunistically take advantage of the attractiveness of our stock and start to offset 2024 employees dilution.

Speaker Change: Nope.

Speaker Change: Ahead, we remain focused on deleveraging and expect to pay down the remaining commercial paper balance near term while remaining.

Speaker Change: Opportunistic and flexible.

Speaker Change: We also remain committed to offsetting employee dilution.

Speaker Change: In closing.

Speaker Change: We are thrilled with the pace at which we are delivering and the results of our integration.

Speaker Change: We are executing on our plans with focus and discipline building, a financial technology powerhouse driving durable growth and profitability for our shareholders. 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 would need to refresh SAR one 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. Please standby, while we compile the Q&A roster.

Speaker Change: And I show. Our first question comes from the line of Dan Fannon from Jefferies. Please go ahead.

Operator: So within financial crime management, you highlighted price increases as a contributor to growth. I was hoping you could talk about pricing more generally across your businesses, and specifically how prices may have contributed to the strong growth in the quarter across the various, Great, thank you. Hi, good morning.

Daniel Thomas Fannon: Alright, great. Thank you so.

Speaker Change: Within financial crime management, you highlighted price increases.

Daniel Thomas Fannon: The growth was hoping you could talk about <unk>.

Speaker Change: And more generally across your businesses and specifically what may be price contributed to the strong growth in the quarter.

Speaker Change: Across the various segments.

Speaker Change: Sure well I would just say that.

Speaker Change: As we've talked about in the past price increases are different per product and kind of different from in terms of how we structure contracts with our clients within fintech.

Speaker Change: No.

Speaker Change: We don't provide you a very specific answer to that question, but I think that if we think about.

Speaker Change: What we've said at least for the extra selling clips of products in the past is that about half of the revenue increase that we see in any given quarter comes from upgrades and upsells of our clients and the other half comes from new sales and price increases or price changes, we made within the contracts.

Speaker Change: Some of our contracts have CPI increases in some what we would do is we would upsell our clients are increased price upon contract renewal. So that would mean that we would have a constant price for a period of time and then increased price on contract renewal, we do that on the basis of increased value to the client or the fact that the clients themselves are.

Speaker Change: Growing and therefore, they're getting more value out of the product so.

Speaker Change: So that's that.

Speaker Change: It kind of depends on the product.

Speaker Change: Understood you mentioned that 10% of the pipeline is made up of a cross sell opportunities I guess.

Speaker Change: And a lot of Upsells and momentum.

Speaker Change: Known as you highlighted in the business across a lot of the businesses I was hoping you could talk about kind of the use cases, you're seeing early within the cross sell and maybe how those that dialogue is progressing from what you are having success today and where you see that momentum in terms of the actual products sure well within the quarter as I mentioned, we had four cross sell.

Speaker Change: And two of them were on selling asking myself to calypso clients and so that really comes from the fact that we.

Speaker Change: We have a really strong relationship with our clients and clip. So they have new regulatory obligations that they are having to become ready for and they've chosen to work with us in one of the benefits. We have is that we can actually we havent and data API connector between those two products. So we can take data directly or the calypso platform and feed it into actually Marcel and make it much easier.

Speaker Change: To implement the axiom of cell solution for those regulatory obligation. So that is definitely helping to drive demand and we also in terms of our cross sell campaigns. We have one cross sell campaign that is really focused on our exchange clients, where we have clients, where we provide clearing technology and calypso has amazing.

Speaker Change: Management capabilities and so we are working with them to show the benefits of adding the calypso cut collateral management into their clearing operations.

Speaker Change: We also have as I mentioned the clip vaccine mouth. So and then the third one is actually looking at our verifone clients across the United States and offering both Treasury management as well as some accident micelle regulatory reporting solutions to the broader bank community. So those are the areas, where we're doing strategic campaigns.

Speaker Change: <unk> and we're definitely seeing that feeding the funnel.

Speaker Change: But but also frankly with as I mentioned in July we have one of our great tier one clients for axiom to sell and Calypso has now signed up to take <unk>. So I think that the strength of our relationship with them across all of our I frankly, all of our business has been a driver of having them trust us with their anti.

Speaker Change: Financial crime needs as well.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Alexander Blostein: And I show. Our next question comes from the line of Alexander <unk> from Goldman Sachs. Please go ahead.

Alexander Blostein: Hey, good morning, everybody. Thank you for taking the question.

Alexander Blostein: I was hoping we could start with discussion on momentum you guys are seeing.

Speaker Change: And you provided a number of different kpis, both in terms of the Upsells and so on.

Speaker Change: The number of new clients, you've signed in the cross selling can you help us maybe frame what sort of Kpis mean in terms of the revenue opportunity you see on the on the back of these wins. So I don't know if its revenue pipeline of revenue backlog you can you kind of kind of sort of frame around these wins, but just trying to better understand what this could mean in terms of revenue growth.

Speaker Change: Think that the best way to measure that is through <unk>.

Speaker Change: So because they are are the contract values of the new sales are factored into <unk> in terms of the annualized contract value.

Speaker Change: So that as you see the air coming in I think it's a 13% across all of the impact and then we've given you the AOR growth for each of the subdivisions. It really does help you have a predictive effect on subscription revenue that's coming in across our businesses going forward.

Speaker Change: I think we can give you a lot of the air our figures both in the script and in the release and presentation. So I think that that's what we look out in terms of the overall health of the business overall health of of how we look at the forward potential of the subscription revenue and then of course. There is also the professional services revenues and we try to give you some under.

Speaker Change: Many of the dynamics there as we've mentioned before for the <unk> clip. So combined properties. When we look at the overall outlook for the business medium term outlook for revenue is slightly below our expectations because of the fact that professional services fees grows a little bit more slowly in general over long periods of time then.

Speaker Change: Subscription revenues.

Speaker Change: Thats I think thats, the way to kind of evaluate the business.

Speaker Change: Great.

Speaker Change: So and then on <unk> you highlighted the tier one international Bank, which is I know is an important market for the firm can we maybe spend a little more time on sort of how you see that opportunity set and the revenue contribution from international markets shaping up for Verifone as you kind of push further into that market.

Speaker Change: Great well first of all today, the tier one tier two banks. The revenue contribution is still very small because we are still signing new clients. We're implementing them, we don't start recognizing the revenue.

Speaker Change: Until we implement in terms of making sure that we have them up and running and the implementation times are ranging from I would say six months to a year, depending on the complexity of implementation.

Speaker Change: So and most of the new sales that we've had in the tier one tier two space has focus on payments fraud. We also have this new consortia based check fraud solution. That's really exciting that was definitely driving demand and as we go into the international banks one of the things that we've been focused on both in Canada and the U.

Speaker Change: He is looking at payments fraud across kind of what I'll call international payments fraud.

Speaker Change: Into their U S operations in other parts of the world, but that's where we really have just incredible strength in our in our business and in our solution, we can cut down false positives.

Speaker Change: We're from frankly, 20% to 40% depending on how they implemented we can increase fraud found and that's been really exciting for the banks to see we run these proof of concepts to prove out the solution and it's pretty remarkable actually is to the benefit they get taking that proof of concept to training to a contract takes time. So we are super excited to see our.

Speaker Change: <unk> tier one sign in July the proof of concept was done probably by April or so I'll just give you a sense great all right. Thank you so much.

Speaker Change: Sure.

Speaker Change: Thank you.

Speaker Change: And I show. Our next question comes from the line of California from K B W. Please go ahead.

Speaker Change: Okay.

Kyle Kenneth Voigt: Maybe just the first question on the deleveraging, you know, that's coming in ahead of expectations. You noted that repaying the additional CP is a priority, but I think there's only $50 million left on that. And I think you're generating close to $250 million plus of free cash flow for dividends. So can you just help us frame what's the preference here in terms of, you know, enacting further repurchases opportunistically on a go-forward basis after you repay the $50 million remaining? Or should we think about the priority really getting that net leverage lower instead of letting the cash build up on the balance sheet in the near term? Thank you very much, Kyle.

Speaker Change: Hi, good morning.

Speaker Change: Maybe just.

Speaker Change: Just a first question on <unk>.

Speaker Change: The deleveraging that's coming in.

Speaker Change: Head of expectations, you noted that repaying the additional CP is a priority, but I think there's only $50 million left on that and I think youre generating close to $250 million plus of free cash flow for dividend. So can you just help us frame whats the preference here in terms of.

Speaker Change: Enacting further repurpose repurchases opportunistically on a go forward basis. After you repay the $50 million remaining or should we think about the priorities really getting that net leverage lower than simply letting the cash build up on the balance sheet near term.

Sarah M. Youngwood: So, we remain focused on the capital priorities that we have outlined today. So, of course, always organic growth first, and then the deleveraging remains very important. So, you are right that we would start with the CP, and the balance that you mentioned is approximately correct.

Speaker Change: Okay. Thank you very much guys. So we remain focused on the capital priorities that we have outlined at Investor day. So of course always the organic growth first and then.

Speaker Change: Deleveraging remains our important so you are right that we would start with the CP and the balance that you mentioned is approximately correct and.

Speaker Change: And then after that we would be opportunistic.

Sarah M. Youngwood: And then after that, we would be opportunistic. We, first of all, have done about half of the employee dilution related share with purchases. So, I think you would expect us to continue to do that. And we use the word opportunistic and flexible because there are other things we could be doing, which are around either debt or equity. Okay, understood.

Speaker Change #103: We pushed it we'll have done about half of R&D employee.

Speaker Change: <unk> related share repurchases Bill I think you would expect us to continue to do that and we use.

Speaker Change: Used the word opportunistic flexible on because there are other things, we could be doing which is around either debt or equity.

Speaker Change: Yeah.

Operator: And then just, just to follow up, and I hate to use this as a question, but I just want to clarify something specifically that you said, Sarah, on the listings business. And I know you said 3 million of initial listings amortization headwind starting the third quarter and the fourth quarter. Just kind of clarify, is that on a year over year basis, or are you talking about an incremental 3 million headwind sequentially in 3Q and then another 3 million sequentially in 4Q?

Speaker Change: Okay understood and then just just a follow up and I hate to use this as a question, but I just wanted to clarify something specifically.

Sarah M. Youngwood: You said Sarah on the listings business I know you said $3 million of initial listings amortization headwind starting in the third quarter and the fourth quarter.

Speaker Change: Or just kind of clarify is that on a year over year basis or are you talking about an incremental $3 million headwind on a sequential basis in <unk> and then another $3 million sequentially in <unk>.

Operator: So what I gave is that in 2Q, it's $1 million year-on-year, and then in 3Q, and after, for the following three also, it would be $3 million. So you could add two on the sequential, but it's year-on-year, so $3 million year-on-year. [inaudible] All right.

Speaker Change: What I gave you is that in <unk>, it's $1 million year on year, and then in <unk> and <unk>.

Speaker Change: For the following three also it would be $3 million. So you could add to on the sequential but its year on year, so $3 million.

Speaker Change: 1 million becomes breakeven between ocular.

Sarah M. Youngwood: understood. Thank you very much. Thank you. Sure. Yeah, so right now, we've actually had an increasing number of POCs, and we're, you know, we don't give specific numbers, but there are a really healthy number of clients evaluating our solution with the proofs of concepts that we have underway. Over time, we'd like to actually think we won't have to run as many because we'll have proven the solution out enough times across clients that it just becomes something that people fully understand, and they don't necessarily need a proof of concept, which is why we're, you know, right now; that number is building.

Speaker Change: Understood. Thank you very much.

Speaker Change: Thank you.

Speaker Change: And I show. Our next question comes from the line of Michael Cho from Jpmorgan. Please go ahead.

Michael Cho: Hi, Good morning, Thanks for taking my question I, just wanted to follow up on <unk> as.

Speaker Change: Yes.

Speaker Change: You talked through kind of the proof of concepts going in.

Speaker Change: It seems like it would seem like a pretty quick turnaround from the most recent tier one from April eight to filing in July I mean can you just give any more color around the pipeline that would be.

Speaker Change: Additional proof of concepts you are undertaking right now for the tier one and tier two clients.

Speaker Change: Longer term like what do you think the right pace of new client additions should be cohort all tier one to clients. When you look further down the road.

Speaker Change: That salesforce scaled as well.

Speaker Change: Yes, sure yes, so right now we've actually had an increasing number of Poc's and we're we don't give specific numbers, but it's a really healthy number of our clients.

Speaker Change: Value, adding our solution with the proof of concepts that we have underway.

Speaker Change: Over time, we'd like to actually think we won't have to run as many because well proven solution out enough times across clients that it just becomes something that people fully understand and they don't necessarily need a proof of concept, which is why we are right now that number is building as.

Sarah M. Youngwood: As we're gaining more traction, we're signing clients, more clients are curious about it, and they want to understand the benefit to them. But over, you know, a period of years, we'd like to think that it'll just become part of the flywheel.

Speaker Change: As we're gaining more traction we're signing clients more clients are curious about it and they want to understand the benefit to them.

Speaker Change: But over a period of years, we'd like to think that it will just become part of the flywheel.

Speaker Change: So I would say right now we should continue to expect a small number of clients over a period of a year not necessarily every quarter as we've kind of shown but but hopefully we're going to see more momentum and more regular signings in the years ahead. So it just builds on itself and that certainly has been the experience of <unk> over <unk>.

Adena T. Friedman: So I would say right now that we should continue to expect, you know, a small number of clients over a period of a year, not necessarily every quarter, as we've kind of shown, but hopefully, we're going to see more momentum and more regular signings in the years ahead. So it just builds on itself. And that certainly has been the experience of Verifin over time. And when they get into a new segment of the banking industry, they'll get, you know, ones or twos kind of on a quarterly basis. It'll start to trickle in, and then it starts to become more of a regular pace.

Speaker Change: And yet they leg into a new segment of the banking industry, they'll get ones or twos kind of in a quarterly basis that'll start to trickle in and then it starts to become more of a regular pace and then they start to really demonstrate the strength, particularly with the consortium data that they have that really kind of feeds on itself and therefore, it gains momentum but.

Speaker Change: I can't give you a specific I wish I could give you a specific understanding of or how much time that would take but but we're definitely measuring it in periods of years at a time like how do we gain more momentum how do we sign more clients used to be years in the years to come but that's about as much color as I can give you right now.

Adena T. Friedman: And then they start to really demonstrate the strength, particularly with the consortium data that they have, that really kind of feeds on itself. And therefore, it gains momentum. But I can't give you a specific, I wish I could give you a specific understanding of how much time that would take.

Speaker Change: Okay. That's great. Thank you and then Paul just <unk> capital markets.

Speaker Change: Okay.

Speaker Change: Revenue tailwind, but in there.

Paul: Okay. Thank you call out a few moving pieces there.

Speaker Change: Maybe the quarterly quarter to quarter uptick in revenues and if theres anything.

Speaker Change: Onetime or large from from clients and then I think you also mentioned more normalized quarterly year over year growth in the second half versus first of all can you just flush that comment out as well.

Adena T. Friedman: But, but we're definitely measuring in a period of, you know, years at a time, like, how do we gain more momentum? How do we sign more clients each of the years in the years to come? But that's about as much color as I can give you right now.

Speaker Change: Thank you.

Speaker Change: So basically what we had is really a broad momentum across our businesses, but specifically you also.

Speaker Change: So where we had.

Speaker Change: One <unk>.

Speaker Change: Strategic early renewal, but also a 29 upsell and several new clients and so it.

Speaker Change: It was five new clients and so as you look forward on.

Speaker Change: You are going to continue to see solid momentum in the business.

Speaker Change: And we told you. It also is that 2024 will remain in line with our medium term molecule, but of course, given the type of first half we have had I think.

Speaker Change: It was not a surprise that we mentioned that we would expect more normalized growth.

Speaker Change: Cost of products within the division.

Speaker Change: Versus the first half of the year and also we pointed out consistent growth across quarters and so this is what we said at the capital market technology revenue level and I just want to make sure. It was actually within the subdivision.

Operator: Okay, no, that's great. Thank you. And then just for follow-up, just inside the capital market tech within FinTech, clearly some good revenue tailwinds are happening there. I mean, I think you call out a few moving pieces there, but can you just flush out maybe the quarterly, quarter-to-quarter uptick in revenues and if there's anything one-time or large from some clients there? And then I think you also mentioned maybe like more normalized quarterly year-over-year growth in the second half versus the first half. Can you just flush that comment out as well?

Sarah M. Youngwood: So basically, what we had is really broad momentum across our businesses, but specifically here in Calypso, where we had one strategic early renewal, but also 29 upsells and several new clients, so it was five new clients. And so, as you look forward, you are going to continue to see solid momentum in the business. And we also told you that 2024 would remain in line with our medium-term outlook.

Speaker Change: Which is the capital market's subdivision, yes mhm.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you.

Sarah M. Youngwood: But of course, given the type of first half we had, I think it was not a surprise that we mentioned that we would expect more normalized growth across the products within the division versus the first half of the year. And we also pointed out consistent growth across quarters. And so this is what we said at the capital market technology revenue level. Yeah, and I just want to make sure it was actually within the subdivision, which is the capital market subdivision.

Speaker Change #106: And I show. Our next question comes from the line of Patrick <unk> from Piper Sandler. Please go ahead.

Operator: Yeah. Okay, great. Thank you. Thank you. And I'll show you the next question comes from the line of Patrick Moley from Piper Sandler. Please go ahead.

Patrick Malcolm Moley: Yes, so I just wanted to go back to your comments on.

Patrick Malcolm Moley: On the IPO environment. It sounded like you said that you expected the landscape to sort of improve throughout the remainder of the year, but you didn't expect it.

Patrick Malcolm Moley: Yeah, so I just wanted to go back, Adena, to your comments on the IPO environment. It sounded like you said that you expected the landscape to sort of improve throughout the remainder of the year, but you didn't expect it to manifest itself until the first half of 2025. So could you maybe just clarify your expectations for the rest of this year and when you expect that to show up in the financials? Sure.

Speaker Change #112: To manifest until the first half of 2025, so could you maybe just clarify your expectations for the rest of this year and when do you expect that to show up in the financials.

Adena T. Friedman: Well, I think we've seen a modest improvement year over year. I think, in a way, we've all been surprised by the fact that you've got strong market performance in general but a continued, I would say, muted IPO environment. Now, we are seeing a very good week.

Speaker Change: Sure well I think we've seen a modest improvement year over year I think in a way I think we've all been surprised by the fact that you've got strong market performance in general, but a continued.

Speaker Change: I would say muted IPO environment now we are seeing a very good week, we have.

Adena T. Friedman: We have the largest IPO of the year happening today, and we had another great IPO yesterday. But I think that we still are seeing it trickling in like that, not necessarily a steady stream of IPOs coming to market in size. And so, as we look out over the pipeline and certainly the conversations we've had with clients, we do think that we'll continue to see a modest improvement year over year in the IPO environment, which, of course, last year was not a strong year. But a lot of the conversations we're having, particularly in the technology space, have been more geared towards the first half of 2025. Now, that's changed, right?

Speaker Change: The largest IPO of the year happening today, and we had another great IPO yesterday, but I think that we still are seeing it coming trickling in like that not necessarily a steady stream of ipos coming to market in size and so as we look out over the pipeline and certainly the conversations we've had with clients. We do think that we'll continue to see a modest.

Adena T. Friedman: So, if there's some positive momentum that happens in the economy, positive things that are happening as we go through the fall, I think you could see the door opening up because more and more companies are getting ready to go public. But I still think a lot of them are thinking that they'll wait past the year and go public in 2025. Okay, great. And then just to follow up on index options, you're seeing really strong momentum there. I think you mentioned that revenues have doubled versus last year, and volumes are up, I think, 50% year over year. So it does seem like you're taking a price there.

Speaker Change: Is that.

Adena T. Friedman: Could you maybe just update us on the broader vision for index options at Nasdaq and maybe your approach to pricing, potentially at the expense of not picking up as much market share as you'd like, just kind of how you think about that? Well, I think, first of all, we're really excited about how the index options business is developing. And I think that the trading ecosystem, as well as investors, are recognizing the benefits of being able to hedge their index exposure through the options markets.

Speaker Change: Well I think first of all we are really excited about how the index options business is developing and I think that the trading trading ecosystem as well as investors are recognizing the benefits of being able to hedge their their index exposure through the options markets. Obviously, we've seen that with other index franchises, but now.

Adena T. Friedman: And obviously, we've seen that with other index franchises, but now with Nasdaq 100, we're really building momentum and leveraging both futures, where futures volumes were up 25% year-over-year in the quarter, as well as in terms of the options business. And now we have more ability to do that. So very excited about where that's going.

Speaker Change: With the NASDAQ100, we're really building building momentum in leveraging both futures, where futures volumes were up 25% year over year quarter as well as in terms of the options business and now you have more more ability to do that so very excited about where thats going it is something where we have it as a premium part of our <unk>.

Adena T. Friedman: It is something that we have it as a premium part of our options franchise because I think that the benefits that our clients are getting from the hedging capabilities are very strong. And so it kind of warrants the fees that we charge there. It is not having, you know, that's not having an impact on demand.

Speaker Change: <unk> franchise, because I think that the benefits that our clients are getting from the hedging capabilities are very strong and so it kind of warrants the fees that we charge there it is not having.

Adena T. Friedman: The demand is really strong and is continuing to grow. Now, we've done a lot of work. There's been a lot of legwork over the last several years to build up an understanding of the options, how to use hedging. We have a data capability that we give out, you know, we provide to the clients to help them understand, you know, just do a lot of analysis on it to help them understand how to use the options the right way. And so the educational process we've had, frankly, over three years, I think is really now paying off.

Speaker Change: That's not having an impact on demand the demand is really strong and continuing to grow now we've done a lot of work there's been a lot of leg work over the last several years to build up an understanding of the options how to use hedging we have a data capability that we give out we provide to the clients to help them understand.

Speaker Change: There's still a lot of analytics on it to help them understand how to use the options the right way.

Adena T. Friedman: And we expect to continue to grow. We will be looking at additional indexes, additional indexes that we want to bring to our index options franchise. But even now, the other thing I would mention is that there's also a really cool flywheel back to the index business. So, you know, the index team and the options team have been working hand in hand to make this work really well, because there are benefits back to the institutional community with the index and their ability then to have a better hedging tools and their ability, therefore, to adopt our index products more successfully. So that's another part of the flywheel that's coming out of this. Very helpful. Thank you, Adena.

Speaker Change: So the educational process, we've had frankly over three years I think is really now paying off.

Speaker Change: And we expect to continue to grow we will be looking at additional indexes.

Speaker Change: Sure.

Adena T. Friedman: Thank you. And I show our next question comes from the line of Craig Siegenthaler from Bank of America. Please go ahead.

Craig William Siegenthaler: Thanks. Good morning, everyone. Morning, Craig. So we had a question about Solovus. Back in May, Bloomberg reported that you're considering a sale of Solovus. And while this could help you reach your financial leverage targets faster and maybe the next deal, we were just curious given the news because Solovus' strategic fit fits pretty well within your objective to provide software data and other services in the financial service ecosystem. And arguably, there are other businesses, maybe like the Nordic Exchange, which doesn't fit as well. So I was just wondering if you could comment on the potential for Nasdaq to sell its existing businesses. Thank you. Yeah, so I won't comment on any particular rumor that's out there.

Adena T. Friedman: But I would just say this, we we do a very detailed review every year on our capital allocation. We look at our businesses strategically, financially, a lot across different, several different factors, and evaluate how each one of them, you know, fits into our overall client experience, and making sure that we're always the right owner for the businesses. And as you've known, since I became CEO many, many years ago, now, seven and a half years ago, we've made decisions to divest of certain businesses where either, you know, we're just not the right owner of the business, because our clients are not seeing us as a strategic owner, they might see us as a, as an owner, you know, they definitely understand that we own the business, but they might not necessarily strategic for our franchise, or we have capital allocation priorities that are that really skewed towards different parts of our business.

Speaker Change: Fits into our overall client experience and making sure that we're always the right owner for the businesses and as you've known since I became CEO. Many many years ago now seven five years ago, we've made decisions to divest of certain businesses where either.

Adena T. Friedman: In terms of, you know, you mentioned areas of business, I would say I do want to say one thing. We view our Nordic business to be very strategic to NASDAQ. And I've said this on prior calls. The Nordic exchange business is the best exchanges in Europe, the innovation ecosystem that exists in the Nordics is incredible and very consistent with the US. And I would say that we do a great job of operating those markets.

Speaker Change: We're just not the right owner of the business because our clients are not seeing us as a strategic owner they might see us as a as an owner.

Speaker Change: We understand that we owned the business, but not necessarily strategic to our franchise or we have capital allocation priorities that are that really skewed towards different parts of our business.

Speaker Change: In terms of you did mentioned areas of our business I would say I do want to say one thing we view, our Nordic business to be very strategic to Nasdaq.

Adena T. Friedman: And we're really proud to be the operator in the Nordic market. The other thing is that the team there really contributes a lot to our broader technology business. So we deploy members of the Nordic team out to work and help our market tech clients around the world. We have a great set of clients in the Nordics that are now wonderful customers that are fintech solutions. So there's a lot of strategic intersection with our Nordic business; I do want to provide a defense of that. But generally, Craig, you know, we do this work, and we make these decisions over time. Because we look at it in terms of the long-term strategic fit to NASDAQ. Thank you, Adena.

Speaker Change: Said this on prior calls the Nordic exchange business, they're the best exchanges in Europe.

Speaker Change: Innovation ecosystem that exists in the Nordic is incredible and very consistent with the U S and I would say that we do a great job of operating those markets and we're really proud to be the operator of the Nordic market.

Speaker Change: Other thing is the team there is really contributes a lot to our broader technology business. So we deploy members of the Nordic team out to work and help our market tech clients around the world. We have a great set of clients in the Nordics that are now wonderful clients. Our fintech solutions. So there's a lot of strategic intersection with our Nordic business I do.

Speaker Change: Provided defense of that but generally Craig we do these this work and we make these decisions over time.

Craig: Because if we look at it as in terms of the long term strategic fit to NASDAQ.

Craig William Siegenthaler: And I had a follow-up question on the response to the last question on index options and specifically the Nasdaq 100 index. What is your desire and ability to expand NDX with zero DT options and then also with rising retail engagement? And, you know, there's a lot of interest around tech overall. So it fits perfectly in here.

Adena T. Friedman: I was curious about your comment about launching other indexes. I'm just curious in terms of what you could do there. Yeah, I mean, we always look at are there index products that we think, as you mentioned, have really strong retail appeal, but also institutional appeal, where they're large enough, and there's enough assets in them to drive liquidity into a futures or an index or an options product, really looking at it from a hedging perspective, we have a whole range of index products beyond the Nasdaq 100.

Adena T. Friedman: We have thematic indexes in terms of different technology trends, like cloud and IT security, AI; we have themes across different investment strategies, like momentum strategies, dividend strategies, things like that. And so to the extent we think that there actually could be a trading ecosystem we could build around that, we will consider it. I don't we don't have any one particular index product right now that we're targeting, but I would say that we do a lot of great analysis on that.

Adena T. Friedman: And then, you know, in terms of how we structure the options and how we look at duration, option duration, we will obviously evaluate that in the context of investor appetite. And, and we'll, you know, work with the SEC on that when appropriate. Thank you. Thank you. And I take our next question comes from the line of Alex Kramm from UBS. Please go ahead.

Alexander Kramm: Yes, hey, good morning, everyone. Just wanted to come back to what you called out on Calypso or capital markets with that early strategic renewal. Can you just explain what exactly happened there?

Speaker Change #102: Two what you called out I'm Calypso, our capital markets with that early strategic renewal can you just explain what exactly happened there why and if that's something that we should expect more more often and then maybe related to that on the impact side looks like.

Adena T. Friedman: Why? And is that something that we should expect more often? And then maybe related to that on the impact side, looks like, you know, AR up 25 million quarter over quarter in that segment. Can you dimensionalize how big that renewal specifically was also on the transactional side? You beat me pretty handily.

Speaker Change: 25 million quarter over quarter in that segment can you dimensionalize, how big that.

Speaker Change: That renewal specifically was also on the transactional side you beat me pretty handily, so maybe more than $10 million as at all related to that so just trying to understand how big some of these individual renewals could be thank you.

Adena T. Friedman: So maybe more than 10 million? Is it all related to that, too? Just trying to understand how big some of these individual renewals could be. Thank you. Yeah, so I would actually say that, you know, having early renewals is not totally unusual, right? I mean, if we call it out, just because it was, we're really excited about the fact that we had a strategic client who chose to renew early and extend their contract.

Speaker Change: So I wouldn't actually say that having early renewals is not totally unusual right. I mean, it's we call. It out just because it was really excited about the fact that we had a strategic client who chose to renew early and extend their contract and.

Speaker Change #107: I think that it's something that we're proud of now with as we mentioned with Calypso revenue just to remind everyone. Our view is that <unk> is a very good reflection of how you should look at the overall health of the business the stability because because of the fact that the license fees you have half the license revenue.

Speaker Change: Recognized upfront and half recognized over the life of the contract, but our cash revenue.

Adena T. Friedman: And I think that it's something that we're proud of. Now, as we mentioned, with Calypso Revenue, just to remind everyone, our view is that ARR is a very good reflection of how you should look at the overall health of the business, the stability, because of the fact that, for the license fees, you have half the license revenue recognized up front and half recognized over the life of the contract. But our cash revenue, how we get cash in the door, and the overall, you know, ACV value of those contracts is better reflected in ARR. So we continue to see ARR being very stable and very healthy. We think that's fantastic!

Speaker Change: How we got the cash in the door and the overall ACB value of those contracts is better reflected an IRR.

Adena T. Friedman: We will have events like this early renewal that happen on occasion. We also had, as we mentioned, you know, five new other clients, 29 upsells. All of that, Alex, contributed to the strong revenue in the quarter. But over time, as Sarah was saying, over time, you know, kind of looking at ARR as a better reflection of the overall growth characteristics of the business, I think it's a better way to look at it over time, as opposed to in a single quarter.

Speaker Change: We continue to see the <unk> being very stable very healthy we think that's fantastic. We will have events like like this early renewal that happen on occasion. We also had as we mentioned five new other clients 29 up sells all of that Alex contributed to the strong revenue in the quarter, but over two.

Speaker Change: Time.

Speaker Change: Sir I was saying over time.

Speaker Change #104: Looking at <unk> as a better reflection of the overall growth characteristics of the business.

Adena T. Friedman: Yeah, the only thing I would add is, by definition, the ARR impact of a renewal is not as much as a new client or an upsell. And so, if you were focused on why we had a good performance on ARR at Calypso or in Capital Markets Tech, it was really because of the breadth of everything that has. That's helpful. Thank you very much.

Alexander Kramm: And then secondarily, a topic that we talked about a lot a few years ago, on the back of the strong, you know, listings environment that we had at that point, there was a lot of excitement around eventually getting, you know, IR solutions on the back of that when those started paying. I know, obviously, there's been a decent amount of delistings since then. So I guess this is not really coming through, but maybe you can just tell us where we are in that, if you're still seeing a decent amount of upsells, or if, unfortunately, it's just not coming to fruition, given the kind of companies that were listed three years ago. Actually, we are seeing conversions of our clients, you know, to paying clients at the end of the free period. So that is still happening, Alex, but I think that there are other headwinds.

Adena T. Friedman: So a few things to mention about IR services, and I would actually say this across corporate solutions. So the first thing is that we obviously gain new clients through IPOs, right? So that's one of the avenues for us to gain new clients, whether that's for our IR solutions, or ESG solutions, and our governance solutions. So that is definitely a funnel, you know, a pipeline for us. Now, some of them, they then become paying clients on their basic services over a period of two to four years, depending on the, you know, kind of way that the IPO is structured.

Adena T. Friedman: But we can also upsell clients in that period of time. So when you have a healthy IPO environment, you have new companies coming in, and then you're showing them the base services, and you can upsell them on new services. That really does become a really nice flywheel, you know, right after the IPO, and then you have an additional opportunity when, as you mentioned, the IPO package rolls off, and those IPO packages are rolling off. And so we are still seeing that happen.

Adena T. Friedman: But the flip side of it is, when you have delisting, then you have paying clients who are no longer listed. And that obviously creates churn, and you have other clients who are continuing to take the services. But they are, but they are, they're maybe taking fewer services because their IR budgets are being squeezed. And so that's becoming the contra, I'll call it the contra flywheel of having more delisting. I would say, you know, when we look at, when we look at the overall conversion rates, they are lower than what we've seen on an average basis.

Speaker Change: And then you have an additional opportunity when as you mentioned the IPO package rolls off and those IPO packages are rolling off and so we are still seeing that happen, but the flip side of it is when you have delisting then you have paying clients who were no longer listed.

Speaker Change: And that obviously creates churn and you have other clients who are continuing to take the services.

Speaker Change: But they are but they are on.

Speaker Change: Maybe taking fewer services because their IR budgets are being squeezed and so thats, becoming the contra I'll call. It the contra flywheel of having more delisting.

Adena T. Friedman: But they are, you know, but I think that's partly because of the fact that some of the companies are delisting, but those who are staying listed, we're seeing relatively normalized conversion. All right. Great color.

Speaker Change: I would say when we look at when we look at the overall conversion rates they are lower than what we've seen on an average basis, but they are but I think thats, partly because of the fact that some of the companies are de listing, but those who were seeing lift that we're seeing relatively normalized conversion rate.

Speaker Change #108: Alright, great color. Thank you so much.

Alexander Kramm: Thank you so much. Thank you. And I'm sure our last question comes from the line of Owen Lau from Oppenheimer. Please go ahead.

Speaker Change: Sure.

Speaker Change: Thank you.

Speaker Change: And I'm sure. Our last question comes from the line of Owen Lau from Oppenheimer. Please go ahead.

Owen Lau: Hi, good morning. Thank you for taking my questions. So for AI, you have many initiatives going on. And when we look at Dynamic Mellow, you highlighted a 20% increase in ball volumes and improvement in fill rate. Could you please talk about how it could impact your market shares and financials over time and how difficult it is for your client, for your competitor, to launch similar products? Thanks.

Owen Lau: Hi, Good morning. Thank you for taking my questions. So for <unk>, you have many initiatives going on and when we look at dynamic Mello.

Speaker Change: Highlight the 20% increase in both volume and improved margins.

Speaker Change #111: <unk> could you please talk about how it could impact your market shares with financials overtime and how difficult. It is for your client portfolio competitive competitive launch simo products. Thanks.

Adena T. Friedman: Well, I say on the first question, this is kind of a specialized order type. So it's not going to be something that's going to have a massive effect on market share, but it is a premium product. So, our clients get a huge value out of it. It's a really nice way to get a higher fill rate in size at the midpoint.

Speaker Change #110: Well I would say on the on the first question. This is kind of a specialized archetypes. So it's not going to be something thats going to have a massive effect on market share, but it is a premium product so.

Speaker Change #110: So our clients get a huge value out of it it's a really nice way to get.

Speaker Change #110: A higher fill rate in size at the mid point. So it's a really it's a it's a premium product in terms of the pricing that we charge. So it's more of a revenue opportunity than it is market share opportunity in terms of being that are replicated we do provide in our filing an explanation of how we do it but I would tell you that it took several years for us to fine tune it with our AI team data science.

Adena T. Friedman: So it's really a premium product in terms of the price that we charge. So it's more of a revenue opportunity than it is a market share opportunity. In terms of being able to replicate it, we do provide in our filing an explanation of how we do it. But I would tell you that it took several years for us to fine-tune it with our AI team and data science team.

Speaker Change #110: Team, it's actually quite complicated and complex to structure, the right way to make sure you're getting the right outcomes. We're constantly fine tuning the various data points in the weightings of those data points as to how they are affecting.

Speaker Change #109: The timer on the on the product so I would say its actually extremely hard to replicate even though kind of look at it as like the formula is available, but how you actually.

Speaker Change: Manage that Formula is is very much a part of the greatness of our technologies Division frankly.

Speaker Change: Got it and then for financial crime management technology.

Speaker Change: We heard that from other enterprise software companies had to lower the air.

Speaker Change #100: Guidance because of some uncertainty in the macro environment, but the momentum in your business seems to be quite robust and you highlighted a highlight at the new tier one clients signed in July could.

Speaker Change: Could you please remind us how garrison could fare well in different macro involvement is any reason we should be worried about the.

Speaker Change #101: My quick commentary thanks.

Speaker Change: Sure well I would actually talk about let's talk about the Fintech level and then we can talk about it in specific areas, but.

Speaker Change: The way that we look at our Fintech solutions as we provide mission critical technology that helps clients manage risk.

Speaker Change: Manage their regulatory obligations and manage criminals out of their networks as well as providing core capital markets technology to the entire exchange ecosystem. So it is a.

Speaker Change: To us these are very durable durable.

Speaker Change: Demand drivers managing risk it get.

Speaker Change: As the World gets more complicated the world gets more risky and I think our ability at a global scale on a global level to be able to help our clients manage risks in their trading books and their treasury operations and our capital obligations.

Speaker Change: As well as and also to manage risk in markets is just it's tremendous honestly and so I think that has actually been a really great demand driver I think that as we look at the regulatory obligations. Those are extremely durable around the world different regulators go at different paces, but theres always regulation thats changing now changes, it's really changes in regulations.

Speaker Change: That drive demand.

Speaker Change: As well as the growth of banks are growing and expanding their businesses into new countries that also drives great demand and so those are things that are also quite durable I think then on anti financial crime as you as we've mentioned before it's a $3 five trillion dollars problem between anti money laundering and fraud.

Speaker Change #105: We are just getting started and so its not just the fact that the Tam is really large the total market opportunity, but our solution is unique I think our solution is remarkable in terms of the way that we bring data together the way that we were able to look at consortia data in a way that really allows us to be very.

Speaker Change #105: Curated and the topologies, we apply using AI and in automating workflows to make it as efficient as possible that I think that.

Speaker Change #105: It creates a great opportunity for us and we're only in the in really in North America. Today. So we have a lot of opportunity globally. There. So.

Speaker Change #114: I think that we've chosen to get into this business in a way with very specific ambitions to be that solutions provider of their most complex challenges that the banks faced in all economic environments and that is what we think is going to create durable growth for us.

Speaker Change #113: Got it thanks a lot.

Speaker Change #116: Thank you.

Speaker Change #116: That concludes our Q&A session at this time I would like to turn the call back over to Dana Friedman for closing remarks.

Adena T. Friedman: Thank you well as you heard this morning, NASDAQ continues to make progress on our three key priorities of integrate innovate and accelerate and through our complementary and integrated solutions NASDAQ is delivering consistent growth and the one nasdaq's strategy is accelerating our evolution as a trusted technology provider to the financial services industry, we look for.

Adena T. Friedman: Forward to updating you on our strategic progress in the quarters to come and thank you all for joining and have a great day.

Speaker Change #115: Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

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Adena T. Friedman: It's actually quite complicated and complex to structure the right way to make sure you're getting the right outcomes. We're constantly fine-tuning the various data points and the weightings of those data points as to how they're affecting the timer on the product.

Speaker Change #118: Good day, and thank you for standing by and welcome to Nasdaq's second quarter 2024 results Conference call. At this time, all participants are in a listen only mode.

Speaker Change #118: So to speak is 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 would then here an automated message advising you hand as ways to withdraw your question. Please press star one again please.

Speaker Change #118: Please be advised that today's conference is being recorded I would now like to hand, the conference over to your first Speaker Otto Garrett Senior Vice President Investor Relations. Please go ahead.

Adena T. Friedman: So I would say it's actually extremely hard to replicate, even though you kind of look at it as like the formula is available, but how you actually manage that formula is very much a part of the greatness of our technology division. Frankly, we got it. And then for financial crime management technology, we heard that some other enterprise software companies had to lower their ARR guidance because of some uncertainty in the macro environment.

Speaker Change #120: Good morning, everyone and thank you for joining us today to discuss Nasdaq's second quarter 2020 for financial results on the line, our Edina Friedman, our chair and Chief Executive Officer, Sarah Young with our Chief Financial Officer, and other members of the management team.

Speaker Change #119: The prepared remarks, we will open the line for Q&A. The press release and earnings presentation accompanying this call can be found on our Investor Relations website I would like to remind you that we will be making forward looking statements on this call that involve risks.

Speaker Change #119: A summary of these risks is contained in our press release and a more complete description on our annual report on Form 10-K.

Speaker Change #119: Also please note that we will discuss our financial results on a pro forma basis and with year on year growth rates, which means that we are showing results versus the prior year period as if we owned the calypso and <unk> for all of 2023, and excluding the impact of FX references to organic growth exclude the impact of FX acquisitions and divestitures.

Athena: Reconciliations of U S. GAAP to non-GAAP results can be found in our press release as well as in our file located in the financial section of our Investor Relations website at IR, NASDAQ Dot Com I will now turn the call over to Athena.

Adena T. Friedman: But the momentum in your business seems to be quite robust, and you highlighted the new tier one client sign in July. Could you please remind us how Verifin could fare or grow in different macro environments? Any reason we should be worried about if the macro environment turns? Thanks.

Athena: Thank you Matteo and good morning, everyone. Thank you for joining us on the call. This morning, I'll provide some perspective on the external environment discuss our strong quarterly performance highlights as well as our progress against our strategic priorities and then I'll hand, the call to Sarah to walk through the financial results in more detail.

Speaker Change #119: Turning to the economy in the U S. We continue we're continuing to see solid but slowing GDP growth.

Speaker Change #119: Along with cooling inflation is slightly rising unemployment these data points support the potential for easing monetary policy in the coming months as the fed continues to strive for an economic soft landing.

Speaker Change #119: The general stability in the U S economy, and the potential for a lower cost of capital going forward is resulting in modest improvements in the IPO landscape as we progress through 2024, including solid activity. This week.

Speaker Change #119: <unk> investors continue to contend with external uncertainties and the timing of monetary policy shifts as well as our dynamic macro political environment. As a result, we continue to expect modestly improving IPO activity for the remainder of 2024 and our current U S. IPO pipeline indicates a stronger momentum is likely to manifest.

Speaker Change #119: Starting in the first half of 2025.

Speaker Change #119: We're also seeing stronger economic underpinnings in Europe aided by the ECB is easing monetary policy, including improving economic prospects in the Nordics.

Speaker Change #119: The improvement is not yet translating into a material increase in new public issuances, but our European IPO pipeline is healthy and growing particularly for 2025.

Speaker Change #119: As investors and industry participants navigate the dynamic market environment, we continue to see sustained robust trading activity in the markets as well as strong demand for mission critical technology solutions from financial institutions globally.

Speaker Change #119: As a result, our markets continued to experience strong volumes and client demand for our Fintech solutions remains consistent with trends, we have seen through the cycle, which provides a healthy backdrop for continued revenue growth across our solutions suite.

Speaker Change #119: Now, let me turn to our financial results, which demonstrate the power and resilience of our diversified business model and our ability to succeed through economic cycles.

Speaker Change #119: We delivered a strong quarter with $1 2 billion and net revenues an increase of 10% year over year with solutions revenues at 13% growth.

Speaker Change #119: Our overall annualized recurring revenue or <unk>.

Speaker Change #119: <unk> grew 7% to $2 7 billion.

Speaker Change #119: I'm, particularly pleased with the strength of the performance across our business, which is a testament to the power of our platform for.

Speaker Change #119: We're integrating the <unk> acquisition ahead of schedule and are realizing the investment thesis that underpins the transaction as we demonstrated value for clients shareholders and employees.

Speaker Change #119: Our expenses for the quarter increased 7% year over year within our guidance.

Speaker Change #119: Our operating income grew approximately 14% and importantly, our operating margin increased to 53% representing over one percentage point of operating leverage while we continue to invest in support to support growth in our business and deliver on synergies.

Speaker Change #119: Turning now to a discussion of the business highlights starting with capital access platforms.

Speaker Change #119: While our growth in the division remained at 1% our index revenue grew 29%, resulting in overall revenue growth for capital access platforms of 10%.

Speaker Change #119: And listings, we welcomed 31 operating company ipos, maintaining our strong win rate of 72% based on NASDAQ eligible listings.

Speaker Change #119: While the slower IPO environment remains a headwind we are encouraged by signs of improvement are supported by our most recent IPO pulse index, which is in the at near a three year high.

Speaker Change #119: Overall growth in data and listings continue to experience challenges as modest growth in market data and the slowly improving IPO environment, while are offset by the impact of prior year de listings.

Speaker Change #119: Growth in our analytics business benefited from continued demand across the investment community for actionable intelligence and increased efficiency. However that growth was partially offset by continued headwinds in corporate solutions, resulting in more muted growth for workflow and insights.

Speaker Change #122: Our index business delivered another exceptional quarter with $17 billion of net inflows during the quarter totaling $53 billion over the last 12 months. We also achieved another record in index ETP AUM exiting the quarter at $569 billion.

Speaker Change #122: Turning next to financial technology.

Speaker Change #123: Our our growth across the division was 13%, including 25% in financial crime management technology, 14%, and our combined axiom, Estelle and clips escalations and 9% in a combined market technology and trade management services.

Speaker Change #123: The Division had 69, new client signings 96, Upsells and for cross sells we also saw continued cloud adoption at 68% of axiom of sell in calypsos combined bookings in a quarter, where cloud based with a strong pipeline for future quarters.

Speaker Change #123: Turning to the specific subdivision financial crime management technology continued its strong momentum we signed over 50, new clients in the SMB space and we continue to make progress in the upmarket segment focused on tier one and tier two banks in July we signed a new international Tier one bank, which is also an exciting cross sell.

Speaker Change #123: Going forward, we continue to maintain a strong sales pipeline within the core SMB segment, and we have a growing pipeline of new clients and upsells among tier one and tier two banks.

Speaker Change #123: Across regulatory technology, we see sustained demand across both existing and new clients as financial institutions face increasingly dynamic regulatory environment, including changes in regulation globally related to asset thresholds.

Speaker Change #123: Among the many regulatory trends that are driving sales demand, we're pleased with our progress in signing clients around the world as they focus on implementing Basel, four and preparing to implement Basel III end game.

Adena T. Friedman: Sure, well, I would actually talk about it, let's talk about the FinTech level, and then we can talk about it in specific areas. But the, you know, the way that we look at our FinTech solutions is that we provide mission-critical technology that helps clients manage risk, manage their regulatory obligations, and manage criminals out of their networks, as well as provide core capital markets technology to the entire exchange ecosystem. So it is, you know, to us, those are very durable, durable kind of demand drivers. Managing risk, it gets, you know, as the world gets more complicated, the world gets more risky.

Speaker Change #123: And capital markets technology, we continue to see strong demand for mission critical technology at many of our clients focus on modernizing their infrastructure to enhance resilience and performance for.

Adena T. Friedman: And I think our ability at a global scale on a global level to be able to help our clients manage risk in their trading books, in their treasury operations, in their capital obligations, as well as then also to manage risk in markets is just, it's tremendous, honestly. And so I think that is actually a really great demand driver. I think that as we look at regulatory obligations, those are extremely durable around the world.

Adena T. Friedman: Different regulators go at different paces, but there's always regulation that's changing. Now changes, it's really changes in regulations that drive demand, as well as growth. You know, banks are growing and expanding their businesses into new countries, which also drives great demand. And so those are things that are also quite durable.

Speaker Change #123: For Calypso, we see robust new demand, especially in the Treasury segment. In addition to cloud transformation of large scale clients.

Adena T. Friedman: I think then on anti-financial crime, as we've mentioned before, it's a $3.5 trillion problem between anti-money laundering and fraud. And we are just getting started. And so it's not just the fact that the TAM is really large, the total market opportunity, but our solution is unique. I think our solution is remarkable in terms of the way that we bring data together, the way that we are able to look at consortia data in a way that really allows us to be very curated in the topologies we apply using AI and in automating workflows to make it as efficient as possible. I think that create And we're only really in North America today.

Adena T. Friedman: So we have a lot of opportunity globally there. So, you know, I think we've chosen to get into this business in a way with very specific ambitions to be that solutions provider for the most complex challenges that banks face in all economic environments. And that is what we think is going to create durable growth for us.

Speaker Change #124: In our market services Division, we delivered revenue growth of 3%, we experienced healthy volumes across North America, and Europe, and we achieved a sequential increase in north American options market share as well as growth in NASDAQ U S equities on exchange market share and capture.

Speaker Change #123: Our U S index options achieved record revenues more than doubling versus last year due to higher capture and volumes.

Speaker Change #123: And our U S cash equities business, we executed successful Russell MSCI and S&P rebalanced as during the quarter, which showcased the strength and resiliency of our markets.

Speaker Change #123: During the Russell event for instance, nearly $2 9 billion shares representing a record notional value of over $95 billion were executed in the closing cross representing the largest liquidity events on an ASIC stock exchange for the Russell reconstitution.

Speaker Change #123: And year in our European markets, the strength of our market ecosystem as evidenced by the depth of book breath of participants and product innovation continues to drive market share gains.

Speaker Change #123: Overall, we're pleased to report a solid quarter market services and remain focused on retaining our leading position across all of our markets.

Owen Lau: Thanks a lot. Thank you. That concludes our Q&A session. At this time, I'd like to turn the call back over to Adena Friedman for closing remarks. Thank you.

Speaker Change #123: I now want to spend a few minutes updating you on how we're how we're executing against our 2024 strategic priorities of integrate innovate and accelerate.

Adena T. Friedman: Well, as you heard this morning, Nasdaq continues to make progress on our three key priorities of integrate, innovate, and accelerate. And through our complementary and integrated solutions, Nasdaq is delivering consistent growth. And the One Nasdaq strategy is accelerating our evolution as a trusted technology provider to the financial services industry. We look forward to updating you on our strategic progress in the quarters to come. And thank you all for joining us, and have a great day.

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thank you for watching!

Speaker Change #123: Starting with integrate we have action to over 70% of the.

Speaker Change #123: $80 million of net expense synergies and our leverage ratio reached three nine times at quarter end both ahead of plan.

Speaker Change #123: With axiom is selling kalypso are fully integrated into the financial Technology Division and we've established strong leadership, a well structured operating model and a one NASDAQ go to market approach to ensure we are delivering for our clients with the highest level of efficiency and effectiveness.

Speaker Change #123: Our CRM integration for the Calypso and axiom solutions has now completed ahead of schedule and this supports divisional sales coordination as well as the sales incentive program established at the beginning of the year.

Speaker Change #123: Importantly across axiom, ESL Calypso and <unk>, we've been highly focused on cultural integration into the broader NASDAQ enterprise.

Speaker Change #123: And internal surveys continue to show that our employees are highly engaged and energized to deliver for our clients.

Speaker Change #123: We're also making strong progress advancing our innovate priority.

Speaker Change #123: We currently have approximately 50% of our employee base working with AI tools focused on enhancing productivity as well as driving our product roadmap by the end of Q3, 100% of our developers will have access to AI co pilot tools and we recently had over 650 employees participated in several AI Hackett.

Speaker Change #123: Bonds across Nasdaq.

Speaker Change #123: During the quarter, we continued to introduce new AI capabilities within our client facing solutions.

Speaker Change #126: Distant with other Gen AI capabilities recently launched in our <unk> and <unk> advantage solution with any investment we haven't deployed a new AI powered feature for the market lens module called pension meeting minutes summarization.

Speaker Change #123: Feature provides asset managers with key insights on current and future pension fund strategies to help inform their business development engagement priorities with top pension decision makers.

Speaker Change #123: We also have a strong pipeline of AI features.

Speaker Change #123: Scheduled to launch in the coming quarters, including in market surveillance and IR insight and we're seeing strong early traction in client adoption and effectiveness related to the capabilities that are already in market, specifically dynamic mellow the first.

Speaker Change #123: SEC approved AI order type, which we launched in April.

Speaker Change #123: Driving a 20% increase in both volumes for this order type and improvement in fill rates compared to the prior static version.

Speaker Change #123: <unk> integrated Gen. Eight Gen. AI feature entity research co pilot is now deployed at more than 250 clients and we expect to complete a rollout in the third quarter client feedback has been positive demonstrating that the integrated copilot functionality with the integrated copilot functionality <unk> solutions can reduce alert research.

Speaker Change #123: Time by up to 90% compared to banks that do not use <unk>.

Speaker Change #125: Beyond AI, we continue to drive innovation towards key growth priorities. For example in our index business innovation is at the heart of our growth strategy as we extend the franchise to new markets globally drive institutional adoption and introduced new products beyond the Nasdaq $100.

Speaker Change #123: During the quarter, 50% of product index product launches were outside of the United States and were kicked in we are quickly gaining traction and investor adoption. In total we launched 18, new products with our partners, including 12, Etp's and three insurance annuity vehicles geared towards our institutional clients.

Speaker Change #123: Additionally, we are pleased that our AI themed ETP saw them more than $1 billion of inflows over the last 12 months.

Speaker Change #123: Wrapping up with our accelerate priority.

Speaker Change #123: The addition of axiom of selling Calypso has significantly elevated the dialogue, we have with our clients as a strategic partner there is no better evidence of that in the early traction we're seeing in our cross sell efforts.

Speaker Change #123: Closing the transaction, we have executed on 11 Fintech Cross sells we had for this quarter, including two cross sells of our <unk> solution to calypso clients.

Speaker Change #123: This is a great start but it is only the beginning on our journey to exceed $100 million in cross sell by the end of 2027.

Speaker Change #123: Just eight months since the acquisition close 10% of the opportunities in our pipeline are cross sells and we expect this to grow sequentially.

Speaker Change #123: The division has several strategic cross sell campaigns underway, which are generating strong top of funnel interest and underpins our continued confidence in our ability to grow cross sell bookings over the coming years.

Speaker Change #123: To wrap up we're pleased to deliver a quarter of strong results driven by continued momentum in solutions.

Speaker Change #123: And the power of our diversified platform to drive scalable profitable and durable growth.

Speaker Change #123: Certainly we are delivering on the <unk> acquisition thesis as our clients increasingly see NASDAQ as a strategic partner that can help solve their largest most complex challenges.

Operator: Thanks for watching! Good day, and thank you for standing by. Welcome to Nasdaq's second quarter 2024 results conference call. At this time, all participants are in a listen-only mode.

Ato Garrett: 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 one on your telephone; you will then hear an automated message advising your hand is right. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Ato 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 second quarter 2024 financial results. On the line are Adena Friedman, our Chair and Chief Executive Officer, Sarah Youngwood, our Chief Financial Officer, and other members of the management team. After prepared remarks, we will open the line for Q&A. The press release and earnings presentation accompanying this call can be found on our investor relations website.

Ato Garrett: I would like to remind you that on this call, we will be making forward-looking statements that involve risk. A summary of these risks is contained in our press release and a more complete description in our annual report on Form 10-K. Also, please note that we will discuss our financial results on a pro forma basis and with year-on-year growth rates, which means that we are showing results versus the prior year period as if we owned Calypso and Axiom SL for all of 2023 and excluding the impact of FX. References to organic growth exclude the impact of FX, acquisitions, and investments.

Ato Garrett: Reconciliations of US 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. Thank you, Ato. And good morning, everyone.

Adena T. Friedman: Thank you for joining us. On the call this morning, I'll provide some perspective on the external environment, discuss our strong quarterly performance highlights, as well as our progress against our strategic priorities. And then I'll hand the call to Sarah to walk through the financial results in more detail. Turning to the economy in the U.S., we're continuing to see solid but slowing GDP growth, along with cooling inflation and slightly rising unemployment. These data points support the potential for easing monetary policy in the coming months as the Fed continues to strive for an economic soft landing.

Adena T. Friedman: The general stability in the U.S. economy and the potential for a lower cost of capital going forward are resulting in modest improvements in the IPO landscape as we progress through 2024, including solid activity this week. However, investors continue to contend with external uncertainties in the timing of monetary policy shifts, as well as a dynamic macropolitical environment.

Adena T. Friedman: As a result, we continue to expect modestly improving IPO activity for the remainder of 2024, and our current US IPO pipeline indicates that stronger momentum is likely to manifest starting in the first half of 2025. We're also seeing stronger economic underpinnings in Europe, aided by the ECB's easing monetary policy, including Improving Economic Prospects in the Nordics. The improvement is not yet translating into a material increase in new public issuances, but our European IPO pipeline is healthy and growing, particularly for 2025.

Adena T. Friedman: As investors and industry participants navigate the dynamic market environment, we continue to see sustained, robust trading activity in the markets, as well as strong demand for mission-critical technology solutions from financial institutions globally. As a result, our markets continue to experience strong volumes, and client demand for our FinTech solutions remains consistent with trends we have seen through the cycle, which provides a healthy backdrop for continued revenue growth across our solution suite. Now let me turn to our financial results, which demonstrate the power and resilience of our diversified business model and our ability to succeed through economic cycles. We delivered a strong quarter with $1.2 billion in net revenues, an increase of 10% year over year, with solutions revenues at 13% growth. Our overall annualized recurring revenue, or ARR, grew 7% to $2.7 billion.

Adena T. Friedman: I'm particularly pleased with the strength of the performance across our business, which is a testament to the power of our platform. We're integrating the Adenza acquisition ahead of schedule and are realizing the investment thesis that underpinned the transaction as we demonstrate its value for clients, shareholders, and employees. Our expenses for the quarter increased 7% year-over-year within our guidance.

Adena T. Friedman: Our operating income grew approximately 14%. And importantly, our operating margin increased to 53%, representing over one percentage point of operating leverage while we continue to invest in support to support growth in our business and deliver on synergy. Turning now to a discussion of the business highlights, starting with Capital Access Platform. While ARR growth in the division remained at 1%, our index revenue grew 29%, resulting in overall revenue growth for capital access platforms of 10%. In listings, we welcomed 31 operating company IPOs, maintaining our strong win rate of 72% based on Nasdaq eligible listings.

Adena T. Friedman: While the slower IPO environment remains a headwind, we're encouraged by signs of improvement, as supported by our most recent IPO pulse index, which is at near a three-year high. Overall growth in data and listings continues to experience challenges as modest growth in market data and the slowly improving IPO environment will be offset by the impact of prior ERD listings. Gross in our analytics business benefited from continued demand across the investment community for actionable intelligence and increased efficiency.

Adena T. Friedman: However, that growth was partially offset by continued headwinds in corporate solutions, resulting in more muted growth for workflow and insights. Our index business delivered another exceptional quarter with $17 billion of net inflows during the quarter, totaling $53 billion over the last 12 months. We also achieved another record in index ETP AUM, exiting the quarter at $569 billion.

Adena T. Friedman: Turning next to financial technology, ARR growth across the division was 13%, including 25% in financial crime management technology, 14% in the combined Axiom SL and Calypso solutions, and 9% in a combined market technology and trade management service. The division had 69 new client signings, 96 upsells, and four cross-sells. We also saw continued cloud adoption as 68% of Axiom SL and Calypso's combined bookings in the quarter were cloud-based, with a strong pipeline for future quarters. Turning to the specific subdivisions, financial crime management technology continued its strong momentum.

Adena T. Friedman: We signed over 50 new clients in the S&B space, and we continue to make progress in the upmarket segment focused on tier one and tier two banks. In July, we signed a new international tier one bank, which is also an exciting cross sell. Going forward, we continue to maintain a strong sales pipeline within the core S&B segment, and we have a growing pipeline of new clients and upsells among tier one and tier two banks. Across regulatory technology, we see sustained demand across both existing and new clients, as financial institutions face increasingly dynamic regulatory environments, including changes in regulation globally related to asset thresholds.

Adena T. Friedman: Among the many regulatory trends that are driving sales demand, we're pleased with our progress in signing clients around the world as they focus on implementing Basel IV and preparing to implement Basel III. In capital markets technology, we continue to see strong demand for mission-critical technology as many of our clients focus on modernizing their infrastructure to enhance resilience and performance. For Calypso, we see robust new demand, especially in the treasury segment, in addition to the cloud transformation of large-scale clients. In our market services division, we delivered revenue growth of 3%.

Adena T. Friedman: We experienced healthy volumes across North America and Europe, and we achieved a sequential increase in North American options market share, as well as growth in Nasdaq U.S. equities on exchange market share and capture. Our US index options achieved record revenues, more than doubling versus last year due to higher capture and volume. In our U.S. cash equities business, we executed successful Russell, MSCI, and S&P rebalances during the quarter, which showcased the strength and resiliency of our market.

Adena T. Friedman: During the Russell event, for instance, nearly 2.9 billion shares representing a record notional value of over $95 billion were executed in the closing process, representing the largest liquidity event on the Nasdaq Stock Exchange for the Russell reconstitution.

Adena T. Friedman: In our European markets, the strength of our market ecosystem, as evidenced by the depth of the book, breadth of participants, and product innovation, continues to drive market share gains. Overall, we're pleased to report a solid quarter in market services and remain focused on retaining our leading position across all of our markets. I now want to spend a few minutes updating you on how we're executing against our 2024 strategic priorities of integrate, innovate, and accelerate.

Adena T. Friedman: Starting with Integrate, we have achieved over 70% of the $80 million of net expense synergies, and our leverage ratio reached 3.9 times at quarter end, both ahead of plan. Axiom SL and Calypso are fully integrated into the financial technology division, and we've established strong leadership, a well-structured operating model, and a one Nasdaq go-to-market approach to ensure we're delivering for our clients with the highest level of efficiency and effectiveness. Our CRM integration for the Calypso and Axiom solutions is now completed ahead of schedule, and this supports divisional sales coordination as well as the sales incentive program established at the beginning of the year.

Adena T. Friedman: Importantly, across Axiom SL, Calypso, and Verifin, we've been highly focused on cultural integration into the broader Nasdaq enterprise, and internal surveys continue to show that our employees are highly engaged and energized to deliver for our clients. We're also making strong progress advancing our innovation priority. We currently have approximately 50% of our employee base working with AI tools focused on enhancing productivity, as well as driving our product roadmap. By the end of Q3, 100% of our developers will have access to AI co-pilot tools, and we recently had over 650 employees participate in several AI hackathons across Nasdaq.

Adena T. Friedman: During the quarter, we continued to introduce new AI capabilities within our client-facing solution. Consistent with other Gen-AI capabilities recently launched in our Verifin and BoardVantage solutions, with an investment, we have deployed a new AI power feature for the Market Lens module called Pension Meeting Minute Summarization. The feature provides asset managers with key insights on current and future pension fund strategies to help inform their business development and engagement priorities with top pension decision makers.

Adena T. Friedman: We also have a strong pipeline of AI features scheduled to launch in the coming quarters, including in market surveillance and IR insight. And we're seeing strong early traction in client adoption and effectiveness related to the capabilities that are already in market. Specifically, Dynamic Mellow, the first FCC-approved AI order type which we launched in April, is driving a 20% increase in both volumes for this order type and improvement in fill rates compared to the prior static version. Verifin's integrated Gen AI feature, Entity Research Copilot, is now deployed at more than 250 clients, and we expect to complete our rollout in the third quarter.

Adena T. Friedman: Client feedback has been positive, demonstrating that the integrated copilot functionality integrated with the integrated copilot functionality, Verifin solutions can reduce alert research time by up to 90% compared to banks that do not use Verifin. Beyond AI, we continue to drive innovation towards key growth priorities. For example, in our index business, innovation is at the heart of our growth strategy as we extend the franchise to new markets globally, drive institutional adoption, and introduce new products beyond the Nasdaq 100.

Adena T. Friedman: During the quarter, 50% of index product launches were outside of the United States, and we're quickly gaining traction with investor adoption. In total, we launched 18 new products with our partners, including 12 ETPs and three insurance annuity vehicles geared towards our institutional clients.

Adena T. Friedman: Additionally, we're pleased that our AI-themed ETPs saw more than $1 billion in inflows over the last 12 months. Wrapping up with our Accelerate priority, the addition of Axiomacell and Calypso has significantly elevated the dialogue we have with our clients as a strategic partner, and there's no better evidence of that than the early traction we're seeing in our cross-cell efforts.

Adena T. Friedman: Since closing the transaction, we have executed on 11 FinTech cross-sells. We had four this quarter, including two cross-sells of our Axioma Cell Solution to Calypso clients. This is a great start, but it's only the beginning on our journey to exceed $100 million in cross-sells by the end of 2027.

Adena T. Friedman: Just eight months since the acquisition closed, 10% of the opportunities in our pipeline are cross-sells, and we expect this to grow sequentially. The division has several strategic cross-sale campaigns underway, which are generating strong top-of-funnel interest and underpins our continued confidence in our ability to grow cross-sale bookings over the coming years. To wrap up, we're pleased to deliver a quarter of strong results driven by continued momentum and solutions and the power of our diversified platform to drive scalable, profitable, and durable growth.

Adena T. Friedman: Importantly, we're delivering on the Adenza acquisition thesis as our clients increasingly see Nasdaq as a strategic partner that can help solve their largest, most complex challenges. We look forward to leveraging this momentum to unlock our next phase of growth. And with that, I'll now turn the call over to Sarah to review the financial details. Thank you, and good morning, everyone.

Sarah M. Youngwood: In the second quarter, we made excellent progress in both the integration of Adenza and the accelerated pay down of debt. We achieved over 70% of net expense synergies six months ahead of schedule. We have also come in ahead of our accelerated deleveraging plans, ending the quarter at 3.9 leverage. Turning to our second quarter results, slide 10. We reported net revenue of $1.2 billion, up 10% with solutions revenue up 13%. Operating expense was $539 million, up 7% within our guidance, with an operating margin of 53% and an EBITDA margin of 56%. Overall, this resulted in net income of $397 million and diluted EPS of $69 million.

Sarah M. Youngwood: Slide 11 shows the drivers of our 10% performance revenue growth for the quarter; we generated 8% outside growth on a net basis, driven by new and existing clients, as well as our focus on product innovation. Overall, beta factors were 2% this quarter, driven by higher valuations in Nasdaq indexes, as well as higher overall volumes in market service. On slide 12, we had 7% ARR growth, and as part of that, we had 17% SAS revenue growth, resulting in SAS as a percent of ARR now at 37%, up 4%.

Sarah M. Youngwood: Let's review division results for the quarter, starting on slide 13. In Capital Access Platform, we delivered revenue of $481 million, reflecting growth of 10%. We had another exceptional quarter for our index, with revenue of $29,000. Driven by $53 billion of organic influence in the last 12 months, including $17 billion this quarter, and Market Performance, both resulting in average eTPA UN of $531 billion.

Sarah M. Youngwood: In addition, future volumes were up 25%. Data and listings revenue was up 1%, while ARR was down 1%. The difference was driven by small one-time revenue benefits, primarily related to... Revenue from higher data sales and usage, new listings, and prices offset the impact of delisting, downgrades, and lower amortization of prior period initial listing fees. We expect the quarterly headwind from lower amortization of prior period listing fees to increase from an immaterial impact in 1Q24 and approximately $1 million in 2Q24 to about $3 million in each of the next four quarters.

Sarah M. Youngwood: However, we have seen roughly 25% fewer delistings in the first half of the year versus the prior year period, suggesting that delistings should be less of a revenue headwind in 2025. Lastly, Workflow and Insights revenue was up 4% in line with ARR growth of 4%. This was driven by continued growth in innovative analytics products, mainly data link and event. This was partially offset by continued headwinds in corporate. Analytics had a strong quarter with both revenue and ARR in the high single digits. Operating margin was 56%, up 1%. I am looking forward to it.

Sarah M. Youngwood: We expect full-year revenue growth for capital access platforms to exceed our medium-term growth outlook range, with index expected to come in above its range, but foreign insights expected to come in below its range, and with data and listings essentially flat year-on-year. Moving to financial technology, on slide 14. We had another quarter of strong growth, with division revenue of $420 million, a 16% increase, and with ARR growth of 13%.

Sarah M. Youngwood: This performance reflects double-digit revenue and ARR growth across our three subdivisions. Financial crime management technology delivered 24% revenue growth and 25% ARR growth with 53 new clients in the quarter. Capital market technology had revenue growth of 14% and AR growth of 11%, on the back of seven new clients and 38 upsells in the quarter. The difference between revenue and AR growth is driven by the timing of on-prem renewals and professional services fees.

Sarah M. Youngwood: Together, trade management services and market tech grew revenues by 2%. We experienced strong subscription revenue and AR growth of 9% for both businesses, and up three percentage points. The lower growth in revenue was due to a year-over-year decline in professional services.

Sarah M. Youngwood: As we mentioned last quarter, in market tech, we had a very large implementation in 2023, which created a $27 million revenue benefit in the full year of 2023, and this year resulted in subscription revenue or ARR of $11 million. We expect this year-over-year headwind to persist in Q3 and abate in Q4. Calypso had revenue growth of 34% and AR growth of 13%.

Sarah M. Youngwood: Revenue was higher than the expectation we provided in the first quarter call due to broad trends in sales activity, including Prodigic Early Renewal, 29 upsells, and 5 new clients. As we look forward, we continue to see solid momentum in the business and expect capital market technology revenue growth for 2024 to remain in line with our medium-term outlook. Overall, for the second half of 2024, we expect more normalized growth across the products within the division versus the first half of the year, with consistent growth across all.

Sarah M. Youngwood: Regulatory technology had revenue growth of 16%, and A. R. Gould of Tencent, with seven new clients and 58 upsells in the quarter. The difference between revenue and AR growth is driven by Axiom SL, which had 23% revenue growth and 14% AR growth. The 23% revenue growth was primarily due to strong subscription revenue, including a large on-prem renewal, 29 up sales, and one new client in the quarter. Partially upset by a decline in professional services due to the timing of client delivery.

Sarah M. Youngwood: The FinTech operating margin was 47% in the second quarter, up 3 percentage points, including the benefit of synergy realization. As we finalize the business combination accounting for Adenza during the measurement period, let me update you on a change we are evaluating for Axiom. As part of this potential accounting change, we would recognize on-prem subscription-based revenue on a rateable basis over the contract term, whereas we currently recognize approximately 50%. This is due to the frequency of critical mandatory regulatory updates that we implement and embed in the Axiom SL software throughout the contract term.

Sarah M. Youngwood: We believe this change would enhance our financial reporting and would not change the Adena medium-term outlook we had provided, nor our ability to achieve it just yet. If an adjustment is made, it would not have a material impact on Nasdaq overall.

Sarah M. Youngwood: And 2Q would remain a strong quarter with FinTech revenue growth near the top of its medium-term outdoor climb, Solutions revenue growth at the high end of its medium-term outlook, and Axiomacelle and Calypso combined revenue growth above 20%. Importantly, combined A.R.

Sarah M. Youngwood: growth of 14% and net revenue retention of 111% would be on. Specifically, at the Actium SL level, we expect subscription revenue growth to be more consistent going forward and remain in line with our medium termality. Axiom S.L.2Q24 subscription revenue growth would have been generally in line with AR. However, the timing-related decline in professional services fees I mentioned earlier would have driven total Axiom SR revenue growth for the quarter to the low to mid-single digits.

Sarah M. Youngwood: We expect to receive additional information to finalize our analysis in 3Q, and if we make the change, we will provide updated historical information by quarter for 2023 and the first half of 2024 during 3Q and ahead of reporting our 3Q earnings. Now wrapping up the divisions with market service. Net revenue was $250 million for the quarter, up 3%. Vote was driven by higher volumes in cash equities in both North America and Europe, as well as in U.S. options.

Sarah M. Youngwood: Increased capture in North America equities, U.S. index options high growth, share gain in European equities from a very strong base, and one additional trading desk. This was partially offset by lower share in U.S. options and equities. However, the share for options was stronger sequentially and increased over the course of the quarter. We also have lower U.S. Market service second quarter operating margin of 58%, a one percentage point decline from the prior year, primarily due to continued investments in market modernization and regulatory compliance. Moving on to non-GAAP operating expense on slide 16, this quarter was $539 million, reflecting performance growth of 7% or $15 million sequentially.

Sarah M. Youngwood: This is within the guidance we provided on our first quarter earnings goal. And, as a reminder, second quarters include the impact of annual merit adjustments and equity. All in, we generated positive operating leverage with an increase in both operating and EBITDA margin of over 1%. This included the benefit of synergies this quarter and the funding of additional revenue-related expenses. We originally targeted $80 million of net expense synergies by the end of 2025.

Sarah M. Youngwood: As of Q2, we have already actioned over 70% of that amount six months ahead of schedule. The P&L benefit of the actions already taken represents approximately one percentage point reduction in expense recorded in the first half of this year.

Sarah M. Youngwood: Please note that the actions of 2Q and 3Q have a longer timeline for expense recognition. As such, we expect the full impact of synergies to moderate expense growth by approximately one and a half percentage for 2020. For the four years, we expect non-GAAP operating expenses of $2.145 billion to $2.185 billion, reflecting an increase to the bottom end of the range to account for strong revenue generation, which increases variable compensation and enables us to invest in growth initiatives while also accounting for the synergy benefits realized in the. Additionally, we continue to expect a full year tax rate of 24.5% to 26.5% on a non-GAAP basis.

Sarah M. Youngwood: Turning to our capital allocation on slide 17, Nasdaq continued its track record of strong free cash flow generation with $328 million in the second quarter, representing a conversion ratio of approximately 100% over the past 12 months.

Sarah M. Youngwood: This takes into consideration specific one-time costs associated with the Adena acquisition and integration. This quarter, we continued to prioritize debt reduction and are ahead of our accelerated de-leveraging plan. We paid down net $174 million of commercial paper and ended the quarter at 3.9 times growth leverage versus 4.1 times last quarter.

Sarah M. Youngwood: This was achieved while also increasing our quarterly dividend 9% to $0.24 per share, or $138 million, reflecting a 37% annualized payout ratio, and repurchasing approximately $60 million of our shares to opportunistically take advantage of the attractiveness of our stock and start to offset 2024 employee dilution. Looking ahead, we remain focused on deleveraging and expect to pay down the remaining commercial paper balance near term while remaining, Unknown Speaker. We also remain committed to assessing employee data, including We are thrilled with the pace at which we are delivering and the results of our integration.

Sarah M. Youngwood: We are executing on our plans with focus and discipline, building a financial technology powerhouse, driving durable growth and profitability for sure. Thank you for your time, and I will turn it back to the operator. 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 11 again.

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. And I'm sure our first question comes from the line of Dan Fannon from Jeffries. Please go ahead. Great, thank you.

Daniel Thomas Fannon: So within financial crime management, you highlighted price increases as a, you know, contributor to growth. I was hoping you could talk about pricing more generally across your businesses and specifically how maybe price contributed to the strong growth in the quarter across the various edges. Sure. Well, I would just say that, as we've talked about in the past, price increases are different per product and, you know, kind of different in terms of how we structure contracts with our clients within FinTech.

Daniel Thomas Fannon: So we don't have a very specific answer to that question. But I think that if we think about what we've said, at least for the Axiomacell and Clipso products in the past, that about half of the revenue increase that we see in any given quarter comes from upgrades and upsells of our clients. And the other half comes from new sales and price increases and price changes we make within the contracts. Some of our contracts have CPI increases, and some where what we would do is we would upsell our clients or increase the price upon contract renewal.

Adena T. Friedman: So that would mean that we would have a constant price for a period of time and then an increase in price on contract renewal. We do that on the basis of increased value to the client or the fact that the clients themselves are growing, and therefore, they're getting more value out of the product. So that's that kind of depends on the product. understood. And you mentioned that 10% of the pipeline is made up of cross-sell opportunities, I guess, a lot of upsells and momentum is known, as you highlighted in the business across a lot of the businesses. I was hoping you could talk about kind of the use cases you're seeing early within the cross-sell, and maybe how that dialogue is progressing from what you're having success with today and where you see that momentum in terms of the actual product. Sure.

Adena T. Friedman: Well, within the quarter, as I mentioned, we had four cross-sells, and two of them were selling AxiomaCell to Calypso clients. And so that really comes from the fact that we have a really strong relationship with our clients in Calypso. They have new regulatory obligations that they're having to become ready for, and they've chosen to work with us. And one of the benefits we have is that we can actually – we have a data API connector between those two products, so we can take data directly out of the Calypso platform and feed it into AxiomaCell, and make it much easier to implement the AxiomaCell solution for those regulatory obligations

Adena T. Friedman: So that is definitely helping to drive demand. We also – in terms of our cross-sell campaigns, we have one cross-sell campaign that's really focused on our exchange clients, where we have clients where we provide clearing technology, and Calypso has amazing collateral management capabilities. And so we're working with them to show the benefits of adding Calypso collateral management to their clearing operations. And then we also have, as I mentioned, the Calypso AxiomaCell, and then the third one is actually looking at our Verifin clients across the United States and offering both treasury management as well as AxiomaCell regulatory reporting solutions to the broader bank community.

Adena T. Friedman: So those are the areas where we're doing strategic campaigns, and we're definitely seeing that feeding the funnel. But also, frankly, with – as I mentioned in July, we have one of our great Tier 1 clients for AxiomaCell, and Calypso has now signed up to take Verifin. So I think the strength of our relationship with them across all of our – frankly, all of our business has been a driver of having them trust us with their anti-financial crime needs as well. Great, thank you.

Alexander Blostein: Thank you. And I show our next question comes from the line of Alexander Blostein from Goldman Sachs. Please go ahead. Hey, good morning, everybody.

Adena T. Friedman: Thank you for taking the question. I was hoping we could start with a discussion on the momentum you guys are seeing at Adenza. And you provided a number of different KPIs, both in terms of the upsells and sign-ups, and the number of new clients you've signed and the cross-selling. Can you help us maybe frame what these sort of KPIs mean in terms of the revenue opportunity you see on the back of these wins?

Adena T. Friedman: So I don't know if it's a revenue pipeline or revenue backlog, you can kind of set a frame around these wins, but just trying to better understand what this could mean in terms of revenue growth. Yeah, I mean, I think that the best way to measure that is through ARR.

Adena T. Friedman: You know, because the ARR, the contract values of the new sales are factored into ARR in terms of the annualized contract value. And so, as you see the ARR coming in, I think it's 13% across all of FinTech. And then we've given you the ARR growth for each of the subdivisions; it really does help you have a predictive effect on the subscription revenue that's coming in across those businesses going forward. And we, I think we give you a lot of ARR figures, both in the script and in the release and presentation.

Adena T. Friedman: So I think that's what we look at in terms of the overall health of the business, the overall health of how we look at the forward potential, the subscription revenue. And then, of course, there were also the professional services revenues, and we try to give you some understanding of the dynamics there. As we've mentioned before, for the Axiom SEL and CLPSO combined properties, when we look at the overall outlook for the business, the medium-term outlook for revenue, it's slightly below our ARR expectations because of the fact that professional services fees grow a little bit more slowly, in general, over long periods of time than subscription revenues. But that's, I think that's the way to kind of evaluate the business. Great, awesome, and helpful.

Alexander Blostein: So and then on Verifin, you highlighted the tier one international bank, which is, I know, is an important market for the firm. Can we maybe spend a little bit more time on sort of how you see the opportunity set and the revenue contribution from international markets shaping out for Verifin as you kind of push further into that? Yeah, great. Well, first of all, today, the Tier 1, Tier 2 banks, the revenue contribution is still very small because we're still signing new clients, we're implementing them, we don't start recognizing revenue until we implement them in terms of making sure that we have them up and running. And the implementation times are ranging from, I would say, six months to a year, depending on the complexity of the implementation.

Adena T. Friedman: So most of the new sales that we've had in the Tier 1, Tier 2 space have focused on payments fraud. We also have this new consortia-based check fraud solution that's really exciting, that's definitely driving demand. And as we go into the international banks, one of the things that we've been focused on, both in Canada and the UK, is looking at payments fraud across, you know, kind of what I call international payments fraud into their US operations and other parts of the world.

Adena T. Friedman: But that's where we really have this incredible strength in our business and in our solution; we can cut down on fraud, false positives, anywhere from, frankly, 20 to 40%, depending on how they implement it, we can increase fraud detection. And that's been really exciting for the banks to see us run these proofs of concepts to prove out the solution. And it's pretty remarkable, actually, that the benefit they get from taking that proof of concept and turning it into a contract takes time.

Adena T. Friedman: So we were super excited to see our latest Tier 1 sign in July; the proof of concept was done probably by April or so, just to give you a sense. Great. Awesome. All right. Thank you so much.

Alexander Blostein: Thank you. And I show our next question comes from the line of Kyle Voigt from KBW. Please go ahead. Hi, good morning.

Kyle Kenneth Voigt: Maybe just the first question on the deleveraging, you know, that's coming in ahead of expectations. You noted that repaying the additional CP is a priority, but I think there's only $50 million left on that, and I think you're generating close to $250 million plus of free cash flow for dividends. So can you just help us frame what's the preference here in terms of, you know, enacting further repurchases opportunistically on a go-forward basis after you repay the $50 million remaining, or should we think about the priority really getting that net leverage lower and simply letting the cash build up on the balance sheet near term?

Kyle Kenneth Voigt: Thank you very much, Kyle. So, we remain focused on the capital priorities that we outlined yesterday. So, of course, always organic growth first, and then the deleveraging remains very important. So, you are right that we would start with the CP, and the balance that you mentioned is approximately correct.

Sarah M. Youngwood: And then after that, we would be opportunistic. We, first of all, have done about half of the employee dilution related share with purchases. So, I think you would expect us to continue to do that. And we use the word opportunistic and flexible because there are other things we could be doing, which are around either debt or equity. Okay, understood.

Sarah M. Youngwood: And then just, just to follow up, and I hate to use this as a question, but I just want to clarify something specifically that you said, Sarah, on the listings business. And I know you said 3 million of initial listings amortization headwind starting the third quarter and the fourth quarter. Just kind of clarify, is that on a year over year basis, or are you talking about an incremental 3 million headwind sequentially in 3Q and then another 3 million sequentially in 4Q? So what I gave is that in 2Q it's $1 million year-on-year, and then in 3Q, and after for the following three also, it would be $3 million.

Kyle Kenneth Voigt: So you could add two on the sequential, but it's year-on-year, so $3 million year-on-year. All right. Understood. Thank you very much.

Sarah M. Youngwood: Thank you. And I show the next question comes from the line of Michael Cho from JP Morgan. Please go ahead. Hi, good morning.

Michael Cho: Thanks for taking my question. I just want to follow up on Verifn as well. Adena, you talked through kind of the proof of concepts going on, and it seemed like a pretty quick turnaround for the most recent Tier 1 from April and to planning in July. I mean, can you just give any more color around the pipeline or around the additional proof of concepts you're undertaking right now for the Tier 1 and Tier 2 clients?

Michael Cho: And then, just like broader, longer term, like what do you think the right pace of new client additions should be for this cohort of Tier 1 and 2 clients, you know, as we look further down the road at that Salesforce scale? Sure.

Adena T. Friedman: Yeah, so right now, we've actually had an increasing number of POCs, and we're, you know, we don't give specific numbers, but there are a really healthy number of clients evaluating our solution with the proofs of concepts that we have underway. Over time, we'd like to actually think we won't have to run as many because we'll have proven the solution out enough times across clients that it just becomes something that people fully understand, and they don't necessarily need a proof of concept, which is why we're, you know, right now; that number is building.

Adena T. Friedman: As we're gaining more traction, we're signing clients, more clients are curious about it, and they want to understand the benefit to them. But over, you know, a period of years, we'd like to think that it'll just become part of the flywheel.

Adena T. Friedman: So, I would say right now that we should continue to expect, you know, a small number of clients over a period of a year, not necessarily every quarter, as we've kind of shown, but, hopefully, we're going to see more momentum and more regular signings in the years ahead. So, it just builds on itself. And that certainly has been the experience of Verifin over time. And, you know, they have entered a new segment of the banking industry. They'll get, you know, ones or twos kind of on a quarterly basis. It'll start to trickle in, and then it starts to become more of a regular pace.

Adena T. Friedman: And then they start to really demonstrate their strengths, particularly with the consortium data that they have, that really kind of feeds on itself. And therefore, it gains momentum. But I can't give you a specific, I wish I could give you a specific understanding of how much time that would take.

Michael Cho: But, but we're definitely measuring in a period of, you know, years at a time, like, how do we gain more momentum? How do we sign more clients each of the years in the years to come? But that's about as much color as I can give you right now.

Sarah M. Youngwood: Okay, no, that's great. Thank you. And then just for follow-up, just inside the capital market tech within FinTech, clearly some good revenue tailwinds are happening there. I mean, I think you call out a few moving pieces there, but can you just flush out maybe the quarterly, quarter-to-quarter uptick in revenues and if there's anything one-time or large from some clients there? And then I think you also mentioned maybe like more normalized quarterly year-over-year growth in the second half versus the first half. Can you just flush that comment out as well?

Sarah M. Youngwood: So basically, what we had was really broad momentum across our businesses, but specifically here in Calypso, where we had one strategic early renewal but also 29 upsells and several new clients. So, it was five new clients. And so, as you look forward, you are going to continue to see solid momentum in the business. And we also told you that 2024 would remain in line with our medium-term outlook.

Sarah M. Youngwood: But of course, given the type of first half we had, I think it was not a surprise that we mentioned that we would expect more normalized growth across the products within the division versus the first half of the year. And also, we pointed out consistent growth across quarters. And so this is what we said at the capital market technology revenue level. Yeah, and I just want to make sure it was actually within the subdivision, which is the capital market subdivision.

Sarah M. Youngwood: Yeah. Okay, great. Thank you. Thank you. And I'll show you the next question comes from the line of Patrick Moley from Piper Sandler. Please go ahead.

Patrick Malcolm Moley: Yeah, so I just wanted to go back, Adena, to your comments on the IPO environment. It sounded like you said that you expected the landscape to sort of improve throughout the remainder of the year, but you didn't expect it to manifest itself until the first half of 2025. So could you maybe just clarify your expectations for the rest of this year and when you expect that to show up in the financials?

Patrick Malcolm Moley: Sure, well, I think we've seen a modest improvement year over year. I think, in a way, I think we've all been surprised by the fact that you have strong market performance in general but a continued, I would say muted, IPO environment. Now, we are seeing a very good week, you know; we have the largest IPO of the year happening today, and we had another great IPO yesterday. But I think that we still are seeing them coming trickling in like that, not necessarily a steady stream of IPOs coming to market in size.

Patrick Malcolm Moley: And so as we look out over the pipeline and certainly the conversations we've had with clients, we do think that we'll continue to see a modest improvement year over year in the IPO environment, which, of course, last year was not a strong year. But as we've seen, a lot of the conversations we're having, particularly in the technology space, have been more geared towards the first half of 2025. Now, that's changed, right? So if we can, you know, if there's some positive momentum in the economy, positive things that are happening as we go through the fall, I think you could see the door opening because more and more companies are getting ready to go out. But I still think a lot of them are thinking that they'll wait past the year and go in 2025.

Adena T. Friedman: Okay, great. And then just to follow up on index options, you're seeing really strong momentum there. I think you mentioned that revenues have doubled versus last year, and volumes are up, I think, 50% year over year. So it does seem like you're taking price there.

Adena T. Friedman: Could you maybe just update us on the broader vision for index options at Nasdaq and maybe your approach to pricing, potentially at the expense of not picking up as much market share as you'd like, just kind of how you think about that? Well, I think, first of all, we're really excited about how the index options business is developing. And I think that the trading ecosystem, as well as investors, are recognizing the benefits of being able to hedge their index exposure through the options markets.

Adena T. Friedman: And obviously, we've seen that with other index franchises, but now with Nasdaq 100, we're really building momentum and leveraging both futures, where futures volumes were up 25% year-over-year in the quarter, as well as in terms of the options business. And now you have more ability to do that.

Adena T. Friedman: So very excited about where that's going. It is something that we have it as a premium part of our options franchise because I think that the benefits that our clients are getting from the hedging capabilities are very strong. And so it kind of warrants the fees that we charge there. It is not having, you know, that's not having an impact on demand.

Adena T. Friedman: The demand is really strong and is continuing to grow. Now, we've done a lot of work. There's been a lot of legwork over the last several years to build up an understanding of the options, and how to use hedging. We have a data capability that we give out. You know, we provide them to the clients to help them understand, you know, just do a lot of analytics on it to help them understand how to use the options the right way. And so the educational process we've had, frankly, over three years, I think is really now paying off.

Adena T. Friedman: And we expect the community to grow. We will be looking at additional indexes, additional indexes that we want to bring to our index options franchise. But even now, the other thing I would mention is that there's also a really cool flywheel back to the index business. So, you know, the index team and the options team have been working hand in hand to make this work really well, because there are benefits back to the institutional community with the index and their ability then to have a better hedging tools and their ability, therefore, to adopt our index products more successfully. So that's another part of the flywheel that's coming out of this. Very helpful. Thanks, Adena.

Craig William Siegenthaler: Thank you. And I show our next question comes from the line of Craig Siegenthaler from Bank of America. Please go ahead. Thanks. Good morning, everyone. Good morning, Craig.

Adena T. Friedman: So we had a question on Solovus. Back in May, Bloomberg reported that you were considering a sale of Solovus. And while this could help you reach your financial leverage target faster and maybe the next deal, we were just curious given the news because Solovus' strategic fit fits pretty well within your objective to provide software data and other services in the financial service ecosystem. And arguably, there are other businesses, maybe like the Nordic Exchange, which doesn't fit as well. So I just wanted to comment on the potential for Nasdaq to sell existing businesses. Thank you. Yeah, so I won't comment on any particular rumor that's out there.

Adena T. Friedman: But I would just say this, we we do a very detailed review every year on our capital allocation. We look at our businesses strategically, financially, a lot across different, several different factors, and evaluate how each one of them, you know, fits into our overall client experience, and making sure that we're always the right owner for the businesses. And as you've known, since I became CEO many, many years ago, now, seven and a half years ago, we've made decisions to divest of certain businesses where either, you know, we're just not the right owner of the business, because our clients are not seeing us as a strategic owner, they might see us as a, as an owner, you know, they definitely understand that we own the business, but they might not necessarily strategic for our franchise, or we have capital allocation priorities that are that really skewed towards different parts of our business.

Adena T. Friedman: In terms of, you know, you mentioned areas of business, I would say I do want to say one thing. We view our Nordic business to be very strategic to NASDAQ. And I've said this on prior calls. The Nordic exchange business is the best exchanges in Europe; the innovation ecosystem that exists in the Nordics is incredible and very consistent with the US. And I would say that we do a great job of operating those markets.

Adena T. Friedman: And we're really proud to be the operator in the Nordic market. The other thing is that the team there really contributes a lot to our broader technology business. So we deploy members of the Nordic team out to work and help our market tech clients around the world. We have a great set of clients in the Nordics that are now wonderful customers that are fintech solutions. So there's a lot of strategic intersection with our Nordic business, and I do want to provide a defense of that.

Adena T. Friedman: But generally, Craig, you know, we do this work, and we make these decisions over time because we look at it in terms of the long-term strategic fit to NASDAQ. Thank you, Adena. And I just wanted to follow up on the response to the last question on index options and specifically the Nasdaq 100 index. What is your desire and ability to expand NDX with zero DT options? And then also, with rising retail engagement, and you know, there's a lot of interest around tech overall.

Adena T. Friedman: So it fits perfectly in here. I was curious about your comment about launching other indexes. I'm just curious in terms of what you could do there. Yeah, I mean, we always look at index products that we think, as you mentioned, have really strong retail appeal, but also institutional appeal, where they're large enough, and there's enough assets in there to drive liquidity into a futures or an index or an options product, really looking at it from a hedging perspective, we have a whole range of index products beyond the Nasd We have thematic indexes in terms of different technology trends like cloud and IT security, AI; we have themes across different investment strategies, like momentum strategies, dividend strategies, things like that.

Craig William Siegenthaler: And so to the extent that we think that there actually could be a trading ecosystem we could build around that, we will consider it. I don't we don't have any particular index product right now that we're targeting, but I would say that we do a lot of great analysis on that. And then, you know, in terms of how we structure the options and how we look at duration, option duration, we will obviously evaluate that in the context of investor appetite.

Adena T. Friedman: And, and we'll, you know, we'll work with the SEC on that when appropriate. Thank you. Thank you. And I take our next question comes from the line of Alex Kramm from UBS. Please go ahead.

Alexander Kramm: Yes, hey, good morning, everyone. Just wanted to come back to what you called out on Calypso or capital markets with that early strategic renewal. Can you just explain what exactly happened there?

Adena T. Friedman: Why? And is that something that we should expect more often? And then maybe related to that on the impact side, looks like, you know, AR up 25 million quarter over quarter in that segment. Can you dimensionalize how big that renewal specifically was also on the transactional side? You beat me pretty handily.

Adena T. Friedman: So maybe more than 10 million? Is it all related to that, too? Just trying to understand how big some of these individual renewals could be. Thank you. Yeah, so I would actually say that, you know, having early renewals is not totally unusual, right? I mean, if we call it out, just because it was, we're really excited about the fact that we had a strategic client who chose to renew early and extend their contract. And I think that it's something that we should be proud of.

Adena T. Friedman: Now, as we mentioned with Calypso Revenue, just to remind everyone, our view is that ARR is a very good reflection of how you should look at the overall health of the business, the stability, because of the fact that, for the license fees, you have half the license revenue recognized up front and half recognized over the life of the contract. But our cash revenue, how we get cash in the door, and the overall ACV value of those contracts is better reflected in ARR. So we continue to see the ARR as very stable and very healthy. We think that's fantastic!

Adena T. Friedman: We will have events like this early renewal that happen on occasion. We also had, as we mentioned, you know, five new other clients, 29 upsells. All of that, Alex, contributed to the strong revenue in the quarter. But over time, as Sarah was saying, over time, you know, kind of looking at ARR as a better reflection of the overall growth characteristics of the business is, I think, a better way to look at it over time, as opposed to in a single quarter.

Adena T. Friedman: Yeah, the only thing I would add is, by definition, the ARR impact of a renewal is not as much as a new client or an upsell. And so if you were focused on why we had a good performance on ARR at Calypso or in Capital Markets Tech, it was really because of the breadth of everything that has happened. That's helpful. Thank you very much.

Alexander Kramm: And then secondarily, a topic that we talked about a lot a few years ago on the back of the strong, you know, listings environment that we had at that point. There was a lot of excitement around eventually getting, you know, IR solutions on the back of that when those started paying. I know, obviously, there's been a decent amount of delistings since then, so I guess this is not really coming through, but maybe you can just tell us where we are in that if you're still seeing a decent amount of upsells or if that unfortunately is just not coming to fruition given the kind of companies that were listed three years ago. Actually, we are seeing conversions of our clients, you know, to paying clients So that is still happening, Alex, but I think that there are other headwinds.

Adena T. Friedman: So a few things to mention about IR services, and I would actually say this across corporate solutions. So the first thing is that we obviously gain new clients through IPOs, right? So that's one of the avenues for us to gain new clients, whether that's for our IR solutions, or ESG solutions, and our governance solutions. So that is definitely a funnel, you know, a pipeline for us. Now, some of them, they then become paying clients on their basic services over a period of two to four years, depending on the, you know, kind of way that the IPO is structured.

Adena T. Friedman: But we can also upsell clients in that period of time. So when you have a healthy IPO environment, you have new companies coming in, and then you're showing them the base services, and you can upsell them on new services. That really does become a really nice flywheel, you know, right after the IPO, and then you have an additional opportunity when, as you mentioned, the IPO package rolls off, and those IPO packages are rolling off. And so we are still seeing that happen.

Adena T. Friedman: But the flip side of it is, when you have delistings, then you have paying clients who are no longer listed. And that obviously creates churn, and you have other clients who are continuing to take the services. But they are, but they are, they're maybe taking fewer services because their IR budgets are being squeezed. And so that's becoming the contra, I'll call it the contra flywheel, of having more delisting. I would say, you know, when we look at, when we look at the overall conversion rates, they are lower than what we've seen on an average basis.

Adena T. Friedman: But they are, you know, but I think that's partly because of the fact that some of the companies are delisting, but those who are seeing lists, they are seeing relatively normalized conversion. All right. Great color.

Alexander Kramm: Thank you so much. Thank you. And I share our last question comes from the line of Owen Lau from Oppenheimer. Please go ahead. Hi, good morning.

Owen Lau: Thank you for taking my questions. So for AI, you have many initiatives going on. And when we look at Dynamic Mellow, you highlighted a 20% increase in ball volumes and improvement in fill rate. Could you please talk about how it could impact your market shares and financials over time and how difficult it is for your client, for your competitor, to launch similar products? Thanks.

Adena T. Friedman: Well, I say on the first question, this is kind of a specialized order type. So it's not going to be something that's going to have a massive effect on market share, but it is a premium product. So, our clients get a huge value out of it. That's, it's a really nice way to get a higher fill rate in size at the midpoint.

Adena T. Friedman: So it's really it's a premium product in terms of the pricing that we charge. So it's more of a revenue opportunity than it is a market share opportunity. In terms of being able to replicate it, we do provide in our filing an explanation of how we do it, but I would tell you that it took several years for us to fine-tune it with our AI team and data science team.

Adena T. Friedman: It's actually quite complicated and complex to structure the right way to make sure you're getting the right outcomes. We're constantly fine-tuning the various data points and the weightings of those data points as to how they're affecting the timer on the product.

Adena T. Friedman: So I would say it's actually extremely hard to replicate, even though you kind of look at it as like the formula is available, but how you actually manage that formula is very much a part of the greatness of our technology division. Frankly, we got it. And then for financial crime management technology, we heard that some other enterprise software companies had to lower their ARR guidance because of some uncertainty in the macro environment.

Adena T. Friedman: But the momentum in your business seems to be quite robust, and you highlighted the new T01 client sign in July. Could you please remind us how Verizon could fare or grow in different macro environments? Is there any reason we should be worried about if the macro environment turns?

Owen Lau: Thank you. Sure, well, I would actually talk about it. Let's talk about the FinTech level, and then we can talk about it in specific areas. But the way that we look at our FinTech solutions is that we provide mission-critical technology that helps clients manage risk, manage their regulatory obligations, and manage criminals out of their networks, as well as providing core capital markets technology to the entire exchange ecosystem. So, to us, those are very durable, kind of demand drivers. Managing risk, it gets, you know, as the world gets more complicated, the world gets more risky.

Adena T. Friedman: And I think our ability at a global scale on a global level to help our clients manage risk in their trading books, in their treasury operations, in their capital obligations, as well as and also to manage risk in markets is just, it's tremendous, honestly. And so I think that has actually been a really great demand driver. I think that as we look at regulatory obligations, those are extremely durable around the world.

Adena T. Friedman: Different regulators go at different paces, but there's always regulation that's changing. Now, it's really changes in regulations that drive demand, as well as growth. You know, banks are growing and expanding their businesses into new countries, and that also drives great demand. And so those are things that are also quite durable.

Adena T. Friedman: I think then on anti-financial crime, as we've mentioned before, it's a $3.5 trillion problem between anti-money laundering and fraud. And we are just getting started. And so it's not just the fact that the TAM is really large, the total market opportunity, but our solution is unique. I think our solution is remarkable in terms of the way that we bring data together, the way that we are able to look at consortia data in a way that really allows us to be very curated in the topologies we apply using AI and in automating workflows to make it as efficient as possible. I think that create And we're only really in North America today.

Adena T. Friedman: So we have a lot of opportunity globally there. So I think, Owen, that we've chosen to get into this business in a way with very specific ambitions to be that solutions provider for the most complex challenges that banks face in all economic environments. And that is what we think is going to create durable growth for us.

Owen Lau: Got it. Thanks a lot. Thank you. That concludes our Q&A session. At this time, I'd like to turn the call back over to Adena Friedman for closing remarks.

Adena T. Friedman: Thank you. Well, as you heard this morning, Nasdaq continues to make progress on our three key priorities of integration, innovation, and acceleration. Through our complementary and integrated solutions, Nasdaq is delivering consistent growth, and the One Nasdaq strategy is accelerating our evolution as a trusted technology provider to the financial services industry. We look forward to updating you on our strategic progress in the quarters to come. And thank you all for joining us. Have a great day. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.