NDAQ - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Nasdaq's Second Quarter 2018 Results Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ed Ditmire, Vice President, Investor Relations. begin. may you Sir,

Edward P. Ditmire

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

may are complying under of Knight, Legal open website. the up line our management team. website Information Reform release materially other projections. is from the Adena actual Regulation Q&A. remarks, in to the will Actual turn filed statements differ meaning within events use to CEO; the to our differ disclosing non-public On that the like future and and Act we'll Adena. forward-looking you prepared results Michael members CFO; reports the now, may forward-looking this periodic to of I during Ed Policy material, and with Securities from Private The of our presentation and Chief our statements presentation to of Q&A to and XXXX. cause obligations After concerning call Litigation We that are Global intend with factors relate as Officer; over and release Friedman, And and information SEC. Ptasznik, FD. I'd the these expectations, such certain and on SEC a in results means disclosure contained our remind could press as statements constitute press

Adena T. Friedman

solid capital and organic for very everyone, the three developments us. to our joining on in the XXXX. markets. Services organic and the for Undoubtedly, Good and during the of quarter I market model. X% in my up that you the our Ed. performance scale growth Nasdaq's our delivered our make areas; recurring Services of part Corporate pleased latest positive important on We business, majority second of revenue is bulk thank current segment remarks transformation activity strong quarter I'm Market healthy regulatory transactional. report segment this beta growth focus revenue you, today inherent and morning, the business levels in revenues the in financial of Thank strategic of with the progress and business will our Market from where Information the across Services, Technology, X% X% reflects and performance,

market our Market our core adaptations is data high-quality efficiency trading profitability our also view the a are they new of in to contributed, IPO Nasdaq running potential about businesses and fully our are away capital company our repositioning Technology facing. quarter and of provider, our business longer by over core this This execute reflects the quarter the solving listing as and bit favorable our quarter success second ability includes maintaining analytics for the that most other Corporate compared and U.S. clients, second benefit needs. to and our as positioning the and markets that shareholders, maximizing products. strategic from improving our term. XXXX. future ourselves world-leading U.S. to growth a its importantly, trading support put to rate clients proposition deliver make and capabilities the new win direction advancements of and need of shareholders we backdrop, as serve and in offerings and improve our However, factors strength and this Nasdaq's Nordic clients' and challenges step with the would their the important while succeed ways to stakeholders opportunity our we are index a investments trading of effectively and our realize XX% Services marketplaces. key efforts our past help a to our the equity continue a will operating quarter of value our the our strategic We're to various advance we company building our of we result technology Taking to believe the when with for the analytics We talk advance like by that share evolving and resiliency, kinds Equally and to I position that new presented to

on enabled on in areas excluding our Media in our XXXX corporate million shift the continuing perform late of to are price within deferred and us board a clients. the we Services to ongoing that resources, critical strong people significant and Relations, more Investor purchase adjustment Corp. and our of terms acquisition opportunities in capital focus Corporate occurred to Solutions levels revenues, businesses the company. allows us Services areas our First, is of to the when It we've efforts revenues. also our eVestment to step $XX strategic most across Digital of quarter as in the Relations sale early strategic collaboration Meanwhile of repositioning, temporary Public mid-April at C-suite with impact second West governance completed This identified solutions non-cash growth to

in to led nine team's eVestment, is acquire the capabilities of While in the plan the to our achievement months maximize still organic first mid-teens us early that very encouraging. and growth synergies

variety the incorporating work to businesses, to with continue platform, industry in driving includes In Framework. of terms of Technology regard product in generation a areas. our Nasdaq to next our a Financial organic innovation technologies and investment, Market be new This our leader we develop across our deploy

number expansion and Surveillance clients enhance our new in our the in functionality analytics Relations Nasdaq platform new offerings data our building all it extend SMARTS for Our to customer work and to the analytics side, into particular, of Investor Insight. to IR groups, hub in of and technology flagship, our buy the

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Operator

resume may your You conference.

Adena T. Friedman

that. about sorry Well,

continue. our there. going talking was believe of So going Stockholm, Technology about I Future from to the in I Conference remarks that to I'm so I'm our continue

from of clients conference, our sizable and the to feedback our technology expand legacy approach. coupled success a prospects looking with to our their the terms attracting markets clients opportunities upgrade strategic and against new confirms products technology, industry, within and the executing in with From So capital we're and of strategy, conviction thoughtful traditional new that in our clients resonating. outside are our from story, and roadmap, clients

contributing clearing about architecture of post-trade a XXXX support we the markets. client clearing solutions traditional their National to dozens this efforts expanded platform the via and Financial market They their of India, international providers Stock to one opportunities partnership days, total in their this NSE, or between were largest allow our The and Nordic world went companies. operator, of relationship can technology NSE, on quarter to I've by any also the Framework to business several and through still the clearing clear is in is learning organizations with both of agreement of outside largest derivatives. in volume, that order from half opportunities a new talked that quarter exchanges believe benefit intake we XX% a industries the encouraging Market initial to with the using has XQ time across us progress. encouraging, major have we settlement marks all This we is relied have equities Swiss upon one exchange key deliver, Nasdaq us well in asset And Financial early will Since risk India, the NSE pan-European the and settlement management replace has to was Exchange strategy classes what with of business and our explore operations. trading with we're efforts impact. outside our expertise into the the leverage to The areas helping will with and its technology year-over-year. process Nasdaq far, seeing second as and Swiss enterprises financial focus the public a India Technology business. largest while first long-term Second as system, Exchange, we bring wins to strong, agreement up and discussed one $XXX million, with second first we're in by of Exchange. especially Nasdaq's what Framework where

the space we matching, surveillance areas cryptocurrency five deploying currently to where is of clients our these degrees have technology. signed and One transaction various clearing

organic as were also Market move we the implementations, Year-to-date surveillance encouraging. line longer in client our growth each periods of revenue in quarter-over-quarter While XX% dynamics forward be gains revenue organic Technology reflected product to in We wins the with in improvement the growth rose with outlook. business SaaS operating strong quarter with saw areas, in quarter new our margin. the strong especially in second business future and growth our revenue term across in will our our the

Now, from dynamics $XX develop inflows of to diverse to most specific ETPs our Achievers assets or of behind Data, products, we've Investment of delivered let's a to to well to the licensed those eVestment also markets, to Nasdaq indices to mentioned in testament already from year-over-year. years. billion the I'm goes And growth an Nasdaq year-over-year worked want beyond set Dorsey strategies. other solid the from to with including Wright highlights recognize Nasdaq businesses. continued every partners Such incredibly of deliver seen into segment AUM of our XX% that and each report and interesting some Dividend XX% the Over XXX, business. across a pleased well impact attractive and strong turn organic the I growth the our tracking But growth Index Nasdaq under our we we've those Data Analytics suite, perform the segment, grow growth increase to management higher and against is over results. In strong the expectations. and of that our Market I've beta our growth continues of products businesses. due Information contributions Services with

three AUM generated We're along XX. growth with XX% ETPs business. now also ETPs in over Nasdaq the Our of represent healthy billion our smart in contribute at beta indices growth pleased to And AUM, the see a strong overall very Nasdaq have how have contributor the our AUM in branded to to our specifically in under using meaningful indices flagship mix and $XX outcome-oriented June done years represents we've management. assets that a newer or last to of indexes business, created

data and well Basic to usage. usage their our additional Nasdaq clients by ensure they're continued sales highlighted grow, strong to with revenues that of data as Our global continued current work and Sale our Last exchange also properly reporting as

and attract GreenSky exchanges Nasdaq Stock IPO listing Nordic Meanwhile, our number a in E.W. we for highlights win America, Carbon and Scripps $XX market rate. cap XX% a Stay Exchange companies deliver in in Services Uxin, with York Avnet, billion the markets, from by from wins exchange growth IPOs to quarter quarter continued and segment, Turning switched of New our to led Extended new in DocuSign, a second representing Corporate total Black, include Specific second quarter. listing. in and U.S. of strong the the switches of

the ESG-oriented client insights A X% They focus of how year-over-year. and and services this for company on and held. the exchanges base the for as our other of already on that to our component IR we're X,XXX capabilities listed services. our Nordic markets serving help time as modules that important new of investment quarter, an the of During year public, products companies as second those in broader to well number corporates listings insight public critical those prepares Solutions go with listed are rose valuable We've innovation globally, our we're privately many are surpassed deliver significant the managers. is first the delivered especially delivering also the offerings, driver companies shifting new new that our including products intelligence Corporate but passiveIQ, from are and navigate

certain capture economics U.S. delivered at Nordic revenue we revenue Finally, from improved dynamics, as the across benefits generally equities, in share to market quality. stable better have Market and market support growth NFX and improved Services shifted segment, benefiting

we're phases our few current despite but markets IPOs, below number XX all-time of seen terms the still a highs, Lastly, and far, new We the final play healthy markets our on U.S. strongest Thus well want listings XXXX, operate that aware economies. very And years had a during of publicly-listed they environment. responsibility minutes to that way in concurrent we companies supporting in remain thoughtful setting role expansions. we've spend of with of level of continue below ago. we're stewardship what XX% the experienced year the successful past recently was the to is the I having regulatory of

felt make talk investors blueprint recognized approach very help public visible markets and that to listed the publication we quarter, markets accessible of a campaign, appealing an number public later, reform, revitalized focusing making of year other for companies. suggestions innovative, all the signs markets This liquid most the and our towards strongly for anniversary deepest, and see in capital of year of would today, more we growth-oriented that on we attractive markets for the capital very the Nasdaq's you included market reforms the our an one ensure remain I milestone but as options early are create During encouraging. world. companies, U.S. more holistic regulatory for investment that A in progress for blueprint

of X House the aspects the blueprints advances that example, vote many Act JOBS XXX passed X.X bipartisan by agenda. to Representatives of For

this would trade legislation the an with market registration SEC that to the issuers and liquidity improve trading reduce company allow allows exchanges of consolidated order environment of overall part to volatility in experience. choose many for venture Importantly, to in

are for for more work transparency affirm dark context The Senate, ahead legislation requirements. we've seen clear the lit to in support the the important we align strong there ATS' House. Also SEC bipartisan the to by this the initiatives, markets. is requirements encouraged closely is While in significant regulatory well-functioning new transparency versus disclosure how of at

roundtable appreciated SEC opportunity revitalize with thinly-traded issuers. the securities exchange to discuss on Nasdaq separately and Additionally, for the consistent our participate we Nasdaq applauds need And Nasdaq a agenda. to continue products. represent to the hosting support thinly-traded traded

the propose access one pilot. agenda On with initiative hand, revitalize other the there SEC is may that fee that inconsistent be

companies We a quality, to the smaller market that broad is have market where vital with there is a have makers agreement on play hamper today there the particular special fundamental providing concerns could in role negative about impact on and improve, impact not that initiative a liquidity need liquidity. where

we in the Fortunately, debate. our their letter to considered corporates weighed on other to listed behalf feedback market our and the interest long-term the comment participants who've SEC processes SEC's economic U.S. encourage we've read detailed and so you through we and concerns. of including our have And, alongside companies the which encourage clients voiced of

investors. and best in to interests vigorously for continue argue our will We issuers the of

produced organic by build our momentum second that the revenue As continue I to going look we as saying wrap clients up, on of working let for solid progress results market me Nasdaq, summarize behalf making of that the growth. environment. most on dynamic our the make particularly quarter year XXXX the We're the regarding half second strong and against our execution to hard we into of priorities

proceeding we to large that look it in keeping ahead and that, turn few the and we investments detail. those you and of are for over opportunities Michael to strategic Our financial we our us. review how performing With apprised pivot deliver forward on see a well I'll to will

Michael Ptasznik

million organic $XX and good found Services. X X% commentary of pages X% everyone. of primarily year $XX will organic combination the revenues attachments and presentation and businesses, the acquisition in $XX inclusion the comparisons million Public here eVestment. consisted noted. $XX impact million the eVestment non-GAAP impact I'll in purchase at on quarter increased increase all GAAP in in My of in revenue and will and the the revenue deferred million can X% of segments increase quarter recognized reporting organic to was from growth million XX. X start a non-trading was with of I'd negative of presentation revenue, of foreign the Relations is Reconciliations primarily page or prior net $XX the XXXX, of favorable Services were growth of the which GAAP Data of reported the and $XX acquisition had divestiture our on revenues negative of results pages which second to up that's our the which of a to X%, be that shown focus release Information results million of on as within by our saw growth changes a The Adena a on revenues revenue of X% and $X $XX which $XXX Market comparison from net the will $XX of by morning Market transaction. on consisting result in adjustment growth. non-GAAP from impact the organic organic U.S. performance and the now highlights growth be revenue aforementioned XX on $XX in in I including from net and segments. X% and XX% press and or million in reviewing million of unless price I million on will closing the growth rates Services our revenue million revenues period review quarterly Solutions associated Digital you, Thank or the reduced start exchange quarter XX% A of Media the the reflected each website eVestment. second related with the note X available to The ir.nasdaq.com. otherwise million index million

XXXX delivery $X as first that. an XXXX. Market in unusually about the from the We below that remaining second million Technology as year-to-date and year increased year-over-year. million should of expect revenues adjustment, Software-as-a-Service revenues The primarily to and reflects higher higher low growing XX%, the and the XXXX reduce quarter. margin level deferred operating $X expect with and X the XX%. increase third and in the or impact pages year margin XX% latter we on quarter In last year-ago the $X income Technology fourth eventually revenue positively we quarter shown quarter, continue Market in Regarding XX% full-year but million said and to develop the revenue, the in XXXX progresses support of of the up quarter was the the XX, for to

term, during the As technology call and Nasdaq Therefore, we are Day, upgrade generation last the the we quarterly to a both more the solutions potential unlock lower move of XXXX making we basis as we we clients the XX% we XXXX. Financial But expect impact margin to Investor mentioned revenue Framework. in the for XXXX XX% versus and the on medium and business expect level XXXX seeing our in higher to investments to on to in are margins seen over model. higher next year-over-year managed

Turning to our In Listings Corporate $X XX% effective issuers for U.S. revenues becoming all due XX, X, Services up U.S. million were pages on to Listings from $X X%. all-inclusive increased higher the business, and or or million on XXXX. offering revenues X primarily January revenue

foreign year the due income prior For period. costs and saw million the organic operating Market revenues year expect X% XX the The Services business, or to leadership organic a reflects margin the $X versus XX% the totaled foreign and million primarily in or from Services Solutions Corporate The well to Services million was in changes period. product, primarily on eliminate from X%, $X as and divestiture XX%, X XX% favorable XX a related exchange. net revenues the we change Corporate transaction. to including margin close growth overhead million points up a X as $XX decrease that increase increased in months percentage impact Market rates. in positive prior pages from board increase operating over exchange the the $XX of

XX pages expenses. X to review and to Turning

from foreign due Solutions from $XXX Media by Second $X the million Relations with $XX impact million to a a expenses unfavorable organic divestiture a expense quarter Public to and businesses. million Services in decrease Digital million operating rates, of increase $XX offset changes increase exchange non-GAAP $XX acquisitions, partially a million $XX increased and million the

year-to-date Turning to the period.

in higher well organic in months compensation reflects X% of the increase the The growth especially on X% growth performance. XXXX strong reflects an increase of driven this expense Services non-transactional compensation included as six perspective, increase in higher segment. organic revenue Our compensation our and Market our organic first year-to-date impact as expense. segments new incentive To in initiatives by X% X% increased to costs our higher spending put a X%

principally expense range strong slide We're our to of Turning revenue organic increase billion. the $X.XX XX. The of a the compensation $XX company's bottom end of low full billion the higher revised aforementioned with by million associated performance. guidance the end to impact reflects the the XXXX raising year to variable of of operating $X.XXX non-GAAP range

expect the revenue over of higher while expense growth vary As average periods term, we've previously, about medium lower to or indicated it we growth. will X% in

million income adjustment income X%. Moving acquisition year-over-year the The price profit we allocated but reflects to the from inclusive Non-GAAP margins. as the well and costs business. increased deferred purchase of including and corporate actions revenue, eVestment total organic to that undertook the operating limited operating year-over-year divestiture and increased the impact on the $X non-cash on been the divested to the approximately basis purchase deferred million overhead $X during million operating revenue an period, have adjustment when $X X% as in change price on

XXXX. the the we have XX-month be we of revenue to point the eliminate end and prior will post previously, plans the the end margin operating the above of QX purchase-related period As X stated totaled overhead year deferred margin versus with specific non-GAAP the from over complete mentioned XX%, impact X year the point have adjustments down by to by divestiture costs period, percentage percentage items. or The a

the security. due outsized totaled increase an issued both $X on due these primarily second equity to acquisition. XXXX think income debt period, $X an quarter was rate with for as of The beyond. effective prior in dividend $XX be of part year $X in quarter million XX.X%. the eVestment versus Net non-GAAP connection to us investment of an the significantly Other tax million received was second in we the and XXXX of forward, about headwinds million Moving interest expense million behind will XXXX,

XX.X%. compared our XXXX share for For to net quarter rate million EPS or with $XXX year-over-year. guidance and the to was of $X.XX the per change increase non-GAAP The diluted rate period. prior a Acts second diluted per $XXX tax attributable drove in a tax the year range Tax share year the income diluted XX.X% of $X.XX Cut is $X.XX or in XXXX Non-GAAP the associated in to full Nasdaq million Jobs

Turning million decreased euro. to capital by XXXX, slide XX, million $XXX primarily to Eurobond net caused decrease and on debt versus a in million book $XXX values QX $XX debt repayment due weaker by a

Our X.X total debt-to-EBITDA at at ended of period quarter ratio the first times times the X.X versus XXXX.

to shares continue to Together mid-X significant as a to months both In period. a count compensation As by we previously, shareholders. as commitment with totaled impact employee the share dividend repurchase and million to quarter after-tax from million we planned XXXX, interest the purposes in mid-XXXX. times mentioned of Share flat first well in designed the to majority the to issuances ongoing executed first our and we plan divestiture of the $XXX the return the the proceeds of maintaining a of fulfill XXXX. returned the the through half to divestiture of amount as offset $XXX delever we to repurchases the shareholders for those payments leverage of proceeds ratio returned the other in of second repurchases six of

we turn use year. carefully the but operator your as of the to second in the to to focused optimize of cash We through the and more levels intend enter expect flow shareholders to to session. capital our for now considered diminish we to returns pace in continue I'll two organic QX, against you half earnings growth repurchases time, have additional we and increase. As M&A, and the Thank to moderate continuing investment objectives, to back dividend for continue authority those Q&A opportunities, to and it the grow some

Operator

you. Thank

first question Rich comes Sandler Repetto Our with from O'Neill.

open. is line Your

Richard Henry Repetto

Adena. Michael. Good morning, Yeah. Good morning,

Adena T. Friedman

are how Rich, you?

Richard Henry Repetto

doing I'm fine.

this income talked I this investment I So, Michael, briefly, from just the about trying came first assume? didn't an it did it's question catch guess – have on what I you'd of was one-time that impact a it EPS from on quarter. to what it I but $X use I'm that and quite question understand a this, an million thing to equity hate is

Michael Ptasznik

get Yeah. thing investments. do one. wasn't a but an was it outsized one-time typically dividends This some our Well, we necessarily equity-based from

of I this or quarterly basis. So, million received million normally couple would we an the a get was dollars about period But say for $X quarter. dividend a that in was so on that that or there's unusual a we annual special

was that So, what was. difference that

Richard Henry Repetto

Got it.

PR then, pivot seems like Okay. broader the back the as it has a I you seems I'll It the Adena. and a like take business. Thank certainly step you. And question, ask and investment well in strategic the guess by community the divest strategy and you're been DMS executing accepted

the plan what year updates there and you're and performing any audibles, any announced looks growing So, just ago? how there you there I initial categories it's guess seeing after the the are executing like here, all Are is audibles, it that or now? on but pure almost now that question is are any plan to updates it in a on business compared

Adena T. Friedman

Yeah.

question. great it's So

in definitely the strategy the are now at Investor execution that we communicated and we fall, kind right back in Day. highlighted against of So mode we

regular However, of always new investments And that that a at and ultimately we looking them to are also making expect results continue at perform the they're our would to to at, reassess on driving that basis. from them. our looking we're they're we initiatives, expect will all assessing our and the that level sure sure making businesses, sure that we making to we performing

our to strategy we with Now, to us our define board have opportunities our for every a year continue those we do continue session management, strategy have session good and plan and execution are with and to a strategy. refine

last against at execution a But right the over regular we're we our focused nine part point, that's months. Rich. of So now, what on this really playbook communicated

Richard Henry Repetto

Thank it. you Got the updates. for

Adena T. Friedman

Thank you. Sure.

Operator

comes next Michael from Our Bank of question Carrier Lynch. with America Merrill

Your open. line is

Michael Carrier

the the a historical right. the of are Things backdrop mentioned organic the your you base transaction changes are in of on maybe putting again in get interest growth. much on the side, just that, you're better coming from one maybe better are rates client But like expected some on surpassing non-transaction Thanks All acceptance seeing side. for Adena, in than some maybe kind than you, of of the Are market maybe lot. the the you of you and maybe place? expectations? where that areas that terms

Adena T. Friedman

Yeah.

although helpful I think could market tailwind two backdrop been point where our kind is our a One flows are into the a of the in would coming are well, I TSO, indexes. – AUM say derived that it's meaning AUM our being I ETPs businesses. areas from growth, there really lot people putting to frankly from is non-transaction in of in certainly actually growth

not really in that by those But interest So healthy improvement helpful helped environment. market it just investing market is it's a strategies. in – but is value

just our had other a have And the obviously, year healthy. thing I also the think we is we've win our rate market very IPO to years more the that fact prior backdrop. is is this in testament had effort. environment The is than IPOs

and that combination efforts positive So it's the both things I and taking us of and say of would positive positive environment. those our for of environment been really advantage have really a

our our you, Technology Market with success, I be the with I'm extremely honest in think to be blunt, by business, surprised very I'm I not have but pleased to success.

the technology has that a partner, future. of So we back carry to of past based on ourselves the quarter, team years were as hard today have they're announced will work think and the that on our lot a we I done clients based on into right? particular, we two for our making, work incredibly our based the that this deals relationships, of in These really customers. that longstanding right back in the that the prove

how but clients So new Nasdaq to on Framework. see to I'm clients extremely coming many continue the the I'm it, by surprised not Financial pleased to out as our of and we build platform

Michael Carrier

thanks. quick margin. Okay, real Michael, the just And, on

phase think the items you're I out and So you this said I you know pointed some in that margin by on of the weighed transition X%.

you're maybe to that technology trying transition mute or of as equal margins versus just of about will are term. that? investments that versus to into else XXXX, get lift in the see all short should the when the we there business I'm like that So talking continue mid-term investments kind understand sort we

Michael Ptasznik

Yeah.

key to the is the the reflects revenue deferred margin second costs and business. is of write the weighing X% in two things the sale the overhead the that So, that eVestment related are piece that down

And really that's that X%. where so, driving that's

that if intention the invest to the Framework targets But and the and That transactional continue continue is Obviously, identified as and we the revenue side of areas about continue grow will the items. Day. that should revenue talked to the specific we the that business, that was respect of are we've We Nasdaq towards really to related in we we did growth to then term medium that good build to growth in X% expense that the investing in Tech during to about the look the we volume business. multi-year the see see to Investor is that we exceed other business Market we're program Financial and a that out. talk that those in some looking with

that to on is muted the would there's we as mix did grow generate But more And business period. look of the the margin continue additional in margin certain to again, where segments maybe the do depending some over term, of the that of we So, margin. business. medium investment

Michael Carrier

Thanks right. lot. All a

Operator

question with Citi. comes next Our Herbert from Ben

open. is line Your

Ben Herbert

Good taking question. Thanks morning. the for Hi.

Adena T. Friedman

Sure.

the kind But you as on ceiling to low investment margin looking of there. uptake up to that that there? behind Just to and us and Tech we side see the Market follow can a guess phase investment as XXXX, wanted expect into I expect the look of bulk margin mid into XXXX beyond cycle. the we XXs

Adena T. Friedman

Sure.

a at we past this expect year have significant this try Day too do of the in we communicate in we the of So, Investor that to did – do said couple And we've business. investment that. years

ability rate for business sustain we start of that the the based that, should on in the the that that to On to we over to scale will that we and – business back time. show over growth hope long-term

investment significant. giving business and making business. at outlook sure customers. want definitely margins appropriately scalability margins. make this have be that serving At we we relatively But we'll past are we get anticipate improve scalability always should the an investment on enhancements to we the have did that's through some and and we're make phase our and period. And deliveries Now, we're impacts as to sure other same related business time, investing that looking we're the guidance particular one we're to things that Investor specific we temporary not as think we Day improve we of should that across because do or But we get segment communicate the

Ben Herbert

a there and would the eVestment some success Thanks. on a you customer and follow-up of base? And existing just lot talk then prior cross-sell driving and quick the the maybe then that of also eVestment into could cross-sell is about either, be

Adena T. Friedman

on we're Sure. days the Well, early cross-selling. think that I very

the it. So the the just the of business and far so growth business we expansion impact been bought has main of really as

from success great their been very clients buy Europe clients to it's that having – expanding that's into The company. offer are and well. and The So the value. products as it's high are more a they Asia continuing company. They're

they've And so growth to teams very its is course days, the a where the have to was though begin and gotten specific stage. longer cross-selling and it wins really their coming. just it's pipeline. high is is starting us of this why The definitely had been with. That's sales which the but joint happen a business, but at early itself at we've together, business attractive to at very growth revenue there not We've to contributor looking looking some huge been

Ben Herbert

you. Thank Great.

Operator

from comes Kramm UBS. Alex with question next Our

Your line is open.

Alex Kramm

a growth you Hey. beta remarks. morning, business. in here highlighted and everyone. your the strong of think start of big portion times prepared I index the Good smart I to couple on Adena, wanted

that's there increased commoditized, use. in in gets for in of premium general, business, that's I more, that to guess, on debate that but pricing, particular, wondering I be right Just the seems pricing business think smart if to word terms a you about as beta

seeing business or that coming little pricing why there's So pressure what potentially bit offerings. a smart there, beta you're maybe if out of a highlight just differentiates itself other to

Adena T. Friedman

establish Sure. Well, you that you with the the of share work agreement an is, as is ETP and the revenue you is that going what thing contract know, I into provider enter the an we first say the would certain per life as but are make of get rates. and and mindful point, of them through with rates, to finding basis that continue the the sure for that that we're I we're making product then based life our so to the fee benefit on sure charge strategies consider appropriate look up that. with sustains the that in we've a product. that and new don't But be to launching an rates at gone find I to coming that itself partnership way wouldn't worked out appropriate products and the appropriate say ability we're that clients that marketplace, And from differentiated launching. of we can unique we premium interesting and our different and things are we are

also we seen mean very significant doesn't years that So, not compression. it But getting got ago. XX have rates that we're we the

our mindful on with clients. we it's thoughtful how that think partner very an and I evolving and we are industry

Alex Kramm

us now announcement real Thank Okay. few – well, months NEX the quick, now. months a still you. but just CME pending, And a with then acquisition few behind secondly Helpful. the

you business, about. Just share your with could you've that Fixed curious on if had anything clients discussions increased Income

your benefit against I this how think this of or But is being takeover you they wondering bit are their just on you're increased because of received. work really if end laws. having muted a could clients little how and discussions with

Adena T. Friedman

our and Well, the the ready with we've accrue platform. really Treasury re-platforming far new ours performance platform, doing benefit obviously the the believe in been about we our get Sure. to the having work which been of business the and we're conversations so of their for of has them to the clients will majority because

the But on going the say overall moves – a are they we've been to I there really of to that the conversations see lot there's extent that landscape, So that. on. would turned focused dynamic dynamic that

for competitive that so make position terms of we think make to most really don't sure transition of it, what it's is we that potential lot have And as to in best our that I they of the that – and possible. job to a mean make really to going the clarity the put particular ourselves in disruption we merger. have them the

instrument we the So is later what coming that have alternative. launching we tends of futures in our coming pricing announcements that quarter off the Fixed we're as Income we having and about really from real think through excited in Part we fact use great have that of focus of interest platform an Treasury that because are they to that the that we the be can the strategy And Futures benchmark. clients a on. a that

that looking forward. Income as what we having part to Fixed are we So offer the forward in space going of

Alex Kramm

All Very good. right. Thank you.

Adena T. Friedman

you. Thank

Operator

Our next question comes with Bank. from Brian Bedell Deutsche

open. is line Your

Brian Bedell

comments Great. nonfinancial Market Thanks just Technology areas. focus to some the earlier maybe back in on very your much. the progress Adena, the in on of wins client

sizeable can uplift in if have if to versus also but a you in example sort know I material little those they're And the mentioned revenue we Exchange, that's I you and maybe futuristic, Day. Investor think us talk then, bit since crypto maybe about. to new you India are our just gave all an enough the models? in the Swiss go of deeper agreements relatively what a clients that, with create of So, two

Adena T. Friedman

you say would they growth support I and Day. anticipated that that the rate Well, we Investor at to we provided

So, of of is that's the as business in I growth of know outside kind because National example worked this Stock part of and types you largest having a all of we next three which us exchange you've of never several before. Exchange the is the And so with know years opportunities see of part India, clear our cut and of a things. why they've these higher different across One – India of I do provider India, think before kind is an present is over well.

that business to expand is good example client have us and client a an say that's where even and so, brand core new our opportunity we grow a And in still for our base. I would

growth. get able and to strategy land we're The – one Exchange area second we develop partnership expand one both in are we the And fully those waiting with of excited associated of mentioned good I with a to of to until is what the exchanges it that our the kind as our implement more some our broader I the markets expand example space but that others. and a down time great you call And are space of support Swiss just because or nearly aren't that the are but nascent opportunities opportunity agreements. and the as the where look implementation the traditional non-financial opposed as a some those them are to smaller fact into then, capture of of relevant is of cryptocurrency revenue are still them, it's we about the implemented. They'll sizeable the as and take to there exchanges they across just now When that we is for ones are non-traditional there's markets, saying, technology of journey how well, starting there. capabilities range demonstrate outside And to large more us markets.

or been lot able like still talk industries. or a about we've gaining that. there, anything different are would to be demonstrate in more a lot engaging to that a We But on of early as intelligence it's too with say, TAM I

Brian Bedell

Yeah. Okay.

you've India organic near term, with a XXXX, sounds if is consistent but just like XXXX. more benefit look has and growth the at then, the we Exchange the that maybe Swiss a it like more Sounds revenue telegraphed near-term in

Adena T. Friedman

they the kick the the of associated demonstrate take with time a that period will to – – cost because you'll whereas don't recognize cost we've to revenue, have lower revenue off little live basically its that as are then but with much both once the they'll associated itself, got will revenue. you XXXX, the the then have margins delivery for projects delivery during all start of Well, in and

will those of kind the deals backdated. how off – So the more profit that's be so

Brian Bedell

the of gathers back all just timing comments. access maybe Okay. fee as with the debate, of going Great. SEC the the the And your of just that then industry view pilot

proposed? If it when as they sort still you this view what do odds still may they kick have think a initially if do you of off the or

Adena T. Friedman

don't either of those any have one questions. So, we into insight

now. of the a to close any here how comment pilot They they within it. may the understand coming to We period. choose and I – in special fee the insight access may choose comments the of for have really were construct think may have the right the defer they that changes and and say it. they They to of to think Obviously, general. into the interest we operates choose don't that that would obviously pilot, choose to – requires we good, pilot to support is investors. material construct – to well, they'll amend period They into to But issuers address is are we comments in it kind that respond is the comment best comments. initial the of believe the to don't very be that it the the something we

into we don't their insights to have process how special going any there. have we'll about So they're But see.

Brian Bedell

you. Fair Yeah. Thank enough. No.

Adena T. Friedman

you. Thank

Operator

comes with Voigt from question Our KBW. next Kyle

Your line is open.

Kyle Voigt

something shifting the else to happens. of on through so focused from industry transaction are morning. Good what the But your does many as towards the changes else. off-exchange it But argued pilot? on argued then does goes potential try if that, in business of through for know trading something impact as guess fee volume others you're just or have if risk, currently move and see we'll business focusing there pilot more you go Hi. potential impact terms I on the and as to potential it to a a that for proposed, I'll implementation just you've Maybe is as I the proposed, one in that just more

Adena T. Friedman

does first some constructed this system that would that changed. creates the of unison, the also, market. across general then exchange. have all it the exchanges then then of and rebate general But fact Yeah. affect makers the potential motivation down likely the that flow mention as kind which ATS', fee have the shifts off in then, impact not thing and But would so commit markets drive usually and goes net into is in liquidity to if that pilot of their be only to an to currently affects just capital say shifts the materially in I our doesn't is capture the venues, down, it the Sure. to market strange two-tiered have the

we material of so, as material base. have one would the in that something that we've But seen it Pilot. And just is at that Tick overall an revenue that is being It's and look could our that the think we to more concern. change an I area not probably impact some say that's

tiers and on impact Pilot So, price exchange financials. has the had you of formation some can had But the it has off of it again, moving a material see and one of some the not our and does price discovery volume impact for Tick impact think we in the think much important things in that's the larger for the occur is where companies. most particularly so the small health and we ability really the of that the ones. are that And impact small companies, the will markets do not in

Kyle Voigt

to elevated Thanks. half. that expect in spend I bit historical XQ, you. million a wondering some from to year you've Okay. you follow-up million that That's think in the $XXX CapEx. years few really just on running did to the just helpful, range? And like Looks just get know $XX of ramped XQ in thank the I for I closer past half And million first if back a then the Michael you $XXX to and range but guess the been the

Michael Ptasznik

Yeah. That's Kyle. correct,

spending the the and will back some be occurring capital that moving real in it so half year. Square half estate back increased some be initiatives of some behind to of our having the be of the where our of there'll other we will while We Times that ago in a on we're moves of the announced also of expense Part year. investment

in So, the you million closer that historically that to we've be range about. where range $XXX we million, $XXX expect talked to been

Kyle Voigt

you. Okay. Thank

Operator

Thank you.

Our next with question comes from Sachs. Goldman Alex Blostein

is open. line Your

Alexander Blostein

everybody. Hi. Good morning,

Michael Ptasznik

Good morning.

Adena T. Friedman

Hey, Alex.

Alexander Blostein

for question you A Hey. guys.

Solutions recovery could been an going a after a couple quarters give on business. little the what's have in I Revenues in last year. on update of you guess bit little if wondered last Just the Corporate of soft seeing

this see driving been what of the the of drivers here? what's near-term sort decline business quarters and the you expect last over in just to two maybe kind update an of So from

Adena T. Friedman

Sure. Well, growing, growth businesses rate. that the retained we've a it's are but relatively low

growth the some we we're it's it the to across lower faster. And investors I mid-single our so of rate that that we of I level had kind digit, want we digits is Corporate Investor what Day kind think of see growth, Solutions business. mid-single definitely expect at of definitely grow but that think would at a told showing end

really things. So One growth products is are couple what ability tuning are strategic the tuning we we on on else having with team capital divestiture just that make believe client we're for to as to successfully well products to sales really markets has ability concentrating the that doing the sure do to to that has focus concentrate are that our big senior really those right? to been the focus the relationships the the are West. we our So the businesses team, team and everyone and went and to that what a of navigate good fundamental our two as towards of And allows companies at.

for going time that's to of us show to growth. ramp the little terms a to through take ability in So

that's are our products into The making sure the IR new the why Insight suite. products is needs second addressing thing that really been we've clients' and launching

their understand passive So passiveIQ navigate companies we the have investors. really which and helps

investments. We to related have ESG something

investors, We have to related et activist cetera. something

believe us lot for product client a little do. work been And And need We we in doing the definitely to So a in board that's there's a we then want workflows, that and that growth segments. in bit segment sure all starting we're we're specific make that that to growth. what But And see into content to But there more kind cadre that of we've greenfield catalyze there. products that it of within we for more to those opportunity business. add IR. and leadership of think along. to so that to growing growth can of continue more grower catalyze clients the relevant work addition tools, offer to been could become will has we our

the business. Corporate are on focused catalyze those Solutions in So to that the more growth things we're

Alexander Blostein

And Thanks. That's it. clean-up a for Got helpful. Michael just you. then, question

out, I'm heard through and just what I has still drag how sort you overhead would the running P&L run mentioned you phase the to it a rate basis phase expect XXXX. I of talk and they're of expenses to do of that think you quarterly think wondering I today, on kind of out when going QX guys of a benefit? about much created be sort for in

Michael Ptasznik

Yeah.

basis, had talked of we about being quarter about there to attributed annual $XX eliminated a to the that's that period million Corporate $XX over an will million Solutions that roughly So on business time. be need

And so, a quarter, quarter we partial there was so. because $X talked was this about million there it or

that so through continue next And the to amount year. we'll need that's to eliminate

Adena T. Friedman

all seeing in of Services Services shows most that P&L. we're though in up the up And most of the Corporate Not it it of Corporate show P&L.

Michael Ptasznik

remaining back much the there bottom the that allocation about growth $X that can as but that's you didn't was Corporate was and because now of going why due of line There that's And businesses. Yeah. growth grow overhead earnings. Services overall that. see to to in Most is of the million

Alexander Blostein

of Got that's fully And by Yeah. out the end you. XXXX, right?

Michael Ptasznik

end Yeah. QX by of the out Should XXXX. of be

Alexander Blostein

Got it. Great. Thanks. QX.

Operator

from comes Vincent question with next Autonomous. Our Hung

Your line is open.

Vincent Hung

Hi.

because Just revenues were lower? revenues, and looks I yet it was it quarter on X%, flat on increased is last derivatives think that AUM like index

Adena T. Friedman

but also great AUM the bit revenue first the is the also because was average a – a revenue derivatives was quarter. quarter-end was Yes, generally, that I derivatives than speaking, in significantly – That's point. think that's generally quarter second we And in versus I as first lower little was elevated in quarter it the think AUM the different. mentioned,

the AUM average think was elevated, quite think prepared it the year-over-year. the an I primary do in that the business better it, index up not we So QX the But much think revenue but remarks. quarter-over-quarter on but as QX a – It it's I and of volume-driven was quarter having like is of impact. – in also I not the bit to mentioned probably cause that quarter-end came little

Vincent Hung

like in Data Got and million items just $X collections? a by it. like lumpy Is small that small Management sequential both. on Market decline And lower there's Services driven Trade audit

Adena T. Friedman

then particular. did the you there had with in Facility, the the Yeah. some also is in it that work Data on TMS business there that has And more in volumes was we first to also the MiFID. On impact And that the than in Market that actually, elevated QX. do quarter definitely volumes fact but the then Trade with Reporting

lot to the in our So their clients so also a that not of were using is testing facility support testing recurring. Nordics MiFID and

time So pay they that but recurring. for wasn't don't that they that –

impact quarter-over-quarter those mentioned two on So you have just the the things change. Trade that solutions exact Management

Vincent Hung

Great. Thanks.

Operator

showing the to for turn back call further Adena remarks. you. Thank currently I'm And over questions like closing time. Friedman I'd this no at to

Adena T. Friedman

to drive, also the while capturing time your We're delivering continue to Thank in across you see to pleased strategic to our top-line quarter of intend very expenses growth much. long-term very our Thanks disciplined areas. we today. much the all be sustain in strong growth manage businesses opportunity for how and to we our

well commitment very bring clients to We and our Surveillance value the platform, as our our Nasdaq Listings our franchise, to acquisition in reacting benefits pleased market, and Financial customers, to are functionality to eVestment. see U.S. our U.S. in our SMARTS ongoing institutional Framework markets through of proposition Index and in our that Nordic are a buyside to premier investments our

our to years to our dedication enhance our and to those months client base innovate order is value we deepen to come. focus offerings through global global our across in and the will and our base in and continue relationships to key them So, client

day. great questions. for time a your very So, much we appreciate and you the Have today thank

Operator

Ladies participation day. wonderful conference. and have gentlemen, for this concludes and today's a your Thanks

Nasdaq (NDAQ) 25 Jul 182018 Q2 Earnings call transcript