NDAQ - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Nasdaq First Quarter 2019 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. of President Vice Ditmire, Investor Relations. Ed may you begin. Sir,

Ed Ditmire

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

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

Adena Friedman

financial we us. market Thank to everyone, laid market. inclusive Nasdaq's the strategic XXXX and thank business effective today and remarks progress My the joining proposed execution create focus positioning, I you, discuss a priorities will points our lastly, morning, capital Nasdaq's earlier we've will structure in more equity achieved company's the for out advance XXXX the changes U.S. that Good to advancing quarter year, results and Ed. you discuss also more in performance. on first and reiterate

the performance of Turning to Nasdaq's first results, for to I'm pleased solid report quarter our XXXX.

backdrop, capital which organic listings, for the activity processes trading new year. saw beginning challenging well amidst the during the growth driven first strong as significantly SEC's the start markets of came and the a Our late business related of the profitability quarter at reduced shutdown by revenue achievements, quarter a to registration as government U.S. effect

in quarterly focusing areas on continue January, to specific we'd year, update our strategy. presented be as last this our we the advance efforts vision and During we

client markets First, enhance through through a capital with is markets the our presence data client drive which financial growth in side, interactions analytics capital client lastly, our driven functionality; and with Despite volume meaningfully mission our to in operate, we in growth and strengthen delivered to strategic segments. long to on analytics, and to through our focus investments we the multiply confirm new buy sell the surveillance, the in across the as headwinds, culture diverse side enhance term, continue to we as and adoption and solutions and to results innovate and our across Second non-trading and certain deliver framework; the solid technology our leadership and renewed is expansion our Nasdaq listings to marketplaces the the grow. is of of opportunities integrity core better for trade continued our technology in quarter beyond, corporate company we groups; position build continued innovate third

increase number and SaaS the segment following first an from quarter in to size surveillance our the of Technology software projects delivery continued at expansion Market XX%, highlights growth delivered quarter, Turning franchise. organic exceptional of specific first and the our in

new order a this with Market U.S. operate as demonstrated platform momentum to Total was forward, the look XX%, new Options dealer a during well year-over-year. legacy up system Corporation Deutsche we new Nasdaq's deal Clearing in terms The intake business as the as importantly, using especially including agreements More replace single customers, of strong with Technology to quarter clearing infrastructure. XX% Bank

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the we me Moving in quarter. to Nasdaq Services new an market Corporate let slower the led welcomed during new New to win-rate Futu We for Fortress period, first. lead including U.S. IPOs, our foundational with by XX first and XX the listings Energy. Holdings continue activity, review businesses XX% IPOs, for listing Lyft, to Despite start the

listings quarter. it the welcoming Meanwhile welcomed attract We from a $XXX and our new pharmaceutical capitalization the company our when its continue switched New also count the listing period. listed up during York was Nordic prior-year our up Nasdaq Sanofi, billion exchange quarter compared new X X% first to to markets market Stock end European to companies, Exchange at issuer to the the market period from

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client progress to to provider, quarter. strategic of repositioning freeing up and a and that capital the as have Next, key technology our not pillars relationships. several proven core to maximize three strategic these I'd foundation strategic marketplace like Along analytics from in to areas and update during you direction, first potential to we our sustain investing our our be our our milestones on strengthen achieved

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well Market the banks organically, to as diverse the strategy, initiated with Index partnership buy within diverse side, of eVestment markets. as well we've Meanwhile wins in On our our significant side our in enjoy over continue as the Information strengths Services, approach our we X,XXX clients franchise partnerships pleased operators, by brokers in I'm and non-traditional as and including market with Technology, organic infrastructure traditional business.

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saying of in As some industry listing Nasdaq, I headwinds in by up, results summarize the for new wrap expansion strong quarter first I margin the the will XXXX significant and volume despite produced declines period. and

We renewed surveillance, in to remain increase client by benefit our continue review and our the on we U.S. to I'll issuers that, and offer strategic encouraged we our look over investors, to data position modernize progress. Michael trade the by our equities leadership analytics to presence results With to to forward early detail. financial believe updating turn market improvements, enhance structural and diversified and markets our will you corporate we're for technology adoption direction be guided and then solutions. leveraging Simultaneously, client it

Michael Ptasznik

and each or I Solutions quarterly the positive from I including as foreign review impact negative with in of Digital Media which, Services saw million on will you, to adjustment XX% Cinnober impact year net website driven or QX Relations XX, increase acquisitions in of growth from now segments, a segments. the of in Information revenue eVestment's $XX result to and Thank April deferred the million and of operating X% noted. X presentation our reflected revenue a $XX quarter an from on the comparisons of the $XX will and was X has I'll million, will shown Page ir.nasdaq.com. the non-GAAP at XX. $XXX in result in start our million organic presentation growth of on of and U.S. $XX focus otherwise decrease on reviewing results million in million, found million inclusion of and divestiture XXXX rates. which revenues was first that's everyone. $XX revenue. organic our reported primarily The price growth, XXXX. revenues This our commentary period, Good growth start the purchase be can a performance $XX prior on organic million the highlights Services, non-trading Reconciliations GAAP and the $XX the from $XX of changes by Quandl, Pages and release businesses and on million non-GAAP impact My be results Adena. to available press X Pages XX% exchange all attachments of of unless within organic a in by unfavorable will was morning, Public

during million acquisition in million increased Excluding primarily revenues, partially of this million and X%, the would have XX, growth up development organic or Analytics were Technology organic growth $XX $X in million organic by adjustment, revenue revenue for & and X and $XX shown Index Market Pages Data XX%, Investment quarter. changes or $XX million well growth first the continued period of SaaS operating number as versus for surveillance In the margin increase note software quarter, as and in size in tends delivery to below Technology. Organic that level rates. first Market business. in the our an Market projects the the exchange would X% income the full foreign strength primarily reflects Technology quarter I year X% the in was margin XX%, impact to of from including revenues. Cinnober, $X offset negative which or as be on of here year-ago due X% been continued margin

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Turning review Relations X% impact divestiture of $X as change impact and for as impact expenses a to and more Cinnober million the Media and X of Public million The reflects increase $XX the well million. Solutions expenses. $XX from to decreased $XXX or by of Pages to million net organic rates. changes of Digital Services the and $XX exchange offset the than million Non-GAAP foreign in the a decrease XX businesses acquisitions favorable the Quandl operating

the $X.XX the non-GAAP foreign BWise business billion, to impact remainder expense compliance of XX, $X.XX Slide in risk is expected guidance of we year. updating primarily to range guidance and divestiture for operating to Embedded Turning an in to expense current XXXX the are exchange quarterly the rates. the updated the and our billion XXXX reflect spend governance, of increase

about seasonality is by This and implies initiatives. annual the and increases guidance such well items, the timing million $XXX and as operational example, awards, spend expected various midpoint certain updated driven per our an as equity both on as range compensation quarter. of increased of of average For product merit uptick

profit foreign operating Moving exchange in to know would suspended XXXX rate customer the the first the plan. margins, phased of dividends and balances. quarter and rebates we XXXX, I change accounting. in income to of method due an largely non-GAAP on by XX%, disapproval a do $X Net from investment SEC's lower changes equity prior acquisitions, the capital, the non-GAAP to organic OCC owners year receive OCC of not The has divestitures debt under SEC operating or versus treatment organic like net and was future We and percentage prompted of that a the the a to to while expense the million impact $X margin interest reflecting offset million in $XX expect On basis, the up began operating continue operating and on the XXXX quarter first here periods. related of income X year capital decreased XXXX, non-GAAP increased by income dividends OCC's growth. totaled the period return income, period. to in prior expect the of million this of $XX million the decrease and contributed recognized income points currently of to

significantly on prior investment also may income this years. compare Our to very

prior for rate presenting towards will is our The changes XXXX and comparative non-GAAP income higher now supplement non-GAAP quarter purposes, As effective exclude range. posted first we the Investor the tax impact. result, which of March on guidance for website the end a on XXXX original was in X, XX%, we the tax detailing Relations the periods of We've as discussed earnings. such recast

net the the with and reflecting tax between exclusion non-GAAP rate now related income to XX% expected be higher For to of is OCC. XXXX, the a the impact of primarily midpoint for to first attributable diluted Non-GAAP million was compared per million or income per share in $X.XX $XXX prior XXXX Nasdaq quarter XX% year to the share or period. $X.XX $XXX net the diluted

net debt amount carrying FX as as in versus bonds a to XX, Slide caused well rates. decrease $XXX short-term borrowings by reduction million XXXX, changes due on the primarily $XX Euro capital to in Turning in of QX million a by our decreased

cash. million $XXX maturing the commercial repaid floating with we period, note paper the issuances rate and During

bonds with debt-to-EBITDA down we quarter from The also XX-year XXXX. a coupon total denominated proceeds notices will times, dollar of the will January of coupon and a take ended refinance X.X million be redemption bonds of Our used in the of fourth redemption X.XX%. X.XX%. January period X.X million of XXXX the with notes denominated place for to ratio issued In We May. April, of issued $XXX the times €XXX XXXX

returned And with time. the policy over company dividend cash reflects the continuation During dividend shareholders to first is This of increasing of are quarterly growth our per by the we to the strong today, through our X% share. our quarter income increasing statement $XX accordance as $X.XX increase flow dividend of XXXX, million grows and story and in dividends. dividend

For it and dividend Thank cash and three the compound that, three operator compounded back turn trailing much the XX% income in excluding for which Section time. year rate, over respectively. non-GAAP the annual to net of by XX instance, last XX% I'll annual your a XX% growth compares growth to free you a Q&A. increased our for years, fees rate period flow With for very

Operator

O'Neill. Thank you. Repetto Instructions] from question comes Our Sandler with first [Operator Richard

Your line now is open.

Richard Repetto

Good hi, Hi, Yeah, Adena. Michael. morning.

Michael, seasonality question results. comes what the Market margin, the I the on headwinds us, first Could from? guess you in remind Technology, So first strong quarter on just is the

Michael Ptasznik

across seasonality headwinds really overall so Yeah, board the business. on comes aspects different the in the of the the

they're realizing respect into also through They respect with And synergies as know, that some the undertaking. the of the just in play. specific Cinnober they're be that So to we'll the QX. be of factors of remainder That's year. with initiatives the came could to had one you timing and

on it. impact of And have that so, those are factors will some the an

Richard Repetto

And guess equity the the relationship what think it the of the on certainly I all summarize, question proposal regards markets. from your you - over the pushing this doesn't helpful. one in and months, use XX - sort the I recommendations do the you're But of what's if Adena, the to reform to so that's is, to fit had follow-up took you're you you even Okay. to regulators least TotalMarkets - then, your I reg that related whitepaper, size the for last technology to and That's my markets your was at is with? been interact making how developed reception given monitor also and

Adena Friedman

think note thing reception client. to from the first is the I the Well, Sure.

one a the So NMS things fact having of we a small mixed are underlying we uniform kind of small and it's what to answer. large And across occur environments on the because reason happen, one-size-fits-all that that a in issuers and fact market of answer want have large and really are that's some is of complexities our investors, I Rule exists. that and the not for really of Reg causes the think focus today, and Order investors that that this the the Protection are good issuers, experience. that And

actually, experience to billion doesn't gives create And market. opportunity would the that a there everyone whether shine all to chance cap not or before lot They their clients. to work the give company proposing a just public cap it view we market a a good their in idea that of So writing of with are uniform But industry. And a in market across total it, think million model is thing work own changes perspective. one-size-fits-all the own have did and come market that is I really did structures markets one a company, through and talking do this us and $XXX the one-size-fits-all, views we you really $XXX anymore. technology, the

with our So really overall the is theme view clients. of the consistent

is policy directly, some let's what of they're market come the holistic with experiment proposals. trying actually when we've gone how pleased I the and whole the to as let's proposals. their to view a debate debate and to the out that matter, that's across a and companies more of point think pigs to experiment, to healthy trying some it have have a is be debate, point around we're and of it think back much writing for than rather The that of a regulators, more symptom do I a should after with picking and create And there fulsome very be Obviously, a that's the as customers it. talk But clients bunch an guinea comprehensive achieve. and on market the to discussion structured. some

down dialogs have In through with we them basis on regulators, this the and yet with our terms of gone proposal. a sat comprehensive frankly not

So that's do our lawmakers in and to and our with come. regulators, something we months to intend the with with clients weeks

Richard Repetto

with Adena. you Thank Great, Okay. with luck and the good talks them.

Adena Friedman

you. Thank

Operator

Thank from comes with Michael you. next And our America Lynch. of Bank Merrill question Carrier

open. now is line Your

Michael Carrier

know so just I Hi, on the shifted the business, was of is of it get time. was initial like areas thanks that and how of and felt this getting there strategic quarter. overview like there the that the the wins just has few, Maybe an dealer lot maybe a on on just of good update. that banker, you you one did are versus And more to I'm traction morning. one - where traction, Tech you Market last some over Adena, side, the when guys wanted but expectations? you highlighted like opportunity in some seems the with not the the quarter, over clients the potential

Adena Friedman

Sure.

I think of and that brokers And the the this that is first the of side business well. with is thing technology quite a definitely to in go growth the segment. continues surveillance banks driver

technology think can contract. we've little risk originally we've technologies, anticipated dealers final I each to traction to think, starting our see functionality getting than is differentiates opposed against to really team's work a management with trading think good get As good clients. really broker other longer infrastructure The and I take definitely well, relationships our cases, that core customer and But we old. trying cases we the that technologies, to from the gosh, in this these that decisions start that say post-trade expand been to to I time the while. we there to as get into technology start show we is is a And strategy. sign take a that And some news key to a time on continue another demand infrastructure some customers them. focus strong to the with of But that contracting clients use process been would core, in with best technologies, to progress is them,

having of these to definitely we conversations productive come but the time so, lot for And across on them it this very a are world also point, decisions. takes with banks to

will clients we just we new that here. So getting hope to progress continue in make steady

Michael Carrier

Michael, quick one. just And a Thanks. Okay.

On the the pricing the either how I data context that know benefiting deferred some year? on can of you're being from that. of core business, is growth curious, eVestment breakup, this you versus by kind Just don't around any that penetration more driven but just analytics, of much clients growth if just

Michael Ptasznik

Yeah.

XXXX back that So the in was million, in QX out deferred there. can numbers the of impact revenue you growth that $XX are so

Adena Friedman

definitely of make think to But it's offer a progress, continued pickup called general launched, in the new customers. And really terms terms it's new there something in and to presence that work to functionality think of of I really there with towards on penetration. eVestment and in we But - part continued I have geographically, business general, clients, continue small just it's but terms demand end that and our new in our and as find customers that we're in growing good in last the something new as can Asia, continue we capabilities that our well Lens we year, for though, Europe. we Market services we of see of focused

existing around the new new our ones work with world. and functionality and finding So customers

Michael Carrier

lot. Thanks Okay. a

Operator

from comes our next And Compass Chris you. Allen Point. question with Thank

line is open. now Your

Christopher Allen

Good morning, everyone.

the ask an noted had underreporting to - missed on Data, [ph]. for wanted I usage of you Just on - this, for Market maybe usage adjustment [tape under the plan]

Just big how wondering a magnitude was. that of adjustment

Michael Ptasznik

last Market this compared was was last Data, it $X in Data was than and itself million usual $X million of larger quarter. Within a total - million Yeah. to it change, Market year quarter a $X

Adena Friedman

So possibly quarter? first last year

Michael Ptasznik

year, First yeah. last quarter

Christopher Allen

the X.X% way $X think about what forward that target, and kind very the for adjusted run adjusting mean, growth to above of is kind the core just then And not in rate the Market Data is going the about you this was that it. good closer right eVestment quarter, non-trading posted a Got segments, I revenue. organic of that now? X% deferred strong million for maybe the of and that to

Michael Ptasznik

Yeah.

If the those The non-trading items, you out both to would itself to closer take which would segment eVestment bring be that of again was that X%. million, $XX about number. growth

out your additional And will to it so, the back if that get X%, number. you closer

Christopher Allen

lot it. Got Thanks a guys.

Operator

comes UBS. And Thank our from next Kramm you. question with Alex

Your line open. is now

Alex Kramm

Hey, morning. Yeah. good

done acquisition, Cinnober your mentioned flesh out I is just going have terms are Just where little well. and you the process done more like of integration in start Adena, integration? Just Can going synergies? you you on it that the little terms in in think, you work on have what of what we a What sales you expect forward? on color bit bit a to

Adena Friedman

Yeah, thanks, Sure. Alex.

So a with fast we got to pretty Cinnober, up start.

with Nasdaq, starting to data their did employees obviously to comparison is technology modern to closed first group. they our we do the of of we our get that know when their did understand their what technology they have we technology do independently welcomed where have, we really technology And to that employees, would Financial stack, on of stack and maintain into where made integrate the we're Framework, Nasdaq want their more dive deep a sure don't that could really organization. the we functionality have what So technology some

feel that I space think we've And technology management - assessment, completed in great have, the their I particularly in so very risk both that clearing they the space. about And really initial very, assessment. that mean, that we

have integrate clearing Nasdaq Framework, And so capabilities, to their Financial risk the into have, because they such in look they new have addition functionality of to technology, clients we're management the to to some maintaining at their as the risk some as the clearing going and standalone capability, some great on continue we really how its come clients that management own of that platform.

several the I of going as and forward think the that's some at look of trading future. terms moving clients time years to over technologies, In over into be renewing

will the I has. on made. start early integrating technologies trading been more some of decisions that have we But their those we've work think, them Nasdaq to into

coming with team working up to closely very around been been teams understand integrate how that. to a we've with and Additionally, into the we've Nasdaq, the plan

And so we're starting to execute on that.

team some the will be we have that into think on in I our then offices side. can the lastly, moving Stockholm Cinnober savings over that's Stockholm summer, based So to the so start real estate

year, So potentially into complete to we're going a early go cost develop as the off good of kind next that to a definitely through even on effort of remainder the some start, and will year there but just we are this side. synergies

then we're - revenue work side in have on. some that interesting. of had client that with On new they've them of side, pipelines some pleased And wins terms and clients really the recent on top their the pipeline they on very to

some they've of the some that so several didn't, of been but and can it surfacing overlaps, months. we over new and we're last follow-up it that really And pleased on some opportunities

Alex Kramm

think perspective, or there like foregone would otherwise usually do. a very And there's think you a the this about in think, see are sense? you a just we But Great. price just quick actually Market small, you typical it, And that from years. I numbers price as that call been know some, I think right. talked of this you over All of obviously mean, quick lot Data, you did you terms do follow-up, on of a millions of like budgeted just around magnitude in put have then terms last if increases how you multiyear I Can something equities. let's that have makes year question, around I debate forego much couple dollars of but increases those I

Adena Friedman

products the mean, our actually year every say space. I the in first price we Yeah, I across is data market would increase don't

we new selective we - potentially the We will or at are new price very at. functionality how look into a capabilities increase to that make in add If add or time. decision feeds, we new create

companies taking like every we're that single some increase do. not it's So a year standard

a proprietary expansion the been like I geographic addition price our we where on is this expanding really increases by year. used on to increases business, how in a hope - to year But data think don't our data that particular that decided focus make to have we been we opportunities would have we there. continue standard in have we're is base focusing price And Asia. we've we to every the in in price I this not have U.S. in expand year, opportunities really amount U.S. but us growth client the - just that haven't for particularly increases. equities clients, made in say, market here any our Alex, significant

So we've we don't really intentionally have that something foregone.

So I every part can't for your anyway. have focus always I something do now, that been it's not right but price last not increases answer but a question, year of that can us say we

Alex Kramm

you. Thank enough. Fair

Operator

you. Thank with [Operator Goldman from comes next Our Blostein question Alex Instructions] Sachs.

now is line Your open.

Alexander Blostein

Thanks. Hey, good morning, guys.

run follow-up the Market I for year So guys ex what Alex's spoke the bigger data? And pricing you lowered wondering to should for last market ETRADE kind rates I guys at the to lower whether of any for think the just rate larger question, of got of recently. some guess Data quarter guys have picture, the actually from players. you kind more not a or Thanks. of expect online rest run brokers I'm audits, benefit specifically some of Ameritrade, you this And

Adena Friedman

give sort don't any across revenue guidance businesses. of our we Well,

answer So last that I question. can't

our made decrease the are side. price sure pricing to always a on We trading significant competitive that clients and - it's we're to that decisions working it's space. our trading that make with of a think make of, very I any sort generally, terms in managing data sure the we obviously side, in in the that competitive have environment, appropriately we're our both not

experience manage dynamic. process. to dynamic trading side, and clients the on say markets pretty to it's our figure really quite our So work it's would it's with in we I a out how and regular their best

use On for as retail where very they their much in side, do enterprise can pricing they ways. we've brokers, can on large enterprise our so expansive particularly sure making more have been data pricing, the across have scale We'll their more that up. focused market bases. businesses, We data go client our cost data, the they do

Alexander Blostein

thanks. Great,

Operator

Voigt comes with our from question And Kyle KBW. you. next Thank

Your line now open. is

Kyle Voigt

any you've the Maybe to are of morning. elaborate just the about show Was then Ministry transaction? now in on taken good Hey, well recommendations for Thank Ministry on that were the the in messaging made the like Finance from a the direct confident kind the the Oslo a as or of of question a the stake offer follow-up Finance less ownership how move? as serious if of just more imposes of that we've Finance Ministry to transaction, Euronext, to a I that rule Børs to Can just Nasdaq, heard given you what you. you're publicly exchange. And believe that, that wondering you just for asset. two-thirds

Adena Friedman

gave opportunity that think the Sure. somewhat there opportunistic, was it. and because ready a purchase buy was to to Well, they that I share was us sell holder particular

think to an bolster helped that I proposal and so has decision. So our just opportunistic was

we to sure our in manage in available with And proposal continue benefits are particular. clients the that capital to Norwegian our Oslo that itself, they the of Norwegian of to all the with part the to very of terms we think I markets there, benefit Børs markets stakeholders their we continue efforts that can regard relationships capital to strongest feel the strongly the make to strategic as provide we have to our that aware there to bid.

their evaluating I the June, they to around ability come they be what don't think it of the on. sort from excited might next extend that we they the to likely make But make to decision ministry, inside but regard they we it weeks, with finance have XX, hear we'll decision view could how in them few conclusion will but May the to have when there, or as any to to they're a And they're ready. mid-June.

Kyle Voigt

you. Thank

Operator

showing back over CEO, any the I call am at this like turn for to questions I Friedman, further any not Adena Thank you. to further time. And would remarks. now

Adena Friedman

and as analytic efforts point trading in closing, to clients diversified them. first out was our would to performance I solutions our to Well, Sure. good technology, like deliver superior ongoing our business, of our quarter to with partner a that reflection as XXXX well

workforce realize energized delivering direction on focused to markets, tomorrow. team our against potential and the and of are re-imagine Our to management global results strategic and

much you very time thank your for So today.

Operator

program. gentlemen, Everyone, today's in thank participating have you This conclude disconnect. may And today's day. does and wonderful all for Ladies you conference. a

Nasdaq (NDAQ) 24 Apr 192019 Q1 Earnings call transcript